Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

Before the debate is resumed on the Taxation of Alternative Fuels Legislation Amendment Bill 2011, I remind the House that, pursuant to the resolution agreed to by the House on 2 June 2011, this order of the day will be debated concurrently with 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.

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

During the last time I spoke on this bill I was highlighting to the House the complete hypocrisy from those on the other side in relation to their approach to these bills. On the last occasion that I was making a contribution, we went through the policy position that the former government adopted in relation to these bills. It was a policy position that this government adopts in relation to these bills. It was a policy position that was supported by a former Prime Minister, the then member for Bennelong, Mr Howard, a former Deputy Prime Minister, Mr Anderson, and a former Treasurer, Mr Costello. All of them put on record their support for this excise—in relation to LPG and LNG—in exactly the same manner as this government has done in the legislation we are debating today.

So, for the opposition to come in here and criticise and say that this is something they are opposed to shows where the opposition stand in relation to this parliament. The opposition oppose everything just for the sake of opposing. It does not matter what the merits are, it does not even matter if it is their own position; they will oppose for the sake of opposing. There are no arguments that they can put about the history of this legislation. There are no arguments about where the policy came from. They started this policy. It was their position. They knew the time line in relation to this. Yet, because the Leader of the Opposition is incapable of any positive contribution in relation to legislation, what are they locked into? A position of opposing their own policy on these bills.

They may also say: 'LPG in cars produces less carbon and therefore there should be a discount for it.' It is reasonable to put the proposition that maybe the excise should be in proportion to the reduction in carbon emissions. If you use LPG, a car emits 13 per cent less emissions. The discount that is in these bills is 50 per cent. So people are getting a 50 per cent discount for a 13 per cent reduction in emissions. No-one can argue that that is not generous.

After my last contribution, the Deputy Chair of the House of Representatives Standing Committee on Economics, the member for Moncrieff, asked Treasury an important question about the price of LPG in Australia compared to other countries around the world and about what effect this excise will have on that price and that ranking. That information has come back, and I am happy to report it. There will be a slight decline in Australia's ranking in price compared to other countries. We will move down one place, to be behind Canada. We will almost have the same price, but we will go just behind Canada. We will still be cheaper than the United States, the United Kingdom, Spain, Portugal, New Zealand, the Netherlands, Italy, Hungary, Germany, Czechoslovakia and Belgium. Our LPG, even after the excise, is going to be cheaper in Australia than it is in all of those other countries, with the exception of Canada. That is where we have moved back.

I note from the speaking list that we will not have the member for Higgins or the member for Bennelong making a contribution. You can understand why. You can imagine the phone call that has gone to the office of the current member for Higgins from the former member from Higgins: 'What are you doing? This is our policy. We need policy. We need to be supporting it.' You can just imagine the phone call and the embarrassment that there would be if she actually had to come into this chamber and oppose the legislation that the former holder of her seat put forward.

This is good legislation. This is about Australia's energy security in the future. This is about making sure that we have the right regimes in place for these forms of fuel. This is good policy, policy that was supported by the former government, policy that is supported by this government. It is only opposed by those opposite because that is all they can do: oppose. I commend the bills to the House.

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

The four bills contained in this package are 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. I just sat and listened to the previous speaker, the member for Dobell, who commented that he was involved in the committee inquiry into the bills. He took aim at the member for Higgins and asked how we could not support this legislation. I want to defend the member for Higgins and rebut the previous speaker. Recently in Sydney the House of Representatives Standing Committee on Economics received evidence from LPG Australia, and other groups whose businesses are going to be affected by this increase in tariff, this increase in tax. We received evidence from NRMA, who represent millions and millions of motorists; from Dalby Bio-Refinery and the United Petroleum group; from BOC, the wholesalers of gas; from the Australian Taxi Industry Association; and from a number of others. It saddens me that the previous speaker, the chair of the economics committee, could not even be bothered to show up to listen to that evidence. These are businesses and peak bodies that are going to feel the real effect of the increase in this tax.

These bills are about bringing into the fuel taxation regime certain alternative fuels used for transport purposes and making them subject to excise duty or excise-equivalent customs duty. The fuels affected are liquefied petroleum gas, the LPG which we stick in the car; liquefied natural gas, LNG; and compressed natural gas, CNG. Those gases currently have a tax-free threshold. This legislation would increase the taxes on them to a rate in line with an excise, which I will get to later on in my speech. It wants to put up the taxes and then discount them 50 per cent to reflect the potential benefits of these alternative fuels. Mr Deputy Speaker, I need to counsel you that, when you hear that there is going to be a reduction of 50 per cent, that is just a play on words. The reality is that this is a money grab.

I want to comment on some of the realities of where this legislation arose from. The previous speaker was correct: it derived from our policy. It was our intent to bring this legislation forward. But it was intended to be brought forward in an environment of economic prosperity and stability. You must remember that when we left government we left the Treasury coffers with no less than $44 billion in them. It is when you have that prosperity and that economic superiority that you can make decisions like that for the future. There was a period of an eight-year lead-in. What needed to happen during that lead-in was for an energy policy framework that matched the future usage of alternative fuels to be mapped out so that this piece of legislation could fold over the top of it. But in the last four years we have seen nothing of a framework being put in place from the Labor government, and without a framework this legislation is nothing. Who is going to benefit from this legislation? We had six Treasury officials attend our committee hearing. I asked them what impact this would have at the bowser on those people who had gone out and done the conversion to LPG—and they just looked at each other. With all the resources available to the Australian Treasury, you would have thought that when they came before the Standing Committee on Economics they would have calculated the impact of this legislation on mum and dad motorists. They had calculated a lot of other things but when I asked the question, 'What impact would it have on the bowser price, all things being equal?' it had to be taken on notice. As quick as a flash I did some sums and calculated that we were going to see around a 20 per cent increase at the bowser for LPG. That is a 20 per cent increase for mums and dads.

The previous speaker dared to label the opposition as 'hypocritical'. A 20 per cent increase at the bowser is a direct impost on mums and dads, yet the government claims to represent them, the working families. The people who can afford it the least are the ones who are going to be hit, notwithstanding the 70,000 taxis that shuttle those people who may not be fortunate enough to have their own form of transport or the impost that this legislation is going to have on public transport services, our bus networks, particularly in Queensland, that run on CNG. This government has skewed this legislation towards a money grab. And the money grab in this legislation comes, from memory, in at around $518 million, yet the government stands up in here and says that we are hypocrites. This legislation is nothing short of a money grab.

This legislation can also be juxtaposed with the carbon tax, because it has potentially negative implications and impacts on the environment. What it speaks to is that, as the price of cleaner, greener energies becomes more expensive, they become taxed out of existence. With the 50 per cent tax excise that these guys are looking to put on, I can assure you that the tax will not stay at 50 per cent in their forward estimates. It will continue to go up until this product is taxed out of the marketplace. When you start looking at the basic premise of the argument of why we should have a carbon tax and trading permits, the procedure creates a disadvantage for mums, dads and pensioners who use energy. Under this system we are expected to believe that it is the messiah, that it will bring home the bacon for the government. I can assure you, Mr Deputy Speaker, it will do none of that. It is a completely juxtaposed position. It will actually force people who have made the conversion to LPG to turn to fossil fuels in order to keep their heads above water.

We also heard the argument earlier about jobs. I can cite two gas conversion companies on the eastern seaboard of this country that have shut their businesses because they can no longer remain viable. I would challenge anyone from the Labor government to explain to me and to those people who have lost their jobs in this industry where these green jobs that you are promising are. Where are these green jobs to which you are telling me that I can direct the people who have left the gas conversion industry? Where are these green jobs? I do not want you to round the number up to 50 or anything; just give me one. Give me one green job that I can show to these people who have lost their jobs because of poor legislation so that I can send them to that job. And I would be glad to go and say g'day to those guys. You say that we scaremonger. The fear that has been driven by this carbon debate is based on the premise that you have not put a price on carbon. You are fostering—and enjoying—scaring the Australian public by not putting a price on carbon and having us suppose what that price will be. I have done some quick calculations. You say that you are going to rebate pensioners with 500 bucks, but the carbon price should be around $4.50. I tell you, if it comes in at any higher than that, if you guys have your way, you will be nothing short of a laughing-stock.

No-one in the carbon debate has been able to tell us how much tax is going to be required to change the temperature of the planet. This is all about the environment. The whole premise of the carbon tax is about changing the temperature of the planet but no-one has been able to identify that price in their speech. You go after the opposition on the fact that we always oppose everything. I will tell you what we opposed: we opposed the installation program because it was simply bad policy. We opposed it because it was bad. We opposed the BER overspends because they were shocking. When you put up bad policy, expect a clip around the ear. We opposed Fuelwatch, which was an absolute waste of money. We opposed your GroceryWatch, which was also just a waste of money. We oppose the way that you are managing Australia's borders and security and the asylum seekers. So do not sit there and say that we say no, no, no, no all the time and that we are going to say no to this. We say no because it is bad policy. If you want us to stop saying no, start changing the quality of the policy that you are putting up. You have not had a decent thought of your own in 60 years. All of this is just regurgitated waffle from other countries. I will take you quickly now to some of the comments that we had from industry leaders with reference to a comment from BOC gas. The bills in their current form will disadvantage a cleaner and greener LNG as an emerging transport fuel when compared with diesel and other alternative fuels. That in itself shows the harm that we are looking down the barrel at. There are going to be the job losses that I spoke of earlier on. These bills in their entirety will do very little to speak to the actual intent. Our intent when we put them together with the absence of that framework was to encompass other alternatives like electric cars and hybrid cars and other alternative fuels which are not encompassed in this bill. This is nothing short of a money grab. Only a coalition government in power will bring control back to the Australian Treasury, back to the Australian coffers, by curtailing the government's horrible wasteful spending.

It will bring control back to an ever-increasing, escalating taxation regime and we, as a coalition, believe in smaller government. We believe in less taxes and we believe in the right for businesses and for pensioners and mums and dads to be able to go about their day-to-day business in an environment that does not have debt up to the back teeth. With that I, I am frustrated.

Stephen Jones (Throsby, Australian Labor Party) Share this | Link to this | Hansard source

I am pleased to stand and relieve the member for Wright, whose company I enjoy but whose policy advice I rarely follow, from his frustration. I have within my grasp a statement from the then Treasurer in 2003. It is under the heading, 'Fuel tax reform for the future'. I would like to quote from this statement from the Treasurer:

An efficient and competitive energy sector is a key priority for the Government's strategic policy agenda. With advances in technology producing cleaner vehicle engines and with the continued emergence of alternative fuels, it is clear that Australia must have a more consistent and sustainable fuel tax regime. The existing arrangements have created taxation distortions in the fuel market leading to inefficient investments in fuel production and equipment and uncertainty for users of fuels.

As the member for Herbert, who has a keener eye and ear for political history than he does for economic policy, has correctly identified, this was a statement issued by the then Treasurer on 13 May 2003. I am not one who says that the touchstone of all good economic management was the Treasurer of the former Howard government. However, I am willing to say that with his statement he was absolutely right. He was absolutely right and this House should support the four bills that form part of this package—the Taxation of Alternative Fuels Legislation Amendment Bill 2011 and cognate bills—not because the then Treasurer in 2003 set a clear pathway for reform of taxation in this area but for four reasons.

The reason first is that it provides equity between fuels and a rational and reasonable basis on which we provide taxation arrangements for transport fuels. That is a tax based on the energy content of those fuels. The second reason is that it provides some certainty in an industry which is in much need of certainty. The member for Wright, in his contribution to this debate, talked about the evidence that was received by the parliamentary committee which inquired into these bills. I too as a member of this committee listened to the evidence of many from the industry who said they were crying out for certainty and this bill and the legislation and the amendments to the legislation would provide certainty which would enable long-term investments to be made into the biofuels industry.

The third reason—and we do not shrink from this—why we should support this bill is that it provides revenue. We on this side of the House know that these fuel excise arrangements are a proxy for road user taxes. It is a road user charge and it enables the Commonwealth government to invest much needed funds into our national highways.

I would have thought members of the National Party, and those who used to represent the National Party in this place, would stand foursquare with those of us on this side of the House who say that we should be providing as much revenue as we possibly can and gathering as much revenue as we can to invest in our national highway system. It is good for the economy; it is good for the social fabric of regional and rural Australia. The revenue source, which is provided somewhere in the vicinity of $500 million over the forward estimates, is an important contribution to the revenue for rebuilding our roads.

The fourth reason goes to the issue raised by the member for Wright, who asked us to identify one job that was going to be created or saved by this legislation. There are thousands of jobs that are going to be saved by this legislation because what the member for Wright has omitted to mention in his passionate contribution is that, unless this legislation is passed, the subsidies that are currently provided to the biofuel industries will drop dead on 1 July.

As the representatives from Smorgon testified to the parliamentary committee, that will lead to the end of their business and their industry. They will close down overnight, because their industry is reliant upon the subsidies and the grants scheme, unless these bills find their way through parliament. It is not one job but several thousands of jobs which will be saved, if not created, through the passage of this legislation. The legislation is about providing some equalisation of the taxation arrangements on a rational basis for alternative fuels, including liquefied petroleum gas, liquefied natural gas and compressed natural gas. These bills also clarify the tax treatment of renewable fuels, some of which I have already mentioned: ethanol, methanol and biodiesel. Through this legislation each of these alternative fuels will, after probably one of the longest phase-in periods in federal taxation history—that is, notice was firmly given in 2003 that this change was to occur and through the passage of the legislation a five-year phase-in period to the new taxation arrangements will be put in place—finally be brought within an equalised taxation arrangement reflecting the energy content of each of the various fuels.

However, to reflect the important role that alternative fuels will increasingly play in Australia's low-carbon future, the rate of taxation applied to these alternative fuels will be discounted by 50 per cent. This 50 per cent discount recognises the environmental benefits of these alternative fuels and provides them with a fuel tax advantage over conventional fuels without completely removing from them that component of this fuel excise which relates to a road user charge. That is to say, just because they are more environmentally efficient to produce and to use, that does not mean that when they are placed in cars and those vehicles are driving on the road it does not have a wear and tear impact on the road and therefore the drivers of those vehicles so equipped with alternative fuel systems should not make a contribution to the maintenance, repair and building of those roads.

With regard to ethanol, it is important to note that it is subject to the full fuel tax rate that applies to petrol and diesel. However, at present, qualifying producers are entitled to a grant under the Ethanol Production Grants program that covers the cost of this tax. It is in effect a full rebate. Legislation in this package of bills will maintain and extend this grant, which would otherwise drop dead on 1 July 2011. In their contributions to this debate I have not heard one speaker from the opposition suggest an alternative which would provide some certainty to businesses and workers in the critical ethanol industry. We can only presume that it is their policy that the industry should drop dead over night along with the Ethanol Production Grants program. This measure will ensure continuity of support for this important regional industry.

As a member of the Standing Committee on Economics, I participated in the recent inquiry, as did some other members who are currently present in the chamber. In considering this legislation, I believe it is important to understand one of the reasons why this government, or indeed any government, puts taxes on fuel—that is, fuel taxes, on either conventional or alternative fuels, are a proxy for road user charges. Every time we drive on any road, we have contributed to the wear and tear on that road and therefore we need to make a contribution to the maintenance of roads. This is a simple user-pays principle. Every time fuel is put into a vehicle, some of what you pay goes towards the cost of the roads we then drive on. People who do not own vehicles or who do not drive their cars on the road do not make this contribution towards road building and maintenance in the same way. It may be paid instead as a part of a bus fare or indeed a taxi fare, but it is not paid through the bowser. The more you drive on our roads, the more fuel you purchase, the more fuel tax you pay and the more you contribute to the cost of those roads. This is an equitable principle.

We all know that the costs of repairing existing roads and constructing new roads are enormous. It is therefore untenable that LPG remains untaxed and that those driving vehicles powered with LPG do not make any contribution towards the cost of the roads that they use each and every day. The taxation of LPG in this legislation represents the largest part of the increase in the revenue the government will receive. Vehicles powered with LPG represent some of our heaviest road users. It is important to maintain the integrity of our fuel tax system, to ensure that it is sustainable for the long term and to ensure that it represents good economic policy.

It is also important that when we put so much emphasis on investing in our infrastructure—and roads are an important part of that infrastructure—we do this in a way that enables us to balance the budget. We have heard many contributions to debates in this place about the importance of spending on regional infrastructure. In fact, if you listened to speaker after speaker in debates on this legislation, you would have heard them making passionate pleas about the need for improved spending on road infrastructure in their electorates. Here is just a small sample from the speeches in reply to the Treasurer's budget speech: the member for Wide Bay made a passionate plea on behalf of his electorate for the Ipswich Motorway and Bruce Highway from Cooroy to Curra to be upgraded at a cost of $325 million; the member for Hasluck called for the upgrading, uncosted I might add, of the Perth to Darwin Highway and the Roe Highway and Berkshire Road interchange at a cost of $11 million; closer to my own electorate, the member for Gilmore called for an upgrade to the Princes Highway from Nerriga to Tarago, and the upgrade of Picton Road. All of these are worthy projects, but if we are to have the revenue on a sustainable basis to fund these new roadworks together with the revenue to ensure that we are able to upgrade and maintain our existing roads then we need to ensure we are doing that in a way that enables us to balance the budget. The $500 million that will be raised through this package of legislation over the forward estimates is an important contribution which will, I hope, go some way to assisting us to meet the deficit in infrastructure spending that we inherited when we came to office.

In confused contributions to this debate from the member for Wright we heard the preposterous proposition which justifies their backflip on supporting this policy—that they supported it when it was proposed by the former Treasurer because at that point in time they had plenty of money in the budget and they had a whopping great surplus but they do not support it now because we do not have a big surplus. This beggars belief because what it says to the ordinary person in the street, if you follow that economic logic from the member for Wright through, is, 'At a time when we are collecting too much in taxation revenue we should increase taxation revenue because we have whopping big surpluses. We should be taxing and collecting more revenue than we are able to spend.' When you are collecting too much money in taxation revenue—

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

You'll never have to deal with a surplus.

Mr Ewen Jones interjecting—

John Murphy (Reid, Australian Labor Party) Share this | Link to this | Hansard source

Order! The member for Moncrieff and the member for Herbert will cease interjecting.

Stephen Jones (Throsby, Australian Labor Party) Share this | Link to this | Hansard source

They do not like it. The member for Moncrieff and the member for Herbert do not like it because they know it is a devastating blow to their feeble backflip on this policy. But if you follow the logic of their argument it is that when you are collecting too much tax you should up the tax and when you are trying to bring the budget back into surplus you should do the opposite. It is appalling logic. (Time expired)

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

I am pleased to rise to speak on the Taxation of Alternative Fuels Legislation Amendment Bill 2011 and cognate bills debate that deals with, among other things, the taxation of alternative fuels. In particular, the part of the debate that I will go to will be the government's decision to whack yet another great big whopping tax in terms of excise on LPG fuel.

In broader terms, as Deputy Chair of the House of Representatives Standing Committee on Economics, it has been instructive for me to have the opportunity to hear evidence from a number of witnesses about what this government's proposals actually are and what they actually mean for users of alternative fuels and for fuels more broadly across the Australian landscape. It is fascinating because this comes from a government that like to preach the green message. This comes from a government that like to claim that they are very focused on environmental issues. It comes from a government that like to claim that they are in touch with the need to look after the environment more so than, for example, they will argue, the coalition.

You have to question why this government, which claims to have those green bona fides, would go out of its way to make a more environmentally friendly fuel more expensive. The consequence of this policy before the House is that Labor will take an environmentally beneficial fuel, a fuel that is used in the taxi sector, the bus sector and the public transport sector more broadly and which produces fewer carbon emissions, and make it more expensive. The consequence will be that Australians will be forced to do two things: (1) use less public transport and (2) resort to using traditional fossil fuels like petrol and diesel. It beggars belief. In fact, you would dare say that it is a government that once again finds itself burdened with hypocrisy when it comes to its talk and its walk. We have this government once again preaching a message but doing something very different when push comes to shove.

The bills that are before the House see this government seeking to penalise those who have been early adopters of cleaner, greener fuels and Australians who are amongst the most vulnerable in our community by using these bills as this government's excuse to whack yet another great big tax on the Australian people. As I said, you would question why. Why would a government do this? What is the need to try to encourage Australians into using traditional fossil fuels over cleaner, greener fuels like LPG? The answer is obvious. It is because these bills represent for this government a windfall gain of around $500 million. That speaks volumes about the motivations of this government. That is $500 million of extra tax revenue that this government so desperately need. They need it because this is a government that is mired in debt. The Labor Party needs this because this is a government that is borrowing $135 million a day on the so-called company credit card because this government is absolutely reckless when it comes to spending taxpayers' money. It needs these bills to go through because it needs that money. That money for this government is like a drug to a druggie. Do not stand between them! Do not stand between them because they are desperate to do whatever they can to justify the ways in which they are raising additional revenue.

There were representatives of the coalition on the House of Representatives economics committee that undertook the public inquiry into this package of bills. Let us be plain and clear about what the consequences of these bills will be should they pass this House. For example, for the fleet of 18,000 taxis out there and some 66,000 drivers that carry in the vicinity of 370 million passengers these bills will represent a massive spike in their operating costs. This is a government that is about to whack up the price of LPG by 20 per cent. This is a Labor Party that likes to talk about its concern for the working people, that likes to talk with its hand on its heart about how it understands Australians are doing it tough despite presiding over some of the biggest cost-of-living increases that we have seen. This is a government that has a carbon tax on the agenda to cause a further spike in the cost of living. This is a government that through these bills is about to put up the price of LPG by 20 per cent.

It is not just the 18,000 taxis, the 66,000 drivers and the 370 million passengers who are going to be materially affected by this government's fiscal recklessness but also there is a fleet of some 700,000 vehicles out there that is running on LPG or has been converted to LPG. People have done this because previous governments, such as the coalition government, recognised the need to match action with talk. When the coalition government was in power it recognised the very real need to ensure that government policy did something for the environment. We did that by providing a subsidy for people to transition from traditional fossil fuels to LPG.

We wanted that to happen because the transition from traditional fossil fuels to LPG did two things: firstly, it reduced the cost of living for ordinary Australians because LPG at the pump was much cheaper than the price of traditional fuels and, secondly, it was good for the environment. It was good for the environment to transition from a petrol powered vehicle to an LPG powered vehicle. That is why the former coalition government made sure that we did not just talk the talk but walked it as well by making sure that government policy was directed towards improving the lot of ordinary Australians and by making sure that the people in Western Sydney, in the outer suburbs of Melbourne and Brisbane and those in working-class areas in my electorate of Moncrieff, such as Nerang, were in a position to transition to a cheaper fuel that was also environmentally beneficial.

That is also why the former coalition government walked away from this policy. It is true, as some Labor Party members opposite have mentioned, that this was in essence part of what the coalition looked at about seven years ago. But we changed our minds. If that is a news flash for members of the Labor Party, so be it. We changed our minds because we listened to the Australian people. We recognised that there was more to be gained by encouraging people to convert to LPG, there was more to be gained by making sure government policy was producing a better environmental outcome and there was more to be gained by making sure that coalition policy provided people with a way to reduce their cost of living. That is why we changed the policy.

This government's stubborn refusal to move from its support of these bills just highlights that this is a government that will turn its back on what is environmentally responsible, this is a government that will turn its back on the most effective way to help keep the costs of living down and, instead, will embrace these bills because it needs the money.

That, in summary, is why the Australian people have stopped listening to this Labor Prime Minister and have stopped listening to this Labor Party. They know that the government cannot be trusted. When you analyse its actions, when you look at Labor members who come into this chamber and preach about caring for the environment and preach about doing what they can to make sure that people's household cost-of-living expenses do not continue to increase and then vote yes on legislation like this, you understand why the Australian people are so deeply cynical of the Australian Labor Party. The Australian people are not listening to the Australian Labor Party. The Labor Party is losing the support of the Australian people for reasons exactly like the debate that we are having here tonight. Labor once again stands for higher taxes and, in this case, not only does it stand for higher taxes but also it stands for a less environmentally beneficial outcome than that which the coalition is proposing.

But the Labor Party is also tricky when it comes to political procedure. We know that the four bills that are currently before the House in this cognate debate could be separated. We in the coalition recognise that one of the bills is in dire need of rapid passage through both this chamber and the other place. In fact, we have indicated some support for that. We have indicated some support for splitting the bills so that bill can go through. But the Labor Party will not split the bills. The Labor Party wants to keep all four bills together and in some way attempt to shackle them so that if we do not pass one none of them gets through. So, although the coalition is comfortable with other bills in this package, because Labor is trying to foist this new $500 million increased tax onto the Australian people it says, no, all four bills must go through together.

I am very pleased to stand up for my constituents, for the working people of Australia, for those 700,000 people who have LPG powered vehicles, for the 18,000 taxi drivers out there, for the 350 million passengers who use those vehicles and for the 66,000 drivers and to say to the Labor Party, 'Change your direction; do not support this legislation.' This legislation just underscores the arrogance that the Labor Party now has when it comes to the need to raise revenue, to turn its back on the environment and to turn its back on those—many of whom are the most vulnerable—who use public transport like taxis.

This is not confined solely to taxis. There are many, many buses—fleets of buses. For example, the Brisbane City Council has a largely CNG—compressed natural gas—powered fleet. CNG powered buses use one of the cleanest fuels that is able to be used and that benefits the environment. Again, the Labor Party, through these bills, is about to whack up the price so that those bus operators—be they city councils or private operators—will have a substantially increased cost base. The Labor Party really has to be viewed with a high degree of cynicism when it is very clear that the only reason it is doing this is that it is so desperate for the money.

It does not make sense environmentally, it does not make sense in terms of the cost of living and it does not make sense of government policy over the past six years, because government policy has been to push people towards the use of fuels like LPG and CNG. So why do it? The answer, as I said, is that Labor needs the money. We know that the Labor Party has the second largest budget deficit this financial year, we know that the Labor Party is borrowing $135 million a day, we know that the Labor Party has racked up a level of debt that amounts to $107 billion and we know that the Labor Party has presided over a complete shemozzle of failed and flawed policies that have cost Australian taxpayers billions and billions of dollars. I say to the people of Western Sydney, I say to the people in working-class suburbs, next time you use a bus and the bus fare has gone up, next time you use a taxi and the taxi fare has gone up, recognise that that has happened because of the Labor Party. It has happened because this government is putting up the cost of fuel, in particular LPG and CNG, because it needs the money. When people talk to me in the street about what all this debt and deficit actually means, I can say to them with hand on heart that it means they pay more tax. These bills do nothing except slug ordinary Australians with the extra costs of paying tax as a result of these fuel excise increases.

There was an eleventh-hour rally outside Parliament House today. The Australian Taxi Council joined with a number of people to protest against this decision. Their anger is red-hot because this government is foisting yet another tax increase on them. This is not a government that introduces policies that are good for working people; this is a government that does the exact opposite. This government's legislation is going to make things more expensive for people. There will be flippant responses from members opposite about how this will only add a dollar onto the cost of the average taxi fare. That might be well and good if you are a parliamentarian earning a parliamentarian's salary, but the reality is that there are people out there who rely on public transport, who rely on taxis, and many of them are the most vulnerable people in the community. They might get a taxi to the shops and back a couple of times a week, and they might go somewhere else in a taxi a couple of times a week, and over the course of the week the increase adds up to $20. That matters to them. Those who are genuinely concerned about the environment are also scratching their head about the way in which this government is demonstrating its complete and utter hypocrisy. These bills should be split and for that reason I certainly do not support this massive new tax whack on LPG excise.

Julie Owens (Parramatta, Australian Labor Party) Share this | Link to this | Hansard source

I stand in this place again tonight thinking the world is perhaps turned upside down. We have the Labor government on this side of the House tackling climate change through a market based mechanism, and we have a Liberal opposition, supposedly the soldiers for the free market system, arguing for direct action. We have a Labor government talking about introducing a Liberal policy that dates back to 2003 in accordance with the Liberal government's time frame of 1 July 2011, and we have a Liberal opposition opposing it. We have a Labor government talking about introducing consistency in the tax regime for alternative fuels to remove distortions, and we have a Liberal opposition, again the supposed soldiers for the free market, arguing to leave those distortions in. I really do think this debate tonight shows a significant change in the way that both parties approach the modern world. You have to go back quite a few decades in the Labor Party to find the kind of anti-free-market rhetoric that we find from the Liberal Party on both this issue and the issue of acting on climate change.

I do know that we are in the world we were in yesterday, because we still have the same scaremongering from those opposite. The member for Moncrieff talked about a massive spike in the price of LPG, and for that reason he wants to keep the distortions there for LPG. The LPG industry has enjoyed a tax holiday for decades—it has been very well protected for a very long time and has had a substantial period in which to grow and establish itself. Let us look at the facts of that before I get back to the alternative fuels legislation in general. Taxi operators are able to claim deductions for the expenses incurred in the course of conducting their business, including fuel. State governments actually set the fees for taxis. For a start, according to the evidence we have heard, if the state governments increased the fees for taxis in accordance with this so-called massive spike—I will talk about that in a minute—the impact on the taxis themselves would be negligible. We heard that evidence from the taxi operators; we heard that it would not have an impact on their profit margins at all. The question is whether it will have an impact on the number of people who catch taxis. Again, the answer from the taxi industry was that the fare rise due to the increase in the tax on LPG would not have an impact on the number of people catching taxis.

Let us look at what the actual amount is. This massive spike is 3.5c on the average metro taxi trip, from 1 December 2011—hardly a massive spike. It sounds like a scare campaign to me. Over the five years, it will be a massive 19c by July 2015. So, again, let us keep the scaremongering in perspective here—we are talking about 19c on an average taxi fare at the height of the increase, by July 2015. By the way, the average taxi fare is around $20, so we are not talking about a massive increase at all—in fact, 19c is a very modest increase over a five-year period. It is a nice bit of scaremongering from an opposition which opposes everything, including their own policy, and tends to work as hard as possible at scaring people along the way.

These taxation of alternative fuels bills reflect policy which was first announced in 2003 by the then Howard-Costello government. They implement very longstanding plans to bring alternative automotive fuels, which include biodiesel, renewable diesel, ethanol, methanol, liquefied petroleum gas, compressed natural gas and liquefied natural gas, into the fuel taxation regime on the basis of their energy content but with a fuel discount of 50 per cent to reflect the benefits of alternative fuel use. The policy underlying the bills, the same now as it was back in 2003 under the previous government, is to introduce greater consistency into the taxation treatment of automotive fuels to reduce distortions in economic activity arising from the tax-preferred status of some fuels—again an objective which we would expect those opposite to endorse. And they did endorse it, for many years. Being an opposition that simply opposes has some interesting side effects in that you end up opposing your very own policy. The second objective is to provide policy certainty to industry, and in a moment I will talk about the lack of certainty that this industry has been working under for the last decade at least. The third objective is to phase in the new fuel tax regime while continuing to provide support to the alternative fuels industry in recognition of the potential environmental, food security and regional development benefits from the use of these fuels. The bills were introduced on 23 March, with the legislation required to be in place before 1 July 2011 to avoid a number of tax consequences. These have been built into the tax laws for quite a while because the assumption was that the 2003 policy would be implemented on 1 July 2011. If it is not in place before then there will be a few gaps when previous laws phase out. So we do need to do it and it is quite time sensitive.

Fuel tax policy has been in flux for the better part of a decade and several elements of the industry have criticised that uncertainty by claiming that it has hindered investment. In the 2003-04 budget the then government announced its intention to tax all fuels, including biodiesel, ethanol, methanol and gaseous fuels, on an energy content basis but with a 50 per cent discount for alternative fuels. In the following budget it was deferred to 1 July 2011, but the financial impact of the alternative fuels taxation measure has been in the forward estimates since that 2003-04 budget.

Since then the government has changed—I think we all know that; it has been changed for quite a while. The current government decided in May 2010 to commit to implementing the previous government's policy on the previous government's time frame, except that we revised the phasing-in arrangement for the taxation of ethanol to allow a 10-year period instead of a five-year period. Apart from that adjustment, we decided in 2010 to implement the previous government's policy on the previous government's timetable, which had been accounted for in the forward estimates since 2003-04 and is something that governments tend to do. When there is a change of government there are quite often policies that flow over from one government to the next. It is less usual that the new opposition opposes its previous policy, but when an opposition simply opposes I guess it has to find ways to go about that and this is one of them. It is one of the stranger ones, I have to say. A number of changes were required to implement the policy, including bringing gaseous fuels and methanol into the fuel tax regime, levying fuel tax on an energy content basis and reducing the excise rates on alternative fuels by 50 per cent.

The bills are really quite important because they play a role in providing certainty for investors. In a submission from Smorgon Fuels, for example, they noted that the biofuels industry urgently required strong investment signals in order to underpin investment decision making and to realise commercial success with second- and third- generation feedstocks and technologies. We heard from a number of witnesses in those public hearings who talked about the fact that their investment had been on hold and that over the last 10 years there had been considerable uncertainty which had prevented the industry from making the kinds of decisions to move ahead in the way that we all need them to. A number of witnesses from the biodiesel industry emphasised the fact that the industry was essentially an infant industry in the very early stages of development. They suggested that the certainty that the bills provided would be invaluable to the further development and eventual maturation of the industry. In their evidence, Biodiesel Industries Australia pointed out that they had only spent funds on repairs and maintenance for the past two years due to that uncertainty in policy. Similar points were made by other witnesses, including the Department of Treasury, which claimed that the bills will provide certainty to industry. At the moment there is no final legislation in place, but it was announced in 2003-04, so there has been a period of seven or eight years of uncertainty about what the final legislation would be.

There was a short period of consultation with the industry earlier this year. We heard from various representatives of the industry that changes had been made to the original draft bill to take their concerns into account. There was general positive feedback from many witnesses on that.

In closing, I would like to lend my wholehearted support to these bills. These bills have been a long time coming. These are bills that industry has known are coming. They were scheduled for July 2011 back in 2004-05 and they have been in the forward estimates. They will provide certainty for the sector. They will provide consistency across the sector. They will provide a framework for this extremely important industry to grow and make the decisions it needs to in order to move forward.

Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source

It is disappointing to rise and have to speak about yet another attack on families and small businesses in this country through another initiative of the Gillard government to introduce a new or increased tax. The Gillard government continues to find ways to hit small businesses and everyday Australians with taxes that continue to drive up the cost of living. The first three bills in this package of bills concern the taxation of gaseous fuels for motor vehicles by applying a tax to LNG, CNG and LPG. These are taxes on mums and dads, taxi fleets and public transport systems, particularly in cities like Brisbane, Sydney and Perth whose buses use compressed natural gas to lower emissions and pollution. These buses burn cleaner and provide Australia with an opportunity to use some of the overwhelmingly ample resources that we have available to us in this country.

We are fortunate that we live in a country that is largely self-sufficient in energy and we are one of the few OECD countries that exports energy. Our energy comes from various resources. Beginning with coal, we are the largest exporter in the world for coking coal in the manufacturing of steel and of steaming coals for the production of electricity. Australia also uses liquefied natural gas, the supply of which will last a couple of hundred years based on current reserves. Whilst we have those supplies, we are still reliant on importing approximately 50 per cent of our petrol, diesel and crude oil requirements. LPG has proven a popular alternative due to the fact that it is significantly cheaper and the fact it is a product we can generate onshore which helps our economy in a positive way. There is no need to apply a tax on these fuels; in fact, it makes no sense whatsoever because by using these natural fuels Australia is already doing its bit towards lowering emissions and pollution.

The Taxation of Alternative Fuels Legislation Amendment Bill 2011 and cognate bills will result in a slug of 12½c a litre on LPG and 26.13c per kilo on LNG and CNG. I know those opposite have spent most of this debate trying to justify the reasons for this legislation and have used the argument that it was a coalition policy from 2003. We accept that, but it is also important to consider the circumstances in which these tax increases are being introduced. As the member for Parramatta pointed out, these increases have been deferred previously. Given the current difficult economic circumstances for families and small business in this country, why couldn't these increases be deferred to a future date when families and businesses are more able to manage the costs.

These bills make a mockery of the incentives which the coalition put in place in 2006 for motorists to convert their private vehicles to LPG in order to reduce fuel costs. The end result has been that over 700,000 Australian vehicles are now powered on LPG, which will mean that 700,000 Australians will be hit with an increase of around 20 per cent in fuel costs that they cannot afford. In Queensland, 21,000 residents received grants for switching to LPG, which will mean that 21,000 Queenslanders will be penalised for taking that good step of making their vehicles more environmentally friendly. It was the coalition's 2006 initiative that saw the $3.5 billion LPG industry grow significantly to meet the increased demand to the extent that it now employs over 10,000 people. The industry has already been damaged by the prospect of this tax and this has contributed to three LPG conversion firms going into receivership in the last three months, destroying 350 jobs. Yet these are the very green jobs that those opposite purport to support.

In effect, there would be no necessity to introduce these increased taxes if we had a government that was more considered in how it actually spent the tax dollars it has already collected from Australians. It is this government's wasteful spending and policy disasters that require it to reach even further into the pockets of Australians, hitting motorists, taxi drivers and small businesses with this new tax hike. Let us not forget that this latest tax will be on top of an estimated extra 6½c a litre that will be the result of the carbon tax. This new tax will create a red-tape nightmare for the engine room of our economy, small businesses, who will have to cope with new measures to separate LPG sold for recreational purposes such as for barbecues or camping from LPG sold as transport fuel. This government seems to be a master at inflicting new highs of paperwork and bureaucracy for small business in Australia.

With 90 per cent of the nation's taxis being LPG powered, this 20 per cent increase in fuel costs will flow directly to fares, hitting passengers in their hip pockets once again. As my colleague rightly pointed out earlier, most of the people in my seat who use taxis are those who cannot afford to run a vehicle and are already struggling to meet day-to-day living costs. These price rises will lead to higher public transport costs with CNG powered buses used in capital cities being forced to pay the extra 26.13c excise. Public transport running on CNG or LPG such as the Brisbane City Council bus service and Surfside Buslines will be forced to increase their fares, making a mockery again of the fact that we are trying to get people off the road and onto public transport to reduce congestion on our roads and to be more environmentally friendly. The decrease in CO2 emissions resulting from taxis and buses having converted to natural gas has also been an important step in lowering particulate air pollution. However, an increase in the cost of running these vehicles will deter companies from continuing this process. The transport industries and resources sector are among those hit by the destruction from the recent floods, yet they are now being targeted by the Gillard government as it attempts a cash grab of a half billion dollars in new taxes because it cannot manage its budget.

I wonder how the government will respond to their constituents when they return to their electorates. What will they say to constituents in their communities when they ask, 'Why are our fuel costs rising by 20 per cent?' What will their answer be? Do those opposite lack compassion for the Australian people? Is it that they are just so determined to find ways to fill the black holes in their budget that they will find any new tax that they can get away with or is it because their debt is so large that this is a last-ditch attempt at raising funds to cover their black holes and waste?

We know that the government have gone from a cash surplus to a net debt over the past 3½ years. We know that they have gone from a budget surplus to a budget deficit. I would hope that those opposite are not deliberately trying to destroy the family budget with this tax but rather are incompetent money managers and wasteful with their spending.

I note that we will support one of these bills, the Energy Grants (Cleaner Fuels) Scheme Amendment Bill 2011. This bill extends the grants scheme to biodiesel and renewable diesel. Logic would state that if you had an alternative fuel you would support it and not tax it. The member for Throsby, in his speech, commented on the fact that these funds are used to build our road network. The question I have is: how much of this tax that is being raised is actually going towards building our road network? For a number of years, Australia has been trying to build a biofuels industry. Along with the government, the coalition supports the measures that were taken previously by the Howard government and that have been continued by the Rudd and Gillard governments to provide grants to the ethanol, biodiesel and renewable diesel industries to offset the excise. The biodiesel and renewable diesel industries are already doing it tough because of the uncertainty over the past few years. They have faced unfair dumping competition from overseas suppliers. I commend the minister for continuing what we started, as we live in a region where diesel fuel is very much in demand.

The other three bills that are before the House will hurt mums and dads and school kids, who are already struggling with a household budget that is tight. With cost-of-living pressures growing every day for families, they now have to find extra money for bus and taxi fares as well. Many of those people who use taxi services are at the lower end of the economic scale, and this legislation will just make it more difficult for them. This government seems to tax every part of sensible living. These bills will introduce a tax on family cars, a tax on buses and other public transport and a tax on taxis. This tax will be administered in a way that means small businesses selling LPG will find it more and more difficult, as they will have mountains of new paperwork and regulations to deal with.

This is bad legislation. It is not about improving inefficiencies in Australia or ensuring that this country becomes a better and more secure place to live. This is legislation based on taxing a fuel source which we have in abundance and the source of which is efficient. These bills tax the livelihoods of Australians, increasing cost-of-living pressures on families. This is simply another tax from the government on top of the flood levy, the proposed carbon tax and the proposed mining tax, all whilst freezing assistance payments to middle-income families. Even the smallest increase in costs will hurt families, small business owners, taxi drivers and everyday Australians.

The coalition will seek to amend these bills. As usual, it is the coalition which stands up for the Australian people and ensures they receive a fair go. The biodiesel and renewable diesel fuel industries cannot be left in the wind while the minister plays games with their livelihood. They have suffered already and deserve certainty, which we will give them. I am interested to hear how the government will justify their continued attacks on the cost of living for Australian families. This continuous strain on Australians' pockets must end and the government must tighten their belt and stop their reckless spending and constant creation of new and further taxes, imposed on the people of Australia, to solve their financial ineptitude.

Andrew Leigh (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

There are two kinds of people in the Liberal and National parties. There are conservatives, who oppose everything, say no and want to keep the world as it is, and there are liberals, who stand for values, who believe in markets, who believe in competition. We are here today to mourn the demise of the small 'l' liberal in Australian politics. With this oppositionist stance, the coalition have shown their true colours. They have shown that they are not only willing to say no to Labor reforms; they are willing to say no to coalition reforms, because that is all this is today. The legislation that is before the House today is enacting a transition path first announced by Treasurer Peter Costello. That is right: this is a Peter Costello reform, enacted by the Labor government and opposed by Tony Abbott's opposition.

In 2003, announcing the May budget, Peter Costello said as follows:

… today I am announcing important long term reforms to the excise treatment of fuels. The reforms establish a broad sustainable taxation framework for fuels, by addressing a number of anomalies in the current fuel tax system and providing increased long term certainty for investors, while meeting Government commitments and providing time for industry to adjust.

Time we have had. Indeed, during the House Standing Committee on Economics inquiry, I asked Treasury officials if they could give me a single example in which a transition path had been longer than eight years, in which an industry had more than eight years to adjust. They could think of no such example. But this eight-year reform, supported by the Howard government, supported by the Liberal and National parties as recently as the last election, has now been abandoned in favour of the quick vote grab, the quick headline. As the regulatory impact statement says:

The announcement of the measure in the 2004-05 Budget means that industry is aware of and has been expecting the proposed changes …

It goes on to say:

Significant deviations from the announced policy that impact on the tax liability of the affected industries may unsettle investment decision making.

Those of us on this side of the chamber believe in providing certainty. We believe in long-run reform, and this legislation is doing exactly that. I hate to say this, but Peter Costello was right in 2003 and continued to be right through the period of the Howard government.

This reform recognises, as the LPG industry say, that they generate 87 per cent of the emissions of regular petrol, and under this policy they will still only pay tax at half the rate of the energy equivalent fossil fuel. Australia ought to tax fuels more consistently. LPG users should contribute to maintaining the roads that are used by all vehicles. Even following the enactment of this legislation, if it passes the parliament, as the member for Dobell has pointed out, Australia will still be well down the list in our taxation of LPG. As a price comparison prepared by Treasury for the House Standing Committee on Economics sets out, LPG in Australia will still be taxed at a lower rate than in the United Kingdom and the United States.

So this is not radical reform. This is reform that recognises that what we need to do is follow through. The government announced in 2003 that fossil fuels would be taxed in a fairer and more equitable way, and we should not suddenly step away from that at the very last minute, making a momentary grab for the headlines. But, sadly, that is exactly what the opposition has done here. If this legislation is not passed, it will drive a $500 million plus hole in the budget. Those opposite did not oppose the fuel tax changes in the election campaign, but now they are opposing the measure. Are they putting up alternative savings to fill that $500 million black hole? Of course not. This is the opposition that went to the election with costings $11 billion short, and, when you are $11 billion short in an election campaign, what is another $500 million between friends?

Sadly, the opposition here are playing exactly the same sorts of simplistic games that the US Republicans are playing. But that puts them apart from their right-wing colleagues around the world. With your indulgence, Mr Deputy Speaker, let me run through what some right-wing governments are doing in different parts of the world. In Germany the Merkel government are putting in place a high-tech strategy. They are aiming to network the research and business communities more closely. They have a pact for research and innovation. The right-wing parties in Germany actually believe in ideas. They are, if you like, small 'l' liberals. If you look at the UK Conservatives, they are putting in place a 'Big Society'. To me, I have to say, it sounds a little bit like Tony Blair's Third Way but there are certainly ideas. They are part of an emissions trading scheme and they are committed to reform within the NHS. The right-wingers in the UK are committed to ideas. They are not a party of 'no'; they are a party of generating ideas. The right-wingers in Canada are investing in a clean energy economy. They have a digital economy strategy. They are looking at new resources to support leading-edge research and they have a new phase of Canada's economic action plan. In New Zealand the right-wingers have in place an emissions trading scheme, a policy that we may hear a little more of next week when Prime Minister Key addresses this parliament.

In all of these countries we see right-wing parties putting in place ideas. But what do we see in Australia? We see the politics of negativity, the politics of no. The Liberal and National parties have truly become the parties of no. They are not only opposing policies being put forward by the Labor government; they are opposing their own policies. They are turning their back on economic reform when it comes from this side of the House, such as carbon pricing and minerals resource rent taxation, and they are opposing good economics even when it comes from Peter Costello.

We now see the Leader of the Opposition in the frankly bizarre position of being the only living Liberal Party leader who does not support putting a price on carbon, the only one who does not support using market mechanisms to tackle dangerous climate change. The Leader of the Opposition's unwillingness to use markets when it comes to climate change is symptomatic of a rejection of any politics of ideas in favour of the politics of negativity and the politics of simplistic bumper stickers and getting his face on the evening news. While we in government are working on long-term reforms, driven by a principled approach that now sees us looking to put in place the LPG reforms announced in 2003, those in the Liberal and National parties are preparing to vote these measures down. They are willing to put a hole in the budget, willing to vote down policies first proposed by a Liberal Party Treasurer.

It is frightening to think what would have happened to Australian economic reform were Mr Abbott to have been the Leader of the Opposition during the Hawke and Keating governments. Would we have had changes to superannuation? Would the superannuation guarantee have come into place? Probably not. Mr Abbott would have run a 'no new tax' campaign against compulsory superannuation. He would have said Australian households could not afford it. And what would the result have been? In recent weeks, we have seen headlines in the UK saying things like 'Millions must work after 70' or 'Now no pension until the age of 72: only way to save the economy, say experts'. Why is that? It is because, unlike us, the British do not have compulsory superannuation. They do not have that bucket of money that provides dignity in retirement. They do not have the benefits of the long-lasting economic reform put in place by the Keating government in the early 1990s. If Mr Abbott had been Leader of the Opposition at that time, I suspect he would have voted down compulsory superannuation. He would have run the mother of all scare campaigns against compulsory superannuation and Australians would, as a result, be impoverished in their retirement. Mr Abbott probably would have opposed the tariff cuts. He would have run a simplistic made-in-Australia campaign, insisting that it was not possible to take down the tariff walls when it came to cars and that it was not possible to take down the tariff walls that were sheltering our textiles, clothing and footwear industries. No, he would have gone to those factories and said: 'The Labor government may be proposing to put in place a long-term plan to sustain jobs and reform, but that's not good enough. It's better for me to just stand against change.' If Mr Abbott had been the opposition leader in that period, we would not have seen the tariff cuts we saw in 1988 and 1991—tariff cuts that put $1,500 back into the pockets of the typical Australian family, tariff cuts that put Australian business on a more competitive footing, tariff cuts that recognised that the Australian economy needs to compete with and engage with the world and that that is the best way to prosperity.

Mr Abbott, I suspect, would have rejected all of that in favour of a spot on the evening news. He probably would have rejected enterprise bargaining as well, one of the great productivity-enhancing reforms of the era. I suspect, in his constant, carping negativity, he would have stood against that as well—rejected the notion that pay deals can be struck at the enterprise level in return for higher productivity.

And of course he would have stood up against capital gains taxation. I suspect that if Mr Abbott had been opposition leader in the mid 1980s he would have said: 'Capital gains taxation? That's a big new tax on every form of capital gain. I'll oppose that.' That, again, would have meant that we had a big hole in the budget. It would have again meant that a source of taxation that, as we know, is an efficient and equitable way of raising revenue would not have come into place. Australia would have been a country that then had to turn to less efficient sources of taxation.

Mr Abbott's constant, carping negativity, applied to many reforms of the past, would have left Australia in a scary position: an Australia with no compulsory superannuation, still sitting behind high tariff walls with no enterprise bargaining and no capital gains tax.

Frankly, we know that people do not like taxes, but we need them. With taxes we build society, and we need to raise tax revenues from the most efficient bases. We need to achieve consistency across different taxes, and that is what we are doing in focusing on the emissions resulting from LPG. We raise tax revenues in the most efficient way in order to fund social services, and we impose taxes on things that have negative externalities that harm others. That is why we impose things like fuel taxes, alcohol taxes and cigarette taxes. We impose these taxes because we recognise that they are an important part of building a civilised society. If we are to constantly oppose every measure, then we end up in the perverse situation of having inconsistencies. We end up in the odd situation of inequitable tax treatment of fuels, whereby fuel users look at the systems and say, 'That doesn't strike me as fair.' If a tax system is not regarded as fair by taxpayers it loses its legitimacy.

With this bill, we are putting in place reforms to LPG, the impact of which will be small. The reforms will be introduced slowly. They will allow families, taxis and other users time to adjust, and, of course, taxi drivers will be able to claim fuel costs as a tax deduction. The modelling we have suggests that the average metro taxi trip from 1 December 2011 will cost an additional 3½c—and that is if the LPG increase is passed on in full. That is a very, very small impact, and it is being put in place to achieve consistency across fuel—a philosophy supported by those opposite for eight years minus the last month, when the Liberal and National parties turned their back on economic reform.

Joanna Gash (Gilmore, Liberal Party) Share this | Link to this | Hansard source

I see that the Minister for Defence Materiel is still in the chamber. With your indulgence, Mr Deputy Speaker, I would like to place on record our sincere thanks to the minister for coming to the electorate of Gilmore with the wonderful announcement that Sea King Shark 07 will be made a permanent display in our museum. Thank you very much, Minister.

The only amendment I will be supporting in this quadrella of bills—the Taxation of Alternative Fuels Legislation Amendment Bill 2011 and related bills—is the cleaner fuels amendment, and I will explain why. This government constantly and loudly crows about its so-called green credentials, about its commitment to the environment and about what a bunch of environmental philistines the coalition is. If anyone cared to drill deeper they would find that this persistent noise and crowing is no more than a self-constructed idol with clay feet. The credentials they lay claim to do not stand up to scrutiny, and in this suite of legislation is the evidence. Alternative fuels are the latest victim to have a Labor tax imposed. Unfortunately, the government cannot see that this new tax will do nothing more than add further pressure on struggling families and businesses and stop any encouragement for industry or motorists to use alternative fuels.

It is an unjustified and unfair impost. The tax will impact the taxi industry, couriers, freight carriers and anybody who relies on vehicle transport propelled by LPG. It will especially impact on regional Australia, which is dependent on alternative fuels like LPG, LNG and CNG. A number of significant inconsistencies are evident in Labor's approach to the environment. A newspaper article on Wednesday, 18 May revealed that some of the more recent champions for a cleaner, greener Australia—Labor ministers—choose to drive gas guzzlers. The article said, in dot points:

No doubt some of their more creative environmental ideas were conceived as they burnt up fossil fuel driving around selling their solar panel and pink batt schemes. Admittedly, the article also said that the opposition was little better in its choice of cars—but at least we are not making hypocritical statements like this government is. It seems to be a matter of do as I say, not as I do. The federal resources minister believes ministers should be able to choose whatever car they wish to drive. 'I'll drive the car of my choice,' he said. Even the PM drives a 3.6 litre Holden Calais while she contemplates slugging Australians with a carbon tax that seems to be destined to achieve nothing but to get people to pay more while the cost of living continues to rise. Perhaps that is why the Minister for Climate Change and Energy Efficiency is now suggesting there will be no carbon tax on petrol. That will be handy in keeping the petrol costs down on his 3.6 litre Calais Sportswagon as he goes about the countryside promoting environmental reform. I have not yet established whether the Minister for Sustainability, Environment, Water, Population and Communities, who drives a Ford Territory, agrees with him. The question that has to be asked is whether they fuel their cars with E10, or do they prefer high-octane fuel? I drive a four-cylinder Tarago, which I fuel with E10 fuel and have done for many years. I have an account at the Marina Service Station in Nowra which once was used to promote ethanol fuel that was being produced at the Manildra plant in nearby Bomaderry, one of the largest ethanol plants in Australia. I am happy to produce the receipts for my regular E10 purchases. My track record on promoting ethanol is on public record and I am sure the chairman of Manildra, Dick Honan, will verify that during the days of trying to get the use of ethanol mandated.

It is important to remind the electorate of this historical background because Labor have a talent for rewriting the record to suit themselves. On 12 September 2002 the Howard government announced that ethanol would be subject to excise at the same rate as unleaded petrol, 38.143c per litre. A production subsidy equal to the excise was also provided to domestic producers, thus bringing the effective rate to zero. The government also imposed a customs duty of 38.143c per litre on imported ethanol. Who can forget the hyperactive campaign waged by Labor at the time suggesting that using ethanol would rot your engine and other doom-and-gloom warnings? The former member for Canberra made an outrageous comment that he had seen evidence that ethanol in cars was destroying engines. Later it turned out that the culprit was either methylated spirits or kerosene that had been put into the car.

With the emphasis now on saving us from global warming, surely a case has been made for encouraging the uptake of cleaner fuel and even more efficient fuel systems. So it is surprising to now find the government wants to apply a disincentive on the use of some alternative fuel types such as gas. The AusIndustry website says that 'the objective of the LPG Vehicle Scheme is to increase the use of LPG as a transport fuel'. Surely slapping another 12.5c per litre on LPG can only make the use of petrol a more attractive proposition. The government has spent over $400 million over the past five years to encourage motorists to convert to LPG. Gilmore had one of the highest take-up rates of LPG subsidy conversions. Now the government is increasing the excise, which will discourage the use of alternative fuels. This new tax on LPG is a punishment on the 700,000 families that made the right decision to take advantage of the conversion grants because LPG is up to 50 per cent cheaper at the petrol bowser and environmentally friendly. Of these families who converted, two-thirds live in regional Australia, where LPG is the preferred fuel used by agricultural and small businesses. Anybody in tune with the electorate will tell you that what the government is doing has people scratching their heads. They are saying to me: 'Jo, what's going on? One minute they're giving us money to convert to LPG because it's supposed to be good for the environment and, now that we've done that, they're putting the price up!' What am I supposed to tell them?

More than 270,000 vehicles have made the transition. Most are now stuck with their LPG converted cars, so you can imagine how angry the owners are. Many made the conversion as an economy measure in the face of rising fuel prices, so they are justified in feeling they are being cheated. And it was those rising fuel prices that we were berated over by Labor, so isn't it ironic that it has now come to this? We will be paying more for our energy needs than ever before despite its promises and as a result of policies introduced by this government. Yet the government still wants to put on a carbon tax. It just doesn't make sense to keep inflicting more costs on those that can least afford it.

So here we are facing up to another raft of taxes that will do nothing more than raise revenue to help pay back Labor's massive debt. In an era of peaking oil production, concerns over carbon emissions, global warming and increasing energy demands, isn't it rather incongruous to be taxing an alternative fuel? These are fuels that industry especially has opted for because they represent a cheaper input cost to production and distribution. In my electorate of Gilmore, LPG is a popular fuel for the thousands of utes being driven by independent tradies. They are trying to keep their costs down but now they will have to charge more to recoup the additional costs being imposed by this government. Some might have to absorb those costs because they are in a competitive market and they do not want to lose customers by passing on these new taxes. Others will charge more, and it is the consumer that will foot the bill. Just another tax in a raft of taxes to come, the biggie being the carbon tax next year. And we still don't have the details except to say it will be definitely passed down the food chain to the end user, in one way or another—of that there is no doubt.

Liquefied natural gas, or LNG, is to have a 26.13c a litre tax imposed as a result of this bill, as will CNG, compressed natural gas. Both are used in the transport industry, which feeds into freight and other production costs. The question that has to be asked is why the government is choosing to do this. Why is it saying we need to go to more environmentally friendly fuels and then slugging us when we do? Why did it commit to keeping down the price of groceries, even to the extent of setting up Grocerywatch, when its own policies will be adding to the price of everyday consumables? Why did it give the impression it was concerned about the price of fuel, even establishing a commissioner to monitor price rises, when the government itself is feeding fuel price increases through its own policies? Gas is less environmentally polluting than other fossil fuels, so you would think that a government that professes its green credentials would be doing all it can to steer us in that direction. But here we have the opposite effect. Let me repeat a concluding remark in the parliamentary research paper I alluded to earlier:

The use of natural gas is less polluting than the use of coal and oil. A major benefit is that natural gas is some 65 to 70 per cent less greenhouse gas intensive than either brown or black coal. Another decided advantage of gas is that it contains far fewer particulates and other elemental contaminants than either coal or oil. As a consequence natural gas can be used as an alternative fuel for transportation in the form of either compressed natural gas or liquefied natural gas, especially in heavy transport such as public buses or road freight carriers that can use centralised refuelling points.

That is why I and my colleagues will be opposing the introduction of yet more taxes on a resource upon which many Australians are dependent. There is no justification except as yet another tax grab to fund a record deficit that could have been avoided with smarter management. And I suspect it won't be the last. The answer to my question as to why the government is choosing to tax alternative fuels is $518.5 million. That is the amount estimated to be gained in additional revenue. But will it be used to pay back the debt or will it be frittered away? That is the multibillion-dollar question. This is Australia paying for the plasma TV stimulus spending of the Rudd government and its successors.

Page 5 of the explanatory memorandum to these bills states:

Although the taxation based advantage of alternative fuels will be reduced, the tax changes continue to provide support to the alternative fuels industry in recognition of the potential environmental, fuel security and regional benefits that these industries can generate.

The thing that is missing from that statement, as warm and fuzzy as it is, is how that will be achieved. Again, long and reassuring on rhetoric but gravely short on vital detail. All I can see happening is a displacement effect of motorists going over to diesel or even hybrids. Then I suspect—give it a few years to build the numbers—the government will hit them with another new tax. It is a modus operandi that is becoming a feature of the government. Do we have to trust them again? Not this pollie.

Earlier this week I noted, of the many press releases produced by the government, one saying that the Prime Minister has vowed to cut red tape for small business. What has not been explained is how, through this legislation, red tape will be cut when more is being produced and, in distinguishing fuel LPG from non-fuel LPG, how my local service station operators, for example, will deal with that. Are the government still working on the detail, as they say they are with the carbon tax, or are they just asking us to believe that they will get it right, much the same as they have done with the previous attempts, such as the pink batts fiasco, the BER overspending and the asylum seeker debacle?

Despite what it loudly proclaims, it is not a government that is a friend of small business; it is a government that is confused as to what it thinks small business actually is. I read an interesting newspaper article last year reporting the vocations of politicians—in other words, what they did before they got into politics. I think only one, or perhaps two, Labor politicians were self-employed or managed a business. Maybe the same two, or perhaps another one, actually held down a real job. Most were dependent on the union movement for their bread and butter and in that statement there is a clue as to why there is this incapacity to manage effectively. When your whole career is spent trying to throw a spanner in the works, eventually you become very good at it. This legislation is yet another example.

In closing: the only thing I will be supporting is the Energy Grants (Cleaner Fuels) Scheme Amendment Bill, because I want to encourage people to use cleaner fuels. It is one thing to rail against the coalition, accusing us of being climate-warming sceptics, yet quite another when we ourselves have introduced many initiatives towards a cleaner environment. The Energy Grants (Cleaner Fuels) Scheme Act 2004 was introduced by a coalition government. Surely, that points to the lie of Labor and their self-constructed new heresy on global warming. I supported the philosophy of a cleaner environment then and I will support that philosophy now. But I will not support a great big new tax just for the sake of it or just to save Labor's hide.

Tony Windsor (New England, Independent) Share this | Link to this | Hansard source

I rise to support the Taxation of Alternative Fuels Legislation Amendment Bill 2011 and cognate bills before the House today. I do so reflecting on a few memories of what has happened in this building. When I first entered this parliament there was a move to achieve a renewable energy target for biofuels, and the member for Gilmore would remember those days. A little more than a decade later fewer biofuels are produced in Australia than were produced when we originally set a target. So I am pleased to have been part of the negotiations with the government that has actually removed biofuels from the taxation regime, and I will go on a little to explain why.

About seven or eight years ago the Howard government determined that a period of seven years be allowed for renewable energy and some of the transitional fuels that the member for Gilmore talked about, LPG in particular, to be exempted from the taxation and excise system. That grandfather clause comes into effect on 1 July. It was the intent of the coalition to include LPG and other transitional fuels—fossil fuels and biofuels—in the fuel excise regime, as of 1 July this year. In discussions that we have had with the minister and others within the government and in the broader community, it has become very obvious that one thing is quite different now to what it was seven or 10 years ago. That particular point of difference is that there is concern about climate change and greenhouse gas emissions. In structuring a fuel taxation system and excise regime that takes into account the need for a transition towards cleaner fuels and renewable energy—and, in a sense, I see the legislation before the House today as part of a transitional process—I see the balance that has been struck by these bills as being quite fair. It is much fairer than what would have been determined had the end of the grandfathering provisions that the Howard government set up seven or eight years ago been applied, whereby both renewable and transitional fossil fuels would have come into the system at much higher taxation rates.

Irrespective of which side of parliament we are talking about, both sides of this parliament have a five per cent target to reduce greenhouse gas emissions by 2020. One way of achieving that is to encourage renewable energy sources. In terms of the zero taxation rate, the renewable energy source that we are talking about today is biofuels. How one could suggest that we should impose a taxation regime on a renewable energy source when, in fact, through the various carbon taxation and emissions trading scheme discussions we are trying to encourage renewable energy of all sources fascinates me. So I am pleased to see that the government has recognised about charging any taxation on biofuels—be that ethanol, biodiesel or some of the variants of those two fuels; and I think there is enormous potential for algae to produce biodiesel in our community as well and for lignocellulosic ethanol to be produced. It is being produced in some parts of the world at the moment. Obviously, there are some cost issues there, but at some stage biomass-to-biofuels will become a much greater reality than it is now. In China they are working on various processes as we speak, as they are in Canada and in parts of the United States. In fact, in the United States, Mr Deputy Speaker Adams—and I am sure you would recognise this, as a great follower and student of global politics—some 39 billion litres of transportation fuel are biofuel. That is 10 per cent of the transportation effort. So, in a raw sense, that suggests that there has been action. Some people in this House would say, 'Well, the United States is doing nothing in terms of moving towards controlling or reducing greenhouse gas emissions.' On that one issue, 39 billion litres is about the total fuel usage for Australia—of diesel and petrol. So 10 per cent of the field market of the transportation fuel is now a renewable fuel source in the United States.

I would like to make a few comments about the Productivity Commission's recent findings on analysing biofuels and other emissions reductions globally. In the main I think it was a very good report, but there are a couple of things I would like to take issue with.

But some would suggest that the production of biofuels in the States—the 10 per cent that I am talking about that has moved to a renewable energy source—is coming essentially from food acreages. That is not strictly the case. In a lot of cases, as with the major producer of ethanol in this country, it is actually a value-add to an agricultural product. The member for Gilmore talked about the Manildra operation in her electorate, which is essentially a starch and gluten producer, with a number of other products—extenders et cetera. An enormous amount of grain is consumed domestically. The residue of that particular value-add to grain production is in fact a biofuel, which is ethanol—which the member for Gilmore uses in her four-cylinder car, as she described a few moments ago.

I have been quite supportive of what the Productivity Commission said in terms of the greenhouse gas emissions debate that this parliament is having, and I am part of the Multi-Party Climate Change Committee that is deliberating on a number of issues now. But the Productivity Commission made some points on biofuels and actually made some errors. I would like to see how they arrived at the conclusions that they did. They were essentially saying that the subsidies, as they call them, to biofuels in Australia are a fairly ineffective way of creating a pathway through to cleaner fuels. They would suggest that the use of a pricing mechanism—an emissions trading scheme or a carbon tax—is a much more effective way of dealing with the issue of getting people to change behaviour.

I had a briefing with the Productivity Commission and raised this issue with them. I find it fascinating—and the Howard government used to run this line as well—that they would argue that the removal of a tax is in fact a subsidy; that the non-placement of an excise on a renewable energy source is in fact a subsidy. As I understand it, as the basis of their analysis, looking at transportation fuels, not only in Australia but in other parts of the globe, they have used that assumption—that the non-placement of a petrol tax on a renewable energy source or a biofuel is in fact a subsidy to that industry. When you see the way in which the value-add to grain occurs—Australian grown grain goes through the Manildra operation and the by-product is the fermentation of the starch, which is the biofuel—they have not taken into account the other processes that are involved there. My view, and I will be asking the Minister for Climate Change and Energy Efficiency to get the Productivity Commission to revisit some of their calculations, is that I do not think they have taken into account the appropriate life-cycle analysis in terms of how most grain is actually produced in this country now—in fact, I think they have taken into account a fairly archaic agricultural practice, where the carbon footprint and fuel usage is quite high, and then relayed that through the various processes and come out with a negative in terms of the life-cycle analysis. There are plenty of life-cycle analyses that are done in other parts of the world—under no-till farming, for instance, and other improved technologies—which would come up with a very different life-cycle analysis.

The third thing that the Productivity Commission have not done in my view—although they did refer to the Chinese biomass-to-biofuel arrangements, which are in their infancy, but nonetheless people are working on that technology as we speak, in many parts of the world—is to look at the potential, the life-cycle issues, the food issues and the acreage or land substitution issues that may or may not occur when you go from biomass to biofuel, or lignocellulosic ethanol, or from algae to biodiesel. They did not look at the potential in terms of transportation fuels into the future. In fact, they have painted a fairly negative picture of biofuels generally, based on, I think, two assumptions—the removal of the tax is a subsidy, and therefore should be counted against the production of biofuel, and the fairly archaic life cycle analysis the Productivity Commission seems to have had running around for some years now, which is based on food acreages going towards bioenergy. Biomass to biofuel is quite exciting and we should be putting research dollars into it.

The other issue I will raise briefly is that of the inadequate funding of our local roads and where our fuel taxation money goes. Most people would know that the current taxation regime for petrol is 38c per litre, plus GST on top of that of 12c a litre or a bit more. So we are paying about 50c a litre in tax. The last time I looked at the calculations, about eight cents of that was going back to roads of any sort. For every cent of excise I think $368 million is actually raised. I have always been a supporter of the Roads to Recovery program and am pleased to see that both sides of parliament have actually agreed on the concept. Not quite a cent a litre out of the 50c goes back to Roads to Recovery. I know that there are some Financial Assistance Grants et cetera that go to local roads, but that is only a percentage of what used to be the road use tax actually going back to local roads. I make the plea to both sides of parliament that it is about time we put more of the revenue from fuel excise into our local roads. I would argue that at least 3c a litre annually should go into the Roads to Recovery program. That would give local government at least a chance not only to maintain the current infrastructure in the fashion that it should be, but also to improve it in some cases.

I encourage people to think quite seriously in this new age, when we are looking at reducing emissions, about how certain fuels, like LPG, are transition fuels and about how certain other fuels are very clean, so there should be a difference in the way they are taxed. The transition fuels, which are pollutants in the sense that they are petroleum products, should be and are in this legislation taxed at about one-third the rate of petrol. Biofuels are not taxed at all, and neither should they be in this day and age.

Darren Chester (Gippsland, National Party, Shadow Parliamentary Secretary for Roads and Regional Transport) Share this | Link to this | Hansard source

I rise to join the debate on the Taxation of Alternative Fuels Legislation Amendment Bill 2011 and, in doing so, will highlight what I believe is this government's failure to provide relief for Australian families who are struggling with the increased cost of living.

This government is completely out of touch with everyday Australians. It promised before the 2007 election to reduce the cost of living. What we have seen is a succession of failures. We had Fuelwatch and GroceryWatch and failed government programs, such as the home insulation bungle which tragically cost four young men their lives. We had the Green Loans assistance program, under which the government trained upwards of 10,000 people with the false lure of a job that was never there for them. Then, of course, we had the blowout in the schools halls program and the government's failure to achieve value for money. To make matters worse, this failure to deliver value for money has left the Labor government desperate for more tax revenue, so it is turning to the Australian people once more.

This Prime Minister talks about a year of decisions and delivery. Her only decisions seem to be the order in which she introduces each new tax and when to take delivery of more money from Australian families, who cannot afford another two years of this government's mismanagement. Already this year we have seen the flood levy, which was imposed on people whether or not they had donated to the many thousands of Australians who suffered in the floods over the summer. The flood levy completely undermined the Australian ethos of voluntarily lending a hand to a mate in need. This Prime Minister is so out of touch that she thinks she can legislate mateship. We have also seen the government's botched handling of the mining tax—and there is still a lot more to go in that debate—and the carbon tax, which will destroy jobs in regional areas, particularly in regional areas like the La Trobe Valley in the heart of my electorate.

The Minister for Climate Change and Energy Efficiency continues to stand up in this House and talk about so-called dangerous climate change and the thousand biggest polluters. It is as if every word has been focus-grouped within an inch of its life to make sure that the key messages get out: 'We must always refer to dangerous climate change and to the thousand biggest polluters.' In fact, this government is imposing a tax on about 22 million Australian households, who are apparently 22 million of Australia's biggest polluters. Just today, we heard the coal industry express concerns about up to 4,000 jobs being lost under the carbon tax. I have had reports previously in my electorate relating to the prospect under the CPRS of 3,000 jobs being forgone in the broader Gippsland region. Families in my electorate do not want a household assistance package from this government. They want the decency of a job, to be able to attend their place of work and to earn income to pay their mortgage and pay off their car loan. They do not want this government's household assistance package; they want to be able to go about their lives without having their jobs sacrificed on a whim of this government.

Now we have this fuel tax, which has been presented to the House in the form of this legislation. It will have a direct impact on the cost of living, particularly in regional areas. I will focus mainly on the LPG proposals, which go to the heart of the problem for regional motorists. We are talking about introducing a new fuel tax which will increase to 12½c per litre over five years. That does not make sense on several levels. To begin with, this government likes to talk a lot about its environmental credentials. It is estimated that a taxi run on LPG emits up to 13 per cent less in carbon emissions than a petrol run taxi. For a government that claims it wants to take action on so-called dangerous climate change, the hypocrisy in making an alternative, cleaner fuel more expensive and less attractive for people to use is obvious for all to see. This is a tax grab, pure and simple, and the government should not pretend otherwise. The hypocrisy and the policy inconsistency get worse when you consider the current incentives to increase the use of LPG as a transport fuel. That is not my stated intention. The AusIndustry website refers to the LPG Vehicle Scheme statistics:

The objective of the LPG Vehicle Scheme is to increase the use of LPG is a transport fuel. The Scheme provides grants for:

the LPG conversion of a registered vehicle; or

the purchase of a new LPG vehicle (this includes vehicles fitted with LPG at the time of manufacture and vehicles fitted with LPG after manufacture but prior to first registration).

As at 30 April 2011, under the LPG Vehicle Scheme there have been 283,512 grants paid. In terms of the LPG Vehicle Scheme grants statistics by state, you will see that Victoria, with 135,500, has taken up the scheme more than most. Even after Labor cut the incentives for the fuel conversion program, it still proved popular particularly, as I said, in Victoria.

The people of Gippsland have been some of the heaviest users of the grants program, given the extra distances motorists in my electorate travel. It is so popular in regional areas because our communities are faced with a high cost of personal transportation. They are doing everything they possibly can to reduce their household bills. The average vehicle in a regional area will travel further each year and motorists have the opportunity to recoup the conversion cost in a far shorter time. Under this exercise, the government is sending a very mixed message to the broader community. The scheme will no longer be seen as attractive because recouping the value of conversions obviously takes longer and motorists know the excise will only ever increase under a Labor government.

Some people would say that, at 12½c per litre, it will not have that big an impact on the rate of conversions, but the simple fact of the matter is that motorists will see this as just the beginning. They know that, whenever Labor need more taxes, they will be going back to the Australian people. They will have their hands in the pockets of the motorists of Australia and the LPG excise will only increase in the future.

This will also have perverse impacts on the autogas conversion industry and on various small business owners right across my electorate. I believe many others will suffer as a direct result and jobs will be lost in the community. There is no question that the impact on the wider community will be felt whether they have an LPG powered vehicle or not. I would like to refer to a statement by the President of the Australian Taxi Industry Association, John Bowe, in May this year, who highlighted the concerns of his industry particularly relating to increased costs. The ATIA has raised these concerns with all members of parliament and says:

The introduction of excise on LPG is at total odds with the Government's policy on energy security and carbon reduction. Why tax an alternative fuel that will underpin our future energy needs, and is cleaner and greener than petrol and diesel?

LPG is a cheaper, greener alternative fuel choice the taxi industry. A taxi powered by LPG emits up to 13% less carbon emissions—

as I noted earlier—

than a petrol-run taxi. It is also up to 50% cheaper than petrol at the bowser.

  …   …   …

If the excise is introduced many jobs in the tax industry could be lost. The increase in costs to many of our passengers will be unbearable. Our drivers and fleet operators will not be able to afford to absorb such a price hike either.

It is inevitable, if this excise is introduced, that taxi fares will also increase and have an adverse impact particularly on members of our community who, for whatever reason, are unable to drive themselves—through disability or age—and rely on the public transport system, which, in many regional areas, means the taxi system. In vast parts of my electorate the only form of public transport is the taxi. Further, in his comments, John Bowe said:

Many taxi licence owners and fleet operators feel they were 'duped' into converting the vehicles to LPG and opting to use the greener gaseous fuel to run their business. The Government encouraged LPG conversions with rebates and other incentives. When taxi fleet operators opted to for LPG, they did so in good faith. They believed they were doing the right thing by environment, their business and customers.

  …   …   …

If a carbon tax is imposed, a further 4.5 cents per litre would be added to the cost of LPG—a double whammy for those who can least afford it.

The excise on LPG will punish those passengers and consumers who are already struggling with the rising cost of living and want the alternative cheaper option. As John Bowe said in his final comments:

We strongly believe that any excise will hurt the taxi industry, bring the LPG industry to its knees, and will hurt other industries and small businesses that rely on LPG.

Again, the regional areas will be most adversely affected, but that does not seem to bother those opposite. It certainly does not worry the Treasurer, who does not even bother to answer questions on this topic. I first wrote to the Treasurer on this issue in October last year on behalf of Mrs Patricia Thatcher of Boolarra, who was concerned about the cost of living. She had heard about the likelihood of excise coming into play in a few months time so she converted her vehicle to LPG. I had no reply from the Treasurer, but I understood that perhaps coming out of the election period he was very busy. So I wrote to him again in February this year but had no reply. I wrote to him on 19 May, but again there was no response whatsoever.

Apart from you, Mr Deputy Speaker Adams, a champion of a regional location, I fear this is the most city-centric cabinet imaginable. Regional Australia does not have a voice in the Gillard government's cabinet. Issues like the increased cost of living for regional motorists are something they simply do not understand. You only have to look at the ministerial list to get some indication of this government's lack of compassion and understanding of the issues affecting regional people. The Minister for Regional Development and Local Government, the Hon. Simon Crean, the member for Hotham, has his electorate office in Clayton. The Minister for Infrastructure and Transport—a very important portfolio for regional people—the member for Grayndler, has his office is in Marrickville.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

Order! The honourable member needs to address the bill before the chair.

Darren Chester (Gippsland, National Party, Shadow Parliamentary Secretary for Roads and Regional Transport) Share this | Link to this | Hansard source

Certainly. As I was saying, the increasing costs associated with LPG excise will have a direct impact on regional communities. The point I am making is that no-one in the cabinet is standing up and fighting against this LPG excise because none of the members of the cabinet actually live in and understand regional communities. We have the Minister for Sustainability, Environment, Water, Population and Communities, the Hon. Tony Burke, whose electorate office is in Kingsgrove in the heart of Sydney. Surely the Minister for Resources and Energy would stand up for regional communities, but his electorate office is in Preston—so why would he? The Minister for Agriculture, Fisheries and Forestry has his electorate office in Brisbane. Not a single member of this government's cabinet lives and works in regional communities and has a deep understanding of the issues affecting regional people on a daily basis. Regional Australia simply does not have a voice in the Gillard government cabinet and these ministers simply do not understand the issues we face on a daily basis.

It makes no sense to be applying this tax to LPG along with CNG and LNG at a time when Australian families are struggling with an increased cost of living and the government is spending billions of dollars of taxpayers' money on its efforts to reduce carbon emissions. The Energy Grants (Cleaner Fuels) Scheme Amendment Bill 2011 is a worthy bill and it has the coalition's support, as other speakers have indicated. It is an interesting tactic to say the least that the minister has sought to combine all these pieces of legislation and then include a clause which basically says that the whole lot needs to pass or the biofuels industry gets the bullet. It is like trying to hold a metaphorical gun to the head of this legislation—pass the other three or the good one gets it. It is not so subtle a piece of political extortion to try and gain support for three pieces of legislation which are clearly contentious. The coalition had previously flagged its intention to oppose this new excise but by adding it to the support for the biofuels industry the government had hoped to wedge this side of the House into supporting its latest tax grab. I support the coalition's decision to oppose the first three bills and I also welcome the amendment from the shadow minister to break the nexus between these bills. Our amendment will make the Energy Grants (Cleaner Fuels) Scheme Amendment Bill 2011 effective from 1 July and we will continue to protect Australian families from this high-taxing and wasteful government which is completely out of touch with the hopes and aspirations of regional communities.

Bob Katter (Kennedy, Independent) Share this | Link to this | Hansard source

In rising to speak to the Taxation of Alternative Fuels Legislation Amendment Bill 2011 tonight I sympathise very strongly with the arguments put by the opposition. This is one of those things where if you are piggy-in-the-middle you have some difficulty deciding which side of the fence you should be on, unlike the members of political parties in this place who mostly resemble ventriloquist dummies because they have not voted against their party machine on either side of the parliament to my knowledge as long as I have been in here. So you say, 'Did you agree to every single thing that was passed in here? Oh, of course you did. So you agreed with every single decision that your party made in here. Oh, of course you did.' We now have a party that I belong to and our first resolution—and I have told people this—is that if in a year there are not 20 separate votes then we have failed in what we are trying to achieve. Sometimes while representing the interests of my electorate I find myself in great sympathy with the one of the senators from South Australia, Senator Xenophon, on almost every issue. But there are times when we disagree and we vote separately and differently. That is healthy and that is a democracy.

There is only Australia now left as one that has a two-party system. You may well ask, Madam Deputy Speaker, 'What about America?' Well, America does not vote along party lines. I followed the vote very closely on the ethanol bill in the United States: the oil-producing states voted almost to a man against the ethanol bill and all the rest of the senators throughout the United States, regardless of their party affiliations, voted differently. Peter Reith, who is running for the presidency of the Liberal Party, makes the point that we should have primaries. He is dead right, of course. The reason that under the American system they are answerable to the people is that you have to go before a primary. It is not just your little coterie of party faithful that you have to keep happy; you have to keep every single registered labour voter in your electorate so. They have got to vote for you in a primary. You are answerable to the people in your electorate and that is why the American system results in people voting along constituency lines and not along party lines. I still think the two-party system is unhealthy. In all the other countries in the world, taking France, Germany, even England now and even New Zealand now, all have multiparty systems. The only country without a multiparty system is ours—and, please, God, that will change soon.

Let me return to the bill specifically and say that once again Australia is out of step. Every other country subsidises and protects their industries. The OECD figures are 41 per cent support levels for agriculture in the OECD countries and four per cent in Australia. We get preached to continuously by both sides of this parliament about level playing fields. Well, you delivered to the agriculturalists in this country the most unlevel playing field that anyone could ever hope to play football on. One section is 40 metres up in the air and other one is down four metres lower, and then you expect us to compete! In addition to that it does not take into account the factor of ethanol. In the United States cattlemen can access very highly nutritious grain called dried distillers grain, which is a by-product of the ethanol industry. I do not have the figures here as to how much they produce in the United States but I know that they exported nine million tonnes last year. So five million people on Earth were fed by some dried distillers grain that happened to be left over. I do not know how many millions, if not tens of millions, of people were fed in the United States.

In this august body called the Parliament of Australia on both sides of this House we have had great spokesmen for the oil companies and we have had great spokesmen for Woolworths and Coles, who are in bed together now as they own the bowsers throughout Australia. We cannot get ethanol into bowsers because we are not oil producers; we are ethanol producers. So we cannot get into those bowsers. Dick Honan, a very great Australian in every single sense of the word, created an industry out of absolutely nothing. Every single gyprock panel in every single home in Australia is produced partly with product out of this plant. He was brought to the very point of crashing by the actions of both sides of this parliament. Thank goodness we have five crossbenchers. The Australian people put five crossbenchers in here, and those people were able to lever a situation in which we are now withdrawing from the destruction of the Australian ethanol industry. We had 75 megalitres of production in Australia. The people on my right smashed it down to 24, and now they have the hide to come in here and tell us they are in favour of ethanol. I hope they are. If the leopard has changed its spots I will be the first to be on public record and congratulate them. I thank very sincerely their leader, Tony Abbott, for giving a tick to our 20 points. Our second point was on ethanol.

Madam Deputy Speaker, let me quote the former Premier of New South Wales, Mr Iemma. He said, 'We are introducing ethanol because I am not going to stand by and watch people die in Sydney who do not have to die.' In America ethanol was introduced not to help their farmers and not to secure their oil supply line; it was introduced as an air quality control act because when the findings of health studies in California became public it became an absolutely unassailable fact of life that vehicle emissions were killing more people than motor vehicle accidents in California. That is an actual quote from the head of the AMA in Australia. The head of the air quality control council of Australia, Dr Tom Beer, from CSIRO, said exactly the same thing. How come neither side of this parliament has done it yet?

Maybe in the forthcoming weeks the opposition will do it with the support of the crossbenchers. If they do, the people of Australia now, and in future generations, will thank them (a) for saving lives and (b) for bringing down the price of petrol. As I have said in this House a hundred times: do not argue about how much it is going to cost; just get on an aeroplane and go to Brazil and fill your motor car up. I had never been out of Australia before and I will never go again, but I went over to do an ethanol tour. I really went over just to bring back a photograph of me filling my motor car up in Sao Paulo for 74c a litre. I then went to Minnesota, or vice versa, and filled my car up for 84c a litre. I came back to Australia and filled my motor car up for $1.39 a litre. Firstly, we save lives; secondly, we bring down the price of petrol; and, thirdly, we feed the world.

Let me just come back to that for one moment, Madam Deputy Speaker. When you extract starch from grain you are left with what is called dried distillers grain. Distillers grain has the same calorific grain as ordinary grain but is three times more nutritious. The Americans are killing us in the cattle industry because they have accessed this supercheap, supernutritious grain. The Brazilians are killing us in the sugar industry because they make so much money out of the ethanol side of their cane industry that they can subsidise the sugar side of the industry. Their mills produce half ethanol and half sugar. They can subsidise from the petrol side or the ethanol side. Ethanol rescues three of our agricultural industries destroyed by this parliament with their ridiculous high Australian dollar and with their ridiculous level playing field, which is the most unlevel playing field in human history.

The fourth issue is the supply of oil. It is fascinating for me that the minister for resources came into this place continuously giving speeches about how we are running out of petrol. I suspect that a few people from the gas industry have been in to see him, because suddenly we have seen a big change of heart. He has switched from saying that the great problem in Australia is that we have got a deficiency of oil to saying that we really do not, because we have got gas. Go and put a gun to the head of every motorist in Australia. Gas has been half the price of petrol and people still will not convert to gas. We can say all we like that there is a benefit in gas—and there is; I do not deny it—but we cannot force the Australian motorist to take gas if he refuses to. We can with ethanol; that is as simple as winking. We said, 'Take the lead out of petrol' and they took the lead out of petrol because people were dying from lead. Now we are saying, 'Put ethanol in because people are dying on account of the carcinogens that are in, and come out of, the petrol tank.' We are quite entitled to say, 'Now you're going to put some ethanol in because we don't like Australians dying so that you can get rich, Mr Oil Company. We don't like that.' And, I might add, the oil companies had a choice when the lead was taken out. They could raise the octane number by putting in ethanol or they could raise it by putting in MTBE. There is one hell of a difference between MTBE and ethanol. MTBE is carcinogenic. To quote Larry Johnson, the founder of the ethanol industry in America, 'Pour petrol into the river and fish die. Pour ethanol into the river and fish smile.' It is pure alcohol. Listerine, the mouthwash, is ethanol.

When I was 17 years of age—and it worries me greatly, with the live cattle issue at the present moment—I was handed a rifle and had to give three telephone numbers to my commanding officer. I was on 24-hour call-up to go and fight a war to secure our supply line of oil. Some nasty, cynical people said it was a war more to look after the interests of Royal Dutch Shell. I think we really do have to fight wars to protect our oil supply line. Since that time, we have fought a war almost every single year to secure our oil pipelines and our source of oil. I think to some degree that is one thing for which you do have to fight wars. I make this point in passing: if we are prepared to fight wars to secure our oil pipelines then maybe other people might get very upset when their food supply is cut off. Maybe that is true. I do not want to see my grandchildren have to shoulder a rifle like I had to as a kid and go off to fight a war. Thank goodness it blew over before I got up there. I was very, very lucky—luckier than my father and my uncles, who fought in the Second World War. One of my uncles died in Changi prison.

I have had great difficulty in deciding which way to vote on the first part of the bill before us tonight, but sometimes compromises have to be reached. Whilst people say that I am a very uncompromising person, I am not like that all the time. There are times when compromises have to be made, and this is probably one of those situations. We have not killed the ethanol industry but we need to fan it into life. Every single European country has biofuels legislation. America has biofuels legislation. Canada has biofuels legislation. Brazil has biofuels legislation. There is no country on earth that grows grain or sugarcane that does not have biofuels legislation—even Europe, which cannot grow them, has biofuels legislation. (Time expired)

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

I would like to thank the member for Kennedy for at least referring to the bill once. I do appreciate that. The question is that this bill be now read a second time. I call the member for Dunkley.

Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Competition Policy and Consumer Affairs) Share this | Link to this | Hansard source

The bills before the chamber tonight deal with planned changes to taxation arrangements through excise tariffs on alternative fuels. I will pick up on the last bill, the Energy Grants (Cleaner Fuels) Scheme Amendment Bill 2011, to carry forward some of the contribution from the member for Kennedy. The opposition supports the Energy Grants (Cleaner Fuels) Scheme Amendment Bill. This bill is an important measure in that it effectively grants back to Australian producers the taxes that would otherwise be levied on ethanol. This is an important measure, one which talks about biodiesel and renewable diesel producers and importers. I stand corrected on my misspeak on ethanol. The bill basically says that, where people are impacted by tax payable that is imposed on those fuels, they are rebated. It becomes very important because, without this measure, further development of that as an alternative transport fuel could well be wiped out by overseas production coming in and taking over all the increased demand for biodiesel and the like.

The bill before us seeks to extend the current grants scheme which sunsets on 30 June 2011. Unless that bill is passed, producers of fuels eligible under the Energy Grants (Cleaner Fuels) Scheme would be exposed to a full 38.143c per litre fuel tax that is payable on conventional diesel. It would have adverse environmental and commercial impacts—and that is quite self-evident. The coalition is keen to see that grants program continue.

What we are less thrilled about are the other bills. They seek to impose new excises on LPG and CNG. These arrangements are quite troubling for the opposition, and they are troubling for a number of reasons. One is that, at a time of cost-of-living pressures on Australian families, the last thing they need is increased fuel costs. They are already staring at the implications of the great big carbon tax that will make transport fuels more expensive. What is not needed is to further increase those costs on Australian families and particularly on Australian small businesses.

It might come as a surprise to you, Madam Deputy Speaker, that it is now over 12 years ago that I first spoke in this chamber about the virtues of LPG. I was trying to highlight to the parliament and to the Australian public that we have here an abundant, cleaner transport fuel that is available now and offering not only cost savings for those that utilise it but also gains in terms of Australia's energy security, emissions and air quality. It was a fuel opportunity staring us in the face that ran into quite a number of obstacles over many years. It was over a decade ago that I stood in this chamber and waved around an LPG conversion unit. Not only did it come as quite a shock to the Speaker at the time that I would bring such a device into the chamber; it also came as a shock to the LPG industry. That converter was caked full of what looked like vegemite. It was actually phylates or impurities in the fuel system, and they were causing poor fuel performance and difficulty in starting. They were effectively undermining the benefits of LPG. At that time there was no fuel standard for LPG. Australian motorists were being dished up LPG that could have contained any mixture of propane and butane—a soup of different gaseous fuels that were expected to run in modern machinery. To cope with that, we had some of the most robust converter technology you could find anywhere in the world.

I once said that a car could run on soup, because of the vast variety of fuel compositions with which Australian technology was being asked to function. What was needed was to take LPG seriously, and so over a dozen years ago my campaign started to see fuel quality standards introduced for LPG. Fuel quality standards gave the LPG technology development and conversion industry some consistent fuel against which they could develop improved technology to even further enhance the efficiency, the emissions benefits and also the air quality advantages of LPG. One of the things that I am pleased to say that the Howard government did was to support the conversion of over a quarter of million vehicles through grants programs encouraging people to take up LPG. It also saw LPG being recognised for its strengths as an alternative fuel, one in abundance in Australia and that had advantages which were not purely about cost, although the cost was important. I come back to cost because so many of the early adopters of LPG technology were enchanted by the costs of LPG. I remember that some years ago when petrol was around 52c to 53c a litre—and this is some time ago—you would get LPG in the teen cents. This was very attractive, particularly for lower income people and retirees wanting to be very careful about their day-to-day budget and being prepared to invest in a conversion to see their longer term cost of living eased somewhat by being able to access LPG.

At that time LPG was seen as a cheap waste product, often distilled out of other forms of fuel production. It has taken some time for the Australian public and the industry to get on the front foot and say this is really now an attractive, cleaner, abundantly available fuel that should be in a greater proportion of our transport fleet. In fact, our great state of Victoria accounts for about half of all vehicles operating on LPG. There are some 18,000 taxicabs running on LPG. I use that as a segue into why I am so keen to join with the opposition in opposing the first of the three bills that would effectively push up the cost of LPG and not only the cost of living for Australian households using LPG but also the cost for the tens of thousands of small businesses that are utilising LPG as a transport fuel. There are 18,000 taxicabs. You would see the cost of transport increase. Many tradespersons' vehicles and delivery vans operate right across the country on LPG.

You would start to see transport costs rise for small businesses, tradespeople and even major fleets—Sensis, RACV, NRMA, Repco, Fleet SA, the Australian Federal Police, just to name a few. All would have their operating costs increased and for what purpose? Increased because this government cannot balance its books. This is nothing more than a grubby tax grab increasing revenue to the Commonwealth at a time when the Prime Minister and the Labor government just cannot help themselves. They just cannot help themselves: they have to keep spending, spending and spending and looking for new ways to tax the Australian public and then try to concoct some kind of policy argument after the event to mask what is ultimately a simple tax grab.

We have a problem here in the parliament in that we have a policy that runs against our ambitions to improve our fuel security, runs against our ambitions to relieve our emissions and runs against our ambitions to improve air quality. I have seen the Minister for Infrastructure and Transport, Mr Albanese, talking about Euro 6 and 7 diesel standards or even 5 and 6 being introduced to improve the air quality in our cities and here we have an answer to all of those challenges staring us in the face. Rather than encourage the uptake of it, the government wants to make it more expensive and it makes it more expensive at a time when this is the least opportune occasion to do it.

There is a $3½ billion LPG industry out there anticipating significant growth opportunities into the future, largely powered by the coalition's 2006 initiative. There are 10,000 people operating in that sector. I pay tribute to all of those people in the LPG industry including dear friends who go back over a dozen years—Tammy Claster and the like—who I have worked with side by side as we have together run this argument over many years. I pay tribute to Jim Richards, who is retiring. Many of you in this chamber would realise he effectively ran the Australian Alternative Automotive Fuel Registration Board, the certification body to make sure conversions were being undertaken, issuing plates to people converting their vehicles, to meet the highest possible standards in Australia. While all that good work is going on, we have a government that actually wants to tax the fuel, make it more expensive and make it less attractive at precisely the time when we should be encouraging its uptake. Might I say, boy haven't things changed.

I have seen the member for Wills, perhaps sensing a freedom in his career trajectory, having a lot to say about Labor policy on a range of things whether it be population, live animal exports or issues around refugees. He did have a lot to say many years ago about LPG but that seems to be have drained away. At that time he was attacking the coalition for trying to support the LPG industry. You know what the attack was, Madam Deputy Speaker? This was the attack when the coalition stopped the automatic six-monthly indexation of petrol taxes. What we used to have in this country every six months was fuel excise creep up. It followed inflation, introduced by Paul Keating as a cunning plan to ratchet up revenues without having to come through this parliament. The Howard government said this was just adding to cost-of-living pressures at a time when oil costs were up and transport costs were rising—and for outer metropolitan communities like mine, who could spend 2½ to three hours a day commuting to their economic opportunity, these were matters of serious concern.

What was the thesis of the member for Wills? The thesis of the member for Wills was to abandon the six-monthly indexation. For those who are interested, go back to 7 June 2001 and a stirring speech trying to defend automatic tax increases on transport fuels. His argument was by not automatically increasing transport fuels—petrol primarily—every six months we were undermining LPG. That was his thesis. We were undermining LPG and his argument was you have to keep pushing up the price of everything else to give LPG a chance. I wonder whether that conviction holds true.

He may well come into this chamber and say, in a moment of profound consciousness, that if that thesis held true on 7 June 2001 perhaps on 14 June 2011—one week and 10 years later—it may still hold true. He might still today recognise that pushing up the cost of LPG is going to be undermining the LPG industry. If pushing up petrol prices more to make LPG comparatively cheaper was a bad thing a decade ago, pushing up LPG prices by an excise that is not justified and is not necessary to make its differential with petrol less has to be catastrophic to be the LPG industry if we are to believe the thesis of the member for Wills. My view is that the LPG industry is resilient because there is so much going in its favour. I do not think price fluctuations alone are a factor but I do know that pushing a new excise onto LPG can be anything but helpful. We have a government that has been funding incentives for the conversion of vehicles, yet it does not walk the walk itself. I have raised in this parliament before my ambition of supporting the LPG industry by having the taxpayer funded car that I am provided with fuelled by LPG. How extraordinary that the fleet purchase policies of the Commonwealth do not even facilitate the conversion and adoption of LPG technology at the same time the taxpayer is encouraging others to undertake such a conversion.

I urge the parliament to look carefully at these bills. I urge the parliament to listen to the advice of ACAPMA, the Australian Convenience and Petroleum Marketers Association, which points to a desperate need for a coherent transport energy plan for Australia. I urge the parliament to consider that the burden that is already on small- to medium-sized businesses at a time of difficult trading conditions will be made worse by the measures in this bill. I urge the parliament to take into account that this is a retrograde step in what we should all be doing—that is, encouraging the uptake of cleaner and abundantly available fuel in Australia. It would strengthen our energy security, improve our environmental emissions and improve the particulates and air quality arrangements around our capital cities. We should be doing all we can to support that.

In closing, I salute Jim Richards. Jim has been a tireless advocate for LPG most of his working life. He is a mature and wise man whose counsel I have valued for well over a decade. He will be retiring in the coming weeks. He has been a wonderful asset for LPG and its uptake. Perhaps that is why half of all the vehicles are in Victoria. I say to Jim and his lovely wife, Jan: enjoy the retirement; I am sure you will stay committed to LPG. I will stay committed to LPG. One of the ways I display that commitment is joining with the opposition to oppose this tax grab by a greedy Gillard Labor government, which is desperately looking for more revenue by imposing a new excise on LPG that is not justified. It runs against government policy and it is a bad idea. (Time expired)

Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

The Greens have some concerns with the Taxation of Alternative Fuels Legislation Amendment Bill 2011, which I will briefly outline. They will be taken up more fully by Senator Christine Milne when this bill is in the other place. In short, whilst we support the use and development of second and third generation biofuels, we do have some concern about first generation biofuels. It is the same concern that is shared by the Productivity Commission, namely that their use and cultivation can tend to displace food crops and that poses a threat to agricultural land, which in an era of concerns about food security is something that ought to be foremost in any government decision making. Of course, that then has a consequent effect on inflation and food prices and so on.

We are pleased that, in the course of discussions with the government about this bill and about the matter generally, the government has said it will be taking steps towards looking at the accreditation process to ensure that it assesses the full cycle of production of these second and third generation fuels. It is not enough to simply measure it on the basis of emissions alone; one needs to look at the full production cycle. What we do support in this bill is that it is, in a sense, a step on what is unfortunately a long road—it should be a much shorter road—towards looking at fuel excise not in terms of a simple revenue grab but in terms of the embedded energy and carbon and the consequent pollution that comes out of particular fuels. What we should have, on any rational assessment, is a system of fuel excise that is graded ultimately on the basis of the level of carbon and the level of embedded energy in a fuel so that consumers are then able to make a choice about choosing between different types of fuels knowing that there is a cost and price incentive to move towards more environmentally friendly and less polluting fuels. So we are pleased that this is a step towards that and that it is going to be recognised in the treatment of the various fuels covered by the bills, but ultimately we do need to move towards a system where consumers are able to look at the various fuels and understand transparently what taxation and excise treatment there is for particular kinds of fuel and make their decisions accordingly. We will be supporting this bill to facilitate its passage through the House, but as I indicated at the start, my colleague Senator Christine Milne will have more to say when this bill reaches the other place

Barry Haase (Durack, Liberal Party) Share this | Link to this | Hansard source

I am quite surprised that the Greens member for Melbourne had not more to say about the Taxation of Alternative Fuels Legislation Amendment Bill 2011. I would have thought that those who pursued the green style of life and embraced the green philosophy would have had a great deal to be critical of in this particular bill, because LPG is a much cleaner fuel that creates far less pollution than petrol. Quite frankly, I am a petrol user, but I recognise that LPG is an advance on polluting petrol in this era of embracing nonpollutants and cleaning up the globe. The member for Melbourne, I would have thought, would have waxed lyrical for a very long time indeed about the benefits of LPG and about making LPG a cheaper fuel choice than petrol. This government's intention to increase the price of this cheaper, cleaner, less polluting fuel by 12.5c per litre seems to fly in the face of the whole philosophy about cleaning up the globe and saving it from damnation caused by CO2 and other greenhouse gasses. So I am caught almost unawares—never absolutely, but almost unawares.

I stand this evening primarily concerned with the aspect of the transport industry energy source of the future. That will possibly be compressed natural gas. It will hopefully be more exotic and scientifically advanced fuel cells using hydrogen, but in the meantime CNG, or compressed natural gas, ticks a lot of boxes. The downside of it at this stage is that we do not have the infrastructure across this nation necessary to allow the users of CNG to access that product as they would like to.

We do need, in our fuel usage, to consider the pollutants as a result. When one is faced with a government with a publicised philosophy about reducing greenhouse gases, it is very odd—indeed, one finds it alarming—that they would add costs to a product that reduces pollution and allow more polluting substances to be at a relatively lesser cost. It beggars belief that a government that is so populist would do such a thing. Of course, often their defence of their decision is that it was a policy of the Howard government that we would increase the fuel tax on LPG. I might clear the record by saying that that was one of many strategies out of a whole mosaic that would have rationalised improved revenue collection in a very different era than we find ourselves in today. Today, families are hurting. Families are facing increases on all facets. There are increases in the cost of electricity at home. They are facing increases in the cost of petrol at the bowser. They are facing numerous increases in addition to the great unnecessary increases in their mortgage costs as a result of this government's excessive spending. Why on earth would they want to be faced with the cost of an increased price of LPG?

I say it again: why would a government that almost prostitutes itself in appeasing the public—

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Durack is straying into territory that I am not going to tolerate.

Barry Haase (Durack, Liberal Party) Share this | Link to this | Hansard source

I am sure it is not an area that you have ever participated in, Madam Deputy Speaker.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

No, thank you! I think the terminology is unacceptable.

Barry Haase (Durack, Liberal Party) Share this | Link to this | Hansard source

Thank you, Madam Deputy Speaker. I accept your admonition. I shall not stray from the point ever again.

This government has made a great name for itself in being very populist in its approach to the reduction of global greenhouse gases. It is a well-known fact not disputed in the least that LPG is an energy source that is less polluting than petrol. So why on earth would this government contemplate putting a 12.5c per litre additional tax on LPG? Why would this government contemplate adding innumerable dollars to the cost of running a cab that will be passed on to consumers, often those consumers who cannot afford a car? We are not talking about the high rollers of our society. We are talking about the elderly who need to grab a cab for medical attention, or the young who are consistently, perhaps irresponsibly, grabbing a cab late at night when they could have arranged for a driver or skipper but did not. They put up for the cost of a cab fare. And the cost of a cab fare is going to go up because this government, frankly, is simply making another grab at any available revenue.

$135 million a day—that is inconceivable, surely, for the common person—is being borrowed by this government just to attend to its spending regime. To get the revenue back to afford that, they have to hit those who are least capable of paying the additional 12.5c per litre of LPG which will hit the pockets of the users of cabs, which were converted to LPG because there was a subsidy provided by the Howard government. All of those people are going to ask, 'Why is this government doing this?' It is a legitimate question. Surely if debate is worth anything in this place it is to try to convince the lawmakers, the government at present, that sometimes their decisions and the bills they introduce into this House are unacceptable to real Australians. Real Australians will question once again why this government is doing such a thing. They certainly questioned the ceiling insulation program. They questioned the program of wasting money on school halls. They question the reason for introducing another tax to hit the only industry in this country that is making a quid these days—the mining industry. They certainly question this government's introduction of a carbon tax. Now, flying in the face of that very same tax, we have this imposition on those users of LPG. It makes no sense.

If this government has a conscience, if this House has a process, if there is any rationale residing still amongst the government benches, surely there will be a realisation that this bill ought be thrown out, that the revenue grab ought be forgone and that real Australians who are battling to survive and are having to catch cabs, amongst other things, ought get a break and ought not be hit for another 12.5c per litre. They should be given a fair go. For the first time in a long time, we are suffering an increased price in electricity, up 51 per cent; gas is up 30 per cent; water is up 46 per cent; education costs are up 24 per cent; the cost of maintaining one's health is up 20 per cent; rent is up an average of 21 per cent across this country; and groceries are up an average of 14 per cent. Since mid-2009, interest rates have added $500 every month to mortgage repayments while wages have risen just seven per cent.

In this environment of increased costs upon those battling families, those of them who have chosen to take the subsidy to convert to LPG that was generously introduced by the Howard government are now going to be slugged an additional 12.5c. That is about a 20 per cent increase—a one-fifth increase in your motoring costs per week.

Quite frankly, if this government has a conscience and if this House process counts for anything, then the government will reconsider this bill. It will forgo the additional grab at revenue. It will hurt less the families of Australia that are already battling and chuck this bill out. Reverse the process and allow common sense to prevail. You cannot run opposing arguments at the same time. You cannot say on the one hand, 'We want to save the planet; little Australia with 22 million population is going to save the planet by increasing the use of less-polluting fuels and more energy-saving regimes,' and at the same time stop people from using a less-polluting product. It is irrational, to say the least. It flies in the face of common sense and it is like a red rag to a bull to the Australian people. This government has absolutely lost the plot. I disagree with this bill.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

Tonight I rise 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. My contribution to the debate tonight will be confined to three areas: first, that this legislation will do nothing but increase the cost of living because in essence it raises over $518½ million over the forward estimates; second, that the bill is bad for the environment because it is increasing the tax revenue on the cleanest form of combustible energy that we have; and, third, that the bill will destroy jobs and destroy an industry.

This Labor government has proposed new fuel taxation regimes which will destroy the Australian ethanol, biodiesel and LPG industries. The Gillard Labor government proposes to phase in by July 2015 a 25c per litre excise on ethanol, a 19.1c per litre excise on biodiesel, a 12½c per litre excise on LPG and a 26.13c per kilogram excise on LNG and CNG. The ethanol excise will initially be offset by a production grant but that grant will reduce to zero by 1 July 2020. Existing protection against cheap and subsidised ethanol imports will also be phased out. An industry that is very close to my own heart in my own electorate—the biodiesel industry—will receive no protection, even though an Australian customs dumping inquiry has found that subsidised biodiesel imports from the United States are damaging our industry and interim dumping securities have been imposed.

The Europeans have placed countervailing duties on US biodiesel, which receives a dollar a gallon subsidy from the US government. It is impossible for Australian producers to compete against the might of the US Treasury. The US ethanol industry is subsidised to the tune of $6 billion a year and the US also imposes a 54c per gallon tariff on imported ethanol. So much for a free trade agreement between Australia and the US. If the US and the Europeans are prepared to place duties on subsidised and dumped fuels, why is the Australian industry being exposed to unfair competition?

This excise on LPG will increase the cost of the fuel by 12½c per litre. This is hypocrisy at its worst. This Labor government has said much about the need to reduce pollution. In fact, this government wants to introduce a carbon tax to reduce pollution but at the same time, with its vein of hypocrisy which knows no bounds, it is going to increase the cost by 20 per cent of LPG, the cleanest form of burning combustible fuel there is. It is a 12½c per litre increase in the cost of LPG.

Back in 2006, I happened to be sitting in the ministry room as the Parliamentary Secretary for Industry, Tourism and Resources when the Howard government decided, because the cost of fuel had hit over $1.60 per litre, that it needed to promote cheaper and alternative forms of fuel. So a subsidy program was put forward for people to convert to LPG. Most of that take-up was by tradies and by families who could not afford the cost of fuel. So here is what we have. We have this Labor government slapping families fair in the face with an increase in the cost of fuel. These people have invested in the conversion of their vehicles to LPG, with an expectation that the fuel would be cheaper.

Bill Shorten (Maribyrnong, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

It was your policy.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

It was a policy that that was explored but it was not introduced as legislation. We are not like you, Minister—you say there will be no carbon tax and then you turn around and introduce one. Your hypocrisy knows no bounds. You want to tax carbon and now you want to tax cleaner fuel. Where does your hypocrisy end? There is a flow-on effect of this cost increase on the family home. For example, most taxis run on LPG. What you will be doing is increasing the cost of taxi fares. I am sure that your constituents out in Geelong will love you for increasing the cost of taxi fares.

Bill Shorten (Maribyrnong, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

Geelong?

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

You are Geelong, aren't you? Well, around that area—

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

And, as you are also speaking through the chair, I certainly do not have any constituents in Geelong! I am referring to the use of the word 'you'.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

I am sure, Madam Deputy Speaker, in your own constituency the people who use taxis will thank you very much for increasing taxi fares. Bus operators will also face higher costs through the increased cost of CNG. The New South Wales State Transit Authority operates over 400 CNG buses, and they have another 255 on order. The cost of operating them will now go up. Who will pay for that? It will be the consumers. What will happen? The cost of living will go up. This is another attack on the hip pocket. It will be very depressing for consumers to feel the member for Maribyrnong's hand slide straight into their pocket, reach into their wallet and take out this money. Over 283,000 vehicles have been converted to LPG under the government's scheme. The taxpayers have already subsidised the majority of those conversions. This $518 million tax grab will do nothing more than cover up the poor financial management of this Labor government.

My third point is that this tax will have a devastating effect on industry. Already businesses involved in the LPG conversion industry are shutting up shop. That is going to cost jobs. As this government introduces this tax, as this government looks at ways of getting out of supporting the LPG industry, jobs will disappear. I suppose that is the hallmark of this government. Already we have heard today of the thousands of jobs that will go in the mining industry because of this government's carbon tax—they are not our words; they are the words of the Minister for Resources and Energy. We also heard in recent days of the 6,500 jobs that will go from tourism under this government's carbon tax. We just keep adding to it, on a daily basis.

This government has absolutely no understanding of what drives the economy. What drives the economy is jobs. The more jobs, the more money people have to spend, the more money flows through the community and therefore the greater benefit to all. What we are seeing from this government is a direct slap in the face to jobs. With this legislation, which I oppose, the government will seek to increase the cost of LPG by 20 per cent—12½c a litre. The minister sits there with a smile on his face as though this is some great achievement—driving up the cost of living for people.

Bill Shorten (Maribyrnong, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

It is just the hypocrisy that takes my breath away.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

No, it is not hypocrisy; it is hip-ocrisy because you are taking the cash out of their pocket.

Bill Shorten (Maribyrnong, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

It's not out of your pocket, Bob.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

No, I do not have an LPG vehicle but, let me tell you, a lot of my constituents do. A lot of the taxis in my area run on LPG, and the buses in my electorate operate on CNG. They will all be taxed directly because of your policies.

Bill Shorten (Maribyrnong, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

It was John Howard's policy.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

It was not our policy; it was put forward but it was never ever—

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The minister will stop interjecting and the member will stop responding to the interjections.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

I am not responding, Madam Deputy Speaker; I am clearly stating the fact that the coalition has never introduced this as a bill. So, Minister, it is you who is using weasel words and looking for a cop-out as you slam those people out there with these increased costs. You are very proud of that, I can see—sitting there with a smile on your face. You are very proud to be impacting on the cost of living of average Australians. A lot of tradies, too, have converted their vehicles to LPG because it is a cheaper way of operating them. All of a sudden you are going to increase the transport costs of their business by 20 per cent. That will flow on to the cost of the labour that they supply, so the cost of tiling, the cost of building houses and the cost of plumbing will go up—and you, Minister, will be the person directly responsible. That must make you feel so good, as the person who once stood up for the workers and working families. Here you are, prepared to slug them and slag them.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member will return to the legislation.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

Madam Deputy Speaker, with all due respect, I am talking about the legislation. This legislation is about the increases in the excise levies on LPG and other fuels and therefore the flow-on effect directly for individuals and particularly those who use LPG—and taxis are one of the greatest users of LPG so, with all due respect, I am addressing the legislation. I will be opposing the legislation. If the minister had one ounce of integrity and no hypocrisy, he would be withdrawing this legislation—he cannot be talking about reducing pollution by imposing a tax and then be increasing a tax on the fuel that produces the least amount of pollution.

Rowan Ramsey (Grey, Liberal Party) Share this | Link to this | Hansard source

I rise to address the Taxation of Alternative Fuels Legislation Amendment Bill 2011 and accompanying bills. There are a number of proposals in these bills, but the most striking is the increased tax on LPG. This is a very confusing message that the government are sending to the Australian public on this issue, and it is associated with many confusing messages that the government are sending to the public. The Australian public is really struggling with the consistency. There was a time when the government in the last parliament wanted a Pacific common market but then they did not. They wanted Grocery Watch but then they did not. They wanted to totally take over the health system and now we do not really know what they want to do. I am not sure that they know either, but we can be absolutely certain that they are not taking over the health system in Australia. They wanted to put a tax on all mines but then they did not; they only wanted to put a tax on iron ore and coalmines. Even though we have seen a draft bill, we are still not too sure about what they want to do, but it certainly has not been a consistent line.

There was a time when the government were going to build us a national broadband network for $4½ billion of taxpayers' money but now they are planning to spend $50 billion of taxpayers' money on the NBN. There was a time when they wanted to be soft and cuddly to asylum seekers but now apparently they do not—in fact, they want to send them to Malaysia. That is a pretty confusing message. There was a time when the government were in favour of an ETS but then they were not. It is approaching the 12-month anniversary of the night of the long knives and the minister at the table would well remember that night. In fact, I saw his staff at the front of his office taking a photo of his name because they knew he would be shifting after the night of the long knives. It was a bit embarrassing when I caught them in the corridor.

David Bradbury (Lindsay, Australian Labor Party, Parliamentary Secretary to the Treasurer) Share this | Link to this | Hansard source

I rise on a point of order, Mr Deputy Speaker. The member has not even made the slightest effort to try to address the substance of the bills. The matters are of no relevance to the bill and I draw your attention to that.

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

There is no point of order. I call the honourable member to continue speaking.

Rowan Ramsey (Grey, Liberal Party) Share this | Link to this | Hansard source

At a time when the government are trying to introduce a carbon tax that will stop Australians emitting so much CO2, they are going to increase the tax on one of the products that does precisely that. It is pretty hard to follow the logic, but it does fit with the track record of the government.

In the last four years of this government, and the last two years of the previous government, the Australian taxpayer has pumped a bit more than half a billion dollars into LPG conversions. Now the government, having invested that half a billion dollars of taxpayers' money in LPG conversions to make for a cleaner Australia, are going to ramp up the costs for those who have the LPG conversions by 12½c or 20 per cent and discourage its use. There is another correlation here with the government's mismanagement of various things in the economy, and this decision will probably end up totally emasculating another industry through clumsy, short-sighted—

Government members interjecting—

Fair enough, they might challenge me, but let us think back about the home insulation industry. Three years ago it was a vibrant industry. I knew people who were in the industry and making a good go of it, but now those businesses are on their knees as a result of government mishandling of public policy. The latest knee-jerk reaction concerns the live cattle trade, and there will be other times in this House to debate that issue. But, in short, the ban on the trade will do damage to our international relationship with Indonesia, including with the workers at the good sites who will be unemployed. Indonesian feedlots operating at best practice will be out of business. Then there are threats from things like foot-and-mouth disease coming into Australia. There are 700 Indigenous workers in Australia whose jobs are under threat, along with the mustering companies that have had to park their helicopters. I can go on and on and on—

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

The honourable member for Grey ought not to go on and on and on because we are talking about Taxation of Alternative Fuels Legislation Amendment Bill 2011.

Rowan Ramsey (Grey, Liberal Party) Share this | Link to this | Hansard source

Of course we are, and I am concerned about the government's handling of the impact on the industries that are installing LPG. In that case, I will leave alone the rooftop solar installers. Hundreds of companies have built an industry around installing LPG conversions, and we are given to believe that three in Victoria have already closed shop. The industry would have thought it was on solid ground when making its investment decisions. It would have thought: 'Australia is looking for a cleaner future and for a lower CO2 emissions future. We might invest a bit of money in a low-CO2 alternative. We will invest some money in gas and clean up the nation's cars.' You would have thought it was a rolled gold investment, but things have changed now and it is not a rolled gold investment. The government is planning to change the riding rules and that decision is already impacting on those industries.

On top of that, and as previous speakers have pointed out, this decision will impact on families. It is my experience, and to my knowledge there is no empirical evidence to back this up, that those who have LPG gas conversions are more likely than not to come from a lower income group. Apart from the taxi industry and those people in business, there are many ordinary Australians who choose LPG as a low-cost alternative. Many are running pretty old cars. I often run into people who are touring around Australia and pulling a caravan who say: 'This is great because I can do it on LPG. I am saving a few bucks as I go around.' I think those Australians will be very angry about this decision. They have already decided this is their low-cost alternative and feel pretty good about it because they were making the environment a bit better as well.

The information I received about South Australia shows that we are the second highest per capita adopter of LPG technology under the government programs. In fact, one in 44 individuals made the decision to access the government program to convert their vehicles to LPG—just behind Victoria where one in 39 accessed the program. In South Australia, almost 36,000 vehicles have been converted under this scheme. You would think we should continue to encourage the adoption of LPG, but if this legislation is passed it will mark a move in the opposite direction. You can understand why a government may want to phase out the subsidies that go with the installation of LPG equipment, but to undercut the guiding mechanism that allowed it onto the market at a cheaper rate seems nonsensical.

More than just small consumers will be affected; 90 per cent of Australian taxis use LPG, as do many buses. Those people who use the buses and taxis are not often the people who own the Mercs and the Audis; they are not often people at the top end of the income stream. The people who use public transport, by and large, are normal workers and those on lower incomes. This tax grab will impact on their cost of living because bus fares and taxi fares will have to rise. And it comes at a time when there are incredible cost-of-living pressures around Australia. In my own state, and probably in the rest of Australia as well, the cost of water will double in the next two years. That was announced in the recent state budget. Electricity is likely to double over the next five years. I think those figures were compiled before factoring in a carbon tax. Council rates will typically rise around 10 to 12 per cent this year, and the cost of fresh food is rising quickly. And now there will be a 20 per cent tax grab on the fuel of choice for a significant portion of the population. This is a new tax the Australian public have not been consulted about. We well remember the election of this government as fiscal conservatives and the promise of no new taxes. Since then we have had alcopops, proposals for mining taxes, flood levies and talk again of a carbon tax. These are not little taxes; they are big ones that affect the price of everything. It is not a bad list, but just imagine if the Labor Party were a party of high taxes—heaven forbid!

I have repeatedly said that whatever we do about CO2, whether it be a carbon tax, an ETS, direct action or another scheme, or a combination of all those, it will achieve nothing unless there is a change of behaviour. If an $11 billion tax to redistribute wealth does not change behaviour as far as CO2 emissions go, it will achieve nothing. But a tax on LPG will change behaviour; however, it will change behaviour in the wrong way. If we look at these things in the broad sense of changing behaviour, you can put them into three categories. One is where an industry can change and you ramp up the cost of CO2 emissions until they reach the point where they say, 'It will be better for us to change our behaviour.' In the case of coal electricity, it has been mooted that that point might be $60 a tonne. On the other hand, you may have industries, as in my electorate at Port Pirie where there is a lead smelter and at Whyalla where there is a steel mill, which cannot change their behaviour because the physical act of making these products includes a CO2 cost. In the case of car fuel, you can change behaviour, but if you put a tax on the cleaner alternative motorists will revert to a product which will put more CO2 into the atmosphere.

The government would say that this is part of running a responsible budget, that they must make savings and that the half a billion dollar tax that they will raise from LPG is important to the budget. Fair enough, they should run responsible budgets. But there will be a $50 billion deficit this year and a $22 billion deficit next year, so the government hit motorists up for half a billion. How did we get to this stage? If it had not been for the government's chronic mismanagement in the first place with the sorts of schemes already mentioned—and I will not run through them again; I will not test your patience, Deputy Speaker Slipper—they would not need this half a billion dollars.

There are four bills in this package of legislation and the government have presented them as a group. We get a little bit of the good and the great big slab of the bad at the same time. The good are the bills that preserve the taxation treatment of renewable fuels and the bad is the targeting of the LPG industry with a 20 per cent increase in tax for motorists.

Bill Shorten (Maribyrnong, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I would like to acknowledge all the members who participated in this debate. Even if I did not agree with all of the contributions of those opposite, I do not doubt the sincerity of their views. The taxation of alternative fuels bills that we have debated today propose to bring liquefied petroleum gas, liquefied natural gas and compressed natural gas used for transport purposes into the fuel taxation regime and make them subject to excise duty or excise equivalent customs duty. The tax rates for these fuels are based on the energy content of the fuels and are discounted by 50 per cent to reflect the potential environmental, regional development and fuel security benefits of their use. The changes are phased in over a transition period of five years to allow affected parties time to adjust to the changes.

I should also acknowledge the good policy work done by the coalition government when they were in government of flagging the intention to include alternative fuels in the excise system in the 2003 budget and the 2004 budget, and any number of public statements since. These bills will finish the journey commenced by the coalition, commenced by former Prime Minister Howard and former Treasurer Costello, concerning the taxation arrangements for alternative fuels. They will also ensure that the overtaxation of the biofuels that would result from 1 July 2011 under the legislation put in place by the Howard government does not occur. The key objectives of this policy are exactly the same as in 2003 when the Howard government put them in the forward estimates and announced them publicly on any number of occasions throughout 2003. To remind some who have contributed and who have conveniently forgotten that this was coalition policy for the best part of seven years, these objectives are to introduce greater consistency in the taxation of fuels used for transport purposes, to provide certainty for industry and to phase in the new fuel tax arrangements while providing support to the alternative fuels industry in recognition of the potential environmental fuel security and regional development benefits that these industries can generate.

This is good policy. I understand from media reports, including in the Sydney Morning Herald, that a number of people in the coalition thought so as recently as a recent coalition party meeting. We know without doubt that Senator Minchin thinks it is a good policy. Despite all the rampant opportunism, populism and obstructionism, some opposite, I know, actually do have a bit of regard for good public policy or policy purity. Sadly, though, the Leader of the Opposition will take pragmatism every time. In other words: in whatever direction the prevailing political wind is blowing he will sail the opposition ship. It is an indictment of the Leader of the Opposition that he will not lead, will not follow and will not get out of the way of good policy.

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 these fuels as part of its consideration of arrangements for fuel under the carbon price. We are indebted to members of the crossbench, along with regional MPs and those most interested in carbon pricing, for helping to ensure that this commitment has been made. As industry has pointed out, LPG has the potential to deliver 13 per cent less in emissions than regular unleaded petrol. These bills, I know the member for Grey will be pleased to hear, deliver a full 50 per cent tax discount in recognition of the potential environmental and other benefits that LPG and other gaseous fuels can deliver. We are taxing them at less than their carbon content.

I would add again that Australia has not gone it alone in proposing to apply taxation arrangements to LPG autogas—most countries in the OECD already apply fuel tax to LPG autogas. Even with the introduction of these tax arrangements, Australian LPG autogas prices will still be amongst the lowest in the OECD. Any attempt to delay passage of this good policy in these bills will add to ongoing industry uncertainty and undermine the potential for future investment in Australia's alternative fuels industry. The passage of these bills will remove this uncertainty and ensure that investment decisions can be made with certainty for the future. And so that I am not accused of plagiarism, I cite that that last sentence was drafted not by me, but by none other than Peter Costello when he was Treasurer. What he said in 2003 is still relevant today.

I will briefly outline the key elements of each bill in this legislative package. The Taxation of Alternative Fuels Legislation Amendment Bill 2011 deals with the taxation of LPG, CNG and LNG when used for transport purposes. It establishes simplified reporting and excise-licensing requirements for industry to make the transition to the excise system as smooth as possible. I am indebted to LPG Australia, who provided the understanding and the mechanism by which we can put the excise requirements. The Excise Tariff Amendment (Taxation of Alternative Fuels) Bill 2011 amends the Excise Tariff Act 1921 to set the excise rates applying to alternative fuels from 1 December 2011 and to calculate the duty payable on branded goods. The Customs Tariff Amendment (Taxation of Alternative Fuels) Bill 2011 amends the Customs Tariff Act 1995 to set the excise equivalent customs duty rates applying to alternative fuels from 1 December 2011. The Energy Grants (Cleaner Fuels) Scheme Amendment Bill 2011 extends the operations of the existing provisions of the Energy Grants (Cleaner Fuels Scheme) Act 2004.

The bills reflect the results of widespread consultation and negotiations with members of parliament, including crossbench members, and industry. Reflecting these discussions, the bills also extend the current taxation and grant arrangements for 10 years for ethanol, biodiesel, renewable diesel and methanol. After 30 June 2021 the taxation and grant settings for these fuels will be reviewed. These arrangements deliver long-term policy certainty for biofuels. They are supported by the Biofuels Association and will encourage a growing, sustainable Australian biofuels industry into the future. The opposition has claimed that these bills will be the death knell of the LPG industry and the taxi industry.

Mr Baldwin interjecting—

I find these comments a little bit rich, coming as they do from the coalition who put this tax in the forward estimates in the first place in 2003.

Mr Baldwin interjecting—

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

The honourable member for Paterson will remain silent.

Bill Shorten (Maribyrnong, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

The member for Paterson does not like hearing what his predecessors, when they were in government, said they were going to do. We are finishing the job. We are finishing the business that they did not. They put the propositions forward and we are finishing the business.

Mr Baldwin interjecting—

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

The honourable member for Paterson will not defy the chair. He will remain silent. He will not say one word until this debate concludes, which might be difficult for him.

Bill Shorten (Maribyrnong, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I also find it a bit rich as the facts do not support the assertion. LPG will continue to exhibit a significant price advantage over regular unleaded petrol. The effect on taxi fares of including LPG in the excise system depends on decisions by state and territory regulators. If the excise is passed on in full, the 2½c per litre excise that would apply from 1 December 2011 would add approximately 3.5c to the average metro taxi trip fare. When fully phased in, the final excise of 12½c per litre from 1 July 2015 would mean approximately 19c for the average taxi trip fare if passed on in full.

It should also be recognised that the cost of LPG, including excise that will apply, can be claimed as an income tax deduction by taxi operators and other business operators. This again reduces the price impact of the new excise arrangements for LPG. I also believe it is important to recognise that the impact of the LPG changes on the Tasmanian taxi industry will not be as dramatic as has been suggested. Australian Taxi Industry Association data shows that only 28 in every hundred taxis in Tasmania use LPG fuel, so, for the other 72 in every hundred of the Tasmanian taxi fleet that use other fuels, there will be no impact. More generally, LPG is cheaper and more cost-effective than petrol with, on average, a saving of around 37 per cent, or $7.44 per 100 kilometres driven. On 1 December 2011, when the excise is introduced, LPG will still have savings of around 35 per cent, or $6.94 per 100 kilometres driven. In July 2015, when fully phased in at 12½c per litre, LPG will still retain an average 25 per cent cost advantage over unleaded petrol. In addition, there will be a review after 1 July 2015, once the tax has been fully implemented, which will consider the impact of the tax, its interaction with the carbon price, and market demand for these fuels.

These bills recognise that it is appropriate that there be some contribution towards the maintenance and construction of our road system not just by the users of petrol and diesel through the excise system but also by users of other alternative fuels such as LPG. However, these bills also recognise that alternative fuels are potentially more environmentally attractive, have regional development benefits and improve Australia's fuel security. These bills get the balance right.

I commend the bill to the House.

Question put:

That this bill be now read a second time.

The House divided. [20:57]

(The Speaker—Mr Harry Jenkins)

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.