Gary Gray (Brand, Australian Labor Party, Shadow Minister for Resources) Share this | Hansard source

This is a good day. It is a day when the government and the opposition have reached agreement on a difficult area of public policy: fuel excise. Fuel excise was indexed to the consumer price index nearly 30 years ago. It was indexed in order to remove the annual budget round of increasing excise on a range of commodities from tobacco and alcohol through to petrol. The classic front-page story that ran on the morning of the second Wednesday of August every year—budget day at that time—would announce 'Fags, beer and petrol go up'. The decision to index it to CPI said to people that these excises should proceed only in a fashion that equals the rate of inflation.

In the early 2000s the then Prime Minister faced difficult political circumstances at a time when the Australian dollar was plunging towards US50c and the domestic price of petrol was rapidly increasing—it went beyond, unbelievably in those days, $1.10. At 110c a litre the political pressure on the government was great. The government had lost a key by-election in Ryan, had lost its kindred spirits in the Western Australian parliament—the loss of the Court government—and found itself under extreme political pressure as a consequence of the cost-of-living impact occasioned by a collapsing dollar. The immediate response of the government brought little or no short-term pain—it was to remove the indexation on fuel excise. That seemed at the time to be a prudent measure, because in the context of one budget how could it do much damage? But over the course of the ensuing nearly 15 years that decision has cost the budget in excess of $10 billion. So it is good to see the government and the opposition reaching a compromise to restore the indexation on fuel excise.

This comes at a cost to consumers. We should all know that. A consumer with an average fuel tank of 60 litres, such as my wife's vehicle has, will pay about $1 a fortnight in additional petrol costs—not much, but we should know and understand that it will cost an additional amount of money. We should also know and understand that it will generate substantial revenues over the forward estimates of the order of $3.6 billion, and over the course of the next decade of the order of $23 billion, to support the activities of the Commonwealth government. Those activities will include road funding and a whole range of other essential functions of government.

It is really pleasing to see a good piece of public policy, hard fought over and hard won on both sides—tough negotiation—producing an outcome that is genuinely in the national interest. One of the reasons we know it is in the national interest is the positive reaction that we have seen in the last few hours from our community. The Australian Local Government Association has welcomed this decision, because it also delivers to Australia's local governments road funding in excess of $1.1 billion. That will go into the Roads to Recovery road funding that is administered by our local government authorities. Our local government authorities are not just excellent authorities but also the authorities with the capability to properly administer these funds. They are the authorities with the right prioritising of local community demands and needs. They are properly democratically elected, held accountable and able to ensure appropriate and proper spending of these funds. So it should be no surprise to any of us that the Australian Local Government Association says of the Labor Party that this:

… underlines their capacity, even in Opposition, to put Local Government at the centre of policy initiatives aimed at enabling councils to deliver essential infrastructure for their communities, create jobs and contribute to productivity improvements across the nation. Councils across Australia will be appreciative and thankful to the Shadow Ministers for this great initiative.

We should also be greatly appreciative of the government for accepting the offer that was made.

I am really pleased to be speaking here today on this bill, because I think all of us in this place see the sound public policy and public administration reasons and the good taxation policy that underpin indexation of these excises. In the context of petrol I think it was an important measure long overdue. Therefore I congratulate the government on having the strength to stay in the ring and to wrangle on this, and the shadow minister for infrastructure and the shadow Treasurer for bringing it home in a way that keeps the Australian taxpayer whole. We know that if this compromise had not been reached the Australian government would have had a terrible job to conclude what to do with the revenue that it has collected, quite properly, over the course of the last year while the excise has been in place. It reasonably had concluded that it might need to give that money back to the petrol companies which originally collected this revenue. So this is a good decision—a good decision for Australia's roads, for Australia's road users, for our community and for local government. It is rare that in this place we can come together, both side of politics, and conclude an arrangement that is so manifestly in our national interest and at the same time do it in a hard-won and legitimate way.

Labor has proudly sought, and the government has agreed to, an additional $1.1 billion in Roads to Recovery funding for regional roads. That decision will, we hope, go some way towards repairing the funding and activity gap left at local government level as a consequence of the cuts in financial assistance grants to our local government authorities. Throughout the country, from north to south and from east to west, from Adelaide to Darwin and from Cairns to Broome, we have had cuts in the Financial Assistance Grants to local governments. And those cuts have a profound impact on the capability of our local government authorities to act in the interests of our communities. I will read some of the funding that has been foregone as a consequence of the freeze to indexation in Financial Assistance Grants.

In Albany on the south coast of Western Australia, cuts over the forward estimates will total in excess of $2 million. In Bayswater, a metropolitan, suburban local government authority in Perth, the cuts will total in excess of $1.1 million. At Chittering in the hills outside Perth we see that the cuts through this non-indexation will total in excess of $630,000. These cuts are very substantial, but they get even bigger and even worse when we get to the regional locations of Western Australia, where we see that as a consequence of these measures Dalwallinu will forego funding that totals nearly $1.4 million over the forward estimates. These are very small local government shires with small populations, lots of roads and lots of infrastructure. They have very, very small rates bases.

Consider Derby-West Kimberley: this is the area of Western Australia that covers from the central part of the Kimberley, from the township of Derby, through to the Kimberley west coast and the township of Broome. That local government authority will lose, under this decision, nearly $3 million. The Shire of Donnybrook-Balingup, where I will be on the weekend at the Truffle Kerfuffle, will lose nearly $1.4 million under these measures.

Local government is literally the first tier of government in our country. It is the tier of government that is closest to the people and it is the tier of government that keeps our communities working and functioning well. It is extremely important. In my own electorate of Brand, due to these freezes in Financial Assistance Grants the City of Kwinana will lose almost $800,000. The City of Mandurah will lose over $1.6 million and Rockingham will lose almost $2.4 million. There is in excess of $4 million in lost funding for key metropolitan local government authorities as a consequence of those Financial Assistance Grant freezes.

Now, the decision which the government has made that unblocks in excess of $1.1 billion will restore a substantial funding stream that will materialise as Roads to Recovery funding. The reason that is important is because all of our local government authorities have priority roads, roads that are about serving the interests of our communities, and construction tasks that are often about safety, always about amenity and always about providing local contractors and local workers with good, local jobs. And that is really important, because those good local jobs are jobs on the tools. They are jobs that are building our roads, streets and pavements which create safer communities—better places to live and better amenity. It is amenity that better accords with the aspirations of our community.

The government's decision to allow this additional funding stream to go to Roads to Recovery should be applauded, and I know it will be applauded by the over 550 mayors and local government authorities around our country. The reason they will applaud is because they have the people, the machinery and the capability to start work right away on Roads to Recovery programs that will deliver immediate benefits to our communities. They will deliver immediate work and immediate benefits in the course of the coming two financial years that will benefit our communities for 10, 15 or 20 years to come. There cannot be a better way to spend a dollar than by having that dollar dedicated towards enduring public assets to support our communities—to make our communities safer places and to make our communities even better places.

Many of our regions are currently experiencing high youth unemployment. Just last Friday I was in Cairns with the Prime Minister and Warren Entsch, launching the North Australia white paper, the government's terrific response to the Joint Standing Committee on Northern Australia. In Cairns, the unemployment rate for young people, as we stand here this evening in Canberra in Parliament House, is in excess of 22 per cent. So we know that the Roads to Recovery program will not just fill an important capital works gap in our local government portfolio works but it will, most importantly, improve amenity in our communities. It will create jobs in our regional communities and it will do all of that on budget and on time in projects that will be well administered and well and transparently managed in the interests of all of our local government authorities. And it will be done on the priority ordering of capital works that our local government authorities have published, that they are prepared to stand behind, that they are prepared to fund and that they are prepared to make sure happen in a safe way to support our communities.

It is a rare day when both sides of parliament can come together to agree on a revenue measure that will stay in place now in perpetuity, that will generate funds from the sale of gasoline and petroleum for generations to come and that will index this excise to inflation. It is a wise decision, it is a good decision, it is a decision that serves our community well and it is a decision of which we should we should all be proud. I commend the bill to the House.

See this speech in context