Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Hansard source

I thank Senator Chapman for that good question. Yesterday the Prime Minister made a number of announcements, building on our energy white paper of 2004, to further address Australia’s energy challenges. The reality that underpins our strategy is that Australia is blessed with substantial and diverse energy resources from coal, crude oil, natural gas, LPG, ethanol and, of course, uranium—which so troubles those opposite and has for so many years.

Australia is well placed to meet the challenges that are presented by high world energy prices, but we are of course conscious that, for most Australians, the reality of high world energy prices is the price they pay for petrol at their local service station. So yesterday the Prime Minister made a very significant announcement of initiatives to encourage alternative fuels—most specifically, a $1,000 contribution from the government to the purchase cost of a new factory-fitted LPG-powered vehicle. I encourage all Australian manufacturers to follow Ford’s example and produce in Australia a factory-fitted LPG vehicle. In addition to that, a $2,000 grant will be provided to assist with the cost of converting vehicles to LPG for private use. The cost of this overall LPG initiative is estimated at $1.3 billion over the next eight years.

In the past it has generally taken consumers up to two years for the ongoing savings associated with the lower cost of LPG to pay off the capital cost of a conversion. The LPG association estimates with our $2,000 rebate it will take just four months for the average motorist to pay off that investment, and that is of course because the average LPG retail price in capital cities, as measured last month, was only 40 per cent of the price of unleaded petrol. LPG is available at 3,200 service stations around the country. I reiterate that yesterday’s statement did not alter the excise treatment of LPG. It will remain excise free until 2011. By 2015, with an excise then of 12½c per litre, it will remain concessionally taxed with an excise rate around 50 per cent lower than fuels with similar energy content.

In addition to encouraging greater use of LPG, the government also will spend just over $17 million over the next three years to help fuel retailers make the necessary investment to be able to sell E10. A further $123 million over four years will be invested in extending the government’s Renewable Remote Power Generation Program to encourage the replacement of diesel power generators with renewable energy sources. In addition to these initiatives to encourage alternative fuels, we will provide a new impetus to exploration activity. Despite our energy resources as a nation, this country is largely unexplored. It is a high-risk and high-cost activity, and we think there is a role for government in providing precompetitive geological data to better inform potential exploration activity. We are spending $76 million to expand Geoscience Australia’s big new oil program and a further $59 million to identify onshore energy and mineral resources.

It is a very significant contribution to assisting Australians diversify their sources of transport fuels, not forgetting that at the end of the day the reason that petrol prices are high is that world oil prices are high, and they are high because of the extraordinary economic growth of China and the demand it is placing on world oil supplies. But the government believes that, with this package of measures, we are going a long way to helping Australian motorists make use of alternative energy sources.