Lyn Allison (Victoria, Australian Democrats) Share this | Hansard source

by leave—I move Democrat amendments (1), (2) and (3) on sheet 4799 revised 1:

(1)    Clause 43-5, page 16 (lines 31 and 32), omit paragraph (3)(b).

(2)    Clause 43-5, page 17 (lines 1 to 3), omit paragraphs (3)(c) and (d), substitute:

             (c)    for a taxable fuel other than biodiesel used off-road, a grant under the Energy Grants (Cleaner Fuels) Scheme Act 2004;

             (d)    for biodiesel used off-road, fifty percent of any grant under the Energy Grants (Cleaner Fuels) Scheme Act 2004;

             (e)    a benefit under the Product Stewardship (Oil) Act 2000.

(3)    Clause 110-5, page 51 (after line 16), after the definition of Australia insert:

biodiesel used off-road means biodiesel that would have been entitled to an off-road credit in respect of the fuel, assuming:

             (a)    that you disregarded subsection 51(2) and sections 52 and 55A of the Energy Grants (Credits) Scheme Act 2003; and

             (b)    that references in Part 4 of that Act to:

                   (i)    “purchase or import into Australia” were instead references to “acquire or manufacture in, or import into, Australia”; and

                  (ii)    “off-road diesel fuel” were instead a reference to “off-road biodiesel fuel”.

The purpose of these amendments is to give biofuels a chance of survival. What this bill does, as I said in my speech on the second reading, is increase the cost of biodiesel comparative to diesel. I will hopefully illustrate this by talking about some figures. I realise this is difficult for people to follow in a debate; however, the Democrats have circulated a number of tables, as did the many submissions to the inquiry which pointed out that as a result of this legislation, depending on a whole range of factors, biodiesel would be severely disadvantaged. So I will use figures to illustrate why it is I am moving these amendments and the effect of them in dollar terms.

For instance, for off-road use there is a biodiesel which is known as B49—a 49 per cent biodiesel, 51 per cent diesel mix. Assuming that the diesel cost was $1.50 a litre and the biodiesel cost was $1.20—and they are roughly today’s prices as I understand it, give or take a few cents—the cost from 1 July 2006 would be 85c a litre for the B49 blend and 97.8c a litre for diesel. So, at the present time, the biodiesel blend has an advantage on the market. In 2007, that changes. Making the same assumptions of cost of $1.50 per litre for diesel and $1.20 for biodiesel, that then shifts to being a cost of $1.03 per litre for the B49 blend compared with the cost of diesel remaining the same—that is, 97.8c per litre. That gives biodiesel a disadvantage because it has now become more expensive than diesel.

My amendment would change that and would mean that, instead of biodiesel costing $1.03 per litre in 2007, the cost would be 85c a litre and it would maintain its comparative advantage. It is a very small advantage, and, of course, it differs depending on the gate price of both diesel and biodiesel but, generally speaking, on an average cost such as I have given by way of example that would be the outcome. So my aim is to say, ‘Let’s look at the impact of these changes and see what that is.’

Time and time again, in submissions and tables that were submitted, with a whole range of assumptions, it was demonstrated to the committee that biodiesel would become more expensive as a result of these changes. One of the reasons for that is that the standard for diesel has been set at 100 per cent diesel or up to five per cent biodiesel, and that gives that very low percentage blend an advantage over all other blends of biodiesel. So, whether it is 49 per cent, 100 per cent or 20 per cent, they are all disadvantaged because they are not now of that standard which receives the benefit.

I just gave the example for off-road use. For on-road use, the figures are slightly different. In 2006, the cost of a B20 blend for on-road use—and I gather this is a fairly typical blend which is made available for trucking—would cost 97.6c a litre, compared with $1.028 a litre for diesel. So biodiesel has the advantage. In 2007, for on-road use that cost for B20 shifts to $1.023 a litre and diesel remains at $1.028 a litre. With our amendment, that cost would be adjusted so that B20 would remain at 98c a litre, giving biodiesel the ongoing slight advantage over diesel.

If this amendment is not agreed to then, as has been said in my speech in the second reading debate and by Senator Joyce, Senator Milne and others in this place, what we are looking at is the government’s supposed support for biodiesel disappearing out of the door. We were told by all of the biofuel industry that their industry was likely to lose 99 per cent of its market. They would become non-viable under this legislation. It is complicated and very difficult to work out what these figures actually mean. As I said in my speech in the second reading debate, even the tax office was not able to tell the industry up to a week ahead of our inquiry what the actual situation was. I would have to be honest here and say that we think we know what we are talking about with the figures that I am expressing, the tables that we have and what we have looked at in terms of our amendment. But we are not absolutely sure, because Treasury is not able to confirm these figures one way or the other.

I ask the minister at this point in time, with regard to the tables that were submitted with the submissions that came in to our inquiry: were they wrong; if they were wrong, in what way were they wrong; and how it is that the industry so misunderstood the intention of this bill? Or is it the intention of this bill that biodiesel will be disadvantaged? After all that the Prime Minister has said about the need for a biofuel industry in this country and a 350-megalitre target—which is a paltry target, as I have already indicated; other countries have gone way beyond this amount—is this really the intention of the bill? Are we talking here about disadvantaging an industry which the Prime Minister said was important?

I know that it is important. I think that other people on the crossbench understand it to be important. But what does the government think? Is it not important now? Are we happy for the industry to just collapse? Do we not care about clean air? Do we not care about the fuel which might be spilled in the Great Barrier Reef that would be petrofuel and therefore damaging to the environment when it could have been biodiesel, which breaks down in such environments and would not be harmful in the way that petrodiesel would be? Do we not care about that? Do we not care that, slowly, mining companies have been taking up 100 per cent biodiesel and using it in their underground mines because it is much safer for the mine workers? Does neither the government nor the opposition, I would say, care that that is the situation?

I ask the minister: can you disabuse this end of the chamber? Are we wrong in saying that petrodiesel will have an advantage, if not next year or even this year—from 1 July in certain circumstances for on- or off-road B5, B20 and B100? Can you assure this place that next year or the year after or this year, from 1 July, biodiesel is not going to be disadvantaged vis-a-vis diesel? Obviously, it is going to be disadvantaged in terms of the benefits that flow from rebates and so on, but what is its position relative to diesel? That is I think what we need to know. Minister, I would be obliged if you could answer that question.