Nick Xenophon (SA, Independent) Share this | Hansard source

I too stand condemned by Senator Leyonhjelm. I appreciate that he condemned me as well, because I actually think that the Excise Tariff Amendment (Ethanol and Biodiesel) Bill 2015 and the Energy Grants and Other Legislation Amendment (Ethanol and Biodiesel) Bill 2015 are good pieces of legislation. This is about fuel security. It is about more Australian jobs. It is about a net economic benefit, net of any subsidies and grants, because we need to look at some of the economic evidence. The Deloitte Access Economics report of 19 February 2014 concluded that the domestic biodiesel industry had a total contribution of $64 million and leveraged 438 full-time-equivalent jobs, net of all subsidies. Significantly, most of these jobs are in regional Australia. I am reading from a very good briefing paper, the biodiesel excise briefing paper, provided by the Biofuels Association of Australia.

I think we need to set out the history of this. The former government did the right thing in terms of biodiesel by giving it a chance to grow and a chance to increase the fuel security of this nation. The inquiry that was instigated by Senator Madigan on fuel security has been quite revealing in terms of how tight things are for our domestic fuel supply: we are only one or two ships away from serious fuel shortages, particularly in my home state of South Australia. I think that we need to put this in context. If the use of biodiesel involves cleaning up waste products, including tallows, waste vegetable oils and used cooking oils, these feedstocks do not compete for agricultural land or water. On that basis, it is a good thing to do in environmental terms.

I was quite shocked that in its budget last year the government essentially took away the support for this industry, and there were real issues of sovereign risk. I thought the coalition was all for businesses—regional enterprises in particular—being able to grow and prosper. You kicked the guts out of them with last year's budget. This is an attempt to try and wind it back to some degree, so that there is at least an element of hope for this industry. In terms of what is being proposed, my understanding is that the bipartisan agreement that was ripped up in the budget last year would have allowed for no taxes on this industry. That was brought forward to five equal steps in five years to a 50 per cent excise. That is an absolute deal breaker. It is destructive of this nascent industry that deserves to grow for environmental, fuel security and economic development reasons.

What is now being proposed, as I understand it, is to change this to equal instalments over 15 years. My understanding is that there is an amendment to this effect, and that amendment forms part of this bill as a result of a bipartisan agreement between the major parties. I think the Greens are supportive of that, because it at least gives this industry a chance to succeed.

I would have preferred the earlier arrangements. I thought the arrangements made by the former government were good arrangements for this industry. Millions of dollars were invested on the basis of the previous rules. ARfuels has raised over $25 million in equity funding and over $20 million in debt funding to invest in the biodiesel industry. This ASX-listed company has directly invested over $45 million of shareholder's funds since December 2011. What happened with the budget? Sovereign risk. They got kicked in the guts and their share price collapsed as a result of a budget move that was in clear breach of a bipartisan commitment back in 2011. According to the biodiesel excise briefing paper, all that money has been invested in the Australian biodiesel industry in new capital facilities and upgrades to existing facilities, in addition to employing a workforce to operate the business. I note that ARfuels has plants in limbo in Adelaide, at Largs Bay, and also in Western Australia, at Picton. Both those plants will employ in the order of 15 full-time jobs, as I understand it. This legislation needs to goes through for those jobs—those precious jobs in our home state of South Australia—to have a chance to be taken up.

I think we should point out that biodiesel not only has the direct economic benefit of picking up waste such as fish and chip oil. The idea of the oil from fish and chip shops being recycled in a way where the particulate pollution is 74 per cent less than ordinary diesel is also an important factor. That is why it should be encouraged. I also think it is worth noting that, previously, some big mining companies were importing biodiesel directly, presumably from places such as Brazil. They were getting the cleaner fuels grant, as well.

Those countries could have been importing biodiesel from countries that provided a subsidy for their biodiesel and they were getting the cleaner fuels grant as well. I think that smacks of double-dipping and it is completely undesirable from a public policy point of view and from those companies that do not have to pay the excise anyway because they are exempt because they are off-road vehicles. That is an outrageous rort and, if companies such as BHP and Rio were doing that, they should hang their heads in shame. It also goes to show that local businesses that were producing biodiesel were at a real disadvantage in respect of this. So, in so far as the government is getting rid of that rort—and it is a rort—I welcome this legislation.

I also note that, in terms of the net economic impact, it is very clear from the Deloitte Access Economics report of February 2014 that:

if the domestic biodiesel industry was operating at capacity, the potential economic contribution of the industry would be $194 million and 1,273 FTE jobs, net of all subsidies—

let alone the multiplier effect in regional communities where the actual job impact would even be greater and even more beneficial.

I can indicate that I do support this bill. I wish that the government would go back to the agreement it struck with the former government back in 2011. I thought that that was the preferred outcome. I do support the fact that the rorting that some big mining companies were engaged in—legal rorting, I should emphasise—of importing biodiesel directly from countries that subsidise their biodiesel and getting a cleaner fuels grant as well when their vehicles are exempt from excise because they are off-road vehicles is pretty outrageous. At least that has been dealt with as well.

I hope that ARFuels' investors and debt providers will get some certainty with this piece legislation and that we do not tamper with this anymore; or that, if we do alter this legislation, it is altered in a way that makes it more attractive for biodiesel in this country. There is that imperative of fuel security that I do not think, as a nation, we have dealt with very well either federally or at the state level.

I look forward to the amendment being passed, which I strongly support, which gives at least some breathing space and a fighting chance for this industry. I hope that ARFuels and other similar companies that produce biodiesel in this country have a chance to prosper as much as they can with this legislation. I am looking forward to those 15 jobs in Largs Bay in South Australia.