Ron Boswell (Queensland, National Party) Share this | Hansard source

Tonight, we are addressing the Excise Laws Amendment (Fuel Tax Reform and Other Measures) Bill 2006, the Excise Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006, the Customs Amendment (Fuel Tax Reform and Other Measures) Bill 2006 and the Customs Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006. The main part of my speech will address the alcohol excise. These bills form part of a package of legislation required to make changes to customs and excise arrangements, and to replace the current system of fuel tax concessions with a single fuel tax credit system. The overall package will simplify the current system of fuel tax concessions and make it more transparent. I intend to make further comments on these fuel excise initiatives for business in my speech on the Fuel Tax Bill 2006. I understand the government is responding to Senator Brandis’s report on it, and we will see that bill when the government has looked at that.

This package of four bills also brings into effect certain changes for the Australian distilled spirits industry, and I wish to concentrate some of this speech on the aspects of the bills which relate to liquor. I have maintained an interest in this industry over a period of more than 20 years. I have always been a strong advocate of the Queensland sugar industry, and I have spent much of my 23 years in the Senate looking after sugar’s subsidiary value-added industries. You could not get a better example of this type of industry than Bundaberg Rum. Its base is in the electorate of Hinkler, whose political interests are looked after by my good friend and lower house colleague Paul Neville.

Distilled spirits is one of the main tertiary products of the sugar industry, and Bundaberg Rum is a company watched over closely by my National Party colleagues and me. We have implemented many changes after consulting with Bundaberg Rum and the Australian distilled spirits industry through DSICA. This package of bills takes the next step. It repeals the Distillation Act 1901 and the Spirits Act 1906. This outdated legislation is no longer required, because the provisions will be covered by the Excise Act. Early on, however, we did identify one area that the Distilled Spirits Industry Council of Australia and the Nationals agreed needed to be addressed.

Maturation of Bundaberg Rum and other high-quality distilled spirits in wood makes the spirit taste better. It takes all the biteys out, improves the characteristics and makes it smoother and more mature. We had to make sure the maturation legislation remained. Otherwise, we would have been taking away the current requirement that brandy, whisky and rum be matured for at least two years before they can be marketed as such in Australia. That keeps us up with the world standard. It means that you cannot make raw ethanol spirit from sugar, grains, potatoes—or whatever else contains hydrocarbon in the form of sugar or carbohydrates—and then flavour it artificially and label it rum, whisky or brandy before selling it to Australian consumers on its own or in a ready-to-drink mix.

We have fought to keep the spirit maturation rules in place over many years. In 1979, a similar proposal was rejected, and in 1986 I helped to defeat in the Senate a Hawke government proposal to remove the maturation rules. Former member of the National Party Bryan Conquest and I argued that raw ethanol had significantly lower production costs than Bundaberg Rum and its manufacturers, many of whom would enter the Australian market from overseas, would be able to spend a lot more on advertising and marketing in our domestic market and still provide a product at the same or at a lower price, disadvantaging our domestic producers.

The coalition government have proven that we will fight to maintain and improve our high-quality Australian spirit industry and companies like Bundaberg Rum that invest in and support regional communities and workers. I have asked Paul Neville about it, and he has told me that the Bundaberg Rum distillery employs 56 local workers and is the top tourist attraction in the Bundaberg area. The company is currently undertaking a $24 million expansion plan, which has included putting in new timber maturation vats at a cost of many millions of dollars.

It would have been wrong for us to have allowed such investment to effectively be negated by allowing the importation and sale of lower quality raw ethanol based spirits. I would like to thank the Treasurer, Peter Costello, on this matter. I approached him with the member for Hinkler. He listened and saw what the damage would be if the provision for compulsory maturation were removed and how the product would deteriorate also. The Treasurer moved quickly to assist Bundaberg Rum and the Australian distilled spirits industry by making sure we kept the two-year maturation period in place, and I thank him sincerely on behalf of the Distilled Spirits Industry Council and our friends at Bundaberg Rum.

I note from the submission by the Distilled Spirits Industry Council of Australia to the Senate Economics Legislation Committee that they are also putting forward a strong case for gaining access to the taxation differential that is applied to low- and mid-strength alcohol beer for their low- and mid-strength alcohol ready-to-drink mixes. I support the detailed supplementary submission by the Distilled Spirits Industry Council of Australia and their arguments to senators, and I recognise that the submission has been examined closely and addressed by Senator Brandis’s committee. The peak body for our distilled spirits industry has put forward a well-researched and solid case that the government should give ready-to-drink spirit mixes access to the 1.15 per cent by volume excise-free threshold which applies to beer products, as well as the reduced excise rates that apply to packaged and draught low- and mid-strength beer. Recommendation 3 of the committee’s report states:

The Committee recommends the Government apply the same tax and excise treatment to low and mid strength ready-to-drink (RTD) alcohol products as is applied to similar strength beer products. The tax and excise structure for RTDs should incorporate the three tiered structure currently applied to beer, with the 1.15 per cent excise free threshold that applies for beer extended to low and mid strength RTDs but not to full strength (3.5 per cent alcohol by volume and above) RTDs.

I know that the committee’s recommendations will be considered as part of the government’s process, with my support and with Paul Neville’s support. We will certainly back these recommendations.

In the brief time I have left, I want to say that one of these bills contains a provision to make biofuel from tallow. British Petroleum is going to put quite a large plant in Queensland. Biodiesel made from tallow does not really have the properties of true biodiesel or ethanol. This bill deems tallow to be biofuel and biodiesel, with all the excise benefits that are afforded to biodiesel. I am concerned that this biodiesel really is not biodiesel, but we are blessing it and saying, ‘You are biodiesel because the Senate has said you are biodiesel.’

I am concerned that this government has put a target of 350 million litres, which is a very small amount—about 7.5 per cent of our total fuel use—on ethanol and biodiesel. That is an election commitment made by this government. I am concerned that this new biodiesel made from tallow will fill a lot of that 350 million litre target that the government has set and we therefore will not have as much ethanol going into that target. It is a pitifully small target to start with. Flooding the target with this tallow diesel—I will not call it ‘biodiesel’, because it is not, but it is renewable—and giving it the excise benefits concerns me, as there will not be much room for ethanol production in Australia. I want to put that on the record. I am concerned and I have expressed those concerns in various places where we are allowed to give our positions. I will address the other biofuels and the excise in relation to the Fuel Tax Bill 2006, which is a much more important bill as far as biofuels are concerned.

Let me say that the decision we made on Bundaberg Rum—making sure that rum, whisky and brandy would be maturated in oak casks, which take all the bitey things out and make it smooth and mellow—is one that I think is worthwhile pursuing. Some Treasury officials decided that alcohol was alcohol, even if you produce it raw out of ethanol. You could call it what you like and there would be no penalty on calling it rum. You could put a bit of raspberry juice in it and have a raspberry and rum. But it is not raspberry and rum; it is raspberry and ethanol.

Debate interrupted.