Ruth Webber (WA, Australian Labor Party) Share this | Link to this | Hansard source

I would like to make some brief remarks on 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. As a member of the Senate Economics Legislation Committee I participated in the committee’s inquiries into the excise bills. I initially place on record my thanks to the committee secretariat for the enormous effort they put into not only organising a public hearing but also producing a report in record time. I also thank the other members of the committee. The Senate Economics Legislation Committee, as is often the case at this time of year, found itself inquiring into these excise bills, the fuel tax bills and some others, which we will deal with this afternoon. The committee was under enormous pressure, having had a series of bills referred to it in one week which were to be reported on in the following week so that they could make their way through this chamber. Given the pressure that the committee found itself under, particular thanks need to made to the committee secretariat and to those whom we borrow from other committees.

When the committee inquired into the excise bills, we looked solely at the sections of those bills that deal with excise on alcohol. Since I have been in this place, the debate about excise on alcohol is something that has occurred every year or so. It is something that I knew very little, if anything, about until I joined the economics committee. I must say that, thanks particularly to the endeavours of Senator Murray, I now find I know a bit more about it. But I still see it as being an incredibly complicated regime. I must admit that I think I am much better at consuming alcohol than at understanding its taxation regime! Having said that, we focused purely on the parts of this regime that deal with alcohol. As is often the case when our committee in particular considers these matters, we agreed on a very important point of public policy and made some recommendations accordingly. They were recommendations that, having listened to Radio National this morning, I think will go down fairly well in the wider community.

There was a debate on the Health Report about funding by industry of public education campaigns and the like, and about different organisations that are formed to combat excessive alcohol consumption in our community. One of the concerns that was raised in that program this morning was that, when those bodies are funded largely by industry, their efforts seem to be focused more around public education than the need, if we are trying to change behaviour within our community, to change public policy and our approach. There was great noise made about the need to look at changing things like taxation regimes because, if we are concerned about the growing consumption, and binge consumption, by young people of things like alcohol, and the health effects that alcohol and tobacco have, there does now seem to be a body of work that says that, rather than solely relying on public education, there is a degree of price sensitivity when it comes to the consumption of those things. Therefore, perhaps we need to look at our models of taxation instead.

When the committee considered that very issue, we talked about the study of alcohol consumption and taxation. It would seem that there is now growing interest, not just amongst community activists but also amongst economists and policy makers. There are taxes on alcoholic beverages that are specific and complex, and they can be a major source of taxation revenue. We also think that such taxes—and we have a greater understanding now—can lead to providing a means of curbing excessive consumption of alcoholic beverages and some associated negative behaviour. Therefore, I think the organisations that appeared before us and those of us on the committee are of the view that there needs to be greater understanding of how price changes can bring about an effective change in behaviour.

It was mentioned on the Health Report this morning and in the evidence that the committee heard that, when you look at the differential taxation regimes between, say, low-alcohol beer and full-strength beer and the effect that that has had on changed behaviour and couple that with state laws about drinking and driving, it would seem that that is one of the things that perhaps leads to changed behaviour rather than public campaigns that tell you not to drink. I think you only have to look at tobacco to see that in fact it is a change of law and a change of price that will lead more effectively to a change of behaviour than just advertising and telling people not to smoke.

I think the committee went through a useful process in examining these things. The committee, in its report, which I am sure has been highlighted by others, has recommended that the bills be passed. But it has also gone out of its way to mention:

In terms of reform of the alcohol taxation regime, the Committee considers that in principle a volumetric tax for all alcohol products should in the long term be adopted. It considers that planning, research and consultation directed towards this goal should start soon. Any review of the taxation regime for alcohol needs to take into account complementary strategies to address alcohol related problems.

So it needs to be complementary rather than stand-alone, as it is at the moment. The report continues:

These strategies include education, treatment and rehabilitation, licensing and sales, enforcement and policing.

The report goes on to say:

In the meantime, the Committee considers that some immediate benefits can be achieved by way of incremental reform to the tax treatment of low and mid strength RTDs.

That is, ready-to-drinks. It continues:

These products should be placed on the same tax footing as comparable strength beers. Realigning the excise regime for lower strength RTDs promises to lower the relative price of these drinks, increase consumption of these products and reduce harmful drinking behaviour and related health and social costs. This would be an incremental low-risk step with minimal revenue implications.

This is step that has been called for by numerous community based bodies and academics who have spent a lifetime studying the linkages between price and altering behaviour. It is, in my mind, a recommendation that the government needs to take seriously if we are serious about intervening in the issues of binge drinking and increased alcohol consumption, particularly amongst young people. It is something I urge the government to consider.

Richard Colbeck (Tasmania, Liberal Party, Parliamentary Secretary to the Minister for Finance and Administration) Share this | Link to this | Hansard source

I would like to thank all senators who have taken part in the debate on these bills: 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 Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006 and the Customs Amendment (Fuel Tax Reform and Other Measures) Bill 2006. These bills, along with the Fuel Tax Bill 2006 and the Fuel Tax (Consequential and Transitional Provisions) Bill 2006, give effect to the government’s announcement in its energy white paper Securing Australia’s future, of 15 June 2004, that the current complex system of fuel tax concessions will be replaced by a single fuel tax credit system from 1 July 2006.

The Excise Laws Amendment (Fuel Tax Reform and Other Measures) Bill 2006 amends the Excise Act 1901 and makes consequential amendments to a number of other acts from 1 July 2006, implementing a number of measures to streamline existing excise arrangements, protect the revenue and promote best-practice regulation. It also amends the Energy Grants (Cleaner Fuels) Scheme Act 2004 so that fuel manufactured through a process of hydrogenating vegetable oils or animal fats receives the same tax treatment as biodiesel. The Excise Laws Amendment (Fuel Tax Reform and Other Measures) Bill 2006 also repeals a number of acts which are no longer required under the new system for providing fuel tax relief.

The Excise Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006 amends the Excise Tariff Act 1921 to provide a mechanism of fuel tax relief for eligible users through the fuel tax credit system legislated through the Fuel Tax Bill rather than through the concessions within the excise system and amends the fuel items in the schedule to the Excise Tariff Act 1921 so that there are only two rates of duty—one for aviation fuel and one for other fuels. In conjunction with the fuel tax credit system, this will remove the effective excise on burner fuels and provide effective excise relief for a wide range of business users of fuel, including where fuel is used other than as fuel. This measure applies from 1 July 2006, but three items in schedule 1 relating to the validation of excise tariff proposals apply from 1 November 2005.

Presently fuel tax relief is provided in the form of remissions, refunds and rebates under the Excise Act 1901 and the Customs Act 1901 and energy grants under the Energy Grants (Credits) Scheme. These schemes have restrictive and complex eligibility criteria and apply to different fuels and fuel uses in different ways. The changes will lower compliance costs, reduce tax on business and remove fuel tax for thousands of businesses and households. When the fuel tax credit system is fully implemented, fuel tax will be effectively applied only to fuel used in private vehicles and for other certain private purposes, fuel used on road in light vehicles for business purposes and aviation fuels where tax is imposed for cost-recovery reasons.

The Customs Amendment (Fuel Tax Reform and Other Measures) Bill 2006 and the Customs Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006 make amendments to strengthen customs control over certain imported goods that are used in the manufacture of excisable goods; ensure that excise equivalent goods, certain alcohol, tobacco and petroleum products are subject to the same duty when imported as is applied under the Excise Tariff Act 1921 for the same products when manufactured or produced in Australia; repeal customs related provisions of the fuel penalty surcharge legislation; and replicate certain provisions of the Spirits Act 1906, which is to be repealed.

I would like to address an amendment the government wishes to move, which relates to amendments to expiry dates for excise licences. The government is amending the bill to change the date for when excise licences will expire. The bill currently provides that excise licences will have a common period of validity of three years. The common expiry date is 31 March. The initial period for a new licence will be two years after 31 March following the initial approval, so it could be for a period of less than three years. All existing licences will expire on 31 March 2007.

The validity period will remain three years with a common expiry date of 30 September. The initial period for a new licence will be two years after 30 September following the initial approval, so it could be for a period of less than three years. All existing licences will expire on 30 September 2006. This will provide an earlier opportunity for the Australian tax office to ensure that all parties in the excise system that are licensed can be formally assessed against the legislated criteria for holding such a licence. This is designed to encourage compliance and protect the revenue. This change ensures that the renewal process occurs during a period of lower activity for certain licence holders, particularly tobacco growers.

I would also like to address a couple of questions that were raised during the debate by Senator Stephens. The first question was: what is the cost of the reduction in excise and customs rates on aviation fuels? This amendment relates to a measure announced in the 2004-05 budget. Excise and customs duty were directed to funding a subsidy for location-specific pricing until 31 October 2005. This bill lowers the aviation rates as the subsidy is no longer required. As shown in the 2004-05 budget figures, the fact that this revenue is no longer expected means that in terms of the forward revenue estimates there is no further cost; it is already accounted for. The second question related to the definition of biodiesel. Biodiesel is already defined as a mono-alkyl ester derived from animal fats or vegetable oils. This is a technical change that removes the requirement that it be for use in an internal combustion engine. Biodiesel is highly unlikely to be used for other purposes, but, if it were, the provisions for fuel tax credits for use other than as fuel, to be legislated by the Fuel Tax Bill 2006, would apply. This change will not bring producers into the excise licensing system that were not already required to be licensed.

The third question was: what are the long-term excise and customs duty rates for biofuels? The current excise and customs duty rates for fuel, ethanol and biodiesel are 38.143c per litre. These bills do not change that. Long-term effective tax rates are delivered obviously by other mechanisms. I am informed that the minister, Mr Dutton, has written to Mr Fitzgibbon advising him of the government’s policy on effective rates. In conclusion, I suggest that the measures proposed in these bills contain positive improvements to the system for providing fuel tax relief and will modernise and simplify the fuel tax system. For these reasons and others outlined here I commend the bill to the chamber.

Question agreed to.

Bills read a second time.