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 must confess that the debate on the Excise Tariff Amendment (Fuel Indexation) Bill 2015 and the three related bills has come on a little more quickly than I expected, having been tabled yesterday in the other place and arriving here in this place for debate today. But, of course, I have learnt many times that it is all about the numbers in this place, and clearly the coalition of the Liberals, Nationals and Labor Party have the numbers to get these bills through. Still, I will take the time today to outline to the Senate and to the minister, who is here present, and also to the senator from Victoria from the Australian Motoring Enthusiast Party why I am likely to be one of the few who will be opposing these bills. My primary objection is the fact that motorists are already paying many times to drive on some stretches of road. They pay the fuel tax, they then pay a toll and they pay the infrastructure incentive scheme, and now, with the indexation, we are looking at paying a fourth time to drive on the same stretch of road.
I have a background in roads. I started my working career in the South Australian Highways Department. Mr Acting Deputy President, I am sure you are familiar with that great building there in Walkerville, which I am pleased to say I was not based at but rather out at the Northfield research laboratories. It was a great time for Australia and South Australia as we truly were building the roads for the 20th century. We had the MATS plan—the Metropolitan Adelaide Transport Study. Land had been purchased. Engineering and design work had been done. In one of South Australia's most catastrophic mistakes since the founding of the colony, the newly elected Dunstan government scrapped the plan, and South Australia has never recovered from that mistake.
At that time, South Australia was the No. 3 city in Australia. It was home to 20 of the top 100 publicly listed companies in Australia. Today, there are just two. It has gone from 20 down to two. As an esteemed professor used to say on TV: why is it so? It is because, essentially, business goes where it is made to feel welcome, and it stays where it gets looked after. Say no more.
I have a strong dislike of tax increases. I believe—and as I told the Senate last September—that the pathway to surplus lies in reducing spending, not increasing revenue. But the government and the opposition are clearly addicted to this fuel tax. I have a background in business and, when faced with a decreasing market, the solution is not to try and raise your prices. The solution is to shrink to viability and then grow from there. Just yesterday BHP Billiton were telling the media that this very thing is their strategy.
Governments, including alternative governments, think they can get away with just raising revenue because, unlike business, they have the force of law to compel people to pay higher prices. But it is not the right way to treat taxpayers. I see the long-suffering taxpayers are looking for people in this chamber who will support tax reduction. They are noticing how my recent motion, co-sponsored by Senators Leyonhjelm and Wang, got no support from others—others who failed to support the merit of tax cuts, even if the budget is not in surplus. Recently in this place, we only barely passed a motion acknowledging that it was desirable that the budget gets back to surplus by 2020. People who want lower taxes and less government interference are noticing the high-tax approach of the major parties.
A little bit of history: petrol taxes were first introduced in Australia in the early 1900s as customs and excise duties on transport fuels, such as petrol and diesel, to fund the development and maintenance of Australia's new road network. Customs duty was first imposed at Federation on imported gasoline and other oils used generally as industrial solvents. It was not until cars became more common in the 1920s that the revenue from this duty effectively became a tax on petroleum products, which were then used as fuel. The definite link between fuel taxes and road funding was reinforced by the provision of exemptions—and later, rebates—of fuel tax for off-road users of diesel from the late 1950s, particularly for farming and mining, and by concessional rates of excise where fuel is used for purposes other than as a transport fuel. In other words, fuel excise is a user-pays model for our roads: those who use the roads should pay for the roads. That is fair enough. The importance of the diesel fuel tax rebate is an acknowledgement that those vehicles that do not use the roads should not have to pay for the roads.
The Australian Automobile Association, a federation of state and territory based automobile associations, yesterday objected to this deal between the coalition and Labor on raising fuel tax. This objection has been running since last year when the measure was first announced, and their pre-budget submission this year indicated they remain strongly opposed to the excise increase. Their first priority for the budget was the reversal of the decision, because it was 'unjustified, unfair and a short-term revenue measure.'
The AAA projects that the increase in taxes per 60-litre tank—and that is assuming a household has only one car to fill each week—will have risen 50c since November 2014 and will rise $2 to almost $2.50 per tankful by February 2018. That is $2.50 per tank increase within the next two years.
Looking at it another way: for motorists travelling an average of 13,000 a year—I am not sure what the Motoring Enthusiast Party's average kilometres travelled per year per motorist is, or what their assessment might be but, as an average motorist, I think I would probably drive between 10,000 and 20,000 kilometres a year at an efficiency of around 11 litres per kilometre—the cost has already risen by $12 a year but the annual cost will have increased to $60, thanks to indexation, by February 2018. That is far more than the 40c a year that has been claimed in the government's projections.
We are here debating this today, because a deal of some sort appears to have been done that gives the government the numbers to get the fuel excise indexation increase through. Labor says, 'Spend it on Roads to Recovery and you've got a deal.' What other choice did the government have? To absorb it into general revenue, Minister, as governments have been doing with a significant proportion of the excise for many years? That would not have gone down too well. Labor got a deal thanks to what the government was likely to do anyway.
Naturally, Family First welcomes more of the fuel excise being spent on roads. But it all should be spent on roads. There are local shire councils all over Australia that are saying they are happy that more will be spent on roads, but the tax they deserve was already being withheld. It is a bit like saying to the dam master, 'Thank you for making the river flow,' when the dam master was the one holding back the water in the first place If the government opened the floodgates to put the excise for roads where it should be, we would have far better—and let me highlight, far safer—roads than we have at the moment.
In my home state of South Australia, the South Australian Labor government is winding down speed limits in an attempt to improve safety. It is a lazy approach to safety. What should be happening is the building of better, safer roads. What we see in the regional areas of my home state and the minister's home state is not spending on regional road maintenance, shouldering, overtaking lanes and upgrades but a tendency to focus on metropolitan projects. For example, in Adelaide $160 million is to be spent on a tunnel for the O-Bahn to save inner suburban commuters two minutes off their travel time to the CBD. And that is just a microcosm of what happens nationally, where Sydney and Melbourne get the big road spending. It is the very thing that the Productivity Commission criticised yesterday.
The Australian Financial Review reports today:
In a scathing attack on how state and federal government are botching the selection of infrastructure, Mr Harris challenged politicians to justify expensive but low-return projects over hundreds of smaller but more effective options. "Make the case for why the mega project must be preferred apparently to the higher return local project', he said. "All of this is most obvious in roads investment; the last redoubt of the unreformed investment planning process."
It goes on:
With many big-ticket road projects delivering little more than $1 for every $1 invested, there were usually many more-modest but productivity-enhancing options that could generate returns of as much as $10, such as electronic traffic management systems …
Let me add a good example from my own home state of South Australia, after representation from regional mayors just this sitting fortnight. The small township of Port Wakefield sits at the crossroads connecting the north and south of our state. On public holiday weekends, when floods of people from Adelaide go to Yorke Peninsula for a spot of fishing, this junction is backed up a very long way and it is very, very dangerous. There was a bad fatality there just recently. These councils want federal government investment to provide either a bypass or another solution to this dangerous situation, not just for road safety but because it will allow that part of South Australia that is north of the Adelaide metropolitan area to take off. But what chance do they have when fuel excise is not spent on roads? I hope that the government will look at the Port Wakefield situation with these additional rivers of gold they will now get from fuel excise. Let's look beyond the metropolitan areas and fix these dangerous and productivity sapping bottlenecks and black spots like Port Wakefield. In this regard I wish to acknowledge the great work of Yorke Peninsula Alliance mayors and CEOs Rodney Reid, Cynthia Axford, Ray Agnew and Paul Thomas. Keep up the great work.
The reality is that the people who are hardest hit by a hike in fuel excise are country people. In my home state they already pay a lot more for petrol than city people do. They have to travel longer distances to visit family, to see their customers or clients and to participate in country sport. That is the reality of who will be hit hardest by this hike in fuel excise agreed to by the Labor, Liberal and National parties today. I thank and respect Senator Macdonald for his decision to cross the floor and vote against this today. I know that is a decision not reached lightly, and it should speak volumes to others in this place. It gives me no joy at all to be critical of other parties in this debate. I appreciate and support the task of budget repair. But, as I have said, the solution is not more taxation, but budget restraint and spending reduction. Perhaps others will join Senator Macdonald in voting against this tax grab. Thank you.