Harry Jenkins (Speaker) Share this | Link to this | Hansard source

As has just been decided, a cognate debate will be allowed, which will include this bill, the Excise Tariff Amendment (Taxation of Alternative Fuels) Bill 2011, the Customs Tariff Amendment (Taxation of Alternative Fuels) Bill 2011 and the Energy Grants (Cleaner Fuels) Scheme Amendment Bill 2011.

Debate resumed on the motion:

That this bill be now read a second time.

Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Energy and Resources) Share this | Link to this | Hansard source

I rise today to speak on the Taxation of Alternative Fuels Legislation Amendment Bill 2011, the Excise Tariff Amendment (Taxation of Alternative Fuels) Bill 2011, the Customs Tariff Amendment (Taxation of Alternative Fuels) Bill 2011 and the Energy Grants (Cleaner Fuels) Scheme Amendment Bill 2011. What we are seeing from the Gillard government with this set of bills is another attack on the cost of living of all Australian families. The first three bills deal with the taxation of gaseous fuels for motor vehicles. They will apply a tax to LNG, CNG and LPG. They will apply a tax to mum's taxi. They will apply a tax to the taxi fleet. They will apply a tax to the public transport systems, particularly those of cities such as Sydney, Perth and Brisbane, whose buses use compressed natural gas not only to lower emissions but also to lower pollution. These buses burn cleaner and provide Australia with an opportunity to use some of the overwhelmingly ample resources that we have in natural gas.

Australia is a very lucky country. We are self-sufficient in energy. We are, in fact, one of the few OECD countries that export energy. That energy comes from a number of sources. It comes from coal, and we are the biggest exporter in the world both of coking coal for the manufacture of steel and of steaming coal for the production of electricity. That energy comes also from LNG, liquefied natural gas, of which similarly we are a very significant exporter. We have a supply of gas in Australia that will probably last a couple of hundred years, at a bare minimum, based on current reserves, and it makes sense to use that resource here in Australia in transportation fuels, which is the one area in which we are deficient. We import almost 50 per cent of the petrol, diesel and crude oil that we use in our transport fleet. Finally, the energy comes from liquid petroleum gas, LPG, of which we are also net exporters, and while many of us in this place know LPG as the thing that runs our barbecues and, in some cases, our hot water systems and stoves, LPG's main use is in transportation fuels. It makes no sense to apply a tax on those fuels.

On top of the increases to electricity prices and the cost-of-living expenses that will occur as a result of the carbon tax, families and businesses now face further pressure on the cost of fuel because of the Gillard government's policies. Unfortunately it is no surprise, bearing in mind that this government is so out of touch, that the most critical component of the family budget—that is, fuel for the motor vehicle—is now in the sights of the Gillard government. As we see from these bills, the intention of the government is to raise the cost of those fuels to those families using LPG in their vehicles by 20 per cent. This is not a small increase; this is a major hit on the family budget, an attack by the Gillard government on the purse strings of everyday Australian families already struggling under massive increases in electricity prices, gas prices, water charges and other living costs. These increases are soon to be made even more massive by an ill-conceived carbon tax, which will add a further cost, including in the area of transport, to all Australians.

Applying an excise of 12½c per litre on LPG makes no sense at all. This government runs a program to encourage families through a financial incentive to convert their vehicles to LPG by offsetting some of the cost of conversion, yet with all that encouragement the government is really just setting a honey trap: 'We'll get these vehicles onto LPG and then we'll increase the cost of LPG by 20 per cent. We'll increase the tax to make sure that these families can no longer cope with the pressures of the cost of living.'

Currently 283,000 vehicles have been converted to LPG under this government scheme. Every single one of those vehicles is owned by a family. This scheme is not open to commercial vehicles, not open to fleet vehicles and not open to business vehicles; it is only open to family owned vehicles. There are 283,000 vehicles that are owned by 283,000 families who will wake up, if these first three bills pass, to higher fuel costs. There is absolutely no justification for this. Why is the government doing it? It needs the money. Why does it need the money? It wastes money. This is an old-style spend, waste and tax government of the kind that we see from the Labor Party every time they sit on that side of the Speaker. Every time a Labor government holds the Treasury benches, it spends and wastes money until it has no option but to increase the taxes on the people of Australia. This tax on Australian families is intolerable, and the opposition, hopefully with the support of the Independents, will do everything we can to defeat these first three bills. Along with those 283,000 vehicles, there are another 400,000-plus vehicles that have already been converted and a majority of those vehicles would be owned by families. Some of these families would have bought them second-hand from a car yard in the expectation that they would be able to continue to use these vehicles to lower the cost of living, to lower the cost of taking their kids to school every morning—mum's taxi—and to lower the cost of running a family in Australia under a government that is so out of touch. Costs rise every day and soon with a carbon tax those costs will rise even more steeply.

What we see in these first three bills is a government desperate for money to fill the enormous black holes that it created by wasting money under the home insulation scheme—that was $2 billion up in smoke. Four times what it is going to get from this scheme has already been wasted and you wonder how the families of Australia feel about that. Of course, the wastage in that area was small compared to the wastage under the Building the Education Revolution scheme, where billions and billions of dollars were overspent. Again, that was many times the money that is going to be raised from this scheme.

When the people who sit on the opposite benches go back to their electorates what do they say when families ask them, 'Why are you putting up my fuel costs by 20 per cent?' I would be interested to hear the answer. Is it because they simply do not care? Is it because they are simply desperate? Is it because we know that they have gone from a cash surplus of $70 billion to a net debt of $107 billion? Is it because they have gone from a budget surplus of $20 billion to a budget deficit of $50 billion? Probably. I would like to give them the benefit of the doubt that they are not deliberately trying to destroy the family budget with this tax, but that it is actually because they are incompetent money managers and wasteful with spending. I would like to think that was the reason, but sometimes it is hard to accept that it is the only reason. It appears to me that it is more about this government being completely out of touch and completely lacking in compassion and understanding for the way in which families in Australia are currently struggling.

I note that the fourth of these bills, the Energy Grants (Cleaner Fuels) Scheme Amendment Bill 2011, is a bill which the coalition will support. It is a bill to extend the grants scheme to biodiesel and renewable diesel. As I said, in Australia we face a challenge in providing enough transport fuel. Logically, you would say that if you have an alternative fuel you would support it and not tax it. If you were awash with it you would not tax it. In the case of LPG we are awash with it, and I have covered that issue extensively. We are trying to build a biofuels industry in Australia. Along with the government, the coalition support the measures that have been taken, previously by the Howard government and continued by the Rudd and Gillard governments, to provide grants to the ethanol, biodiesel and renewable diesel industries to offset the excise which is applied to those fuels at the full rate of 38.143.

The Energy Grants (Cleaner Fuels) Scheme Amendment Bill is a worthy bill that the minister has brought to this House and it is one which the coalition will support because it maintains the grants for the biodiesel and renewable diesel industry. That is an industry that is doing it tough. That industry has faced unfair dumping competition from overseas supplies. I commend the minister for continuing what we started. He has not done anything more, but at least we should be grateful that he has not done anything less. With that certainty, at least through until 2020, I hope that the biodiesel industry, truly supported and protected from dumping actions by the anti-dumping legislation, will be able to resume some economic growth and help us supply the burgeoning demand for diesel fuel in Australia. We live in a region where diesel fuel is very much in demand. I am often asked by my constituents, particularly those constituents who drive diesel vehicles, why they have to pay more for diesel than they do for not only ULP but also higher octane petrol. The answer is quite simple: it is a case of demand. We live in the South-East Asian supply region where diesel is very much in demand not only for heavy equipment but also for transport fuels.

We can look at the trend in the motor industry in Australia. Much of the romance goes to the hybrid vehicles, and we are producing a hybrid vehicle here in Australia, the Camry, which is based on Toyota's Prius technology. There are a number of other vehicles around now that run on hybrid technology. If you want to buy a Porsche you can buy one that uses hybrid technology. But if you want to drive the most efficient vehicle in the world, as measured by litres per 100 kilometres—or, as my dad used to say, miles per gallon—you will drive a diesel vehicle. I think the turbocharged Volkswagen Golf holds the record at the moment. It is more efficient than a Prius and it runs on diesel. So if the opportunity is there for Australia to increase its self-sufficiency in that most efficient of fuels—diesel—through the production of renewable diesel or biodiesel then we need to ensure that those incentives continue. That is what this fourth bill does—it provides the incentive for diesel production.

We then move to compressed natural gas. It is a cumbersome fuel but one which has a place in the Australian urban environment, particularly for delivery vehicles or buses that return to a depot that can carry this bulky fuel. It is not liquefied; it is compressed. It takes up a lot of room and the tanks weigh a lot, but it has a very significant role to play in public transport. This is a fuel that we are trying to get into our bus fleets. Perth has about 300, Sydney has around the same number and growing, and Brisbane has also made an investment in these sorts of buses. These are buses which do not leave the particulates in the air, they burn cleaner, they provide an opportunity to reduce emissions and they will increase the efficient transport of people through the public transport system. So, what does this government do to those buses? It taxes them. And what is the result of that tax? Those buses will no longer be bought because the economics of running a compressed-natural-gas bus simply will not be there. So we will stop using a fuel that we are abundant in, so abundant that we export tens of millions of tonnes, and perhaps soon 50 million tonnes, of natural gas per year, in the form of LNG. So, instead of using a fuel that we are abundant in, this government taxes it to the point where it is not economical to use those buses, so the buses will go back to being diesel. Then there are all the issues associated with that, in terms of the balance of payments.

But those 900 buses already in use would face a fuel price increase of at least 20 per cent, in the case of CNG. That means that bus fares go up. Here we have a government that claims it is all about reducing emissions and introducing efficiencies and all about trying to get people to use public transport, but they are so desperate for money that they have these bills in the House.

So the mums and dads, and the kids going to school, who are already struggling with a household budget that is tight, with cost-of-living pressures growing every day for families, now have to find extra money for bus fares as well. When that family has to then use the other form of public transport, taxis, to perhaps take their elderly parents to the doctor or to attend an occasion somewhere without the family car, they are going to get hit again. This government reaches out to every part of sensible living and taxes it. We have a tax on family cars, a tax on compressed-natural-gas buses and we have also got a tax on taxis. The 19,000 taxis in Australia are going to see a 20 per cent increase in their fuel cost. And guess what? That means higher taxi fares in Australia, because the Gillard government cannot manage money. They are so desperate to get money into their coffers that they will literally tax anything that moves.

It does not end there. In Tasmania we have recently seen a very responsible decision taken there to put in place an LNG plant, not to export liquefied natural gas to our northern neighbours, but to run trucks. Trucks are big users of diesel. Diesel is expensive and in Tasmania it all has to be shipped there, so it made sense to power the logging fleet with LNG. LNG is already used on the mainland in trucks. People like Goulburn dairy co-op are using it in their milk trucks, Wesfarmers have been using it in their transport fleet out of Perth and a number of other installations have been mooted. This tax will kill that dead. Another opportunity to use our abundant natural gas to lower emissions, lower running costs and lower particulates is shot dead by this government, which is desperate for money. So the transport LNG industry will fold overnight, as well.

If it stopped there I guess we would say 'Whew, how much damage can you do in a day,' but there is more, because this tax will be administered in a way that means small businesses selling LPG—it might be for my barbecue, or the member for Bass's hot water system or it might be to a large commercial business user—have to acquit that in a whole new set of regulations and red tape, because LPG will now have a tax on it. So it will mean more work and more red tape for small business. It was small business people to whom the previous leader of Labor in opposition, Kim Beazley, was referring when he said: 'They are not the natural friend of small business.' But they do not have to show small business every day that when they wake up in the morning they will have a tax applied to them—to their motor vehicles if they are running an LPG vehicle—and also give them a heap of red tape to deal with.

This is bad legislation. It is not about improving inefficiencies in Australia. It is not about ensuring Australia is a better pace to live. It is legislation about taxing a fuel source in which we are abundant. It is legislation about taxing a fuel source that is efficient. It is legislation about taxing a fuel source that is a lower emitter. It is legislation about taxing the livelihoods of Australians. And it is legislation about increasing the cost-of-living pressures on families.

The opposition will oppose these first three bills. I flagged that we will move an amendment to the fourth bill. When I watched the minister presenting these bills a few weeks ago I could tell by the sly smile on his face that there was something in these bills that I had to go and look for. I looked hard and sought the advice of the library and they looked hard. And then we found it: the suicide clause. If each of these bills is not passed, none of them will receive royal assent. Here is a minister who is prepared to say to the biodiesel industry: 'If the opposition knocks over these bad bills on LPG, we are going to tax you at 38.143 cents.' This is not a minister who cares about the energy industry. This is a minister who is desperate for money.

Our amendment will break the nexus between these bills. It will ensure that if the first three bills are defeated, which they should be, and the fourth bill is passed, which it should be, then we do not have to rely on all four bills being passed to get royal assent. Our amendment will make the fourth bill, the Energy Grants (Cleaner Fuels) Scheme Amendment Bill 2011, effective from 1 July 2011. There should be no other way. You cannot leave the biodiesel and renewable diesel industries swinging in the breeze while the minister who sits opposite plays games with their livelihood. As I said, the biodiesel industry has been through enough already. We need to give that industry certainty, and it is the coalition, as usual, that has to do that.

I will be interested to listen to the contributions from the other side. I will be interested to hear how they justify increasing the cost of living for families. I will be interested to see how they can be so oblivious to the circumstances we currently find ourselves in, which is the reason the Howard government never proceeded with this.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

It's their plan.

Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Energy and Resources) Share this | Link to this | Hansard source

He says, 'It's their plan.' We never presented legislation in this House when families were in financial crisis, because we knew, we were in touch and we understood. We believed in making sure that there was no pressure put on families by a tax. This government is mindless and careless to that fact. It knows families, or it should know families—

Mr Champion interjecting—

Mr Lyons interjecting—

Perhaps the interjecting members opposite do not care or perhaps they do not know—perhaps both—but we know that families are under pressure now, just as we knew when we were in government, which is why we never proceeded with these bills. Those members are now saying to their electorates, 'We don't care that we're going to put your price of LPG up by 20 per cent.' I say to them: you had better hope we save you by defeating these bills.

Geoff Lyons (Bass, Australian Labor Party) Share this | Link to this | Hansard source

This is the first time I have spoken with you in the chair, Mr Deputy Speaker Adams. The electorate of Lyons is a great electorate. I rise in the House today to speak on the Taxation of Alternative Fuels Legislation Amendment Bill 2011, the Ethanol Production Grants Bill 2011, the Excise Tariff Amendment (Taxation of Alternative Fuels) Bill 2011, the Customs Tariff Amendment (Taxation of Alternative Fuels) Bill 2011 and the Energy Grants (Cleaner Fuels) Scheme Amendment Bill 2011.

The current taxation arrangements for fuel impose excise on certain domestic manufactured fuels and excise-equivalent customs duty on relevant imported fuels. Fuels subject to fuel tax include petrol, diesel, fuel oil, kerosene, benzene, toluene, xylene, biodiesel and fuel ethanol. The bills before us today reflect policy first announced in 2003 in the Howard days, implementing longstanding plans to bring alternative automotive fuels into the fuel taxation regime on the basis of their energy content, with a discount of 50 per cent to reflect the benefits of alternative fuel use. The Truck Industry Council, in its submission to the Implementation Of Alternative Fuels Taxation Policy inquiry, stated:

The principle of applying excise according to the fuel's energy content is considered fair and equitable.

It is worthy to note that the financial impact of the alternative fuels taxation measure has been included in the forward estimates since the 2003-04 budget. Taxation of LPG contributes to the largest part of this revenue. Essentially, these bills bring certain alternative fuels used for transport purposes into the fuel taxation regime and make them subject to the excise duty or excise-equivalent customs duty. The fuels affected include liquefied petroleum gas, LPG, and compressed natural gas, CNG.

It is important to note that only fuels used in vehicles will be taxed. Fuel for domestic use, such as for barbecues and heating, will be exempt from the tax. The rates for these fuels are based on the energy content of the specific fuel and are discounted by 50 per cent to reflect the potential benefits of these alternative fuels. The changes are phased in over a transition period to allow affected parties time to adjust to the changes. This is very important. Three tax bands are now used to reflect the energy content of the fuels: high, medium and low. Methanol, LPG and compressed natural gas are currently outside the fuel tax system and are thus excise free. We recognise that there has been considerable debate about this. We took steps to consult with industry about this bill and, as a result of those discussions, the introduction of the excise was pushed back from July 2011 until December 2011. It is important to note that there is a five-year transition period to phase in taxation on alternative fuels such as CNG, LPG, methanol and biodiesel. The bills allow for a longer lead-in period for ethanol, which will be subject to a 10-year phase-in period.

Taxing alternative fuels improves the operation of the fuel market by enhancing competition between the different types of fuel, improving market efficiency, economic choice and the consequent allocation of resources. Ethanol is a renewable, environmentally friendly source. It is sourced from natural products, like annual sugarcane crops. Blending ethanol and petrol in various proportions has been put forward as a means of reducing greenhouse gas emissions and alleviating adverse economic conditions in the sugar industry. Ethanol blended fuels represent 3.5 per cent of the world gasoline market. Ethanol blended fuels are widely used in countries such as the US and Brazil. In Brazil they represents 41 per cent of the local fuel market. I am pleased this bill has a 10-year phase-in period for the excise to allow this industry to grow. Presently, fuel tax on biodiesel is imposed on the full rate, as it is for petrol and diesel. Under these bills, biodiesel will be subject to fuel tax at a high-energy content rate of 100 per cent of the petrol and diesel rate but discounted by 50 per cent. Australia enjoys the lowest LPG prices in the OECD. By introducing taxation on these fuels, we bring Australia into line with the taxation treatment of LPG in most other OECD countries. Methanol has not previously been subject to excise or excise-equivalent customs duty. There is evidence to suggest that methanol is not widely used as a transport fuel, either directly in blends or as a fuel substitute. Under Australian fuel quality standards, methanol cannot be used as an extender or additive to petrol or diesel for commercial sale. This is due in part to the significant damage that methanol can cause to some engines designed to run on petrol or diesel. Methanol is mostly used as an industrial chemical and as racing fuel.

There has been some criticism that taxing LPG would have an impact on taxis. The impact of including LPG in the excise system on taxis depends on decisions by the state and territory regulators. If the excise is passed on in full, it could add approximately 3.5c to the average metro taxi fare trip upon the introduction of a 2.5c per litre excise on 1 December 2011. This will increase to approximately 19c for the average metro taxi trip when the final excise of 12.5c per litre is introduced in 2015. While the government is aware that the LPG industry does not want to be taxed until their market share hits 10 per cent—they are currently just under six per cent—this would blow a $600 million hole in the bottom line, and petrol and diesel, which are their main competitors, are all taxed. The majority of OECD countries, in particular France, Germany and the UK, as well as New Zealand, Canada and the US, all tax LPG to various degrees. In addition, the EU is looking to substantially increase the tax on LPG over the next five years to take into account climate change.

A sustainable alternative fuel industry will provide rural and regional economic development, create new jobs and revenue streams, help reduce our reliance on imported, finite fossil fuels, improve fuel security and improve air quality and the environment. Many of the alternative fuels subject to this excise are embryonic industries and we recognise this fact. Future Australian transport fuel energy security embraces two major changes: climate change and the transition from oil. Both these events will occur roughly at the same time. Climate change is the great challenge of our generation. Australia is very vulnerable to the effects of climate change. We are already the driest inhabited continent on earth, heavily exposed to the dangers of extreme heat and drought. We are home to many globally important and vulnerable ecological systems. Australians are overwhelmingly coastal dwellers. Our industries and urban centres face ongoing water limitations. Our economy, including food production and agriculture, is under threat. The longer we wait to act on climate change, the more it will cost and the worse its effects will be.

The government is currently developing an energy white paper that will look at alternative fuels policy more broadly. While the government has not made any final decisions about the treatment of fuel in the carbon price arrangements, a principle of carbon pricing is to apply a price that reflects the emissions of different activities. The government is committed to addressing the relative emissions generated by those fuels as part of its consideration of arrangements for fuel under the carbon price.

Australia has a lot of cars and trucks on its roads. Of the nearly 500,000 trucks on the Australian register, over 90 per cent use diesel. The alternative fuel debate is one well worth having. The government recognises that alternative fuels have the potential to reduce environmental harm as they have the capability to reduce Australia's carbon footprint. They provide an alternative to conventional fuels, which ensures that there is a wider and more diverse range of energy sources, and the alternative fuel industries create jobs, particularly in rural and regional Australia.

As the Assistant Treasurer, the Hon. Bill Shorten, stated in his first reading speech on these bills:

The support of the parliament for this legislation is crucial.

Under the former government's legislation that will apply unless new legislative arrangements are made, the taxation arrangements for both imported and domestically produced ethanol will both jump to 7.6c per litre from 1 July 2011. This will mean that on this date the net excise on domestic ethanol will rise by 7.6c per litre and the duty on imported ethanol will fall by more than 30c per litre. In addition, the tax on imported and domestic ethanol will continue to rise each year by more than 7.6c per litre until they are both taxed at the petrol rate of 38.143c per litre. Biodiesel will also be overtaxed from 1 July 2011 if the bills are not passed. The consequences of these arrangements would be devastating for industry. The Gillard government is committed to completing the unfinished business of the Howard government and to acting in the national interest. It is imperative to have these bills passed to avoid the unintended tax consequences on the ethanol and biodiesel industries.

Once enacted, the legislation will provide certainty for alternative fuels taxation so that industry will be able to make decisions, confident in the knowledge of the tax arrangements that apply.

…   …   …

It is critical that the bills are considered promptly in the parliament. Royal assent is necessary before 1 July 2011 to prevent the changes legislated for ethanol, biodiesel and renewable diesel by the Howard government coming into operation on 1 July 2011. These changes would seriously undermine Australia's renewable fuels manufacturing industry.

These bills have been developed following an extensive consultation process with industry that included the release for comment of a discussion paper and release of exposure draft legislation.

The alternative fuel industry should be aware that there will be a review after 1 July 2015, once the tax has been fully implemented. It is likely to consider the impact of the tax, its interaction with the carbon price and the market demand for these fuels. The government remains committed to ensuring that alternative fuels make an important contribution to transport fuel use in Australia both today and into the future. I commend these bills to the House.

Warren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | Link to this | Hansard source

It is almost 10 years since I launched Australia's first national biofuels policy in Townsville during the 2001 election campaign. That policy set an objective that renewable fuel—namely ethanol and biodiesel—produced in Australia would contribute at least 350 million litres to the total fuel supply by 2010. To implement that objective the coalition committed to provide excise-free treatment of biofuels and a grant process, a capital subsidy for new or expanded domestic production infrastructure of 16c per litre of biofuel.

When the coalition moved in government to implement this policy in 2002, we witnessed one of the most dishonest campaigns ever launched by the Labor Party. Labor sought to discredit and denigrate the use of ethanol at every opportunity, with claims that it was damaging car engines—which was later proved to be false—and other similar claims which it systematically fed to its friends in the media. The ethanol industry still suffers today in the aftermath of that disgraceful Labor scare campaign. Nevertheless, the coalition's commitment was met. It certainly started slowly in the wake of the vilification campaign, but I am very proud that the vision that I outlined in 2001 has come to fruition. We now need to move to the next step, increasing the level of biofuels and renewables in our liquid fuel supply.

There have been many champions of ethanol over the years but none has been greater than Dick Honan. The Manildra group of companies have been real champions of the industry. They have a very innovative process, making ethanol as a by-product of their Nowra starch plant. They had a problem with effluent that needed to be disposed of and they developed a really clever solution. They had a lot of resistance from the fuel companies and they suffered very badly in the aftermath of the ethanol smear campaign, but they have won through and their product is now widely used across the country. Dick Honan, above anyone else, is the father of the Australian ethanol industry. He can be proud of his achievements but he knows that there is still a lot more to be done as well. There are other important contributors—particularly CSR and other players in the sugar industry, and I note the new grain based plant at Dalby—and a number of other innovative ideas, because ethanol can be sourced from a wide range of feedstocks.

Not much has changed since that time in 2001 as far as the Labor Party is concerned. The Taxation of Alternative Fuels Legislation Amendment Bill 2011 and the other bills before us show that, once again the government is incapable of producing a coherent policy response to an energy related issue. In June 2004, the then coalition government released its energy white paper, which proposed to adjust the excise rate applicable to all fuels based on their energy content relative to petrol. The rate was to be halved for alternative fuels as an industry development and environmental measure. The new rates were to be phased in from 2011 to 2015. This policy received bipartisan support at the time from the then Labor opposition. But the policy was not enacted in legislation before the coalition lost office, although significant good-faith investment was made in ethanol facilities by companies like CSR based on the white paper. The new income from the coalition policy was incorporated in the forward estimates in the 2010-11 budget papers, apparently without the Labor government even realising it had done it. On budget night, both the Treasurer's office and the office of the Minister for Resources and Energy denied that an excise on LPG was being introduced. But by 7 am the next morning the Assistant Treasurer and the Minister for Resources and Energy had issued a media release confirming that a new excise regime on alternative fuels would in fact be introduced after all and announced a consultation process.

After the 2010 election, as part of a deal with the member for New England, the government announced that ethanol excise would be phased in over 10 years, rather than five. This would have been an acceptable position had it applied to all alternative fuels but, inexplicably, the phase-in period for other alternative fuels was to remain at five years. This was stage 1 of the government's descent into policy confusion on this matter. Following the consultation process, on 24 January 2011 the Assistant Treasurer released an exposure draft of legislation. At the same time the government deferred the introduction of the new excise rates by five months, to 1 December 2011. This legislation would have allowed the excise-free import of unlimited amounts of subsidised ethanol from the United States. The US ethanol industry receives subsidies of $6 billion per year, or about 15c per litre, and also receives tariff protection, as does Brazilian ethanol. Under the government's proposed legislation, the Australian ethanol industry would cease to exist on 1 July this year. The United States also subsidises biodiesel, including exported biodiesel. It took the Minister for Home Affairs four months to act on Australian Customs recommendations that countervailing duties be imposed on subsidised US biodiesel, despite this being one of the most straightforward cases ever brought. The US government had legislated for the subsidies. They were clearly breaching the rules, but it took the government such a long time to act to protect the Australian industry, as it had an obligation to do—stage 2 of the government's policy confusion. Next, the member for New England indicated that, rather than just an extension of the phase-in period, he would prefer no excise on ethanol at all. It must be said that the member for New England is also not always particularly noted for his policy consistency. Remember his bill proposing that Australia reduce its greenhouse gas emissions by 30 per cent by 2020 and by 80 per cent by 2050? That is a position from which the member now distances himself.

Astonishingly, the minister did not bother to discuss the legislation with the opposition. He pulled the bills on the day they were scheduled to be introduced into the House—policy confusion stage 3. So now, with only seven sitting days left before excise is automatically imposed on ethanol, we finally get to the debate about the government's proposals, and what a mess it is. Ethanol, biodiesel and methanol are now to remain excise free for at least 10 years but LPG, LNG and CNG are to have excise phased in over five years at half the energy-equivalent rate. The minister even had the hide to criticise me for allegedly opposing bipartisan fuel tax arrangements while he himself was throwing the whole package out the window.

Indicative of the quality of this legislation is the regulation impact statement attached to it, which is actually based on the earlier legislation that the minister withdrew before it was even tabled. The regulation impact statement extols the virtues of imposing an excise on biofuels. 'Significant deviations from the announced policy may unsettle investment decision making,' it says. What a laughing stock the government has become. It is hard to justify treating some alternative fuels differently from others. In the case of LNG and CNG, use is restricted almost entirely to heavy vehicles. There is little financial gain to the government in taxing those fuels, the cost of which will fall disproportionately on bus users, particularly metropolitan bus users.

When we were in government, we implemented programs to help people with LPG conversion grants for new and used vehicles. It was the sound, environmentally responsible thing to do—$550 million was spent on grants to support 283,000 vehicle conversions or new LPG vehicles. Labor has halved and capped that program and will now tax people who have made the conscious decision to do the right thing for the environment. Adding insult to injury, Labor is singling out LPG, having shelved plans to tax ethanol and biofuels. Again, at the very least the government should treat all alternative fuels equally. Trying to pick winners puts the LPG sector at a distinct disadvantage.

This tax leap from zero to 12.5c per litre over five years will trap around 700,000 motorists, including families who can ill afford it—yet another Gillard government tax slug. It will also affect the fleet of small business operators and, notably, 70,000-plus taxis. The tax will be the death knell for the $300 million LPG conversion industry and its 2,500 employees, who have been hung out to dry by this government.

Labor's craving for new taxes is akin to that of a junkie looking for their next hit. What will Labor tax next? All this is on top of the all-pervasive carbon tax and the hikes it will impose on the cost of everything. At a time when Holden and Ford are releasing new Australian-built LPG vehicles, Labor has taxed the fuel. What of their green car plan? The logic and policy inconsistency shown by this government is simply beyond belief. The bill is a bizarre, counterintuitive twist from a government that claims the moral high ground on environmental matters. LPG is a cleaner alternative fuel. The Gillard government is now penalising the very drivers it should be rewarding. It likes to parade its environmental credentials but it is actually damaging the industries that could help reduce our CO2 emissions.

Finally, I would like to say something about the further development of the biofuels industry. The lack of consumer information on biofuels and the residual effects of the ALP campaign against biofuels use continues to lead to uncertainty amongst consumers about the benefits and safety of biofuels. Research on second-generation biofuels, such as ethanol from cellulose and biodiesel from algae, is lacking. Similarly, research is needed on optimisation of agricultural feedstocks and car-manufacturing innovation. What is needed is a support package comprising measures such as a consumer information campaign, guaranteed warranty cover for all Australian manufacturers of cars using E10 and research and support for the development of second-generation biofuels, including agricultural research.

There are many exciting opportunities available. Industry is now making important investment decisions which will underpin the further development of Australian biofuels. I commend Holden, on the launch last year of their E85 Commodore, and Caltex, for rolling out E85 outlets in capital cities and regions. Holden and Caltex, with other partners, are looking to establish a plant in Victoria to generate 200 million litres of ethanol a year from waste. Ford has focused on the LPG market and developed a new generation LPG engine which markedly improves engine efficiency. Toyota, of course, has gone down the hybrid route.

Only last week the CSIRO reported that Australia could cut jet fuel imports by $2 billion a year and reduce aviation carbon emissions by 17 per cent. But Australian research has only been laboratory scale to date, according to the CSIRO. These companies and research bodies deserve support within the framework designed to secure Australia's energy future. The government promised us an energy paper by 2009. Two years after this deadline, we are yet to see even a draft. The opposition will support the 10-year moratorium on excise on biofuels and methanol, even though the biofuels industry itself accepts that it will need to accommodate some excise in the future. The industry is entitled to 10 years of certainty to secure its future, and the opposition will provide that certainty.

But the opposition will not support the different treatment of different alternative fuels, as the government proposes. The opposition will not support the government's new excise on LPG, LCG and LNG, which will unfairly discriminate against public transport users, taxi users and motorists, who have invested in good faith in a clean fuel.

For a government that likes to pride itself on, and argue in the media about, its environmental credentials and that wants to impose new taxes to reduce CO2 emissions and to be a world leader in addressing climate change, this bill is incredible—a bill that will impose a tax on some of fuels that could in fact make a real difference.

Andrew Wilkie (Denison, Independent) Share this | Link to this | Hansard source

I have mixed feelings about the government's package of bills regarding alternative and cleaner fuels: the Taxation of Alternative Fuels Legislation Amendment Bill 2011, the Excise Tariff Amendment (Taxation of Alternative Fuels) Bill 2011, the Customs Tariff Amendment (Taxation of Alternative Fuels) Bill 2011 and the Energy Grants (Cleaner Fuels) Scheme Amendment Bill 2011. While I do regard the government's proposal regarding ethanol as wholly desirable, the move to put a 12½c per litre tax on auto LPG is deeply troubling.

Tasmania is the best place in Australia to live—as I am sure, Mr Deputy Speaker Adams, you are well aware—in part due to its isolation and small population. But this isolation and small population means we regularly pay more for basic everyday items such as groceries, electricity and fuel, even though the state's population earns less on average than people elsewhere in Australia. While shipping costs are often given as the reason for price discrepancies on our side of Bass Strait, the price hike at the Tasmanian cash register often reflects much more than the cost of transport, as is the case with LPG, where the industry is much less mature and thinner on the ground than on the mainland.

That is why I simply cannot support the proposed excise on LPG in the government's alternative and cleaner fuels package. Quite simply, this tax will have a patently disproportional effect on Tasmania, to the extent that I am very concerned that the market in Tasmania for LPG could collapse altogether.

The effect on the taxi industry in my electorate, in particular, would be catastrophic. Many of the vehicles use LPG—as they do on the mainland in the taxi industry—and the excise will surely mean that the state government, already guilty of flogging off too many taxi licences every time it needs more cash, will be pressured to approve fare increases. Moreover, taxi drivers in my electorate already work ridiculously long hours and take home a pittance—often just $5 or $6 an hour—so this excise can only make things worse for them. I simply cannot, in all conscience, come into this place and support a tax that will reduce their meagre income even more. Then of course there are the customers who are already struggling with the rising cost of living. Remember that many people who rely on taxis are elderly, disabled or infirm, and they are the last people who can afford 12½c a litre being added to their taxi's fuel bill.

Nor am I convinced that the proposed LPG excise makes sense nationally. Remember that successive federal governments have offered subsidies to encourage people to convert their vehicles to gas because LPG is an environmentally friendly, reliable and cost-effective alternative to petrol. I well understand why people who thought they were doing the right thing by the environment and their household budgets and who took advantage of the subsidies feel duped at the prospect of this tax on LPG. It is a pity that the government does not understand. Nor does the government seem to recognise that vehicles powered by LPG emit up to 13 per cent less carbon than petrol-powered vehicles. The proposed excise will add 12½c a litre to LPG and will push its price so close to petrol that it will scarcely be a viable alternative fuel.

In other words, LPG is a cleaner fuel and, for the life of me, I cannot see why we would slap a tax on it at a time when the country is on the verge of introducing a price on carbon. I trust that the government's muddled thinking on LPG does not forewarn of problems with its commendable move to put a price on carbon.

The government's proposal to put a tax on LPG makes no sense to me at all. For that reason I will not support the three separate bills to do with taxing LPG. In other words, I will not support the Taxation of Alternative Fuels Legislation Amendment Bill 2011, the Customs Tariff Amendment (Taxation of Alternative Fuels) Bill 2011 and the Excise Tariff Amendment (Taxation of Alternative Fuels) Bill 2011.

I will, however, support the Energy Grants (Cleaner Fuels) Scheme Amendment Bill 2011, because ethanol is of great value as an alternative fuel and Australia should move quickly to produce and use as much of it as possible. As long as fuel crops are not produced at the expense of food production—and in Australia they do not need to be—we should better embrace ethanol, because it is so obviously cleaner and more sustainable than petrol or diesel.

I applaud my colleagues the members for Kennedy and New England for their passionate advocacy for ethanol, and I look forward to working with my colleagues, as well as the government and/or the opposition, to ensure much greater production and take-up of ethanol over the coming years.

Tony Smith (Casey, Liberal Party, Deputy Chairman , Coalition Policy Development Committee) Share this | Link to this | Hansard source

In following the member for Denison and his remarks on LPG, let me highlight that what government members in this House will do when these bills—the Taxation of Alternative Fuels Legislation Amendment Bill 2011 and cognate bills—come to a vote is knowingly vote to damage the LPG industry in Australia. Members opposite need to understand that. It is pure and simple. What we will have from senior ministers opposite is attempts to talk about what they say is their consistent policy. But what they will not talk about is the abject uncertainty they have created over so many months and the incompetent way in which they have come to the position they are in now. The previous speaker, the Leader of the National Party and the shadow minister on behalf of the coalition, just an hour or so earlier outlined very capably and in great detail the approach of the opposition to these four bills and our fundamental difference on three of those bills. In relation to those three, as I indicated, I wish to focus on LPG in particular.

When you look at the history of this issue, which they say they are interested in, you discover—

Mr Craig Thomson interjecting—

And I would urge the member opposite, who talks so often before he thinks, to listen and learn the history. You discover that those opposite, despite what they have said in the past, have at every step—for reasons which I am oblivious to—taken action to damage the LPG industry in Australia.

To illustrate that point, let me depart from these bills for just a second, which I know you will allow me to do, Mr Deputy Speaker. I look back to 2006–07. My friend the member for Gippsland will know this, being a fellow Victorian, because the LPG industry is very important in outer suburban and rural electorates in Victoria. In 2006 the Howard government introduced the LPG Autogas tank rebate—and I concede it would have had a more eloquent name that would have formed itself into a nice acronym. The Labor Party at the time did not say anything, but in the 2009 budget they took action to cut back that rebate. They did not promise before the 2007 election that they would cut the rebate back.

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

It is like Work Choices.

Tony Smith (Casey, Liberal Party, Deputy Chairman , Coalition Policy Development Committee) Share this | Link to this | Hansard source

The member opposite did not say to his electors that, if he were elected, he would support a cutback in that rebate, but the Labor Party did that, without notice, in the 2009 budget. Then just at the start of this year, when they were searching for savings, one of the first things they chose was this same scheme, and they chose to cap it. At every point since their election, when given an opportunity they have quickly taken action to damage the LPG industry in Australia.

The other important point that is lost on those opposite is the policy context today. Those opposite are introducing a carbon tax, a carbon tax which—as has been made clear in many forums in this House—they pledged they would not introduce. But they are introducing one, against their word to the electorate. There is talk of how petrol will be treated in that carbon tax. The government has hinted—and Professor Garnaut in recent days has suggested—that in introducing a carbon tax the government would simultaneously cut the excise on petrol. Those opposite will not disagree with that. That has been what Professor Garnaut has said. I imagine that, in introducing their damaging carbon tax, that is what those opposite will argue.

But there is no mention at all of LPG. There is no mention because it is not on their minds, unless they have an opportunity to damage the industry. In this whole context of rising cost of living, of families facing a difficult time paying their bills—as so many previous speakers on this side of the House have indicated—it is important to acknowledge that many of those who have taken up LPG, who have taken up that grant to get their car converted, are low- and middle-income families. Before the grant was cut, many took it up to have their car fitted with an LPG system or to buy, as you can these days, a car with a factory-fitted LPG system.

Those opposite will knowingly in this House vote to put up the price of LPG. They will do so in a way that they know will make life tougher for LPG users. But what about the industry? This is an industry that has dealt with the unexpected cut in the tank rebate that those opposite never mentioned before the 2007 election. Remember the good old days? The member for Griffith was the Leader of the Labor Party in 2007 and they were going to reduce the pressure on cost of living. They were going to have GROCERYchoice and Fuelwatch. Their third promise was not to cut the rebate for the installation of LP gas tanks in cars, but they went ahead and did it anyway and, in doing so, showed their true colours. The combination of these actions by the government and the fact that they have now rushed ahead with this legislation solely as a revenue grab, and off the back of increasing the cost-of-living pressures on the families that use LPG in their vehicles, has been to spread incredible uncertainty within the industry itself.

The Leader of the Nationals talked about the 2½ thousand people who work in the industry, and there is no doubt that those workers in the industry will face a tougher time. Some of those workers will lose their jobs if this government gets its way. The member for Corio, sitting opposite, has workers in his electorate. In the outer eastern suburbs of Melbourne there are significant LPG auto industries. It would be very hard to drive through any electorate if you cross Springvale Road, along those golden miles where the auto industry is so long, and not come across many industries.

The members for Deakin and La Trobe—Labor members who adjoin my electorate of Casey—need to know that in voting for this bill they will be voting directly against the interests of the workers in that industry in their electorates. The consequences that flow from this legislation will be their responsibility. This is a chance for some of those members opposite to show if they care about the working families they spoke about so often before the 2007 election and the last election and if they care about those working in industries like this. This is the chance to show they mean it.

But what we know over here is that, when given a choice between standing up for what is right and toeing the line for what they know in their heart is wrong, they will always choose the latter. The consequences of this legislation at this time, on the back of what the government is doing, for the reasons outlined by the Leader of the Nationals and the shadow minister, will be to put up the price of LPG, to make it harder for families, to put up taxi fares, as we said, but more than that—and I want to focus on this—to put in jeopardy some of those in the industry who are facing uncertain times through a combination of reasons. Some of those, as I have outlined, are the government's incompetence and the government's actions on LPG.

Those opposite will have a lot to say, but if they have any integrity they will stand up and say, 'Yes, we did break our word before the 2007 election, and we did cut back the rebate which we said we wouldn't do, and we fully understand what we are doing today.' But they will not. They can say what they want in this House, but I would ask them to do one thing in their electorates, and that is to visit some of the LP auto gas installers, talk to some of the workers and think about what it is they are doing—think about whether what they are doing on this bill is what they really came here to do.

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

In speaking to the Taxation of Alternative Fuels Legislation Amendment Bill 2011 and cognate bills I start with a quote. It says:

The reforms will establish a fairer and more transparent fuel excise system with improved competitive neutrality between fuels. They will provide the opportunity for currently untaxed fuels to establish their commercial credentials in the market place.

Who would have said that?

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

Someone from outside parliament.

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

Yes, it was. It was in fact the former Treasurer, the former member for Higgins, who said that in 2003, supporting these pieces of legislation in pretty much their current form, except at that stage the then government was not prepared to give the tax breaks that these bills do to ethanol. We had from the previous government a position that is identical, except for us being more generous in our treatment of ethanol, to what is now proposed. What has changed since then is the Leader of the Opposition. We now have a Leader of the Opposition who has no interest in what is good for this country, has no interest in what is good public policy and whose automatic reaction to any legislation that we put up is no. What we have here is the ridiculous situation that he is opposing the coalition's own policies on these bills. It is not some Labor developed policy that we have suddenly decided that we need to put in place. This is something that your side announced in 2003, something that your side said it was going to do. We have the ridiculous position that the Leader of the Opposition is opposed to his own policies. The House must find that absolutely extraordinary. The Leader of the Opposition is opposed to the opposition's own policy positions. The only reason he is opposed to them is that we have introduced them. How can he ever come into this place and say that he has the interests of Australia at heart when he takes a position like that? How can he ever, on any issue, come in here and say, 'I'm in here to try and better the lot of Australians,' when he takes a position of opposing his own policies? It is an absolutely farcical situation that we find ourselves in. We on this side are absolutely stunned that these are the tactics that those on the other side have employed. We have got used to the negativity that we see from the Leader of the Opposition, but this is in another realm entirely. To oppose your own policy position because the Labor Party brought it into parliament I think must be a first in any Western democracy.

These are important bits of legislation for the reasons that the former Treasurer, Mr Costello, gave when he was the member for Higgins. Of course, it was not just the member for Higgins who had that view, either. The former member for Bennelong said that the reforms 'will result in a more consistent and neutral tax regime for fuels used in vehicles'. So the former Prime Minister and former member for Bennelong in December 2003 also supported these bills. The Deputy Prime Minister at the time, Mr Anderson, said that these bills 'emphasise the importance of investment certainty'. Can I say it is a very rare day that you find anyone on this side quoting the former Prime Minister, the former Treasurer and the former Deputy Prime Minister and saying they were right, but this is one of those days. The reason they were right was that those policies were in the national interest, and that is why we are prosecuting these bills. They are in the national interest. We have an incredible situation of those on the other side opposing their own policy position, which is just unbelievable.

Mr Stephen Jones interjecting—

As my good friend and colleague the member for Throsby points out, it is because, in the absence of any policy position on the other side, rather than be consistent with their own position in the past they would rather say no. They say, 'Look, we actually don't have any policies other than opposing everything the government puts forward.' That is where we are today. We have a very sorry opposition who have no position other than 'no'. They expect that they can lead this country on a negative position without a policy. It is an unbelievable situation that we are in.

These three bills, which are the ones that those on the other side have decided to oppose even though it is their own policy to support them, do not apply to liquid petroleum gas, compressed natural gas or liquid natural gas. These fuels were not previously subject to excise. These bills will now apply a 50 per cent excise, which is 50 per cent lower than that which applies to petrol. We have seen some incredible claims coming from those on the other side in relation to this, and one of them was that the opposition are opposing these bills because they are environmentally more sound in what they want to do. They say this will encourage people to use petrol. There is a 50 per cent discount on what applies to petrol, and the emissions that come from LPG are only 13 per cent less than those of petrol. So they are getting a 50 per cent discount for emissions that are 13 per cent less.

Geoff Lyons (Bass, Australian Labor Party) Share this | Link to this | Hansard source

Not a bad deal.

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

That is not a bad deal. That is not a bad situation to be in. You only make 13 per cent less in emissions but you get a 50 per cent discount. Those opposite say that their opposition to this in some way means their green credentials are better, when we know that they do not believe in climate change. They do not have any rational position in relation to making sure that carbon is dealt with properly. They instead want to tax ordinary Australians, costing billions of dollars, and pay the polluters.

The Garnaut report the other day really did bell the cat in terms of the difference between the government's position on climate change and the opposition's. It was clear from the Garnaut report that the proposal from this side of the House is for a low-cost, sensible way of dealing with climate change—one that compensates households, as opposed to the one from the other side that attacks households and compensates big business and polluters. If anyone on that side says that their negativity in relation to these bills is about their green credentials, it just does not stack up against anything else that comes from the opposition. Instead, what we are faced with from those on the other side is a policy vacuum. They have taken the position they have on this bill because it is their standard line. Their standard line is: 'We oppose anything that the government puts up, even if it's our own. We're going to oppose it anyway.' We have this absolutely unbelievable position.

I had the pleasure of chairing the House of Representatives Standing Committee on Economics inquiry that looked into, investigated and reported on these bills. We received a large degree of evidence on the effects that the bills would have and the way they should be dealt with. In some senses, I am in an ideal position to make some comments about this. I know I will have to save those comments for another time.

Debate interrupted.