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 acknowledge the comments of my colleague Senator Day, particularly his comment that lowering speed limits is a lazy attempt at road safety. In reality, as we pay a lot in fuel excise and other road taxes, we could be focusing on building much better and safer roads—and I come from a rural area, so I get to see some shockers. I acknowledge the Greens commitment to public transport but I do not think they speak to the masses of country people who have to drive 20 or 30 minutes through potholes to get to their local point of public transport and then go home and replace tyres and suspension components because not enough money has been spent on roads.
I rise to speak on the Excise Tariff Amendment (Fuel Indexation) Bill 2015 and related bills. As a senator representing the Australian Motoring Enthusiast Party it would come as no surprise that I would have something to say on this issue. The bills currently before the Senate are similar to the 2014 package of bills which did not progress through the Senate. The bills currently before the Senate validate the Excise Tariff Proposal (No. 1) 2014 and the Customs Tariff Proposal (No. 1) 2014 which were tabled in the House of Representatives on 30 October 2014 to index fuel duty to the consumer price index from 10 November 2014. The legislation is expected to raise $3.6 billion over the five years to the end of 2018-19 and $23 billion over the next decade.
Given the similarities, I would like to spend a bit of time discussing the 2014 package of bills and how the proposed changes were received within the motoring community. The 2014 package of bills was referred to the Senate Economics Legislation Committee and the committee's report was tabled on 7 July 2014. Evidence presented to the committee can be grouped into three broad areas: (1) support for the indexation but with assurances that the tax credit arrangements would be taken into account and compensate for the increase in indexation; (2) support for the indexation but with additional funds raised to be dedicated to projects that go beyond road infrastructure; and (3) opposition to the package of bills because of concerns over the disproportionate adverse effects that an increasing petrol price could have on particular communities, lack of transparency and accountability associated with the Special Account and the potential to undermine the positive results stemming from the funds credited to the Special Account by withdrawing funds from other areas of road infrastructure. Some other arguments in favour of the proposed changes were that it would generate significant revenue, that the excise is not a new tax, that indexation works by maintaining the real value of existing taxes—so it is a tax—and that taxes on motor fuel are very low compared to other developed countries. For example, fuel tax in Germany is approximately three times as much as fuel tax in Australia—but we live in Australia, not Germany.
Arguments opposing the bill include that it will increase the cost of running a car. On average a motorist in Australia, as Senator Day pointed out, driving at around 10 to 11 litres of fuel per 100 kilometres, would need to fork out an extra $60 to $68 annually by the fourth year. If a motorist uses 60 litres a week, this would increase to an additional $142 annually by the fourth year. Not everybody drives one car, some families have more than one, and some people use a lot more than 60 litres of fuel per week. Indexation would hit low-income earners the most and, of course, those in rural and regional areas. The price impact of any increase will fall most heavily on households and users of light commercial vehicles used off-road—so not mining companies.
The opposition decided to vote against the measure at the time, saying it broke a government promise not to introduce new taxes. With the opposition now coming on board to support this broken promise, they have opened themselves up to criticism. The Leader of the Opposition, Mr Bill Shorten, said yesterday that supporting the fuel excise was the best option for Australians. He said:
In a beauty parade, between giving money to oil companies and putting money back into Australian roads, generating jobs and confidence, it is clear which way Labor has to go.
It has been reported that the government will use $1.1 billion from the extra revenue it raises to pay for regional road upgrades through the Roads to Recovery program over the next two years. He said, 'This is a great outcome for people in rural and regional areas, especially my home state of Victoria.'
The coalition, according to an article on the ABC, said that all excise increases will go into road infrastructure. If that is the case, this means that over the next five years $3.6 billion will be spent on roads. This may not be good news for the Greens, but for all the other people who do not live in the inner city of the capitals it is good news. Better roads mean safer roads, and safer roads can help improve road safety.
However, the reality is that just how much gets spent on roads will rest with the Treasurer, who has the power to make a determination under clause 8 of the Fuel Indexation (Road Funding) Special Account Bill 2015. I cannot say with any certainty that every dollar raised from reintroducing indexation of fuel will be spent on roads. Then what about the other 38 cents per litre that is currently taken, which mainly goes into consolidated revenue?
The passage of these bills is a bittersweet moment for me. Yes, I want better roads, but I think motorists already pay enough. I think that shadows what Senator Day said just moments ago. These changes will hit low-income earners the most. The price impact of any increase will fall most heavily on households, users of light commercial vehicles and users of roads. I am very concerned about how this will affect those on low incomes. As I said last year in response to the Treasurer's comments about poor people not driving cars, we cannot all hop onto cows and ride into town.
As I have previously said, I am also concerned that, apart from the $1.1 billion that will be spent on roads through the Roads to Recovery program, there is no guarantee that the additional revenue raised from reintroducing indexation of fuel will be spent on roads. There is just no guarantee. Will this end up in consolidated revenue?
What about the 38 cents per litre that is currently paid by motorists? Perhaps there should be a guarantee that a percentage of this amount will be used for improving Australia's infrastructure—a guaranteed percentage of the current revenue which ends up in consolidated revenue. After all, this Prime Minister is the Prime Minister for infrastructure. I believe this could help provide long-term certainty for infrastructure projects rather than the uncertainty created by annual determinations by the Treasurer or backflips by major parties. Roads are not built in a day. They are long-term projects and need long-term funding and guarantees by the government.
Financial assistance grants have affected local councils and the money which they can spend on their roads. As was said earlier, they are heavily reliant on roads in the local economy. These are important issues for all motorists and issues that I will be raising with the Treasurer when I meet with him tomorrow.
On this note, I oppose this bill, as I believe a lot more could be done for motorists if the taxes they already pay were actually spent on roads instead of going to general revenue. Also, rural and regional people will be hit the most.