Wednesday, 24 June 2015
Excise Tariff Amendment (Fuel Indexation) Bill 2015, Customs Tariff Amendment (Fuel Indexation) Bill 2015, Fuel Indexation (Road Funding) Special Account Bill 2015, Fuel Indexation (Road Funding) Bill 2015; Second Reading
I rise to speak in support of this package of bills that will reintroduce the indexation of fuel excise and ensure that the benefits are seen through improvements in outer suburban and regional roads. By way of overview, these bills amend the Excise Tariff Act 1921 and other legislation in order to ensure that the rate of fuel excise duty applying to all fuels, with the exception of aviation fuel, crude oil and condensate, will be biannually indexed by reference to the consumer price index.
As the minister pointed out in his second reading speech, there is a long history in the levying of excise on fuel in Australia. Excise has applied to domestically produced petrol since 1929. From its introduction up until 1983, changes to the excise rate were largely made in an ad hoc manner. Indexation of excise was introduced by the Hawke Labor government in August 1983 in order to maintain the real value of excise collections and to provide more stability for business and consumers.
In March 2001, as part of a reflexive political measure, the Howard government ended regular indexation and froze the excise rate applying to petroleum products. This left the excise rate on petrol at its current level of 38.143c per litre.
The re-introduction of fuel excise indexation will provide a predictable and growing source of revenue, which will be used to deliver road infrastructure projects. Labor has sought, and the government has agreed to, an additional $1.1 billion in Roads to Recovery funding for regional roads as part of a compromise to pass the government's re-introduction of indexation for fuel excise. This is good news for regional and local roads.
The Abbott government's cuts to local government have had a devastating effect on economic activity in regional areas, with unemployment high and many regions currently experiencing youth unemployment over 20 per cent. The $1.1 billion boost to the Roads to Recovery program will stimulate regional economies, generating much needed jobs and a boost for vital local infrastructure.
The government has smashed confidence since it came to office and undermined the transition in our economy. In its first budget, the Prime Minister froze local government assistance grants for three years, cutting $925 million from regional communities over three years. With economic growth below trend, unemployment with a six in front of it, the economy and our regions need a kick-start to help bring youth unemployment and unemployment, generally, down.
There is currently a $15 billion local government infrastructure deficit. This funding boost extracted by Labor is critically needed in regional areas. The Australian Local Government Association estimated that 11 per cent of roads managed by councils were in poor or very poor condition. Overall, councils manage 670,000 kilometres of roads, which is about 75 per cent of all roads by length.
As a result of a trick to bypass the Senate on the excise indexation, the Abbott government had threatened to return the additional fuel excise it has collected from Australian motorists over the last eight months back to oil companies. This is just clearly unacceptable to Australian motorists. It is unacceptable to the community and it is unacceptable to Labor. This was a difficult decision, but the prospect of billions of dollars being returned to oil companies was clearly unacceptable. We would much prefer this money to be spent on roads in regional and outer suburban areas rather than handed back to multinational oil companies.
This additional allocation to Roads to Recovery addresses a clearly identified and acknowledged infrastructure gap. We know that there is a backlog, and that local government had to pull back on road works due to the FAG cuts last year—as we said earlier, $925 million over four years. Experience shows that these additional funds, available in effect from next week, could be and will be quickly applied to the road backlog, helping to fix roads and put downward pressure on unemployment. The funds go to all local governments around Australia, ensuring that all communities will benefit from the additional roads spending.
These funds will be of particular benefit for regional areas and outer suburbs, as the Roads to Recovery formula, a very complex formula, works that way. In November 2014, the Australian Local Government Association estimated that 11 per cent of roads managed by councils were in a poor or very poor condition. We have a large number of roads, about 75 per cent of all roads by length, which are managed by local councils. That report showed that $11.1 billion worth of council roads were in poor or very poor condition. These funds will make a start on addressing that backlog.
The national infrastructure audit, released last month, made the following points with respect to rural roads:
Rural roads owned and operated by local councils are important for local economic activity, and are an important part of the nation's transport network, providing the 'first and/or last mile' of many land based supply chains. There is evidence of a maintenance deficit across many of these roads. This is a particular issue for local governments in rural areas with large road networks and declining income bases.
Labor also believe that the federal government should invest in public transport. This is our clear and consistent position. However, in the context of this decision, it is appropriate that the first two years of excise—calculated to be about $1.1 billion—be initially allocated across the nation rather than to any single public transport project.
The fuel excise indexation move of the Abbott government will add over $22 billion to the budget bottom line over the next decade. As we know, this change was part of last year's budget and is part of the current projected tax-GDP levels. The fact is the Abbott government is taxing Australians at higher rates than at any time since the Howard government. Before the last election, Tony Abbott, as the then opposition leader, said there would be no new taxes and that they would lower the tax burden. Those promises, like many others, were well and truly broken in the first budget and then broken again in the second budget. The most recent budget saw tax receipts rise each and every year over the budget forward estimates. This government cannot be trusted on tax. They promised not to increase or to introduce new taxes. They promised a lot on taxes. The Abbott government's second budget includes at least $3.9 billion in new taxes, tax rises and charges—that is just over the forward estimates—and that is just what we know about. The Prime Minister and the Treasurer like to pretend they do not increase taxes, but their record is the opposite of that.
As I have already said, supporting this legislation is a hard decision, but the prospect of billions of dollars being returned to oil companies was clearly unacceptable for Labor and for the community. We believe spending this revenue on roads in regional and outer suburban areas rather than handing it back to multinational companies is a preferable outcome. Labor will ensure the government is held to account for its announced position that every dollar raised by re-introducing excise indexation is directed to building new and upgrading existing road infrastructure. We also believe that these discussions must continue to be had in this place. We support the legislation.