Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | Hansard source

The Excise Tariff Amendment (Ethanol and Biodiesel) Bill 2015 reforms the taxation treatment of the biofuels ethanol and biodiesel. As part of this reform, the Energy Grants and Other Legislation Amendment (Ethanol and Biodiesel) Bill 2015 abolishes the cleaner fuels grants scheme. Labor supports these bills and their intent to create a sustainable taxation framework for biofuels.

Domestically produced and imported biodiesel and ethanol are currently subject to the same rate of excise as petrol and diesel. However, producers and importers are able to access a grant for the full amount of duty paid. The cleaner fuels grants scheme refunds excise and excise-equivalent customs duty paid on both imported and domestically produced biodiesel. Similarly, the Ethanol Production Grants scheme, which refunds excise paid on ethanol to domestic producers, will close at the end of this month.

In place of the cleaner fuels grants scheme and the Ethanol Production Grants scheme, the excise payable on the domestic production of biodiesel and ethanol will be reduced to zero for one year from 1 July 2015. The excise rate will then gradually increase from 1 July 2016 to reach a reduced excise rate for domestic producers. The new final excise rate for ethanol will be approximately 33 per cent of the excise rate for petrol and will be reached in the financial year 2020-21. The new excise rate for biodiesel will reach 50 per cent of the full rate of excise that applies to petrol and diesel.

Government amendments to this legislation will see a longer transition process for the biodiesel industry. The amendments will ensure that excise duty on biodiesel will increase in equal increments until reaching a final rate of 50 per cent of the diesel rate in the financial year 2030-31 and for later financial years. Imported biodiesel and ethanol will be subject to the full fuel duty rate, giving a comparative advantage to local industries.

Ethanol and biodiesel make an important, albeit small, contribution to our liquid fuels mix. I thank the Biofuels Association of Australia and the member companies that have worked to ensure the sustainability of their industry. Labor supports reasonable measures to protect this industry and welcomes the government's willingness to negotiate in the interests of this industry.