Christine Milne (Tasmania, Australian Greens) Share this | Hansard source

I rise today to support the Tax Laws Amendment (2011 Measures No. 5) Bill 2011 and to say how extremely pleased I am that at last the perverse incentive which was in the tax system and encouraged people to drive their cars more in order to qualify for a tax concession is gone. This is something I have been campaigning for since I got into the Senate. It was identified in the Senate inquiry that I instigated on Australia's future oil supply and alternative fuels. It is absolutely ridiculous that in an age of peak oil—and we have reached peak oil—we should have embedded in the tax system a fossil fuel subsidy that encourages people, effectively, to waste oil in a world where we are going to see upward pressure on oil prices and real dislocation in oil economies around the world as there is a recognition that cheap, accessible oil has run out. We are going to see increasing dislocation in the food production system, particularly, and also in transport in cities.

So the first thing is that we should be looking at all fossil fuel subsidies and getting rid of the lot of them across government. If you are serious about addressing climate change and greenhouse gas emissions and if you are serious about preparing for peak oil then you would instigate a plan for the whole country: a plan to get off fossil fuels and to move to a transport system that is not dependent on imported oil. President Obama has recognised that and moved rapidly in the United States, realising the vulnerability of the United States's economy to its exposure to imported oil. That is why he spent billions in their recent stimulus package to try to encourage the use of biofuels in the United States in order to get off their dependence on imported oil. The problem, of course, with the disproportionate influence of biofuels is that it has led to distortions in agricultural production, and that will happen here in Australia unless we get some good rules around biofuels and focus on second- and third-generation fuels.

But what we are going to see rapidly is the electrification of the transport fleet. The passenger vehicle fleet will become electrified, and the challenge for government is to think about a transport plan for Australia in the age of peak oil and climate change—a transformational plan to get more public transport, more rail for freight and a very fast train for passenger commuting. We need more of those throughout the country. This I see as a beginning.

When I negotiated the luxury car tax changes through the Senate in the last period of government, that was the first time that we had a shift. Instead of just taxing luxury we were taxing vehicle fuel inefficiency. What we said then is that we should be looking at the efficiency of the vehicle and driving people to more efficient vehicles, and that should be the way that we consider taxing wasteful resource use. That was the first. As part of that arrangement I got an agreement from the government that the Treasurer, Mr Swan, would write to the Henry tax review and ask about this whole issue of moving the excise system into looking at efficiency and carbon embedded energy in fuel, in particular the fringe benefits tax concession on motor vehicles. I was very pleased, then, when the Henry tax review came out and recommended getting rid of this subsidy.

Senator Brown, as Leader of the Australian Greens, asked for a costing from Treasury on reform arrangements for the fringe benefits tax of motor vehicles in November last year. We got that costing back, and of course what we see is that it is a substantial saving to the budget. It improves the underlying cash balance by $953.9 million over the forward estimates. So for people who say that, with the Greens taking the balance of power, they might be concerned about fiscal responsibility: the Greens are extremely fiscally responsible, and for everything we want to spend money on we are prepared to find savings measures. I can inform the government at this point that every time they bring in a measure to get rid of a fossil fuel subsidy it will not only improve the bottom line in the balance sheet over the coming years; it will be great for the environment. It will reduce fossil fuels.

Just today I noticed, in looking at the Auditor-General's report into the fuel tax credits—I have to say that they are very firmly in my sights, having now got rid of the fringe benefits tax concession for motor vehicles rort, as I would call it, and saving more than $1 billion over the forward estimates—where we can now have megasavings is in the fuel tax credits scheme. What you have there is about 1,500 mining companies getting $1.7 billion per annum in fuel tax credits at a time when they are making profits they could never have dreamt of. They are making extraordinary record profits and, frankly, they were allowed to get away with their ridiculous advertising campaign and reduce the tax take with the mining tax concession that they achieved without people realising that we are $1.7 billion worse off in this country every year because 1,500 mining companies get that fuel tax credit. I make the point of it being 1,500 companies because in the research and development spend in this country—and I have just supported and negotiated with the government a change to the research and development measures—we currently have less than 100 companies in Australia getting more than 60 per cent of the R&D spending in Australia. Here comes another major subsidy: 100 companies getting 60 per cent of the R&D funding and, of those 100 companies, 37 are miners. So the mining companies are hogging the research and development budget and hogging the fuel tax credit scenario while, at the same time, out there sponsoring the tour of a climate sceptic in Australia and putting ridiculous amounts of money into advertising budgets to undermine the national interest.

I want to inform the government as I stand here tonight, having had a substantial success in getting rid of one of the most blatant fossil fuel subsidies and perverse outcomes in this year's budget, that we are coming to do the government a great big favour and free up billions of dollars. We estimate there are something like $8 billion worth of fossil fuel subsidies given out every year, and they include everything from exploration subsidies to tax concessions and goodness knows what. We are here ready and willing to help on that bottom line, to get in there and not only make a better outcome for Australia in terms of greenhouse gas emissions but accelerate the day when we plan for a low and then a zero carbon economy based on a magnificent transition to public transport, to electrification of the vehicle fleet, to getting more rail in this country, to getting freight off the roads and back onto the rail. This could be a very exciting future for Australia in the transport sector, rather than having the focus, as we always have, on road transport, on more highways, on more flyovers, on more dual carriageways et cetera. What are we going to do on those dual carriageways when oil hits $200 a barrel and we are still making cars in this country that are fuel guzzlers?

I also want to say that it is a terrible policy for a country to have its free trade agreement with Saudi Arabia on the basis that we sell them six- and eight-cylinder cars to roar around the desert and use up more oil. What a thing to be proud of! Whereas on the other foot we have got China moving for very high vehicle fuel efficiency standards, setting an objective of increasing its global market share of the electrified transport fleet, and setting up fuel efficiency standards for motor vehicles that mean that no car produced in Australia would meet Chinese standards today. That is because China wanted to build itself a global position so that the Europeans have got global market share for luxury vehicles and the Chinese are building massive market share for the mainstream passenger vehicle of the future. Where is Australia? Stuck at the bottom, with poor vehicle fuel efficiency standards and a trade agreement with Saudi Arabia to send our six- and eight-cylinder vehicles there. What a disgrace.

We want to see mandatory vehicle fuel efficiency standards in this country that get us to a point where we are manufacturing vehicles which are competitive. If you want a strategy to make sure we have no vehicle industry in Australia, the best strategy is to do what we currently do, and that is to have such low standards that we produce mediocre cars in terms of efficiency so that, as the oil crisis proceeds, Australian consumers will want to buy imported cars and not locally produced cars. The only market for locally produced cars will be governments, again propping up cars that just do not cut it, and putting them into government car fleets. This is ridiculous. Again, we will be stuck with a massive subsidy to the car industry to produce cars that nobody wants to buy. That is not a strategy for efficiency or jobs. If you want to keep jobs in the car industry in Australia, we should be making highly efficient vehicles for the Australian market. That is why I will continue to campaign for very high, mandatory vehicle fuel efficiency standards.

At the same time we need to shift the excise system in Australia so that it truly reflects the energy content, the carbon content, of the fuel: the most expensive fuels would be the worst in terms of greenhouse gas emissions, right through to electric vehicles which would not be paying any fuel excise. If a government was truly thinking of a national transport plan for the future it would be looking at setting the fuel excise to cover all of those in specific terms. That process has been started, but it is by no means finished. We need to accelerate the review of that excise and at the same time negotiate with the states on a road use charge; otherwise we are going to reach a point where people will be driving electric vehicles generating energy from their own rooftops in order to have plug-in electrics and they will not be paying anything for the roads they use. The government will then be in a crisis in terms of its revenue take. So now is the time to be thinking about how we are going to think about the future. Already here in Canberra we have people installing electric recharging stations. In China there will be 10 million of these electric charging stations across that huge nation. They know where the future is in vehicles, and it is in electrification.

This is a first step. It is a really good step. It is a step we have been campaigning for and it gives me great satisfaction, having campaigned for this since I got here in 2005, to be standing here in 2011 and seeing a government deliver a reform that was laughed at five years ago. When we recommended it in the oil inquiry report that time ago, people said it was ridiculous. Now we are actually doing it. We need to have as a philosophical view that we should be encouraging people to drive less and, when they do drive, to drive more efficiently. This is the first step in saying: we want people to drive less.

We want to end the March 'rally' in Australia where people would stand in offices, put the car keys on the table and say, 'If anyone's going to the coast this weekend or needs to go to Queensland, take my car, drive it there, because I need to get the tax concession for vehicle use.' Getting rid of this means people who genuinely need to drive long distances will still have their logbooks, will still be able to demonstrate that and will have it recognised, but we will not have this perverse incentive that requires people to drive round and round and anywhere they need to go in order to get themselves up to a level where they qualify for a tax concession. So I could not be happier. And I know the tax office will be delighted to know that, as we come into the balance of power, the Greens stand ready and willing to produce billions for you in getting rid of tax concessions, getting rid of fossil fuel subsidies. We are the most economically rational when it comes to fossil fuel subsidies.