Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

The Excise Tariff Amendment (Ethanol and Biodiesel) Bill 2015 reforms the taxation treatment of the biofuels ethanol and biodiesel. As part of this reform, the Energy Grants and Other Legislation Amendment (Ethanol and Biodiesel) Bill 2015 abolishes the cleaner fuels grants scheme. Labor supports these bills and their intent to create a sustainable taxation framework for biofuels.

Domestically produced and imported biodiesel and ethanol are currently subject to the same rate of excise as petrol and diesel. However, producers and importers are able to access a grant for the full amount of duty paid. The cleaner fuels grants scheme refunds excise and excise-equivalent customs duty paid on both imported and domestically produced biodiesel. Similarly, the Ethanol Production Grants scheme, which refunds excise paid on ethanol to domestic producers, will close at the end of this month.

In place of the cleaner fuels grants scheme and the Ethanol Production Grants scheme, the excise payable on the domestic production of biodiesel and ethanol will be reduced to zero for one year from 1 July 2015. The excise rate will then gradually increase from 1 July 2016 to reach a reduced excise rate for domestic producers. The new final excise rate for ethanol will be approximately 33 per cent of the excise rate for petrol and will be reached in the financial year 2020-21. The new excise rate for biodiesel will reach 50 per cent of the full rate of excise that applies to petrol and diesel.

Government amendments to this legislation will see a longer transition process for the biodiesel industry. The amendments will ensure that excise duty on biodiesel will increase in equal increments until reaching a final rate of 50 per cent of the diesel rate in the financial year 2030-31 and for later financial years. Imported biodiesel and ethanol will be subject to the full fuel duty rate, giving a comparative advantage to local industries.

Ethanol and biodiesel make an important, albeit small, contribution to our liquid fuels mix. I thank the Biofuels Association of Australia and the member companies that have worked to ensure the sustainability of their industry. Labor supports reasonable measures to protect this industry and welcomes the government's willingness to negotiate in the interests of this industry.

Larissa Waters (Queensland, Australian Greens) Share this | Link to this | Hansard source

Initially we had grave concerns about the state of this bill. In its original form it was proposing to slash the support the government has been providing to both the ethanol and the biodiesel industry—and that was of course in keeping with their hatred of clean energy generally. We have seen their attacks on wind farms just in the last week. We know that the government are trying, later today, to slash the renewable energy target and that they have repealed the mining tax and slashed the carbon price. So it was no surprise that this government was once again trying to weaken support for cleaner fuels—because it just does not get the need to transition to a low-carbon economy and does not understand that we can sustainably provide biodiesel and ethanol while ensuring that it does not compete with food-producing land or incentivise land clearing.

I am really pleased that, thanks to some excellent advocacy by, in particular, the Biofuels Association, the government and the opposition have agreed to amendments to this bill. I understand those amendments will allow a 15-year transition period to the reduced rate of excise that is now to apply to biodiesel. My understanding is that the industry now feel that they will not be kneecapped anymore and that their industry will in fact now be able to persist, given this longer transition period.

We maintain our extreme concern about the extent of climate change denialism in this government. We maintain the urgency of the need to transition to a low-carbon economy. Biofuels and ethanol are of course part of that transition, particularly if they are not competing with food-producing land or having impacts on land clearing or biodiversity. We know the industry can meet those parameters. The Greens have long supported cleaner fuels and, given that the industry is now content with the much longer phase-in period for this change to excise, we will be supporting this bill.

Janet Rice (Victoria, Australian Greens) Share this | Link to this | Hansard source

I also rise to speak in support of the Excise Tariff Amendment (Ethanol and Biodiesel) Bill 2015, particularly because the bill now lays out a longer transition period for the excise rate for biodiesel. I am pleased that the government has amended this bill in the other place in order to achieve this transition to protect the local biofuel industry. The original provisions of the bill really laid out a worrying future for the industry and would have wound back, very significantly, the local industry. So I am very pleased that this bill, as it has come to the Senate, has provided for that longer transition.

The importance of biofuel and biodiesel is very significant in our transport mix. It is important that we are cleaning up our act and shifting our economy to a zero carbon economy as quickly as possible, and that means that the transition needs to occur across all energy sectors. Transport of course is no exception. Transport in Australia is the fastest growing source of our carbon pollution and, depending on what part of the country you are in, it ranges between 14 and 17 per cent of our emissions. So we need to be acting on our transport fuels. It is going to be the economically and environmentally responsible action and direction to be taking in order to create a clean energy future for our children and our grandchildren.

We consider that clean electricity from renewable energy is probably going to be the main game as we shift our transport fuels. We will be shifting to electric vehicles for cars; there is also the prospect of electric trucks, which have now been introduced into Australia. There is going to be significant potential from biofuels as a cleaner alternative fuel source. I recently had the opportunity to meet with a manufacturer of biodiesel, ARfuels, who are based in Barnawartha in north-east Victoria. They have a thriving business producing biofuels, supporting local jobs in their rural community. They are there in Barnawartha in regional Victoria, and there are other biofuels manufacturers across regional Australia, because they are co-located with animal agriculture that is providing the tallow, which is the input for their biodiesel production.

When I met with ARfuels, they were very concerned about the bill in its original form; very concerned that in fact, as it was originally conceived, they would have gone under. They would have no longer been able to produce biodiesel and no longer able to provide jobs in their local community. So I am pleased that with the longer transition periods, they will have much more certainty under the provisions of this bill and they will be able to build their biodiesel manufacturing.

The other major source that is going into biodiesel manufacture at the moment is waste cooking oil. When I was a councillor on the city of Maribyrnong, we had a massive problem with waste cooking oil. For many restaurants in my home town of Footscray, it cost them to dispose of their waste cooking oil. We had big problems with waste cooking oil being illegally dumped into drains, causing blockages of the drains, health problems and massive waste problems. It was a real initiative that met the waste problem and also helped with the production of an environmentally sustainable transport fuel when the initiative to begin collecting that waste cooking oil for the production in diesel oil began. That is also the sort of initiative that is being supported by just giving some incentives for the ongoing production of biodiesel. Using these waste products for producing a renewable energy source makes so much sense. What is needed, of course, is a level playing field with fossil fuels.

The other real issue, as well as electricity as a renewable energy source to potentially be used as a transport fuel and the use of biodiesel, is to be helping with Australia's fuel security. I have been on the Senate inquiry into fuel security and the big issue is that we do not have enough supplies of petroleum products in Australia. We only have 30 days supply whereas the internationally recognised amount of supply that we should have is 90 days. In order to deal with that as an issue, we really have two ways to go. We can either increase the amount of supply and the amount of storage that we have of our petroleum-based fuels or we can shift away from those petroleum fossil based fuels and produce more renewable transport fuels ourselves here in Australia. That latter direction is much more consistent with the shift to a zero carbon economy. I do want to note that biofuels really are only a desirable fuel so long as they are from genuine waste products—for example waste that it is not derived from native forests.

We also need to make sure, when we are creating those biofuels, that they are not competing with land and water that should be used for food production. It is incredibly important that prime agricultural land is still used to produce food. There are so many opportunities for the use of biofuels from waste and waste products, and from land that is not suitable for agriculture. They are the directions we need to be heading in.

As I said, it is important, in terms of the support for biofuels, to note that we still do not have a level playing field; we still have massive subsidies for fossil fuels in the Australian economy; $10 billion over the forward estimates. So, if we are going to be properly encouraging the use of biodiesel, we need to be addressing and removing those fossil fuel subsidies. We need to be looking at our overall fuel energy mix and how we are supporting clean energy alternatives. So, alongside our support today for the biodiesel and biofuels sector, the Greens are going to continue to call on the government to drop those huge handouts it provides in the form of fossil fuel subsidies.

I want to make a final point about the economics of supporting biofuel production and our shift to a zero carbon economy—that is, it not as if there are costs in making this change that are not balanced by what we are avoiding: the cost of climate change. It actually makes massive economic sense for Australia to play its role in tackling climate change in the world community. As media coverage over the last week has pointed out—and as the Greens know—the cost of not dealing with climate change is going to be an extraordinary imposition on the Australian economy.

Consider the costs of sea level rise; consider the costs of losing some of our tourist icons, like the Great Barrier Reef and the ski fields. The massive economic cost to the Australian economy is something we really need to be putting into the equation when we are considering the incentives that are required. We need to be looking at what is going to be really beneficial to the Australian economy as well as to the global environment. Thank you.

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

I am pleased to enter this debate in support of the bill to effectively put ethanol into the regular taxation treatment of fuels.

The government's role in facilitating the success of Australian industries has to be balanced against the government's debt, the cost of future prosperity of Australians and fiscal policies that do not maintain a sustainable trajectory back to surplus. Of course getting the budget back to surplus is this government's principle goal in this term of parliament. For those reasons, the government has decided to move domestically produced fuel ethanol and biodiesel into the excise system and apply excise with reference to energy content. This approach is consistent with the government's approach to alternative fuels and will ensure that fuels are taxed fairly and transparently.

The approach in these bills recognises both that biodiesel is a close substitute for conventional diesel and that fuel ethanol has a lower energy content than petrol or diesel. This treatment in respect of domestically produced biodiesel and fuel ethanol is consistent with Australia's longstanding government policy to tax alternative fuels at half the energy equivalent rate. This policy recognises not only the potential benefits of these alternative fuels but also the desirability of tax neutrality across alternative fuels. This puts in the hands of Australians the choice of fuel; rather than it being dictated by its tax treatment. But biodiesel and ethanol will still be treated more favourably than other fuels, and I am hopeful that that will mean that some of the proposals for increased ethanol production from sugarcane will reach fruition.

The growing of sugarcane is one of the major industries of North Queensland, the state I represent in this Senate—not only growing sugarcane but manufacturing raw sugar from the sugarcane and sending it to the various mills up and down the coast of Queensland. The raw sugar industry has been going in Queensland for more than a century and has been the reason for much of the decentralisation of Queensland.

Cane has been one of the sustainable and longstanding crops that support so many communities in Queensland—towns up and down the Queensland coast. Originally it was around Maryborough, Childers and Bundaberg; then up to Sarina, Mackay, Proserpine, Ayr, Home Hill—where I live in the Burdekin district—Ingham, Innisfail, Mossman and, more recently, the Atherton tablelands, around Mareeba and Atherton. So it is a very important industry to Queensland.

It of course has its ups and downs—with the world market price and with various climatic conditions at times. Although climatic conditions are not as critical these days as they were in the past. In the area where I live—the Burdekin delta, Ayr and Home Hill—we irrigate all of the sugarcane from the Burdekin River dam, an initiative of Malcolm Fraser when he was the Liberal Prime Minister of Australia. That has meant that the industry in the area I am from is particularly sustainable. There are very good arguments for additional dams in the north of Queensland that could drought-proof various other parts of the sugar growing industry, around Mackay, Ingham and elsewhere, which at times do have difficulties with lack of rainfall.

But there are opportunities for new uses of sugarcane and that is where this bill before the parliament is relevant. There is a group based in Ingham, just north of Townsville, called the North Queensland Bio-Energy Corporation which is looking at additional uses for sugarcane in biofuels and ethanol, and looking further into plastics and other innovative uses of sugar. I believe John Hewson is now a director of that company. I know that the company—very well-led by Mr Robert Carey—is seeking financial support for this entity as it goes into so-far-uncharted waters. If it does get off the ground with a flourish, then it will be very good for the economy of North Queensland and northern Australia, and will provide yet another use for sugarcane.

In my own community of Ayr, Mr Geoff Cox has for years been looking at the financial viability of another sugar mill in that town, mainly focusing on ethanol rather than raw sugar production. It has never been easy, but these pioneers of northern Australia continue to work towards a whole new use of sugarcane.

Just last Friday, at the launch of the northern Australia development white paper in Cairns, I met up with Mr Peter Scott, the mayor of the Cook Shire. For those who are not aware, the Cook Shire covers most of Cape York Peninsula and it is based, obviously enough, in Cooktown. The mayor was telling me that there is a real opportunity for another dam at Lakeland Downs; a dam in that area could secure additional agricultural production, including sugarcane, in that part of the world. This would be a great boost to employment, and therefore population, in the north and it would give jobs to many people, including many of the Indigenous people of Cape York. Regrettably, at the moment the area does not have the economic activity up that way that would support long-term sustainable employment for many of the Indigenous people in Cape York.

I sometimes wonder at people in this chamber and elsewhere in the community who seem to be doing their damnedest to stop opportunities for employment for Indigenous people, particularly in Cape York. Just recently I noticed the ABC running a story headed, 'Knitting nannas trek Cape York in stand against coal seam gas industry'. The article on the ABC says:

Environmental activists, the Knitting Nannas Against Gas and Greed … will walk along the deserted and often dusty roads of Queensland's Cape York Peninsula in protest of the coal seam gas … industry.

That is very interesting, because there is no coal seam gas industry in Cape York—as I understand it, there is no coal seam gas in Cape York and there was certainly never ever any intention of having a coal seam gas industry there—and yet this group of environmental activists, no doubt encouraged by the Greens political party, is making this highly public trek up there to stop something that was never going to happen anyhow.

As well-intentioned, perhaps, as these people might be, as misinformed as they might be, it would be great to see their efforts used to address the real issues in Cape York, which is what I am talking about. Instead of opposing the non-existent coal seam gas, it is a pity these ladies and the Greens political party were not more interested in the huge unemployment in that area, the lack of infrastructure and services, the high youth suicide, the high prices and cost of living. All of these are worthy causes that the knitting nannas could address, but rather than do that they choose to address a non-existent issue, which they can obviously claim success for stopping as the coal seam gas industry is not likely to happen.

Senator Waters would know all about this; I have heard her talking about the non-existent coal seam gas industry in Cooktown. It always amuses me that someone obviously intelligent enough to be a member of this chamber can still not understand that there is not any intention—I do not think there is any gas up there; the early trials from many years ago showed that there was no coal seam gas up that way. Nevertheless, it is a political platform for the Greens political party and obviously the knitting nannas as well. But I urge the knitting nannas, if they want to do something seriously—I give them the credit of wanting to do something for Indigenous people in Cape York—then look at unemployment, the lack of infrastructure and services, the high youth suicide, and the high prices and cost of living because they are the real issues up there.

One of the ways that unemployment and suicide can be addressed is by new economic activities. Again, I mention the proposal for a dam around the Lakeland area on a river that runs out to the Coral Sea. That dam could double, treble or quadruple the amount of agriculture in the Lakeland area, and that could well include sugar for ethanol. So these are important issues for Australia.

That brings me to the issue of greater activity right across the north of Australia, where there is so much potential and so many opportunities abound. Naysayers will say, 'You did have an attempt at a sugar industry on the Ord some years ago, but it failed,' and certainly both of those statements are correct. But there were reasons for the failure, which I will not go into here, but they are not insurmountable problems that could not be addressed. Energy from ethanol and biodiesel are areas that could be looked at.

There were reports some months ago of a big Chinese development company buying into the Ord stage 2 in order to—as I recall from the newspaper articles—enter into sugar production for both raw sugar and energy purposes. I have not seen much further detail on that, and in the time this morning before this debate I have not been able to look further into it, but that is the sort of thing that I think that we need. I have no concern about it being an investment of a Chinese investment group into Australian land. Some people around the country will say, 'We're selling too much to the Chinese.' As I point out to them, they can never take the land back to China; it will always be in Australia, and whatever activities occur in places like that will always occur in a manner that is governed by Australian law: workplace and health and safety and conditions will always be governed by Australian law. I welcome that sort of investment, because it does in fact encourage investment into northern Australia. It encourages investment into agriculture that can be used for energy.

I am also aware of a group who have done a lot of work on the Gilbert River, which runs into the Gulf of Carpentaria. The Gilbert proposal is by a group called IFED, which is chaired by Mr Keith De Lacy. He was, many years ago now, a Labor Treasurer of the Queensland government, and he is now a very successful businessman. It is a proposal that is mainly agricultural, but it has an element of energy involved in it. It is a project that was more or less ready to go. Unfortunately, with the change of government in Queensland earlier this year, there was a bit of a pause on that project. There was a pause because, as you would know, Acting Deputy President Bernardi, in Queensland the Labor Party win elections because they get preferences from the Greens political party; without the preferences from the Greens political party, Labor would not win anything. In that way, the Greens political party always have this oversight—this final veto, one might say—on legislation that goes through any parliament where Labor is in charge and where Labor are there because of the preferences of the Greens political party.

The Greens have never liked this particular proposal; everybody else does, but the Greens political party and the Wilderness Society are totally opposed to it. I understand that there was a pause on that IFED proposal. I understand that a lot of work has been done, and there has been a bit of internal friction within the Labor government. The last news that I had was that it could go ahead with some other restrictions. But that would be good news, because that is another project in the north of Australia involving agriculture and involving alternative forms of energy that could be of particular use.

So whilst some would say that this legislation is putting an excise on ethanol that has not been there before, it is important to note that at all times under this regime, under these bills, there will be a concession to the ethanol industries so that you should always be able to buy blended ethanol petrol cheaper than the full price of petrol. This legislation retains that concession to the ethanol industry. While it is a long-term project, there are a lot of difficulties with the ethanol industry; one of them is getting enough ethanol to mandate a greater percentage of ethanol in petrol. But these things will be improved in an incremental way. In Brazil ethanol is a huge component of fuel, but the sugar industry in Brazil at the moment is in very, very dire straits. That does show that ethanol production is not the panacea for growing sugar cane. I think that these bills deserve the support of the parliament, and I would certainly urge that senators do vote for the bills.

David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

I rise to oppose the Excise Tariff Amendment (Ethanol and Biodiesel) Bill 2015 and the Energy Grants and Other Legislation Amendment (Ethanol and Biodiesel) Bill 2015. Specifically, I rise to condemn the Liberals, the Nationals, Labor and the Greens.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

And me.

David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

Each of these parties supports these bills. I accept that interjection from Senator Xenophon; I condemn him as well.

These bills are some of the worst to be put to the parliament this term. The bills introduce a high effective tax rate on imported ethanol and biodiesel, to align with the tax on petrol and diesel. This is to occur in nine days' time. The bills gradually introduce an effective tax rate on domestically-produced ethanol and biodiesel, with the final tax rate on ethanol representing only a third of the tax on petrol, and the final tax rate of biodiesel representing only a half of the tax on diesel.

The bills hit motorists hard, but the Liberals are silent on this, despite their claims to being a low-tax party, because they realise that, to improve the budget position, the path of least resistance is to increase tax. By introducing a significant wedge between the tax treatment of imported and domestically-produced product the bills represent a bold return to protectionism. There is not a murmur about this from Labor, which has a proud history of reducing protectionism to the long-term benefit of Australian businesses and consumers. The support of the Greens for the bill is expected. They rail against tax concessions for superannuation, but they will happily accept a tax concession for biodiesel over diesel. And the support of the Nationals is also expected—they will support any handouts to farmers, no matter how perverse, including mandating the inclusion of ethanol in fuel, irrespective of the economics and how market-distorting it is.

The Liberal Democrats are the only supporters of free trade, low tax and the abolition of corporate welfare in this place. The other parties should hold their heads in shame.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I too stand condemned by Senator Leyonhjelm. I appreciate that he condemned me as well, because I actually think that the Excise Tariff Amendment (Ethanol and Biodiesel) Bill 2015 and the Energy Grants and Other Legislation Amendment (Ethanol and Biodiesel) Bill 2015 are good pieces of legislation. This is about fuel security. It is about more Australian jobs. It is about a net economic benefit, net of any subsidies and grants, because we need to look at some of the economic evidence. The Deloitte Access Economics report of 19 February 2014 concluded that the domestic biodiesel industry had a total contribution of $64 million and leveraged 438 full-time-equivalent jobs, net of all subsidies. Significantly, most of these jobs are in regional Australia. I am reading from a very good briefing paper, the biodiesel excise briefing paper, provided by the Biofuels Association of Australia.

I think we need to set out the history of this. The former government did the right thing in terms of biodiesel by giving it a chance to grow and a chance to increase the fuel security of this nation. The inquiry that was instigated by Senator Madigan on fuel security has been quite revealing in terms of how tight things are for our domestic fuel supply: we are only one or two ships away from serious fuel shortages, particularly in my home state of South Australia. I think that we need to put this in context. If the use of biodiesel involves cleaning up waste products, including tallows, waste vegetable oils and used cooking oils, these feedstocks do not compete for agricultural land or water. On that basis, it is a good thing to do in environmental terms.

I was quite shocked that in its budget last year the government essentially took away the support for this industry, and there were real issues of sovereign risk. I thought the coalition was all for businesses—regional enterprises in particular—being able to grow and prosper. You kicked the guts out of them with last year's budget. This is an attempt to try and wind it back to some degree, so that there is at least an element of hope for this industry. In terms of what is being proposed, my understanding is that the bipartisan agreement that was ripped up in the budget last year would have allowed for no taxes on this industry. That was brought forward to five equal steps in five years to a 50 per cent excise. That is an absolute deal breaker. It is destructive of this nascent industry that deserves to grow for environmental, fuel security and economic development reasons.

What is now being proposed, as I understand it, is to change this to equal instalments over 15 years. My understanding is that there is an amendment to this effect, and that amendment forms part of this bill as a result of a bipartisan agreement between the major parties. I think the Greens are supportive of that, because it at least gives this industry a chance to succeed.

I would have preferred the earlier arrangements. I thought the arrangements made by the former government were good arrangements for this industry. Millions of dollars were invested on the basis of the previous rules. ARfuels has raised over $25 million in equity funding and over $20 million in debt funding to invest in the biodiesel industry. This ASX-listed company has directly invested over $45 million of shareholder's funds since December 2011. What happened with the budget? Sovereign risk. They got kicked in the guts and their share price collapsed as a result of a budget move that was in clear breach of a bipartisan commitment back in 2011. According to the biodiesel excise briefing paper, all that money has been invested in the Australian biodiesel industry in new capital facilities and upgrades to existing facilities, in addition to employing a workforce to operate the business. I note that ARfuels has plants in limbo in Adelaide, at Largs Bay, and also in Western Australia, at Picton. Both those plants will employ in the order of 15 full-time jobs, as I understand it. This legislation needs to goes through for those jobs—those precious jobs in our home state of South Australia—to have a chance to be taken up.

I think we should point out that biodiesel not only has the direct economic benefit of picking up waste such as fish and chip oil. The idea of the oil from fish and chip shops being recycled in a way where the particulate pollution is 74 per cent less than ordinary diesel is also an important factor. That is why it should be encouraged. I also think it is worth noting that, previously, some big mining companies were importing biodiesel directly, presumably from places such as Brazil. They were getting the cleaner fuels grant, as well.

Those countries could have been importing biodiesel from countries that provided a subsidy for their biodiesel and they were getting the cleaner fuels grant as well. I think that smacks of double-dipping and it is completely undesirable from a public policy point of view and from those companies that do not have to pay the excise anyway because they are exempt because they are off-road vehicles. That is an outrageous rort and, if companies such as BHP and Rio were doing that, they should hang their heads in shame. It also goes to show that local businesses that were producing biodiesel were at a real disadvantage in respect of this. So, in so far as the government is getting rid of that rort—and it is a rort—I welcome this legislation.

I also note that, in terms of the net economic impact, it is very clear from the Deloitte Access Economics report of February 2014 that:

if the domestic biodiesel industry was operating at capacity, the potential economic contribution of the industry would be $194 million and 1,273 FTE jobs, net of all subsidies—

let alone the multiplier effect in regional communities where the actual job impact would even be greater and even more beneficial.

I can indicate that I do support this bill. I wish that the government would go back to the agreement it struck with the former government back in 2011. I thought that that was the preferred outcome. I do support the fact that the rorting that some big mining companies were engaged in—legal rorting, I should emphasise—of importing biodiesel directly from countries that subsidise their biodiesel and getting a cleaner fuels grant as well when their vehicles are exempt from excise because they are off-road vehicles is pretty outrageous. At least that has been dealt with as well.

I hope that ARFuels' investors and debt providers will get some certainty with this piece legislation and that we do not tamper with this anymore; or that, if we do alter this legislation, it is altered in a way that makes it more attractive for biodiesel in this country. There is that imperative of fuel security that I do not think, as a nation, we have dealt with very well either federally or at the state level.

I look forward to the amendment being passed, which I strongly support, which gives at least some breathing space and a fighting chance for this industry. I hope that ARFuels and other similar companies that produce biodiesel in this country have a chance to prosper as much as they can with this legislation. I am looking forward to those 15 jobs in Largs Bay in South Australia.

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

Firstly, I would like to thank all those senators who have contributed to this debate. These bills implement the government's 2014-15 budget measures to reform the taxation treatment of biodiesel and ethanol. These measures have been amended to provide additional transitional assistance for domestic biodiesel producers to assist that sector in adapting to these excise changes.

Following some further discussion with industry, further amendments are being made in the Senate to provide a slower phase-in of the rate of excise. As a result of the amendments yet to be moved, the fuel tax rates for biodiesel increase in a straight line manner from 1 July 2016 until 1 July 2030 when the excise right for biodiesel will be approximately 50 per cent of the excise right for diesel. The extended phase-in for biodiesel producers will provide additional support to that industry while it continues to develop and grow.

The government's amendments balance the support for the biodiesel industry against the need for a sustainable approach to the budget going forward. The phase-in of excise gives these producers time to adjust while encouraging their businesses to be self-supporting in the future.

These bills also abolish the cleaner fuels grant scheme, which refunds excise and excise equivalent Customs duties paid on both imported and domestically produced biodiesel. In addition, the Ethanol Production Grants scheme, which refunds excise paid on ethanol to domestic producers, will cease on 30 June 2015.

The government is continuing to provide support to Australian producers of ethanol and biodiesel while ensuring that responsible decisions are made to continue the path back to a budget surplus. Continued support for these industries highlights the role of ethanol and biodiesel producers in maintaining diversity in Australia's fuel mix and future energy security. I commend these bills to the Senate.

Question agreed to.