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

My question is to the Minister representing the Prime Minister. I refer to the Prime Minister’s grand scheme for LPG conversion. On what basis does the government say this will lower fuel prices for families? Isn’t it the case that the fund for LPG conversions will likely deliver only 400,000 passenger vehicles? Does the government admit that that is a mere four to six per cent of passenger vehicles in this country that can be converted to LPG with this fund? Why did the government exclude compressed natural gas conversions from the scheme? Isn’t it the case that natural gas is cheaper and its price more stable? Will the government extend the current alternative fuel conversion grants that do cover CNG but run out next year?

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

The government has consistently stated that petrol prices—which I must say I am pleased to see are easing in the marketplace—are very much a function of international crude oil prices and no government in the Western world has a lever to flick to ease that sort of pressure, but we have said that we will do what we can at the margin. I am very pleased with the LPG initiative that we announced. It was a fairly substantial commitment on the government’s part to seek to stimulate an alternative source of energy. That is what we are seeking to do. We understand that petrol and diesel are likely to remain the primary sources of transport fuels for some time to come but that we should seek to responsibly encourage a diversity of sources of fuels to the best of our ability. We have done that, as Senator Allison would know, for ethanol and biodiesel and, with the significant encouragement of our colleagues in the National Party, that has been a key part of our diversification strategy. But we have also sought, as she knows, to encourage greater use of LPG. The demand for participation in the government’s scheme has been overwhelming and we are very pleased with that.

As to compressed natural gas, we do understand and accept the interest of the Democrats in that as an alternative fuel. Certainly, it has some potential. There are a few things that should be noted, however, with respect to it. I note that it is currently excise free but that it does have a lower energy content than petrol or diesel and, as a transport fuel, there are some difficulties with it. CNG, and indeed LNG, are stored at considerably higher pressures. They require specialised heavy-duty storage tanks in vehicles, which affects the amount of fuel that a vehicle can carry and its operating range. Specialist refuelling facilities are required to handle both of those fuels. We provide assistance to operators and manufacturers of heavy commercial vehicles and buses, which are the more appropriate vehicles for this sort of fuel, and there is an alternative fuels conversion program run through my colleague Senator Ian Campbell’s portfolio to assist those sorts of vehicles in making the transition to CNG. But, for the reasons I outlined, it is not necessarily a relevant fuel for ordinary motorists.

LPG is a relevant fuel for ordinary motorists and that is why we have initiated this conversion scheme. We are pleased with the take-up of that and we continue to promote alternative fuels like biodiesel and ethanol. As I have said in this place repeatedly, I think that the hybrid market is going well, there is potential for electric vehicles and that, well down the track, hydrogen is likely to be a significant and widespread transport fuel of the future.

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

I ask a supplementary question, Mr President. I thank the minister for his answer. I am not sure that I would agree that compressed natural gas is not suitable for passenger vehicles, because I had one for a time that used it. Does the minister acknowledge that the availability of compressed natural gas refuelling is one of the biggest barriers to take-up? What is the plan to have compressors of natural gas at petrol and diesel service stations? What happened to the fund that was established to set them up? Just what is the plan for natural gas in long-term transport options in this country? Isn’t it the case that natural gas infrastructure will be necessary in any transition to hydrogen fuel, or has the government given up on that as well?

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

No. The government is very keen on ensuring that Australians can continue to have widespread access to fairly priced transport fuels, acknowledging that diesel and petrol are likely to remain the key fuels for many years to come. I referred to the Alternative Fuels Conversion Program, which does provide grants to vehicle owners to offset the cost of natural gas conversions and upgrades to purchased new vehicles. That is the key program in this area. I understand that of course it does require specialist refuelling facilities. There is a limit to which the taxpayers should be funding these things. The taxpayer is effectively subsidising the use of CNG by the tax-free status that it enjoys. It will not start to pay any excise until 2011, when an excise will be phased in—but we will continue to have a 50 per cent discount to fossil fuels on an energy content basis. So we do think the government’s— (Time expired)