Ursula Stephens (NSW, Australian Labor Party, Shadow Parliamentary Secretary for Science and Water) Share this | Link to this | Hansard source

I begin by thanking the participants in the Senate inquiry into the Excise Laws Amendment (Fuel Tax Reform and Other Measures) Bill 2006, the Excise Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006, the Customs Amendment (Fuel Tax Reform and Other Measures) Bill 2006 and the Customs Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006 and the officials who were required to produce the report on such short notice. It is an increasingly common trend that legislation is being referred to committees for consideration without adequate time for witnesses to prepare submissions or for the committee to do justice to the kind of legislation that is being presented.

The report on these bills, which was tabled out of session last night, makes some rather strong conclusions in favour of reform of alcohol taxation. We received quite significant evidence in that inquiry about the need for reform of alcohol taxation, but we were cautioned about doing it in an ad hoc manner. On that basis, for expediency, I indicate that Labor is supporting the government’s amendments to these bills but is not supporting Senator Murray’s amendments, simply because we believe that there needs to be much greater scrutiny and consideration of the proposals that he has put before us.

Although a participant in the inquiry, Labor chose not to make any additional comments to the inquiry report, but I must say that recommendations 2 and 3 of the report, which relate to volumetric taxation of alcohol and excise on low-alcohol products, including some ready-to-drink products, are technically beyond the scope of the terms of reference of the inquiry that Senator Murray initiated. The bills do not propose any change to the excise rate for alcohol products, although some minor definitional issues are addressed. Consequently, any recommendation that seeks to indicate a position in relation to excise rates falls outside the scope of the inquiry report. The bills give effect to the fuel tax bills. They also involve some streamlining of excise customs classifications for alcohol and tobacco and changes to the rate of duty for aviation gasoline, which is in effect a cost recovery measure.

The Excise Tariff Amendment (Fuel Tax Reform and Other Measures) Bill changes the list of products subject to excise so that only two rates of duty apply: one for aviation fuel and one for other fuels. Excise duty of 38.143c per litre and customs duty at the excise equivalent rate of 38.143c per litre will be applicable to all fuels other than aviation fuels. Relief from the incidence of fuel tax is delivered in the fuel tax bills through a provision for fuel tax credits. The bill proposes a nine per cent reduction in the duty rates for aviation gasoline and kerosene. New arrangements for cost recovery of aviation fuel have also been introduced. The reduction in the duty for aviation gasoline was announced in November 2005 as part of these changes. However, it is not clear why such a reduction is needed, and I pose that question to the minister this evening and invite him to answer it in his summation of the debate on the bills.

Schedule 1 of the bill amends the Excise Act 1901 and makes consequential amendments to a number of other acts to implement measures to streamline existing excise arrangements. It also amends the Energy Grants (Cleaner Fuels) Scheme Act 2004, adding a new fuel tax to the cleaner fuels grants scheme. Renewable diesel, which is a liquid fuel manufactured from vegetable oils or animal fats through a process of hydrogenation, is added to the definition of ‘cleaner fuel’.

Schedule 2 of the Excise Laws Amendment (Fuel Tax Reform and Other Measures) Bill 2006 repeals a number of acts. Coal is listed in the excise tariff and has attracted a free rate of duty since 1992. The inclusion of coal in the excise tariff means that it is an excisable product and, therefore, coal producers are required to be licensed as excise manufacturers. Coal is omitted from the excise tariff rather than included at the free rate of excise duty, as in the existing law, the Coal Excise Act, which contains licensing and other requirements. It is repealed as it is no longer considered necessary to impose these requirements on activities involving coal.

The Spirits Act, which provides for controls over the manufacture of spirits, including brandy, whisky, rum and methylated spirits, is repealed on the basis that most of the provisions it contains are adequately covered in the Excise Act or are no longer relevant to the effective management of the alcohol taxation regime. The Distillation Act, which provides controls on the distillation of spirits, including stills, distilleries, licences and fortification of Australian wine, is also repealed.

The Customs Amendment (Fuel Tax Reform and Other Measures) Bill amends the Customs Act 1901 in three ways: to strengthen customs control over certain imported goods that are used in the manufacture of excisable goods; to repeal the customs related provisions of the fuel penalty surcharge legislation; and to replicate certain provisions of the Spirits Act 1906, which, again, are to be repealed.

The purpose of the Customs Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006 is to amend the Customs Tariff Act 1995 to implement changes that are complementary to amendments contained in the Customs Amendment (Fuel Tax Reform and Other Measures) Bill 2006. These measures are designed, as the government argues, to strengthen customs control over certain goods that are used in excise manufacture and ensure that excise equivalent goods are subject to the same duty when imported as they would be under the Excise Tariff Act 1921—that is, the same products when manufactured or produced in Australia.

In the House of Representatives, the member for Hunter asked the Assistant Treasurer a number of questions. The minister has answered one of these questions in part. Minister Dutton has not proved very cooperative in answering questions put to him in the parliamentary debate on the bills. So I now ask the minister representing him in this chamber to address these matters. For the record I will put the questions again. The first question is as follows: these bills reduce the customs duty and excise for Avgas and AVTUR by nine per cent. The minister has indicated in the explanatory memoranda to these bills that reduction is part of a change to the cost recovery regime for aviation services. However it is not clear exactly how this reduction in the excise and customs duty operates as part of the new arrangements. So I now ask the minister: what is the cost to revenue of reducing excise and customs duty rates for aviation gas and aviation turbine fuel?

The second question relates to the definition of biodiesel in schedule 1 item 2 of the Excise Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006 and this is quite a significant change. The definition of biodiesel is now to be amended so that biodiesel includes liquid fuels manufactured by chemically altering vegetable oils or animals fats like tallow to form mono-alkyl esters. Labor now seeks information as to whether this change in definition will allow manufacturers to claim that products previously not part of the biodiesel regime will now be able to claim their products as biodiesel products with the consequent concessional excise regime applying. If the definitional change means that some products will be brought into the biodiesel net that were previously excluded, we ask the minister to provide to the Senate details of the products included and the producers of those products, and to indicate to the Senate what discussions have been held with oil companies in relation to this change. We also ask the minister to consult with his colleagues and report back to the Senate about any consultations that have been held with oil producers in relation to this definitional change.

The third question is in relation to how the new customs changes relate to biodiesel and ethanol. Will the minister now inform the Senate what is the precise schedule of changes for reduction of customs changes for these products until the full introduction of the new fuel tax regime? We are seeking a table of annual customs rates for these products up until 2020. The minister has provided details of effective tax rates. We are now seeking the precise schedule for proposed customs and excise rate changes. Given those three important questions, Labor is supporting this bill.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

These four bills are being dealt with cognately. Like all customs and excise bills, they are difficult to both read and use. They deal with a variety of matters related to excise and customs. Parts of these four bills directly relate back to the proposals in the white paper, Securing Australia’s Energy Future, that proposed among other things a fuel tax credit scheme to replace the Energy Grants Credits Scheme. These four bills are interlinked in some aspects with the Fuel Tax Bill 2006 and its accompanying consequential amendments bill.

The overall Democrat position on these four bills is not significantly affected by our views on the Fuel Tax Bill 2006 to which we are opposed. With respect to all non-fuel aspects of these four bills, the Democrats support them very fully and we support the bill overall. Although I expect they will inevitably fail because the government has not yet, hopefully, accepted low-alcohol wine and low-alcohol RTDs as policy, I will take the opportunity to propose amendments introducing such a regime for RTDs because I know that by doing so it therefore puts a schema in front of the Senate and to the broader community that they are able to consider at their leisure.

This amendment of mine continues previous amendment attempts on the same lines, and I will note for the record that I have been a persistent and consistent advocate, as has my party, for the encouragement of low-alcohol products along the same lines as beer. I am pleased to have noted that the Labor Party is supportive of that approach and I am also very pleased to record that the Liberals on the committee led by the chair, Senator George Brandis, are also of the same opinion.

My colleague and party leader Senator Allison will be dealing with the changes to the excise on fuel and its impact on the fledgling biofuels industry in debate on the Fuel Tax Bill 2006. All I will say is that it is very disappointing that the government has seen fit to disadvantage biofuels, which are just getting started and which could hold a key to help secure Australia’s energy future.

I will briefly outline the four bills dealing first with the Excise Laws Amendment (Fuel Tax Reform and Other Measures) Bill 2006. The purpose of this bill is to amend or repeal several acts to effect the government’s proposals with respect to excise contained in the energy white paper and simplify and update legislative requirements relating to excise. The bill prescribes circumstances where excisable and imported inputs that may be used in excise manufacture will be removed. The prescription ability is retained. Fuel blending will be considered blending unless the resulting blend is carved out as per the Excise Act or the Fuel Tax Bill 2006. Regulations can be made to limit movement permissions granted by the commissioner of tax, where duty has not been paid. All excise licences expire and specific requirements on expiry and renewal dates are provided for. I note the government amendments in that respect, and we support those amendments.

Streamlined rules for measuring the volume, weight or alcoholic strength of an excisable good is in the bill. Anyone who possesses a tobacco leaf can be asked to account for it and pay excise duty as if it had been manufactured into excisable tobacco—a good integrity measure. Bottling of duty paid bulk beer is excise manufacture to prevent lower excise liability applying. The concessional spirit scheme is streamlined to reduce administrative burdens on users of concessional spirits and to protect the revenue. Remissions, rebates and refunds are allowed in prescribed circumstances and regulations may be made for and in relation to the Commissioner of Taxation granting approvals in such circumstances. The recovery of debts under section 60 of the Excise Act is covered by the Tax Administration Act 1953, so it is no longer needed as a section. The tax commissioner can direct licence holders to keep, retain and produce records. The bill adds a definition of renewable diesel to mean liquid fuel manufactured from vegetable oil or animal fats by a process of hydrogenation. In noting that point, I recall the somewhat macabre and humorous remark of Senator Bartlett on another bill where he said, ‘They are now replacing a tiger in your tank with a cow in your fuel.’ The bill repeals provisions and certain acts which are redundant or inconsistent with best practice regulation.

Moving to the second bill, the Excise Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006, the purpose of the bill is to repeal the current excise tariff and replace it with a new one. The new law impacts in the following areas: the excise tariff is streamlined, incorporating a simpler two-tier numbering system, replacing a complex numbering system and disaggregations often based on the prospective use of the product as the basis for the classification; concessional rates of excise duty for burner fuels and free rates of duty for fuels used otherwise than as fuel are no longer available; duty-free treatment for products for use by certain parties is no longer delivered by free rates in the excise tariff; fuel from various non-petroleum sources is captured by the excise tariff—all fuels which can be used in an internal combustion engine should be subject to fuel tax, so the excise tariff captures liquid fuels irrespective of their production, method or feedstock—and a certain product which is recycled for own use is excluded; the tobacco rate will apply to all tobacco products not in stick form, including snuff tobacco—another good integrity and health measure; and certain definitions are clarified and redundant definitions and indexation provisions are omitted. These definitions relate to alcohol and fuel.

The third bill is the Customs Amendment (Fuel Tax Reform and Other Measures) Bill 2006. The purpose of this bill is to amend the Customs Act 1901 to strengthen Customs control over certain imported goods that are used in the manufacture of excisable goods, to repeal the customs related provisions of the fuel penalty surcharge legislation and to replicate certain provisions of the Spirits Act 1906, which is to be repealed, as opposed to—what do priests do? I am trying to remember the word for what priests do with people whose heads spin around.

George Brandis (Queensland, Liberal Party) Share this | Link to this | Hansard source

Exorcise.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

They are exorcising the Spirits Act 1906. Thank you, Senator Brandis.

The fourth bill is the Customs Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006. The purpose of the bill is to amend the Customs Tariff Act 1995 to implement changes that are complementary to amendments contained in the above act. This bill amends the Customs Tariff Act by: reducing customs duty applicable to aviation gasoline and aviation kerosene, in line with alterations to the Excise Tariff Act 1921; amending schedules 3, 5 and 6 of the Customs Tariff Act to ensure uniformity of customs duties with excise rates of duty; changing the definition of mead to conform with the definition in the A New Tax System (Wine Equalisation Tax) Act 1999—which I wish they had not done, because I think it should have been done volumetrically; aligning the snuff tobacco rate with excise rate and imposing a duty on tobacco leaf of $290.74 per kilogram to protect the revenue—this import duty will not be payable when the tobacco leaf is used in excise manufacture; repealing items 44 and 67 of schedule 4 of the customs tariff that currently allow concessionary importation for excise equivalent goods that are for use in the manufacture of excisable goods; reclassifying biodiesel from chapter 15 to chapter 38 of the customs tariff; and implementing related and consequential amendments to the customs tariff. A fairly formidable list.

Numbers of these changes are administrative and technical and modernise and improve the customs and excise regime, and are to be welcomed as such. The minor changes to tobacco and alcohol are positive from a health, administrative and tax perspective. The real issue of contention with these bills, more so with respect to the fuel tax bills, concerns biofuels and changes to fuel taxes.

As we all know, excise is levied in part to influence consumer behaviour. That is primarily the reason why the excise on cigarettes is so high. It is an attempt to give people a reason to stop smoking, and it has been effective. In case the health benefits are not a call to action, then a hip-pocket shock might do the trick. I am pleased to see in this legislation amendments are proposed to treat all tobacco products in the same way as cigarettes. And I want to compliment the government, as I have in previous debates, for their action in introducing a far better excise regime with respect to tobacco products than we had formerly. This will have an impact on the number of people who roll their own cigarettes, not to mention chewing tobacco, both of which are heavy contributors to the rate of mouth and throat cancer in Australia.

I took the opportunity to refer these bills to the Senate Economics Legislation Committee to examine alcohol related issues. The alcohol changes in the bills are supported by the various sectors of the industry, who welcome the streamlining. That was not at issue. The committee reference was, quite frankly, an excuse to address some of the larger issues which sit on the horizon and, because these sorts of bills which affect alcohol only come along once in a while, we had to take the opportunity when it came. I am grateful to both major parties for supporting that reference.

The health professionals and spirits industry have urged the government to continue incremental reform—and that makes a great deal of sense to me, given the high stakes at hand with respect to the industry concerned—in particular, as for low-alcohol beer, to introduce price incentives for low- to mid-strength ready-to-drinks. A great virtue of ready-to-drinks and the reason I and others have strongly supported them is that they are a measured drink and you get away from the barbaric practice of people just sloshing a bit of Coke into a large amount of spirit and not having a measured drink. Health authorities continue to advocate customs and excise tariff changes that embrace volumetric taxation for wine and cider and differential tax rates based on alcohol strength.

As a party, the Democrats continue to be the strongest advocates in parliament for further alcohol tax reform to encourage responsible consumption but, as individuals, I know that there are members of all parties who are very supportive of the view that further alcohol tax reform should encourage responsible consumption. In that respect, I want to put on the record my recognition of the courageous stance—and the man is not without courage in any forum—of the committee chair, Senator George Brandis, who has grasped that nettle and has made recommendations for the government to consider the long-term adoption of a volumetric tax system for all alcohol products and has recommended that the government commence planning and consultations with relevant parties as a step towards this goal. He quite rightly used a long-term approach. It is a difficult issue and needs careful management. His other recommendation in this area was that the government apply the same tax and excise treatment to low- and mid-strength ready-to-drink alcohol products as it applied to similar strength beer products. The tax and excise structure for RTDs should incorporate the three-tiered structure currently applied to beer, with the 1.15 per cent excise-free threshold that applies to beer extended to low- and mid-strength RTDs but not to full-strength RTDs with 3.5 per cent alcohol by volume and above. I thought the chair’s summary of the evidence and the support of the other parties in ensuring a unanimous report was very important, so I express my thanks to you, Sir, for your chairing of that committee.

I have worked long and hard to bring more equity into the way in which alcohol is taxed in Australia, because I have strong connections to the industry and always have. I am very much connected to their economic interests, but I also have a very strong social view, and I think taxation has a major part to play in the way in which responsible consumption can occur. Alcohol is alcohol. It is a basic principle that like goods should be taxed alike. In the case of alcohol, that is volumetrically. Discrimination in tax levels should only occur as a result of sound policy reasons, which have economic and health considerations in this particular case. In the case of alcohol, that requires tax concessions to encourage the consumption of low-alcohol beverages. We have the precedent and we know how well it works and has worked with beer. Economic support for any part of the industry, such as small wine farmers, should be via grants or rebates. It should not be via discriminatory tax exemption. I am supportive of measures to boost the economic circumstances of regional communities through encouraging tourism and through maintaining small business wine farmers on the land, but I do not think it should be done through tax exemptions; I think it should be done through grants or rebates.

One reason excise is levied on alcohol is that the government, health authorities, doctors and the road safety councils around the country all realise that alcohol impacts on the health of our citizens, it contributes to family violence, it contributes to road fatalities and it increases the strain on our health system. So any strategies which can be implemented to limit the abuse or misuse of alcohol consumed should be supported. There is no point in spending money on road safety advertisements about drink driving, healthy eating and drinking habits or on family violence issues if the excise and customs system does not play its part in pricing to affect consumption. As I have said on a number of occasions before, the government’s low-alcohol policy is insufficient, because it only focuses on beer when there are clear opportunities for incentives to encourage low-alcohol ready-to-drink beverages and wines.

As I said earlier, I took the opportunity to refer these bills to the Senate Economics Legislation Committee to examine alcohol related issues. In the submission from Beam Global Spirits, they urged the government to provide identical excise tax treatment for RTDs as it currently does to low- and mid-strength beer—that is, low- to mid-strength RTDs should have access to the 1.15 per cent excise-free threshold that is currently available to all beer products, because the effect of that is to lower the price. If you lower the price, you encourage consumption of those low-alcohol products. You might think, ‘They would say that, because it works in their favour.’ Of course it does. They are going to sell more products, but this argument is supported by the Alcohol and Other Drugs Council of Australia and many other health bodies which were listed in submissions to us. In their submission, the Alcohol and Other Drugs Council of Australia pointed out:

Outside of beer, little incentive exists within the current tax system to manufacture, promote and consume reduced strength alcoholic products.

And that is not a group, as the chair said in his report, that could be seen to have its own bottom line as a motivator.

This approach, advocated by both sides of the argument, is about public health. In Australia, there are more than 3,200 alcohol related deaths per annum. More than 400,000 hospital bed days are taken up with alcohol related illness and an estimated $4.5 billion of taxpayers’ money is spent addressing alcohol related harm. That makes for a very stretched public health system. Many of the submissions to the committee pointed out that, from a public health perspective, the excise and taxation on alcohol should be based on alcohol content and the strength of drinks rather than the cost of manufacture or the method used to produce the alcohol. The policy priority for government should be—and it is not reflected in this new raft of legislation—to introduce excise taxation incentives for the low-alcohol consumption of RTDs and wines.

Although I am supporting the passage of these bills, I still take issue with the wine equalisation tax. I have been against it from the start—although I should note that my party was not—because it has created a low-price cheap alcohol cask market that is at the centre of alcohol abuse and because as a value-added tax it punishes the premium and small business bottled wine sector. The wine industry in Australia has exploded over the last 15 years and now there is a wine glut in Australia where well-known winemakers are being forced to the wall. The way in which the excise has been levied on wine is part of the problem. The way in which excise is levied on premium wines impacts on the ability of that end of the market to do well.

These customs and excise bills yet again do not address the volumetric taxation of wine. Part of the consequences of such a decision by the government is that the economics of the industry are distorted. I notice the government has again been lobbied by the wine industry to provide a bail-out, and that lobbying has been successful. I notice that in legislation soon to be in this place, the Tax Laws Amendment (2006 Measures No. 3) Bill 2006, one of the schedules we will be voting on is to increase the WET producer rebate from $290,000 to $500,000.

That kind of ad hoc approach to industry support seems absurd. Why not create a system in which the wine industry is assisted in a sensible, ongoing way through industry support, rather than distorting the excise system so that wine industry support ends up as a greater priority, and pricing wine casks so that the appalling alcohol abuse in some Indigenous communities, including in my state, can be lessened through price mechanisms. This is further evidence of a short-term approach being taken to a problem, rather than a long-term, considered plan to maintain the viability of the industry.

Once again, I commend the chair of the committee that looked at it for understanding that point and making it in the report. Cheap cask wine is at the centre of alcohol abuse, which in turn is a cause of family and domestic abuse. Price affects alcohol consumption. That is empirically established fact. A simple change in the way the excise is levied has the potential to change consumer habits. The government should take that step, and support it with advertisements, family assistance programs, housing programs, health programs and so on. Volumetric taxation of wine is, in the long term, the way to go. (Time expired)

Ron Boswell (Queensland, National Party) Share this | Link to this | Hansard source

Tonight, we are addressing the Excise Laws Amendment (Fuel Tax Reform and Other Measures) Bill 2006, the Excise Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006, the Customs Amendment (Fuel Tax Reform and Other Measures) Bill 2006 and the Customs Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006. The main part of my speech will address the alcohol excise. These bills form part of a package of legislation required to make changes to customs and excise arrangements, and to replace the current system of fuel tax concessions with a single fuel tax credit system. The overall package will simplify the current system of fuel tax concessions and make it more transparent. I intend to make further comments on these fuel excise initiatives for business in my speech on the Fuel Tax Bill 2006. I understand the government is responding to Senator Brandis’s report on it, and we will see that bill when the government has looked at that.

This package of four bills also brings into effect certain changes for the Australian distilled spirits industry, and I wish to concentrate some of this speech on the aspects of the bills which relate to liquor. I have maintained an interest in this industry over a period of more than 20 years. I have always been a strong advocate of the Queensland sugar industry, and I have spent much of my 23 years in the Senate looking after sugar’s subsidiary value-added industries. You could not get a better example of this type of industry than Bundaberg Rum. Its base is in the electorate of Hinkler, whose political interests are looked after by my good friend and lower house colleague Paul Neville.

Distilled spirits is one of the main tertiary products of the sugar industry, and Bundaberg Rum is a company watched over closely by my National Party colleagues and me. We have implemented many changes after consulting with Bundaberg Rum and the Australian distilled spirits industry through DSICA. This package of bills takes the next step. It repeals the Distillation Act 1901 and the Spirits Act 1906. This outdated legislation is no longer required, because the provisions will be covered by the Excise Act. Early on, however, we did identify one area that the Distilled Spirits Industry Council of Australia and the Nationals agreed needed to be addressed.

Maturation of Bundaberg Rum and other high-quality distilled spirits in wood makes the spirit taste better. It takes all the biteys out, improves the characteristics and makes it smoother and more mature. We had to make sure the maturation legislation remained. Otherwise, we would have been taking away the current requirement that brandy, whisky and rum be matured for at least two years before they can be marketed as such in Australia. That keeps us up with the world standard. It means that you cannot make raw ethanol spirit from sugar, grains, potatoes—or whatever else contains hydrocarbon in the form of sugar or carbohydrates—and then flavour it artificially and label it rum, whisky or brandy before selling it to Australian consumers on its own or in a ready-to-drink mix.

We have fought to keep the spirit maturation rules in place over many years. In 1979, a similar proposal was rejected, and in 1986 I helped to defeat in the Senate a Hawke government proposal to remove the maturation rules. Former member of the National Party Bryan Conquest and I argued that raw ethanol had significantly lower production costs than Bundaberg Rum and its manufacturers, many of whom would enter the Australian market from overseas, would be able to spend a lot more on advertising and marketing in our domestic market and still provide a product at the same or at a lower price, disadvantaging our domestic producers.

The coalition government have proven that we will fight to maintain and improve our high-quality Australian spirit industry and companies like Bundaberg Rum that invest in and support regional communities and workers. I have asked Paul Neville about it, and he has told me that the Bundaberg Rum distillery employs 56 local workers and is the top tourist attraction in the Bundaberg area. The company is currently undertaking a $24 million expansion plan, which has included putting in new timber maturation vats at a cost of many millions of dollars.

It would have been wrong for us to have allowed such investment to effectively be negated by allowing the importation and sale of lower quality raw ethanol based spirits. I would like to thank the Treasurer, Peter Costello, on this matter. I approached him with the member for Hinkler. He listened and saw what the damage would be if the provision for compulsory maturation were removed and how the product would deteriorate also. The Treasurer moved quickly to assist Bundaberg Rum and the Australian distilled spirits industry by making sure we kept the two-year maturation period in place, and I thank him sincerely on behalf of the Distilled Spirits Industry Council and our friends at Bundaberg Rum.

I note from the submission by the Distilled Spirits Industry Council of Australia to the Senate Economics Legislation Committee that they are also putting forward a strong case for gaining access to the taxation differential that is applied to low- and mid-strength alcohol beer for their low- and mid-strength alcohol ready-to-drink mixes. I support the detailed supplementary submission by the Distilled Spirits Industry Council of Australia and their arguments to senators, and I recognise that the submission has been examined closely and addressed by Senator Brandis’s committee. The peak body for our distilled spirits industry has put forward a well-researched and solid case that the government should give ready-to-drink spirit mixes access to the 1.15 per cent by volume excise-free threshold which applies to beer products, as well as the reduced excise rates that apply to packaged and draught low- and mid-strength beer. Recommendation 3 of the committee’s report states:

The Committee recommends the Government apply the same tax and excise treatment to low and mid strength ready-to-drink (RTD) alcohol products as is applied to similar strength beer products. The tax and excise structure for RTDs should incorporate the three tiered structure currently applied to beer, with the 1.15 per cent excise free threshold that applies for beer extended to low and mid strength RTDs but not to full strength (3.5 per cent alcohol by volume and above) RTDs.

I know that the committee’s recommendations will be considered as part of the government’s process, with my support and with Paul Neville’s support. We will certainly back these recommendations.

In the brief time I have left, I want to say that one of these bills contains a provision to make biofuel from tallow. British Petroleum is going to put quite a large plant in Queensland. Biodiesel made from tallow does not really have the properties of true biodiesel or ethanol. This bill deems tallow to be biofuel and biodiesel, with all the excise benefits that are afforded to biodiesel. I am concerned that this biodiesel really is not biodiesel, but we are blessing it and saying, ‘You are biodiesel because the Senate has said you are biodiesel.’

I am concerned that this government has put a target of 350 million litres, which is a very small amount—about 7.5 per cent of our total fuel use—on ethanol and biodiesel. That is an election commitment made by this government. I am concerned that this new biodiesel made from tallow will fill a lot of that 350 million litre target that the government has set and we therefore will not have as much ethanol going into that target. It is a pitifully small target to start with. Flooding the target with this tallow diesel—I will not call it ‘biodiesel’, because it is not, but it is renewable—and giving it the excise benefits concerns me, as there will not be much room for ethanol production in Australia. I want to put that on the record. I am concerned and I have expressed those concerns in various places where we are allowed to give our positions. I will address the other biofuels and the excise in relation to the Fuel Tax Bill 2006, which is a much more important bill as far as biofuels are concerned.

Let me say that the decision we made on Bundaberg Rum—making sure that rum, whisky and brandy would be maturated in oak casks, which take all the bitey things out and make it smooth and mellow—is one that I think is worthwhile pursuing. Some Treasury officials decided that alcohol was alcohol, even if you produce it raw out of ethanol. You could call it what you like and there would be no penalty on calling it rum. You could put a bit of raspberry juice in it and have a raspberry and rum. But it is not raspberry and rum; it is raspberry and ethanol.

Debate interrupted.