Richard Colbeck (Tasmania, Liberal Party, Parliamentary Secretary to the Minister for Finance and Administration) Share this | Hansard source

I would like to thank all senators who have taken part in the debate on these bills: 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 Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006 and the Customs Amendment (Fuel Tax Reform and Other Measures) Bill 2006. These bills, along with the Fuel Tax Bill 2006 and the Fuel Tax (Consequential and Transitional Provisions) Bill 2006, give effect to the government’s announcement in its energy white paper Securing Australia’s future, of 15 June 2004, that the current complex system of fuel tax concessions will be replaced by a single fuel tax credit system from 1 July 2006.

The Excise Laws Amendment (Fuel Tax Reform and Other Measures) Bill 2006 amends the Excise Act 1901 and makes consequential amendments to a number of other acts from 1 July 2006, implementing a number of measures to streamline existing excise arrangements, protect the revenue and promote best-practice regulation. It also amends the Energy Grants (Cleaner Fuels) Scheme Act 2004 so that fuel manufactured through a process of hydrogenating vegetable oils or animal fats receives the same tax treatment as biodiesel. The Excise Laws Amendment (Fuel Tax Reform and Other Measures) Bill 2006 also repeals a number of acts which are no longer required under the new system for providing fuel tax relief.

The Excise Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006 amends the Excise Tariff Act 1921 to provide a mechanism of fuel tax relief for eligible users through the fuel tax credit system legislated through the Fuel Tax Bill rather than through the concessions within the excise system and amends the fuel items in the schedule to the Excise Tariff Act 1921 so that there are only two rates of duty—one for aviation fuel and one for other fuels. In conjunction with the fuel tax credit system, this will remove the effective excise on burner fuels and provide effective excise relief for a wide range of business users of fuel, including where fuel is used other than as fuel. This measure applies from 1 July 2006, but three items in schedule 1 relating to the validation of excise tariff proposals apply from 1 November 2005.

Presently fuel tax relief is provided in the form of remissions, refunds and rebates under the Excise Act 1901 and the Customs Act 1901 and energy grants under the Energy Grants (Credits) Scheme. These schemes have restrictive and complex eligibility criteria and apply to different fuels and fuel uses in different ways. The changes will lower compliance costs, reduce tax on business and remove fuel tax for thousands of businesses and households. When the fuel tax credit system is fully implemented, fuel tax will be effectively applied only to fuel used in private vehicles and for other certain private purposes, fuel used on road in light vehicles for business purposes and aviation fuels where tax is imposed for cost-recovery reasons.

The Customs Amendment (Fuel Tax Reform and Other Measures) Bill 2006 and the Customs Tariff Amendment (Fuel Tax Reform and Other Measures) Bill 2006 make amendments to strengthen customs control over certain imported goods that are used in the manufacture of excisable goods; ensure that excise equivalent goods, certain alcohol, tobacco and petroleum products are subject to the same duty when imported as is applied under the Excise Tariff Act 1921 for the same products when manufactured or produced in Australia; repeal customs related provisions of the fuel penalty surcharge legislation; and replicate certain provisions of the Spirits Act 1906, which is to be repealed.

I would like to address an amendment the government wishes to move, which relates to amendments to expiry dates for excise licences. The government is amending the bill to change the date for when excise licences will expire. The bill currently provides that excise licences will have a common period of validity of three years. The common expiry date is 31 March. The initial period for a new licence will be two years after 31 March following the initial approval, so it could be for a period of less than three years. All existing licences will expire on 31 March 2007.

The validity period will remain three years with a common expiry date of 30 September. The initial period for a new licence will be two years after 30 September following the initial approval, so it could be for a period of less than three years. All existing licences will expire on 30 September 2006. This will provide an earlier opportunity for the Australian tax office to ensure that all parties in the excise system that are licensed can be formally assessed against the legislated criteria for holding such a licence. This is designed to encourage compliance and protect the revenue. This change ensures that the renewal process occurs during a period of lower activity for certain licence holders, particularly tobacco growers.

I would also like to address a couple of questions that were raised during the debate by Senator Stephens. The first question was: what is the cost of the reduction in excise and customs rates on aviation fuels? This amendment relates to a measure announced in the 2004-05 budget. Excise and customs duty were directed to funding a subsidy for location-specific pricing until 31 October 2005. This bill lowers the aviation rates as the subsidy is no longer required. As shown in the 2004-05 budget figures, the fact that this revenue is no longer expected means that in terms of the forward revenue estimates there is no further cost; it is already accounted for. The second question related to the definition of biodiesel. Biodiesel is already defined as a mono-alkyl ester derived from animal fats or vegetable oils. This is a technical change that removes the requirement that it be for use in an internal combustion engine. Biodiesel is highly unlikely to be used for other purposes, but, if it were, the provisions for fuel tax credits for use other than as fuel, to be legislated by the Fuel Tax Bill 2006, would apply. This change will not bring producers into the excise licensing system that were not already required to be licensed.

The third question was: what are the long-term excise and customs duty rates for biofuels? The current excise and customs duty rates for fuel, ethanol and biodiesel are 38.143c per litre. These bills do not change that. Long-term effective tax rates are delivered obviously by other mechanisms. I am informed that the minister, Mr Dutton, has written to Mr Fitzgibbon advising him of the government’s policy on effective rates. In conclusion, I suggest that the measures proposed in these bills contain positive improvements to the system for providing fuel tax relief and will modernise and simplify the fuel tax system. For these reasons and others outlined here I commend the bill to the chamber.

Question agreed to.

Bills read a second time.