Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Hansard source

The House has agreed to deal with 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 cognately. They are not unimportant bills, not in any sense of the word, but they are not the bills we should be debating today. The bills we should be debating today are the Fuel Tax Bill 2006 and the Fuel Tax (Consequential and Transitional Provisions) Bill 2006. We are not debating them today, apparently because the government has a backbench revolt.

It would have made a lot more sense for us to be debating the fuel tax bills prior to dealing with these four bills in cognate debate. That would have been the course of action if the government’s original proposal had been followed. Indeed, we would have been debating the fuel tax bills yesterday. But we were surprised late last night, or this morning, to learn that we would not be debating those bills this week at all and, indeed, would be having this cognate debate today instead. That is disappointing from the opposition’s perspective. It gives us little notice, but it also causes additional confusion in the parliamentary processes and, of course, new and uncertain times for the industries which are affected.

These bills that we are debating today are effectively machinery bills. Although they do many things that are not related to the fuel tax bills, overwhelmingly they are about putting the technical machinery in place to allow the fuel tax bills to have effect. It is unusual that we are doing them in reverse order. Why is there government backbench revolt? It is for the same reason that Labor has been expressing concern over the last few weeks—that is, the proposed fuel tax changes will have enormous cash flow implications for many businesses in this country.

My office has had representations from many sectors that are very concerned about this aspect. On 22 May Minister Dutton reaffirmed the government’s commitment to putting these changes into effect without any further change. He claimed that he had consulted widely in the industry and that, if he did not go forward with the proposals, we would end up ‘in the same old mess we currently find ourselves in’. Surprise, again: we are not debating the relevant bill today. That is a source of both disappointment and curiosity for those of us on this side of the House.

Labor’s course of action—and it has already been put into motion—was to send the bill to a Senate committee to tease out these cash flow issues and to allow representatives from each of those sectors to put their submission to the Senate committee to determine whether this bill can be redeveloped in a better way, with changes either to come back here or to the Senate by way of amendment. That would have been the sensible course of action. But the government did not want to do it that way because it was concerned about the embarrassment it might face as that Senate committee process unfolded.

I am now joined by my colleague the member for Bruce, and I formally move the amendment that has been circulated in my name:

That all words after “That” be omitted with a view to substituting the following words: “whilst not declining to give the bill a second reading, the House:

(1)

condemns the Government for inappropriately bringing forward debate on these excise and customs bills in advance of consideration of the primary legislation contained in the Fuel Tax and Consequential Bills;

(2)

calls on the Government to bring forward debate on these bills forthwith; and

(3)

criticises the Government over its insensitivity to the impact of record high petrol prices on Australian families”.

I will return to those points later. I will now turn to the technical aspects of the bills being considered by the House this morning. The customs amendment bill and the customs tariff amendment bill change the Customs Act 1901 and the Customs Tariff Act 1995. These bills are designed to extend changes to imported equivalents that the accompanying excise laws amendment bill and excise tariff amendment bill make to excisable goods. While these bills give effect to the fuel tax bills, which constitute what the government claims is major reform of fuel tax—which is something I question but will return to later—the bills 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.

I turn now to the Excise Tariff Amendment (Fuel Tax Reform and Other Measures) Bill. This bill changes the list of products subject to excise so that only two rates of duty apply: for aviation fuel and 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 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. I pose this question to the Assistant Treasurer and I invite him to answer it in his summation of debate on the bill.

Labor had been offered a briefing from the minister’s office on these bills. I thank the minister, because this is somewhat of a departure from the practice of the former minister, Minister Brough, who constantly and regularly denied the opposition briefings on some of these very complex issues. So I again thank the minister for that offer. Unfortunately on this occasion we were not able to take up the offer because of other demands, but I trust that the minister will continue to make his people available to us when we have detailed questions to ask in advance of the debate on these complex issues.

I want to ask a series of questions on this bill. In the absence of an opportunity to submit answers earlier, I hope the minister will answer them in his summation on the bill and, if he is not able to, he will take the opportunity to provide answers through the usual channels as soon as he can. It is very important to the opposition to have these answers before the bill is considered by a Senate committee and, of course, before it is debated in the Senate.

The fuel tax bills combine into one piece of legislation the means of providing fuel tax relief to businesses and households. It is intended that from 1 July 2011 these bills will also provide the legislative basis for taxing certain liquefied and compressed gaseous fuels, when fuel tax is levied on LPG, LNG and CNG for the first time. This takes me back partly to some of the concerns I addressed earlier about a backbench revolt.

It also takes us back to a very important debate we had a few years ago about whether the time had come to start applying taxation to some of these alternative fuels. It was an important debate. My view is that we got a pretty appropriate outcome from that debate. It is very important that these alternative fuels have government assistance in their infancy while they develop the technology and their markets and then build the sort of market share they need to remain competitive, but the time does come when these alternative fuels do need to show that they are capable of standing on their own two feet. The regime that the fuel tax bills will put into place is a balanced one whereby tax-free status is kept in place for some time yet but with a slow phasing in of fuel tax based on the energy content of the fuel—which I think is the appropriate way to levy the tax—and, just as importantly, with an ongoing 50 per cent reduction in that energy content to keep them competitive.

I want to remind the House about the very difficult time that LPG has had as a result of the government’s approach to this issue. Not all that long ago, LPG was tax free. When the GST was introduced, the full weight of the GST was felt by the LPG industry because, unlike petrol and certain other fuels which had their excise reduced to compensate for the impact of the GST, LPG was not carrying any excise; therefore there was no excise to be reduced, and therefore there was no opportunity to give the same sort of compensatory effect to LPG. So in that case LPG took the full weight of the government’s GST, and I know it is an industry that has been suffering ever since as a result of that change.

I want to talk briefly again about the proposals to change the way in which business makes a claim on its GST exemption. Until now, business has been effectively able to do that up front. In some cases—and some would argue that this is a bad thing—that has been cash flow positive for businesses. In other words, they have been able to claim the tax back before making the payment. That would certainly often be the case in circumstances where the business has a 30-day credit line with the supplier of fuel. But what has been proposed in the fuel tax bills is that businesses now claim the rebate on their BAS at the end of the month or the end of the quarter, depending on their circumstances. The government claims this is a streamlining process—it involves less compliance. That is a very strong case. But the government obviously has not properly taken into account the extent to which this will impact upon the cash flow of many businesses in this country, and that is why the Labor Party moved quickly in the Senate to have a Senate committee inquiry. That is the course the government should have followed, rather than putting this House into shambles by pulling the bill while it deals with its backbench revolt.

We have had representations from all sorts of people on this issue, not just the people you would expect to make representation—like farmers, people in the transport industry and the fishing industry, very importantly—but people in areas like chemicals, plastics and paints. ACCI has been making strong representation on their behalf in recent weeks. This could be tens of thousands of dollars, and, in the case of some big paint manufacturers, millions of dollars, in cash flow difficulty for some businesses. We intend to vigorously pursue these issues in the Senate committee process, if indeed we do not see some reversal from the government between now and then.

It is simply the case that the excise tariff will have some transitional compliance costs for taxpayers, as they will have to modify their accounting systems to reflect the changes made. However, it will decrease compliance costs—hopefully—in the longer term, due to the decrease in legislative complexity. Labor understands that and supports that. The difficulty is that the consultation obviously has not been extensive enough. It would appear to me that the government was not made aware early enough of the strength of the lobby and the extent of the problem this poses to industry, and that reflects the fact that the government did not properly consult on the bill.

What surprises me is that the government backbench are in revolt over the cash flow difficulty posed by the new system of reclaiming the tax rebate on the BAS, but we have heard not a word from them on the difficulty posed by the decision in the fuel tax bills to repeal the fuel sales grants scheme. When you have a look at the various reports in the newspapers, you see that the people revolting on the backbench, not surprisingly, are typically members and senators representing rural and regional seats. The fuel grants scheme, of course, is designed to assist people in rural, regional and indeed remote Australia. So why is it that we have a revolt on the cash flow difficulties emanating from the new BAS system but not a word from National Party senators and members and not a word from Liberals representing rural and regional seats? It defies any logic.

The government is going to put the Labor Party in a difficult position, because the government has cleverly decided to link the fuel grants scheme repeal to road funding in rural and regional areas. So everyone is going to have to pay so that some people can get more road funding in their particular area. No doubt, if past form rings true, those areas will be marginal seats held by National Party members in particular but also by other coalition party members and, of course, Labor marginal seats in rural and regional Australia. That is fine. The government can make it difficult for us, but it is going to be up to it to explain to people living in rural, regional and remote Australia the logic behind the repeal of the fuel sales grants scheme.

Here is a little bit of history. This scheme came into effect because of the government’s reluctant acknowledgment that they were unable to meet their promise that the GST would not cause fuel prices to rise. They imposed a 7c per litre reduction on unleaded fuel, working out in their minds that, if you took 7c a litre off and put 10 per cent on fuel, taxes should remain about the same—the GST should not force petrol prices up. But they did not anticipate fuel prices going beyond 70c per litre. If you do the simple arithmetic you will find that, for anything below 70c, if you take 7c off and put 10 per cent on, you come out with about the same result. But, beyond that, take 7c off and put 10 per cent on and you will find the GST starting to dramatically impact on petrol prices. So the government had to run up the white flag and say, ‘We’ll fix this. The real impact, because of the knock-on effects of transport et cetera, will be in rural and regional Australia, so we’ll give people living in regional Australia a 1c rebate at the bowser. For people living in rural Australia, we’ll give you a 2c rebate at the bowser, and people in remote areas of Australia will get a 3c rebate at the bowser.’

That is the scheme the government is repealing. The GST is still there. The GST will continue to have an enormous impact on fuel prices, with oil prices so high, at around $US70-odd per barrel. So the GST is not disappearing; oil prices are not about to fall. The government still refuse to have the ACCC formally monitor petrol prices. And the impact is always worse in the bush. Yet they are repealing this important scheme. So why wouldn’t members of the coalition backbench also be in revolt over that issue? It is a mystery to me. I invite them, when contributing to this bill and the fuel tax bills, both in this place and in the other place, to justify their silence on this enormous whack on country motorists at a time when fuel prices are so high.

One would have thought that there was never a more important time to be extending relief to country motorists than now, when petrol prices are at record highs. The logical thing, if anything, would be to be strengthening the subsidy to the bush, not taking it away from the bush. What we will certainly be pursuing in the Senate committee is some assurance that the government’s claim of I think $1.1 billion saved over four years as a result of the abolition of this scheme will go to roads. We will not be taking that in good faith and on face value; we will be checking and looking for the facts in the Senate committee to ensure that that is the case.

I want to return to the Excise Laws Amendment (Fuel Tax Reform and Other Measures) Bill 2006. 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 liquid fuel manufactured from vegetable oils or animal fats through a process of hydrogenation, is added to the definition of what is a cleaner fuel.

Schedule 2 of the Excise Laws Amendment (Fuel Tax Reform and Other Measures) Bill 2006 repeals a number of acts. Through changes to the Fuel Tax Bill 2006 fuel tax credits will replace existing rebates and subsidies on fuel. I want to clarify a point to the House. The government is presenting this as big fuel tax reform. In its normal, Orwellian way it has included ‘reform’ in the title of the bill. Once upon a time we had a diesel fuel rebate. I think most people in this place, and constituents who have been beneficiaries of that rebate, will understand the meaning of that rebate. The excise on diesel used off-road and in certain road uses for the purpose of business was able to be claimed back. Then we lost that scheme and the government created the energy grants scheme. The energy grants scheme was basically the same scheme. There were some amendments and some improvements to the system, and some minor extensions of the system, but effectively it just replaced the diesel fuel rebate. Now we are going to have the new fuel tax scheme, which again is just a rejig of the way the tax is claimed back. Instead of making an application to the ATO after you have bought the fuel to get your money back, you wait till the end of the quarter and claim it on your BAS. You will take off the money owed to the ATO that money that you believe is payable to you as a result of the tax on fuel that you paid but which you did not need to pay under law because of your exemption.

I want to make one point here. I note in the bill and in some of the announcements by the minister that this scheme is now going to be extended to petrol, not just diesel and some other fuels. That is all well and good. Anyone listening to that announcement would be forgiven for taking a great leap in the air now that not only diesel but petrol for business use will also be effectively tax free. I would understand them thinking that. But this rebate only applies to vehicles that are 4.5 tonnes or heavier. I am not aware of any vehicle of 4.5 tonnes or heavier that runs on petrol. I invite members following me in this debate to nominate a vehicle of 4.5 tonnes or heavier that runs on petrol. The member for Fisher is following me on this bill. I know that he has a great interest in motor vehicles. I invite him to nominate for me a vehicle that is in that classification. I do not know whether the member for Page is speaking on this bill.

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