Ruth Webber (WA, Australian Labor Party) Share this | Hansard source

As a member of the Senate Economics Committee, it gives me a great deal of pleasure to rise and speak on the Fuel Tax Bill 2006 and the Fuel Tax (Consequential and Transitional Provisions) Bill 2006. The economics committee inquiry into this package of legislation is an example of one of the ways that the committee process in this place can work very well. So I want to place on record my thanks to other members of the committee and the committee secretariat for what was a fairly rushed process but, nonetheless, I think a very productive process.

In fact, it would seem just the thought of having a Senate Economics Committee inquiry into this legislation produced action on the part of the government. It is interesting to note that as soon as our inquiry was announced, once it was agreed to by government senators, the government made an announcement about the transitional arrangements for this bill and decided to allow a further two years for some of the transition. Whilst as a member of the opposition I welcome that announcement, I think we all need to be aware—and I noted this at the time—that if this is the path that the government insists on taking us down then it is incumbent on the Assistant Treasurer and on Treasury to ensure that this is real transition, that we really do spend the next two years working on transition and addressing a lot of the cash flow and other issues the businesses have raised. I for one do not want to be having the same argument and the same rush in two years time. I think that, for the future of the industry and for the future of small and medium businesses, we need to get this right and to work on effective change.

As has been mentioned by others in this debate, whilst these bills deal with a number of aspects, some of the aspects of these bills have caused a great deal of concern within the biofuels industry in particular. Renewable Fuels Australia summed up the views of a number of submissions, claiming that there has been a lack of policy coordination and consistency which has hindered the growth of the biofuels area. They said, as quoted in our report:

The Biofuels Taskforce, for example, represents the development of positive policies for new ethanol and biodiesel industry growth, while Fuel Tax Bill 2006 represents a clear example of impediments being put in place that will undermine the achievement of those policy objectives.

Again, if we are going to have transitional arrangements and have this debate, it is incumbent on all of us to get a consistent approach to the development of this industry and to get it right.

As a member of the Senate Economics Legislation Committee and also as a West Australian, I was approached by a number of people in the lead-up to the Senate inquiry. I was approached by people from the WA Fishing Industry Council, who talked about some of the cash flow problems that the changes—as announced at the time, before the two-year transition was announced—would cause to their members who, if they were to submit for the subsidy when they did their BAS, would be paying for the fuel up front. They go away to sea for between three and six months at a time, so that is a very hefty cost for them to carry before they come back to the mainland and submit their BAS. So it is good to see that we have taken that into account. I was also approached by a number of people from the biofuels industry.

In considering this, the Labor members of the committee supported the recommendations that were made by the chair of the committee—and the committee obviously recommended that the bills be passed. However, the committee considered that there are a number of issues that require resolution before the bills proceed. Accordingly, the committee recommended that:

• during the transition period announced by the Minister, the Government re-examine the effects of the legislation on manufacturers who use hydrocarbons for non-fuel manufacturing processes, with a view to minimising and offsetting any adverse effects;
• the Bills be amended to exempt oil recycling companies from the operation of the legislation;
• the Government implement an urgent review of the effectiveness of the Product Stewardship for Oil program, with a particular focus on whether the program will continue to be effective in meeting its objectives following the abolition of the energy grants credits scheme and the implementation of the fuel tax credits system;
• the Minister for Environment and Heritage initiate a review of disposal requirements applying to used oil, and in particular whether more stringent standards on the use of this material as a burner fuel are appropriate; and
• the Government reconsider whether Subclause 43-5(2) of the Bill is fully consistent with the Government’s other policies in relation to encouraging the development of a biodiesel industry and if appropriate, exempt the industry from its operation in the meantime.

What is important to note with those recommendations is that they are an example of how committees in this place can work. Whilst the recommendations were put forward in the name of the chair, they were actually with the unanimous agreement of all committee members. Those of us from the opposition went on to make some additional comments after our examination of the legislation. We said that we believe the bill should be amended along additional lines. Firstly, the two-year transitional arrangements for early payment of the fuel tax credit should be provided for on an ongoing basis. Secondly, the 31 December 2006 date for receipt of applications for early payment should be dispensed with. Those are recommendations that, obviously, as a member of the opposition I wholeheartedly endorse.

As a Western Australian and having been involved in this inquiry, not only was I approached by people involved in the development of the biofuels industry in my home state and those involved in other industries that may use biofuels but also I have had cause to have discussions with my own state government. They have an across-government approach to encouraging the development of the biofuels industry and the use of biofuels. Kim Chance, one of the main ministers responsible in this area, has a number of concerns about the government’s approach to this. It is his view that the federal government needs to fix the unfair burden of the cash flow issues, which are particularly placed on small and medium businesses. It is his view that the initial bill would require fuel users to pay the fuel tax up front. I accept the two-year transition, but not getting credit until they lodge their BAS would actually target small and medium businesses, many of whom do not lodge their BAS with the regularity that perhaps others assume they do. In the view of Mr Chance:

The Australian Government should be looking to expand the E-Grant system as an option for farmers and fishers to claim their credits.

That is something that the committee discussed at length. He went on to say:

The Australian government should also provide a more detailed industry by industry assessment of the measures which it claims will result in savings to industry, with a view to ensuring that industries such as the agricultural and fishing sectors receive fair treatment within the scope of the bill.

That is a remark that I wholeheartedly concur with. Whilst Mr Chance supports the move to have large claimants join the Greenhouse Challenge Plus program, another issue that we discussed in some detail in the committee hearings, he believes that the federal government should acknowledge the businesses operating in regional and remote areas—something that Western Australia specialises in—may need additional administrative support and time to enact those changes. He said that this support would then ensure that the program is seen as a positive partnership with the government rather than an attempt by the government to shift responsibility and costs.

It is the view of my home state—and it is a view that I share—that some form of assistance should also be given to compensate fuel users, particularly those in remote communities, for the impact of the removal of the Fuel Sales Grants Scheme. It is certainly my view that the case for the scheme remains just as valid now as it was in 2000. Mr Chance also suggested that there be a review of the legislation to ensure that it retains the current incentives for commercial operators to use blends with higher volumes of biofuel and that there is no disincentive for producers to set up plants in regional areas. I know of at least one company in Western Australia which has a long-term plan to establish facilities in regional towns in Western Australia, particularly those in the wheat belt, that are really struggling for any form of ongoing economic development and employment. Any adverse impact that this legislation has on that company will have a direct impact on the viability of those townships. That is something we all need to be aware of. Whilst I know it is the case in Western Australia, I am sure that we are not unique in having concerns in that area. Probably, when you look at that, consideration should also be given to simplifying the scheme so it is easier for people.

As part of its fuel tax regulatory changes, the federal government should delete section 43, a particular section of the bill that Labor senators have highlighted as a disincentive for farmers and fishers to purchase biodiesel as they cannot claim back the excise for biodiesel. The net effect is that biodiesel will become even more expensive and uncompetitive compared with diesel. I am sure that is not an outcome that we all want to see. Finally, when I was talking to Mr Chance, he said that in his view the federal government should, as part of its 350 million litre biofuels target, allocate a portion of the excise extracted from biofuels to supporting national and state based research and development of biofuels by allocating significant resources to appropriate research organisations. Improving the technology is critical to the future success of the biofuels industry. That is something that I am sure we all support.