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

The Fuel Tax Bill 2006 and the Fuel Tax (Consequential and Transitional Provisions) Bill 2006 are the clearest example yet of policy in a vacuum, with very little regard for the consequences on business, the environment, rural economies or jobs. The government has effectively cherry-picked from the recommendations of task forces, studies and inquiries and it has neither consulted with those most affected nor taken notice of their entreaties. The Democrats were pleased that the Chair of the Senate Economics Legislation Committee, your good self, Mr Acting Deputy President Brandis, reported on the problems associated with this bill and the need for resolution of those problems before it proceeded. Unless something has happened in the last few minutes, the government has not done that, and the bill may join the many to be pushed through regardless of the outcome. I hope this is not the case but it is looking likely.

The most significant of those problems was the fact that, in simple terms, the government is imposing a tax burden on biodiesel that would make it more expensive than diesel. This is a backflip of the highest order, reversing the agreements made with the Democrats in 1998 when massively cutting diesel excise threatened to wipe out the alternative fuels and oil-recycling industries and when mechanisms, some of them complex indeed, were put in place to stop that happening. It reverses decisions made even as recently as two years ago. Some time before that, the government announced that the same excise as is imposed on petrofuels would be applied to alternative fuels. Knowing that this, too, would spell the end of the fledgling alternative fuels industry, it had to again back down and agree to delay the introduction of the phase-in by three years until 2011 going through to 2015 and to halve the rate to avoid this disaster. I am pleased to say that we have for the third time done what Democrats do so well in this place, and that is to peel back the layers of complexity and find a fair solution. I will be moving amendments along those lines.

The government says this bill simplifies the fuel tax system, but what has become clear is that not even the government—the ministry and Treasury officials—fully understood the implications of the bill. I do not know if they do now, but certainly at the time we conducted this inquiry, Mr Acting Deputy President, it is fair to say that you and others on the committee made that conclusion. It is very complex because of the complexity of the current system and, as is usually the case, the policy outcomes dictate to some extent that complexity. I will recall them: grants, rebates, excise differentials and boundaries, all of which add to that complexity.

The new bill has its own complexities and variabilities. We had advice, for instance, from Biodiesel Australia, who listed some of the variations in assumptions and inputs into this whole question. There is the price consumers can buy diesel for, and that currently varies from $1.33 for very large trucking companies to $1.50 for small users in remote areas. There is the price biodiesel can be sold for, and that depends on a range of things—operating costs, feedstock costs and blending and transport costs—and at present bulk sales are occurring at as low as $1.05 ranging up to $1.20 in more remote areas. There is the year being considered, and this affects the comparison between fuels, as taxes and grants vary each year between 2006 and 2015. Without exception, the position gets worse for biodiesel each year, because grants are phased out and taxes are phased in. There are questions about whether the fuel is being used on or off road—different rebates apply, and the road user charge only applies of course to on-road use—and whether the blend meets diesel standards, which I will say more about in a moment.

The bill is either a result of carelessness by the government or, as is more likely, a sop to the very influential petroleum industry. Whatever way you look at it, it is a giant backflip on the part of the government and the Prime Minister, who have purported in the past to support biofuels—that is, the biodiesel and ethanol industry.

The officers from Treasury, facing the critics of this bill—and there were many—were able to provide no rationale for the changes, offering only that they are ‘policy decisions of government’. No modelling was done, no advice was sought from other departments and there was no explanation as to why this was necessary. No impact statement was done on the industry most affected. I do not know what goes on in coalition party room briefings on legislation, but this one slipped through, obviously, without questions being asked about the impact on the renewable fuel industry, on farmers or on rural communities.