Ursula Stephens (NSW, Australian Labor Party, Shadow Parliamentary Secretary for Science and Water) Share this | Hansard source

I begin by thanking the participants in the Senate inquiry into 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 and the officials who were required to produce the report on such short notice. It is an increasingly common trend that legislation is being referred to committees for consideration without adequate time for witnesses to prepare submissions or for the committee to do justice to the kind of legislation that is being presented.

The report on these bills, which was tabled out of session last night, makes some rather strong conclusions in favour of reform of alcohol taxation. We received quite significant evidence in that inquiry about the need for reform of alcohol taxation, but we were cautioned about doing it in an ad hoc manner. On that basis, for expediency, I indicate that Labor is supporting the government’s amendments to these bills but is not supporting Senator Murray’s amendments, simply because we believe that there needs to be much greater scrutiny and consideration of the proposals that he has put before us.

Although a participant in the inquiry, Labor chose not to make any additional comments to the inquiry report, but I must say that recommendations 2 and 3 of the report, which relate to volumetric taxation of alcohol and excise on low-alcohol products, including some ready-to-drink products, are technically beyond the scope of the terms of reference of the inquiry that Senator Murray initiated. The bills do not propose any change to the excise rate for alcohol products, although some minor definitional issues are addressed. Consequently, any recommendation that seeks to indicate a position in relation to excise rates falls outside the scope of the inquiry report. The bills give effect to the fuel tax bills. They 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.

The Excise Tariff Amendment (Fuel Tax Reform and Other Measures) Bill changes the list of products subject to excise so that only two rates of duty apply: one for aviation fuel and one for 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 also 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, and I pose that question to the minister this evening and invite him to answer it in his summation of the debate on the bills.

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 a liquid fuel manufactured from vegetable oils or animal fats through a process of hydrogenation, is added to the definition of ‘cleaner fuel’.

Schedule 2 of the Excise Laws Amendment (Fuel Tax Reform and Other Measures) Bill 2006 repeals a number of acts. Coal is listed in the excise tariff and has attracted a free rate of duty since 1992. The inclusion of coal in the excise tariff means that it is an excisable product and, therefore, coal producers are required to be licensed as excise manufacturers. Coal is omitted from the excise tariff rather than included at the free rate of excise duty, as in the existing law, the Coal Excise Act, which contains licensing and other requirements. It is repealed as it is no longer considered necessary to impose these requirements on activities involving coal.

The Spirits Act, which provides for controls over the manufacture of spirits, including brandy, whisky, rum and methylated spirits, is repealed on the basis that most of the provisions it contains are adequately covered in the Excise Act or are no longer relevant to the effective management of the alcohol taxation regime. The Distillation Act, which provides controls on the distillation of spirits, including stills, distilleries, licences and fortification of Australian wine, is also repealed.

The Customs Amendment (Fuel Tax Reform and Other Measures) Bill amends the Customs Act 1901 in three ways: to strengthen customs control over certain imported goods that are used in the manufacture of excisable goods; to repeal the customs related provisions of the fuel penalty surcharge legislation; and to replicate certain provisions of the Spirits Act 1906, which, again, are to be repealed.

The purpose of the Customs Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006 is to amend the Customs Tariff Act 1995 to implement changes that are complementary to amendments contained in the Customs Amendment (Fuel Tax Reform and Other Measures) Bill 2006. These measures are designed, as the government argues, to strengthen customs control over certain goods that are used in excise manufacture and ensure that excise equivalent goods are subject to the same duty when imported as they would be under the Excise Tariff Act 1921—that is, the same products when manufactured or produced in Australia.

In the House of Representatives, the member for Hunter asked the Assistant Treasurer a number of questions. The minister has answered one of these questions in part. Minister Dutton has not proved very cooperative in answering questions put to him in the parliamentary debate on the bills. So I now ask the minister representing him in this chamber to address these matters. For the record I will put the questions again. The first question is as follows: these bills reduce the customs duty and excise for Avgas and AVTUR by nine per cent. The minister has indicated in the explanatory memoranda to these bills that reduction is part of a change to the cost recovery regime for aviation services. However it is not clear exactly how this reduction in the excise and customs duty operates as part of the new arrangements. So I now ask the minister: what is the cost to revenue of reducing excise and customs duty rates for aviation gas and aviation turbine fuel?

The second question relates to the definition of biodiesel in schedule 1 item 2 of the Excise Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006 and this is quite a significant change. The definition of biodiesel is now to be amended so that biodiesel includes liquid fuels manufactured by chemically altering vegetable oils or animals fats like tallow to form mono-alkyl esters. Labor now seeks information as to whether this change in definition will allow manufacturers to claim that products previously not part of the biodiesel regime will now be able to claim their products as biodiesel products with the consequent concessional excise regime applying. If the definitional change means that some products will be brought into the biodiesel net that were previously excluded, we ask the minister to provide to the Senate details of the products included and the producers of those products, and to indicate to the Senate what discussions have been held with oil companies in relation to this change. We also ask the minister to consult with his colleagues and report back to the Senate about any consultations that have been held with oil producers in relation to this definitional change.

The third question is in relation to how the new customs changes relate to biodiesel and ethanol. Will the minister now inform the Senate what is the precise schedule of changes for reduction of customs changes for these products until the full introduction of the new fuel tax regime? We are seeking a table of annual customs rates for these products up until 2020. The minister has provided details of effective tax rates. We are now seeking the precise schedule for proposed customs and excise rate changes. Given those three important questions, Labor is supporting this bill.