Ian Macdonald (Queensland, Liberal Party) Share this | Hansard source

I am not happy with the Fuel Tax Bill 2006 and the Fuel Tax (Consequential and Transitional Provisions) Bill 2006 before the parliament at the moment. I live in rural Australia and, for most of the 15 years or more that I have been in the Senate, I have been the only Queensland senator living in and representing rural and regional Australia. In that time I have come to understand very precisely the impact of fuel on rural and regional Australia. If I want to go to a specialist from where I live, I will have to drive a round trip of about 200 kilometres. If the people in the Gulf Country, in western Queensland and up in the cape want to see a specialist, they will have to drive a round trip of over 1,000 kilometres. If children in my community want to go to university, they have to drive a round trip of 200 kilometres. Children in the cape, the gulf and western Queensland have to drive thousands of kilometres to do that. If you happen to be lucky enough to live in Brisbane, which most senators in this chamber from Queensland do, you have to drive five, 10 or perhaps 20 kilometres to get to university or a specialist.

That just highlights that, for rural and regional people, fuel is a real expense. At the present time, the cost of fuel, through international circumstances—there is nothing at all that this government or any other government in the world can do about that—is crippling for rural and regional Australia, not just for the people who live there but for people who travel up my way in caravans. The grey nomads, as they are called, come up and add an economic benefit to rural and regional Australia.

These bills contain a lot of benefits. Senator Boswell mentioned some of them and, if time permits, I will come back to them later in order to highlight that there are a lot of advantages in these bills. But there are impacts of these bills that particularly affect regional Australia and, despite the best attempts of the Assistant Treasurer and Minister for Revenue, and others, I do not think those impacts have been properly addressed in the package of bills before us.

In Croydon, on Tuesday morning when I inquired, you were paying something like $1.48 a litre for fuel, and that was after the Queensland government’s 8c a litre subsidy. I might add, that is a subsidy that was introduced by a non-Labor government in Queensland, but it has been wisely continued by the current government. That is an enormous cost. Today, that fuel is subsidised to an extent of 2c or 3c a litre, whether you happen to live in Georgetown, Croydon or Karumba. In two weeks time, that 2c or 3c subsidy will disappear. I guess you could say that 2c or 3c is not a big amount when you are paying $1.60, but there are 10 customers of a petrol supplier in Georgetown who will pay, according to the proprietor of the fuel distributor, about $4,000 extra each with the removal of the 2c or 3c a litre subsidy.

Whilst that is being provided for in this bill, the decision was actually made a couple of years ago. The argument for removing it was that the 2c a litre subsidy was not getting through to the consumer, that some of the suppliers were snaffling it and that it was not making a difference. That came from a report that the government commissioned. Unfortunately and regrettably, I did not take as much notice of that at the time as I should have—I was busy as a minister at the time—and it escaped through. I do not recall what the evidence was, but I am suspicious of it. The government decided, on the basis of the report and this recommendation, that the subsidy should be scrapped and the money should go to roads—from memory, something like $297 million. The government believes that it is doing a good thing by putting that money into roads. It is putting it into Roads to Recovery, which is a great program that I was very instrumental in devising at the time that it was first implemented. It is one of the best programs that this government has ever devised. Roads are going to get another $297 million.

I will use the example of a council in the Gulf Country which desperately needs road infrastructure. They will probably get an additional $300,000 a year. By the same token, Brisbane will get $20 million a year from Roads to Recovery. Good on Brisbane. Brisbane desperately needs it. But the towns of Croydon and Georgetown up in the gulf desperately need road infrastructure and are going to get a little bit out of it. So the 2c or 3c a litre that country Australia was getting as a subsidy is being put into AusLink and Roads to Recovery. The main beneficiaries of that, I have to say with some regret, will be the more populated areas, usually in the south-east part of our country. I am concerned about that particular aspect of the matter.

In the same area there is now a new arrangement whereby trucks that are over 10 years old and over 4.5 tonnes will be paying 18c a litre extra for their fuel from 1 July. Currently they get a subsidy from their excise, but that will be removed if they have a truck that is over 10 years old. It does not apply to farmers on agricultural properties—and good luck to farmers—but there are many small business operators in the remote parts of Queensland, which I represent and that I travel to very often, who are not farmers and use their trucks, and they will be paying 18c a litre more for fuel.

I must say that there was not a lot of help in doing further research into this area, but I hope my staffer, Mr Crisafulli, who did this for me has been accurate. He tells me that you can overcome that problem if you conduct regular engine maintenance and maintenance of the vehicle in accordance with the requirements set out in some material. This does seem to mean that, even if you have a 10-year-old or older vehicle, if you do adhere to the manufacturer’s specified maintenance schedule for the vehicle or do some other things like changing oil and oil filters regularly—there is a list of things in criterion 4—perhaps you can overcome that. That is not known well. I did not know about it until a couple of hours ago. So for those truckies who are despairing about having to pay 18c a litre more from 1 July—and that will put many of them out of business—I would certainly urge them to get a bit more information or give my office a call, if need be, and we can refer them to the material that is on a government website. Unfortunately, I cannot indicate what that is, but my office will be able to tell them that. So there may be ways to overcome this, but it is an impost which has to be addressed.

The third thing that I am concerned about with this bill relates to the fishermen and to certain farming users. At the present time, fishermen pay the excise but they get it immediately refunded because the fuel companies have been able to claim the excise for them. So the fuel companies have actually sold them the fuel excise free. So the fishermen pay it but get it back. The effect has been that they have been able to buy their fuel 38c a litre cheaper. Under this proposal, the 38c a litre excise will have to be paid upfront. It can be claimed back through the BAS in the normal course. Whether that is done three monthly or monthly, you will get it back.

But for the fishing industry, currently struggling under a lot of circumstances beyond their control, that immediate cash flow problem is going to be a real difficulty. This decision was made back in 2004, and this was a difficulty that the then Minister for Revenue and Assistant Treasurer, Mal Brough, raised with me about 12 months ago when I was then the fisheries minister. We were charged with understanding that that was government policy—it is sensible that everyone in Australia should have the same rules and that fishermen should not have a different set of arrangements to others—and we were tasked with trying to address the negative short-term effects of that on fishermen.

There has been a lot of work done between Treasury and the Department of Agriculture, Fisheries and Forestry over the year. They came up with the solution that, for a two-year period, fishermen will be able to claim back their excise almost immediately. ‘Almost immediately’ means that, if they put in the claim now, they will get it back within four and 14 days, according to Treasury. This claim has to be done on paper. Apparently, you cannot do it electronically. With the huge facilities the Australian Taxation Office has, one wonders why it cannot be done electronically and why it cannot be done instantaneously. Some of these fishermen do get substantial amounts of fuel and go out for two or three weeks at a time, and it will be a real impost to them.

Unfortunately, I left the position of Minister for Fisheries, Forestry and Conservation—which is a nice way of putting it—part way through this, and what has transpired is that the government has adopted this as a way to ameliorate the problems over a two-year period. My solution was that it would have been better to get each fisherman to calculate the actual cash flow implication to him and then for the government to pay them a grant. Once they get over the cash flow problem, things will right themselves because each three months or each month, as they put in their BAS, they will be getting back the excise from the previous one. So it was only that first period that needed to be compensated.

The Labor Party have said in their minority report on the Senate investigation into this that, if this is going to work for two years—because this transition period of getting instantaneous refunds is needed—why can this not be done consistently, for ever and a day? I must say that I am rather attracted to that proposition. I am not quite sure whether the Labor Party are moving such an amendment. Unlike some of my colleagues, I do not go and speak to the media about these things and I do not go and negotiate with the Labor Party over things—so I do not know whether the Labor Party are moving such an amendment. But we do need to ensure that the impact on fishermen is carefully followed and, if there is a real problem to them, that some ameliorating work is done. I think my suggestion of giving a cash grant to fishermen would have been very appropriate.

Many of the fishermen who do not have big fuel bills will be surprised at the narrowness of the effect on them. If you work it out, it is really only the interest on the extra money you will have to borrow to bring forward your payments. But many in the fishing industry think it will be a problem for them. The Mooloolah River Fisheries wrote to me about this. They say:

We represent a considerable number of fishing and seafood operators in the Queensland area. On top of the huge increased costs of fuel, fishing closures, industry rationalization, and competition with global markets, the additional impact of an increase in the up front payment for fuel will represent increases of up to 40% in operating costs.

I do not think that is right, but they are the experts and that is what they tell me. They continue:

The conversion of fuel rebates to tax credits will take huge additional working capital amounts that are not viable.

And they go on:

Providers of fuel to fishing operations will no longer provide the necessary credit to operators, as their carrying costs will exceed any viable considerations. The impact will extend well beyond the direct operations of the industry, as it will severely impact on a huge range of companies and individuals who are totally or substantially dependent upon cash flow from the industry, through the supply of goods and services.

The Queensland Seafood Industry Association provided me with a copy of a letter from a fuel supplier regarding the situation if this scheme comes in. In their letter they say:

We wish to confirm that—

and they mention the name of their company—

will not be providing extended trading terms to customers affected by these changes.

Therefore, it is important that you address any concerns with your Accountant or the Tax Office immediately.

So I am concerned about the impact this might have on fishermen.

They are the issues over which I have some real difficulty with this legislation. I have had a number of discussions with Mr Dutton and with the Treasurer, Peter Costello, who has been, as ever, particularly helpful. I agree with them that this bill in its other form brings particular benefits to the farming, fishing, and rural and regional Australian areas. One benefit I just mention in passing is that the excise on petrol fuel for outboard motors will eventually under this legislation become completely refundable. That is going to be great for a lot of the inshore fishermen. So there are real benefits in this. I did intend to go through and highlight some of the benefits that this bill does have—it is not all negative—and in fact there are very substantial benefits, but time is not going to allow me to highlight some of these substantial benefits that will follow from this.

There are problems with it that I believe could have been looked at a little more closely. There has been some discussion about biofuels and the excise on biofuels. Perhaps I have not read this properly, but I am not sure that issue is dealt with in this particular bill. The amelioration that is currently there—the extension by five years from 2006 up to 2011 of the so-called ‘five-by-five’ excise arrangements—is something that I would particularly like to give due credit to the Economics Legislation Committee for. That committee put down a report a few years ago. The committee chairman was Senator Brandis and I see that Senator Stephens was deputy chairman. I congratulate that committee for their perspicacity. The recommendation was adopted by the government, and congratulations to Senator Brandis for highlighting that those years ago and getting a better outcome for the biodiesel industry.

There is a lot more that I would like to say on this. In the last few minutes available to me I want to reflect on a couple of the comments from the Labor Party. They are very critical of some aspects of this bill. When I first came here in 1990, in every budget, and twice a year in between, we used to get an automatic increase in the excise. At the time that Mr Hawke became Prime Minister, I think—don’t hold me to this but it is around this order—excise was about 6c to 8c a litre. I think that Fraser had brought it in as an extra road subsidy and it was hypothecated to roads. Labor got in of course and increased the excise from 8c to somewhere over 40c a litre. One thing our government have done, and done very well, is to stop the automatic indexation of excise. We have actually reduced the excise over the period of time. So to hear some of the Labor people now criticising these issues—as I am criticising them, though I come with clean hands—is interesting. When Labor are in government they just whack up the excise because it is just another form of revenue. It impacts, as I said right at the beginning of my speech, on rural and regional people far more than it does on the majority of Australians—and I regret to say that by far the majority of people in this chamber live in the capital cities and in the major provincial cities. It is a problem. Our government has done much better. This bill in itself will do a lot of positive things. There are a few aspects of the bill, which I have highlighted at some length, with which I have some real difficulties that I have spoken with the Treasurer about. I will be participating in the committee stage of the debate to see whether there is some way or other that we can achieve resolutions to the issues that I have concerns about.