Senate debates

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

10:03 am

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Minister for Finance) Share this | | Hansard source

I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—


The Government is determined to build a stronger and more prosperous economy and repair the Budget.

That's why we are continuing to calmly and methodically implement our Budget measures.

Today I am pleased to say that the Government has successfully reached an agreement to re-introduce the indexation of fuel excise to inflation.

Restoring the biannual indexation of fuel excise—first introduced by the Hawke Labor government—is a significant structural reform that will provide a stable and growing source of revenue.

All the revenue raised through this measure will be linked by law to funding roads.

It will provide a source of revenue to enable us to deliver our historic infrastructure growth package of over $50 billion—the biggest infrastructure spend in the history of the Commonwealth.

The agreement that has been reached today will see the Roads to Recovery programme receive a boost of $1.1 billion over the next two years—$300 million in 2015-16 and $805 million in 2016-17.

This funding builds on the additional $350 million provided under the program in the 2014-15 Budget and brings total Road to Recovery funding to $3.2 billion over the 5 years to 2018-19.

This investment will go straight to local councils around the nation to upgrade and repair local roads according to their own priorities. Allocated funding will be distributed according to a formula based on population and road length set by the Local Governments Grants Commissions in each state and territory.

Payments go directly to Councils and are made either on a reimbursement basis or based on the projected expenditure across the forward 6 months.

There are no shortages of good projects for the councils to fund, and under the Roads to Recovery programme councils will have to demonstrate they have not reduced their baseline funding allocation toward roads.

Excise has applied to domestically produced petrol since 1929.

Indexation of excise was first introduced by the Hawke Government in 1983 to ensure that excise continued to grow at the same rate as consumer prices, providing more stability to businesses and consumers.

From March 2001, the rate of excise was frozen at 38.143 cents per litre. This eroded the value of excise as a share of the price of fuel over time and, as a result, the real value of excise has decreased.

The policy announced in the 2014 Budget is for fuel excise to increase twice a year in February and August in line with movements of the Consumer Price Index.

Restoring this indexation is currently implemented by 12-month tariff proposals. These proposals took effect from 10 November 2014 and increased fuel excise from 38.143 cents per litre to 38.6 cents per litre. Fuel excise was then increased in line with Consumer Price Index to 38.9 cents per litre from 2 February 2015.

These two increases total less than a cent per litre and for a typical household consuming 50 litres of petrol a week, the estimated price impact of the indexation of fuel excise has been a modest 40 cents per week.

While the impact on households has been modest, the impact on the Budget is significant.

The indexation of fuel excise will raise approximately $3.6 billion over the five years to 2018-19 and over $23 billion over the next decade.

The reintroduction of fuel excise indexation will provide a predictable and growing source of revenue, which will be used to continue to deliver the vital road infrastructure that Australia needs.

The Bills will also establish the Fuel Indexation (Road Funding) special account.

This account will ensure that the net revenue raised through the reintroduction of fuel duty indexation is invested in road infrastructure through the States and Territories.

Importantly, this measure will not increase input costs for businesses using fuel in off-road operations or operating a vehicle with a gross vehicle mass in excess of 4.5 tonnes. This is because these businesses are able to receive fuel tax credits to offset the increased fuel excise paid.

Consequential amendments will also be made to the Excise Tariff Act 1921 in order to simplify the burden on businesses by rounding the applicable duty rate of indexed fuels from three decimal places of a cent to one decimal place.

Madam Speaker, this agreement is a further step that demonstrates the Government is making significant progress in repairing the budget.

However, there is still more work that needs to be done to ensure we return the budget to surplus as soon as possible.

Full details of this Bill are contained in the explanatory memorandum.


This Bill is part of a package of Bills that will give effect to the Government’s commitment to reintroduce biannual indexation of fuel excise and excise-equivalent customs duties.

Specifically, this Bill amends the Customs Tariff Act 1995 so that the rate of excise-equivalent customs duty applying to all imported fuels, with the exception of aviation fuel, crude oil and condensate, will be biannually indexed by reference to the Consumer Price Index.

The indexation of fuel excise and excise-equivalent customs duty will contribute to the Budget by raising approximately a net $3.6 billion over the five year period to 2018-19.

Consequential amendments will also be made to the Customs Tariff Act 1995 to simplify the burden on businesses by rounding the applicable duty rate of indexed fuels from three decimal places in the cent to one decimal place.

Full details of this Bill are contained in the explanatory memorandum.


This Bill is part of a package of Bills that will give effect to the Government's commitment to reintroduce biannual indexation of fuel excise and excise-equivalent customs duties.

Specifically, this Bill establishes the Fuel Indexation (Road Funding) special account for the purposes of the Public Governance, Performance and Accountability Act 2013.

The Treasurer will be responsible for making a determination to allocate funds to the special account. The Deputy Prime Minister and Minister for Infrastructure and Regional Development will then be able to direct that amounts be transferred from the special account in order to provide funding to the states and territories for road infrastructure investment.

This account will ensure that the net revenue raised through the reintroduction of fuel duty indexation is used to assist the Government continue to deliver the vital road infrastructure that Australia needs and will be reported in Budget Paper No. 4.

Full details of this Bill are contained in the explanatory memorandum.


This Bill is part of a package of Bills that will give effect to the Government's commitment to reintroduce biannual indexation of fuel excise and excise-equivalent customs duties.

This Bill makes consequential amendments to the COAG Reform Fund Act 2008, the Excise Act 1901 and the Fuel Tax Act 2006 as a result of the reintroduction of fuel indexation. These amendments include ensuring that the determination of future rates of the road user charge are made to one decimal place of a cent consistent with fuel duty rates.

Full details of this Bill are contained in the explanatory memorandum.

Photo of Claire MooreClaire Moore (Queensland, Australian Labor Party, Shadow Minister for Women) Share this | | Hansard source

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.

10:12 am

Photo of Cory BernardiCory Bernardi (SA, Liberal Party) Share this | | Hansard source

In following Senator Moore, I am going to express my principled opposition to increasing tax and, in particular, this tax. However, I do need to comment that my principled opposition to this is because I do not believe Australians should be paying more tax. During the contribution by Senator Moore, I noticed that while she said she is opposed to this tax, Labor are going to be supporting it and voting for it. There is no commitment from the Labor Party—not a skerrick of commitment from the Labor Party—to abolish this additional tax, so they cannot credibly come in here and take this pious view—'We don't like it, but we're going to support it because we really don't like new taxes'—and yet continue to advocate for new taxes again and again and again.

Labor have embraced, I must say, what is this Orwellian newspeak, where they talk about budget savings. But do you know what budget savings are under the Labor Party? They are actually new taxes. They are costs for consumers in this country; they are new taxes for taxpayers. They are not savings; they are expenses. Australian people are heartily sick of this double-dealing and distortion of words, by the twisting of things in saying, 'We're saving the budget, we're saving money', when you are actually putting an additional penalty on the Australian consumer.

They have this rhetoric about roads and how they have had this road to Damascus moment, this epiphany, and that there is some sort of trickery. The government, to their credit—they are clever—used a legislative framework, which is entirely permissible, to bring this to a head. The framework did not go to the parliament—it is going to be voted on now—but the government are perfectly entitled to do that; it is within their realm to do it. It was not trickery, it was not anything else; it was a legislative instrument, Senator Moore. The fact that they have called your bluff on this, and the Labor Party's bluff on this, says more about the Labor Party than it does about the government. The government is in the business of pursuing its agenda. I have a principled opposition to increasing taxes, but that is not the point. The Labor Party have no principles. They have absolutely no principles in this respect. The Labor Party are saying that they have had this road to Damascus moment, because all of a sudden this funding is going to go into roads. It is going to go into roads for the next couple of years. Let's not hear the pious lectures about stimulating rural economies or anything like that, because that is not what it is about as far as Labor are concerned. Labor are only interested in getting more and more taxes, otherwise they would commit to abolishing this should they ever get back into government. But they will not, of course.

If we in this country are serious about tax reform, serious about acting in the national interest, we will have a radical rethink about how taxes are applied. Ronald Reagan was right about how governments approach things. They never have enough money. If something is continuing to function, you tax it and tax it and tax it until you cannot tax it any more. It is not sustainable. We already pay far too much tax in this country. We need to have a radical rethink about how government can move into the 21st century from its taxation base. That means simplifying it, ensuring that today's governments—I do not mean in any sense the immediate government—the current crop of political people, do not continue to go ahead mortgaging our children's futures and asking them to repay the debt so that we can enjoy a standard of living today. It is not fair, it is immoral and it is not sustainable. That is the radical rethink that we have to come to terms with.

How can we do it? We have to get past the tired old means of giving people money or allowing them to earn it, taking it from them and then giving it back again. It is not necessary. What is necessary is that there be some sort of constitutional limit on the ability of government to borrow, quite frankly. There need to be spending limits. In six years under the previous government, we saw a net position of $60 billion of surplus funds—hard-won over 10 or 12 years, saved by coalition governments—turn into a $260 billion debt. That is outrageous in six years—$260 billion of debt and a debt trajectory that would have seen nearly two-thirds of a trillion dollars, $667 billion, in debt going forward, if we followed Labor's plans. That is Labor's way of managing the economy. Let me tell you, it is simply unsustainable. It is something that we will rue for decades to come.

I understand that the government needs to redress the imbalance in the budget, and this measure today is a small way of doing it. I understand that the government has do this because it cannot get real savings measures through the parliament. I go back to that. A savings measure in this place is not a new tax—that is an expense for the Australian people. So let's stop this Orwellian newspeak. Let's stop redefining words, saying that a saving for government is a new tax for the individual. Governments do not have any money in their own right. What they have is taxpayers' funds, and it is incumbent upon them to spend those wisely, appropriately and efficiently and to be effective in delivering outcomes. We need to have a serious look at the role of government and the role of Federation in this country and at how we best maintain a tax base that is both fair and equitable and that is going to limit the insatiable appetite of government to do more, to try more, to fail more, to spend more. That is what we need in this country. I commend this government for producing a tax white paper for discussion so that we can have a Federation white paper, because they are important components of how we can get through this.

I say on the record that I am opposed to this—not for the reasons that the Greens will be opposed to it or anyone else will be opposed to it, but because I do not believe we need new taxes in this country. We should be cutting taxes in the interests of every Australian.

10:19 am

Photo of Richard Di NataleRichard Di Natale (Victoria, Australian Greens) Share this | | Hansard source

I rise to speak today about what is an enormous missed opportunity, a missed opportunity to get Australia on track when it comes to taking real action on climate change, a missed opportunity when it comes to addressing the great inequity and unfairness that exists in this country—the growing gap between the haves and the have-nots. Before I talk about that missed opportunity, let's talk a little about the context here and the history behind this Excise Tariff Amendment (Fuel Indexation) Bill 2015 and related legislation.

In the government's first budget, we saw a budget that attacked almost every group in Australian society: the young, the old, the sick, the poor. It was a budget that attacked the social contract that many generations have fought so hard to create here in Australia: the notion of a fair go, the notion of what it means to be a caring, decent and compassionate society. In among that budget was a budget measure that was to increase the price of fuel for ordinary Australians; alongside a co-payment to go and see a doctor; alongside changes that would make it harder for young students to get a university education; alongside an indexation measure to pensions which would effectively mean a pay cut for almost every pensioner in the country; and alongside a change that would have booted a young person off income support for six months if they were unable to find a job, and they would struggle to feed, clothe and house themselves.

It was also in the context of a big, bold promise that the Prime Minister made to the nation that there would be no new taxes. That is the context in which this announcement was made and that is the context in which the Australian Greens responded, under the leadership of Senator Christine Milne, and supported by each and every member of our party room—that is, that you need to go back to the drawing board. You need to fix that cruel and harsh budget, and if you are to introduce a change to fuel indexation then you need to do it in a way that transforms our economy and starts taking the necessary action we need to take to address climate change.

Instead, what we got from the Prime Minister was the middle-finger salute, saying, 'No. Every cent is going to roads, like it or lump it. If you don't support us then what we are going to do is come up with a sneaky plan to hand back every cent to big oil companies.' I say to the opposition: it is the government that would be making a decision to hand back that money to big oil companies and it would be the government that would wear the consequences of that decision.

If you are to introduce a measure, and in principle we do not oppose measures such as increases to fuel through changes to indexation, you need to do it in a way that allows us to drive the transformation that is necessary to tackle climate change and also address the regressive impacts of those taxes. I point to the shining example of how you introduce a pollution tax and drive that transformation in the example that is the introduction of the price on carbon.

What we saw there was a price on carbon, essentially a pollution tax. What we also saw was one of the biggest changes to taxation in this country with this enormous raising of the tax-free threshold, which meant that the poorest and the most vulnerable people in the Australian community would pay less tax and would be compensated for that decision. We also saw another $10 billion investment through the Clean Energy Finance Corporation to enable us to drive the transformation that is necessary. That is the model for how you introduce a measure such as a pollution tax.

Senator Milne made it absolutely clear at the time that we were prepared to negotiate on the basis of that model, which is: let us invest in public transport to drive the transformation and let us deal with some of those equity measures. But what we saw was a government that attempted to bully, hector and use the sneaky mechanism of blackmail, effectively suggesting that money would go back to big oil companies. That is where we were until recently. But there was a change recently. The government has finally recognised that it cannot use a sledgehammer if it wants to get its legislation through the Australian parliament. This is the parliament voted for by the people, and this parliament exists as a check on the otherwise untrammelled power of the executive. So, it is true that the Australian Greens started having some discussions with the government, on both of those measures that were outlined earlier, under the leadership of Christine Milne—investment in public transport and dealing with equity measures. Those talks were constructive and we were making progress.

This nonsense that you cannot pick one the public transport project over another is just that—nonsense. Why can't we have a public transport fund that allows us to pay for those measures that we know will help us drive the change that is necessary? Why can't we have an equity measure in the budget that allows a small compensation payment for some of the most vulnerable members of the community? Despite what Joe Hockey might say, poor people do drive cars, and this is a bigger hit on their budget than it is on the budgets of those people who are at the more wealthy end of the income scale.

What we saw only yesterday was a case of putting politics before good policy. That is what it was, pure and simple—putting politics before good policy. This veil of an excuse that we cannot hand the money back to big oil companies? Give me a break! Up until yesterday we heard comments from the Leader of the Opposition about this being a huge mistake, an attack on poor people, the government using blackmail to try to get its way. Then we have this road to Damascus conversion, conveniently after the Labor Party were shown up to be hypocrites for their decision to oppose pension changes that would benefit those with more modest means ahead of those at the wealthy end of the scale. It was pure politics. Simply, the idea that the Greens would get an outcome that was good for the Australian community was too much to bear. So what do we see? We see the opposition leader and the government do a deal that puts more money into roads, that does nothing to address climate change and the transformation that is necessary in this country, and does nothing to address the inequity that exists in this measure.

The opposition leader went as far as to say that the more you drive, the more you pay, the more roads you can have. Every person in the country who cares about climate change, global warming and the future that our children will inherit will remember those words—get in your car, put the pedal to the metal, pollute the atmosphere and we will build more roads. What does that do in addressing what is the great challenge that lies ahead of us? It does nothing. This is a case of politics being put ahead of policy. We had an outcome that would have meant hundreds of millions of dollars being invested in public transport and some compensation for people on low incomes—that was ripped away from the Australian community because the Labor Party was desperate to do a deal with the government to deny the Greens the opportunity of getting that outcome for the Australian community. That is what this was about, and nothing else—politics ahead of policy.

We could have worked together on this. We could have had a sensible discussion about what was necessary to get this measure over the line to ensure that we saw changes that would set this country up through this century. Instead, again, there is no vision, no forward-thinking: 'How do we ensure that we deny some oxygen to an opponent and ensure that they do not make the evening news?'

That is what is wrong with the political debate in this country. For too long, politics has been put ahead of good policy, and what we need now is for people to recognise that we are here at the service of the Australian people and that our job is to deliver outcomes for them, not outcomes for us.

That is why the Greens express our deepest concerns at a measure that will make pollution worse and will ensure that people at the lower income end are hit hardest and that we do nothing to address the great challenge that lies ahead of us—and that is the challenge of catastrophic climate change. If you ever wanted a clear indication of where this government and the opposition stand on the great challenge that lies ahead of us, look no further than this decision.

10:30 am

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party) Share this | | Hansard source

It distresses me that on this bill, the Excise Tariff Amendment (Fuel Indexation) Bill 2015, I might be seen voting with the Greens political party, but my opposition to this bill is now 12 months old. I made it quite clear 12 months ago, when these measures were first talked about, that I would be opposing this aspect of the government's repair job.

I, as much as anyone, understand the difficult job our government has had in trying to repair Labor's financial mess. As everyone knows, if something were not done about it, the debt owed by the Australian taxpayer would have increased to something like $700 billion in a very short period of time. Already we are paying something like $1 million a day in interest on money that the previous Labor government borrowed. That is $1 million each and every day that is not going to hospitals, schools and roads. It really shows just how completely incompetent the Labor Party was, and I know our government had that very difficult job in last year's budget to try and arrest that decline. Last year and over the past year, I opposed certain elements of last year's budget, most of which, I am pleased to say, have now been addressed. While some people did not like the approach I took to some of the initiatives in last year's budget, I am, as I say, pleased that nearly all of the concerns that I complained about and argued about have been understood and, in one form or another, adopted by the government. By contrast with last year's budget, I think this year's budget is a credit to Mr Hockey, Senator Cormann and, indeed, the government as a whole. It has set the country on the right path.

But I am opposed to this bill and I said so last year. I indicated publicly last year that I would vote against this measure, but the government in its wisdom last year found a lawful mechanism whereby it could introduce the excise, as I understand it, as a customs regulation that did not need to come before this parliament. But it was said by the government at the time that in using this mechanism under the Customs Act, as I understand it, it did have to come before parliament within 12 months for parliamentary approval. I indicated 12 months ago that, when that did happen, I would be voting against this, and I intend to honour the commitment that I made to myself and, more importantly, to the people that I represent in this country.

I will be opposing it for a different reason to Senator Bernardi, who has long held a view, which he so articulately represented today. I have a different view to him but have reached the same conclusion—that I oppose this excise increase. I will be voting against the bill, certainly, on very, very different grounds to those enunciated by the Labor Party and which I am sure will be even further discussed by the next speaker from the Greens political party. The Greens political party oppose this because they do not have any regard for people who live outside the privileged capital cities, which have a tram system, a suburban train system and a public bus system on every corner. That is all the Greens are concerned about. They want more money for public transport—that is great, but there is not much public transport in Croydon or Normanton or Julia Creek or even Mount Isa. This is why the Greens, on this subject and on so many others, are completely wrong.

In fact, whilst opposing this bill I congratulate the government and thank them from the bottom of my heart that the additional money that will be raised by this facility will, as I understand it, go into a hypothecated fund for road construction over the future and will provide funds for road building around our nation even in excess of the moneys that have been announced by the government today. I give the government every credit for that and I congratulate them on it. In that sense, I completely oppose the reasoning of the Greens political party and support the government in where the money is going. Some might say I am having a bob each way in this debate, but I am a realist. I understand that the Labor Party is voting with the government and that my voice, opposed to this, will be not particularly relevant. So the money will flow and, acknowledging that, I am delighted with the government's commitment, which I think the Labor Party supported, which means a lot more money will go into roads around the country. Indeed, I understand that Senator Cormann has already indicated on behalf of the government that an additional $1.1 billion from this excise money will go into Roads to Recovery.

Photo of Jacinta CollinsJacinta Collins (Victoria, Australian Labor Party, Shadow Cabinet Secretary) Share this | | Hansard source

You can thank me later!

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party) Share this | | Hansard source

I will thank you now, if you had something to do with that. People come up to me and explain how good Roads to Recovery is. I do not need to be told about Roads to Recovery. I was the minister for local government who, in this chamber, introduced the Roads to Recovery program. It is probably the best program for rural and regional Australia, particularly, although it does apply to capital cities as well. It is a program that enables local council to look after their roadworks with their rate base where they were not able to do it before.

As I used to say to John Howard: 'This has been the most popular program you have ever introduced in rural and regional Australia.' Roads to Recovery has done marvellous things, over time. There was some thought that under the Labor term they would cut back on that but, when pressured on it, they did not. That program was introduced into this chamber in 2001, I think it was, and I am delighted to see it has continued. It has done such a lot to help rural and regional people, particularly in getting decent roadworks out there.

The Greens would not understand this. I suspect Senator Lazarus—who always supports the Greens—would not understand this either. Rarely are they in rural and remote Australia. They do not understand the importance of Roads to Recovery funding for rural communities right across the nation. That is why the Howard government introduced it. I am delighted at Senator Cormann's indication that an additional $1.1 billion is going into the Roads to Recovery program.

Having been so praiseworthy of what will happen up with the money, why am I opposing it? I oppose it because any fuel increase—be it by way of government tax or by way of international oil-company profits—impacts more heavily on those who live in rural and regional Australia. I asked Mr Hockey, at the last budget, whether any modelling had been done by the federal government on the impact of an increase in excise on rural and regional Australia as opposed to our privileged fellow citizens who live in the suburbs of the major cities and towns of our nation. Mr Hockey did give me something.

With respect to Mr Hockey—and Treasury, who did it—it was not particularly persuasive. I do not have the figures; I do not have the resources to get the figures and this debate has come on a little earlier than I might have expected. From my own experiences, over 25 years, in trying to help people in Queensland, the state I represent, and particularly those who live distances from the capital cities, I know the impact of any increase in fuel on the cost of living for people in those areas.

People who live in areas remote from the capital cities already are disadvantaged. You do not have to be Einstein to work out that if you need to get goods from the capital city to where I live, in Ayr, you have a 1,000 kilometre road hike by the transport company to bring the goods. Of course, things have to cost more. We who live in the country accept that. There are advantages of living in the country, but the cost of living is always more.

If I want to see a specialist doctor I have to drive a hundred kilometres from my town. That is a hundred kilometres worth of fuel just to go and see a doctor. If you live in a capital city you can get on your suburban train and stop outside the doctor's door. It costs you—what's a suburban train ride these days? Ten dollars? I do not know. I rarely do it, I have to confess, but certainly it is a lot less than paying for the petrol. I am pretty privileged. I live in a small country community that it is only 100 kilometres away from Townsville, a major northern city with all services.

But if you happen to live in Croydon or Normanton or Julia Creek or Birdsville, just for the normal costs of living—education, getting you kids to school or getting to see any sort of doctor—it costs a lot more. Where does the cost come? It comes because you have to drive there, and to get there in your car you have to put fuel into the fuel tank. So every time the cost of fuel increases, be it by government excise or otherwise, the cost of living to people in rural and regional Australia increases.

I know of an instance up on the Gilbert River in the Gulf Country of Queensland where a mother drives her children 80 kilometres to school in the morning, comes back—that is 160 kilometres—to do her work on the entity they are involved with and then, in the afternoon, drives another 80 kilometres back to the town and 80 kilometres back home. That is 320 kilometres a day, just to get the kids to school. The cost to that person is enormous. But it is never thought of by the Greens. There is not, unfortunately, a tram running from George Town to the Upper Gilbert River to allow these kids to get to school.

Photo of Richard Di NataleRichard Di Natale (Victoria, Australian Greens) Share this | | Hansard source

Don't you believe in regional rail and buses?

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party) Share this | | Hansard source

I'd love it! Where is your proposal? Are you ever likely to have a suburban rail network going from George Town—population of 400—to the Upper Gilbert—population of about 50? How stupid. How unrealistic. How completely removed from reality are the Greens political party? That is why they are concentrated on the inner-city latte set, who can easily jump on the tram, jump on the train, get the public bus—

Photo of Richard Di NataleRichard Di Natale (Victoria, Australian Greens) Share this | | Hansard source

Coal seam gas—

Senator Whish-Wilson interjecting

Photo of Sue LinesSue Lines (WA, Australian Labor Party) Share this | | Hansard source

Senator Macdonald, resume your seat, please! Senators are entitled to be heard in silence, so let's have silence. Thank you, Senator Macdonald.

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party) Share this | | Hansard source

Madam Acting Deputy President Lines, thank you for protecting me from this vicious attack by the Greens political party. Unfortunately, I did not hear the interjection about coal-seam gas, but that is a matter for another debate. To you and your mate Senator Lazarus: in Queensland where the coal seam gas is, the LNP won every seat in the last state election. So, if we do live in a democracy, if we do live where the voices of people count, then you know what the people think about coal seam gas, in spite of you and your mate Senator Lazarus trying to build up some support in an area that is, I might say, made up of very sensible people who know how they are voting. That is why every seat in South-West Queensland at the last Queensland election went to the LNP.

I am distracted. I come back to the very serious subject of the cost of living for people in the bush. I have given one small example. There are a million examples I could give if time permitted, but they would be repetitive. The couple that I have given clearly explain that. I understand the government has to raise money and, if they raise it from the people who have the advantage of getting on the suburban train or on the tram or on the public bus, that is fine. I remember some years ago—and regrettably the details have escaped me a little—that during the Fraser years there was a scheme in place where petrol anywhere in Australia would be no more than 5c a litre dearer than it is in the capital cities. I am not sure why that was ever stopped. I suspect the voting strength of people in the rural and regional areas was not sufficient for successive governments to continue that program, but that was a good scheme that should be looked at again. In one way it would help ameliorate the often very great disparity in the price of fuel in more remote areas. The fact that rural people, of necessity, must use their cars for longer distances and more often than those in the city means that, again, the cost of living for people in the country is more expensive.

The government, perhaps even misguidedly, think that giving more money to Roads to Recovery will help rural people and might be some form of compensation, but, as I have pointed out, Roads to Recovery goes to the Brisbane City Council as well. I do not begrudge them that, but of course you know the Brisbane City Council has a budget bigger that the state of Tasmania, so it does not really compensate. There are other programs that this government have had for rural and regional people that do recognise the cost disadvantages of living in the country, but nothing impacts on people's lives in areas 100 or 200 kilometres from major cities more than the cost of fuel—just to get the kids to school, to get kids to their sporting events and to get to doctors. For a lot of Australians to see a doctor involves a $500, $600, $700 or $1,000 plane flight to the next community or it involves driving those sorts of distances. Every time you put up the cost of fuel, those people suffer.

Because I said so a year ago and made the commitment to myself and to the people I represent, but more importantly because it has a huge impact on people living remote from the major cities and towns in our community, I do oppose this and will always oppose it. I was in parliament when the Howard government stopped the automatic indexation of fuel and I thought that was one of the best decisions. It was another very good decision of the Howard government. One was, as I said, Roads to Recovery, and stopping the automatic indexation was another. Why? Because it had a beneficial effect for people who live remote from the services that we all need for our daily lives.

I conclude where I started. It will distress me having to vote with the Greens on anything, but I will be voting against this legislation. I emphasise that it is on completely different grounds to the Greens. In fact, diametrically opposed are the grounds upon which I oppose this. I have no truck with the arguments the Greens have and will make on this subject. I would like to hear Senator Milne's next contribution regarding how she understands the plight of people living 1,000 kilometres away from a major city. I do not think the state Senator Milne represents has any communities more than 1,000 kilometres away from a capital city, but it will be interesting to hear that. It is with some regret that I will be voting against my own government, but I do so in furtherance of my long-held view that people who live in the country should not be disadvantaged any more than need be by where they live, and increases in the price of fuel certainly increases that disadvantage, which I will fight against forever.

10:51 am

Photo of Christine MilneChristine Milne (Tasmania, Australian Greens) Share this | | Hansard source

I am glad to hear Senator Macdonald at last expressing some concern for rural Australia, because for the last year he has been defending the Abbott government's increase in the fuel excise as government policy. It is interesting that he has now discovered what the Greens have been saying—since day 1, I might add—and that is that the poorest people live furthest from the centre of the city, often drive the oldest and least efficient vehicles and have least access to public transport. Those have been the facts for a very long time. We have endlessly pointed out the impacts of the fuel excise on the poor, especially in rural and regional Australia.

I rise today because it is a great opportunity to set the record straight on a lot of nonsense that has been talked about on fuel excise. Let's go back to the very first principles. Firstly, the Greens want to see a reduction in greenhouse gas emissions as climate change is the emergency we are living in. Secondly, we want Australia to be a prosperous country with cities comparable with the world's best. We want amenity in our cities, because the overwhelming majority of people live in urban centres. We have to design our cities for the 21st century. Only yesterday, The Lancet mentioned the advantages of how redesigning cities to bring down greenhouse gas emissions also contributes to public health—more walking, more cycleways, more public transport. What is not to like about that? It addresses the obesity crisis at the same time as it addresses greenhouse gas emissions. Australia's cities are falling absolutely behind the rest of the world. We have to redesign the urban environment for the 21st century, and that is not happening. That is fundamentally the point that the Greens have made from day one.

We need to be raising money in order to spend it on the things that we need and raising the money in a way that actually contributes to social change. I would like to remind the Senate of what the Treasurer, Mr Hockey, said. He said:

Over the next six years, the government will help to build new roads, new rail, new ports and airports.

He went on to say:

And to help pay for this, the government is re-introducing fuel indexation where every dollar raised by the increases will be linked by law to the road-building budget.

He then continued:

Shovels will start moving within a matter of months.

He cited projects and said:

… in New South Wales construction on the $11 billion WestConnex project will start within 18 months. …

The $18 billion East West Link in Melbourne starts work before Christmas …

He went on to say that that is where the government's priorities would be. The people of Victoria did not want the East West Link. People in Sydney do not want WestConnex. There was no way that the Greens were going to provide the Abbott government with the money to build exclusively roads and prioritise two projects which we were campaigning against because the communities did not want them.

It happened at the exact same time as the government dumped commitments to public transport projects. Let me remind the Senate what they were—the Melbourne Metro, which had previously had money allocated to it, the Perth light rail and the Brisbane Cross River Rail. These projects, which were meant to be funded, were axed in favour of bitumen, not steel rails, but bitumen. All the Abbott government can think about in the 21st century is bitumen. It shows that they do not understand the way the world is moving.

If you were interested, as the government is, in just raising money—and this is a pure revenue raiser, not a transformative measure—and if you were genuinely interested in and actually knew the way the world was going, you would not be seeking to raise revenue from petrol excise because it may have crossed your mind that the transport fleet is rapidly going to convert to electric vehicles. We already have hybrids, and we will go to fully plug-in electrics. When you go to a fully plug-in electric, you will not pay a fuel excise, and that is increasingly the way it is going to go. The wealthy are going to go straight to electric vehicles and the residualised cost is going to end up with the poorest people who drive the oldest and least efficient vehicles. They are left behind paying an ever-increasing fuel excise whilst wealthier people buy their Nissan LEAF and never have to pay fuel excise again. That is why cities around the world that have the smarts are saying, 'We need to get into massive investment in public transport, and we will raise money for roads from congestion charges, or it will come from restructured taxes on use of roads.' That is the way the world is looking at how you would actually structure the cost of investing in infrastructure when the world is moving away from fuel excise as such, if you regard it purely, as the government does, as a revenue raiser.

I also want to talk about why it is such a great thing to invest in public transport. One example I can give you is the Epping to Chatswood line in Sydney. It was the first major rail line in Sydney for two decades and it was finished in 2009. The evidence on that shows that it helped spur a surge of activity in the Macquarie Park area in Sydney. In fact, it led to an extra 1½ to 2½ per cent growth in spite of the global financial crisis. So that is a classic case of where investment in a rail project led to extra economic activity around the rail line. You are not going to get that with roads. In fact, what happens when you build motorways and freeways is that you get greater congestion, greater urban sprawl, cities sprawl further out and the poorest go right to the edges. For all those people who think that, automatically, an increase in fuel excise leads to a decrease in greenhouse gas emissions, it does not if you spend all of the money on not putting in alternatives like public transport but just build more freeways. That is why I had such an objection when former Prime Minister Rudd said he wanted to free up land on the edge of the cities, cheap land to build cheap housing to address housing affordability. That is the worst-case scenario because it condemns those people to poverty. It condemns them to poor amenity in their lives because cheap housing is going to be expensive housing through being costly to heat and costly to cool. Plus, they are not going to have public transport. They will have to spend a whole lot more to get to work and to be on their daily commute.

We have a situation where, if you are serious about addressing a genuine 21st century upgrading of our cities, you would be saying, 'What do we need to do?' We need to decrease congestion, we need to increase access to fast, efficient, safe public transport. We need to help improve people's health with better air quality, with more opportunities to walk, to cycle, to be part of looking after their own health and having better amenity in their urban environment. You would be planting more trees, having more parks and more shaded areas, because global warming, especially for Australia, is going to make life in a concrete jungle much more unpleasant than it already is. When you look around the world and see the sorts of projects that people are supporting, that is exactly what they are doing.

Go to what Infrastructure Australia has as its priority list for public transport. As the first thing it has that it would spend on the cross-river rail and Brisbane transit ways. The second thing would be Melbourne Metro, and the third thing would be the Adelaide east-west bus corridor. The next category for real potential is Perth's MAX Light Rail, Brisbane's east-west bus way, Sydney's north-west rail, Melbourne's Dandenong line and the Gold Coast's light rail. And in the early-stage category would be Brisbane for a rail line, inner Sydney for a regional bike network, Sydney for a light rail, Western Australia for an airport rail link, and Canberra for a transit corridor and metro rail lines. They are Infrastructure Australia's clear directions in terms of where and how to spend on public transport. Yet this government said, 'We actually don't want public transport; we're going to kill those projects, and we're going to put every single dollar into roads and start by increasing congestion in Melbourne and Sydney with East West Link and WestConnex'—increased congestion, increased greenhouse gases.

Let me go back to my point about addressing global warming. Transport is a major emitter, an increasing emitter, in Australia. So, what are we going to do about it? When we tried to negotiate the clean energy package with the Labor Party, I tried to get mandatory vehicle fuel efficiency standards consistent with the European Union in the package. That would have made sense—to actually phase in those mandatory fuel-efficiency standards. Labor opposed it outright. They would not have it, and they have continued to oppose it, until the car industry shuts down in Australia. Why? Because the car industry here was not building fuel-efficient vehicles, was not building the vehicles that would have met the standards we wanted to set. And why didn't we require it of those companies, to build on that platform? Because the platforms they had were old-fashioned. Other places around the world had forced those vehicles to be more fuel-efficient. We were building cars here that were exactly the same vehicles as were being built by the same company elsewhere in the world, except that elsewhere in the world they were building them to higher standards.

The first thing you would do is mandatory fuel-efficiency standards. I have a private senator's bill in this parliament, and I have no doubt that my Greens colleagues will continue to work with that legislation to get mandatory vehicle fuel efficiency standards. That is the first thing you would do: upgrade your transport fleet. The whole objective should be getting people to drive less and, when they do drive, to drive more efficiently. In that context, you get people to drive less by getting a government to invest in public transport. And to get them to drive more efficiently you facilitate them in being able to get those more fuel-efficient vehicles. That is exactly the position of the Greens, and that is why we have argued it all along.

In the midst of all this we have had the Treasurer, Mr Hockey, coming out and saying that I would not answer his telephone calls in relation to fuel excise. Wrong. He never rang my mobile, ever. Let me put it on the public record here in the Senate: he never, ever rang. If you want someone to answer the call, you have to make it in the first place. It is fairly fundamental, but somebody who only supports bitumen and not 21st century measures maybe does not understand that. Secondly, he has clarified the record to say, 'Oh, no, actually I rang the office, and the office did not get back to me.' Well, I can say that I do not believe that is true either, because my staff absolutely understood that if ministers rang then the message had to be passed on—and it was passed on. It is peculiar that it was passed on for every other minister and just not the Treasurer—according to the Treasurer's assessment.

Minister Cormann knows that when he sought a meeting I did make myself available. His office asked for a meeting when he was overseas. I made myself available at a suitable time. The call was not made. Something came up. That is fine; those things happen. On another occasion I met with Minister Cormann in my office. At that point, again, I put the Greens' position: we wanted money for public transport and clarification of whether every dollar was going into the roads the government prioritised, and Minister Cormann made it very clear that the government's policy was, whether or not the money was hypothecated or not hypothecated, that all of it would be going into roads, into East West Link, WestConnex and the other roads the government had prioritised.

The pig-headedness in this debate was the failure of the government to actually think about fuel excise as a transformative, 21st-century measure, to look at what Australia's vision is for how we want people to move around the country in this century. What is our vision for that? How do we make it fair for people who are poorer and in many cases, as I said, have further to travel by virtue of the fact that they are forced into the outer suburbs, or people who live in rural areas? How do we deal with that? How do we deal with competitiveness of our cities? I can tell you that when you speak to chambers of commerce around Australia they are very worried about the fact that both Melbourne and Sydney are congested compared with other, comparable, cities.

Many people will remember that when Ken Livingstone introduced the congestion charge in London there was a lot of criticism. But London has been transformed. It is amazing to see the public transport in London now. You would be crazy to take a car into London when you can take public transport so easily, so efficiently. It is regular, it is safe and it is reliable, and that has made a huge difference compared with how it used to be. That is what we could have done in Australia, and that is why the Greens said that we want money spent on public transport. It is why Senator Di Natale made that point and continues to make that point in relation to the Greens' position—because we want to bring down greenhouse gas emissions; we do not want to increase congestion; we do not want to increase greenhouse gas emissions by building motorways and freeways, leading to urban sprawl and increasing those emissions when we can see the way the world is going.

Let's have a conversation about what we want our cities to look like. I congratulate my colleague, Senator Ludlam, who has done fantastic work looking at how you would transform Perth. He worked with the Property Council there, and they came up with a model for seven representative public transport corridors. They were looking at how that would not only contain urban sprawl but lead to greater infill along those corridors. It would build more connected communities along those corridors, make it cheaper for people to commute and make a local community around those corridors.

The Property Council in Perth are not people with whom the Greens often have a great deal in common, but I have to say that they are totally on board with us around Australia, looking at how you can actually have a strategy of planning that leads to better amenity in our cities. I congratulate Senator Ludlam and I know that Senator Wright is keen to be looking at exactly the same thing for Adelaide, because it makes sense.

The overwhelming issue of the century is that people want to be happy and healthy and they want to live in a connected community. They want to bring down greenhouse gas emissions. All of those things are achievable if you change your mentality from bitumen to rail; if you change your mentality from petrol to electric vehicles and public transport; and if you change your mentality on revenue raising from just wherever you can grab that revenue to actually using it as a transformative measure.

My final remarks are with regard to the Labor Party. Last year Mr Shorten referred to Mr Abbott, during an SBS interview, saying, 'I'm not going to increase taxes, no new taxes' and then increasing the tax on petrol. Mr Shorten said:

We were never going to vote for that. A crocodile wouldn't swallow his nonsense.

Well, it seems the crocodile has swallowed the nonsense on this occasion. Mr Shorten went on to say:

That’s why we’re standing up for the 300,000 senior citizens getting the supplement. That’s why we’re standing up against the petrol tax.

Until, of course, we now discover that they are not. Finally, in a Radio National interview, he says:

I know that people say this is only a small increase but over time it compounds. People need their cars to get to work, to pick up the kids. When you increase transport costs it flows onto every aspect of the economy. It’s sneaky, this measure. They won’t take it through the Parliament. It does affect cost of living. The other thing about the way they’re doing it is that if they’re unable to convince Labor or the Greens then what happens is—because they’re doing it by regulation rather than legislation, that if they’re unable to convince us to change our principles in the next 12 months, which they’re not going to be able to do of Labor, under the way they’re constructing their sneaky manoeuver all this money will go back to petrol companies. It’s very ill thought out.

Indeed it is, and I am surprised. But it is the second time in a week that Mr Shorten has backflipped. Having said he was not for turning on the renewable energy target, he did: he slashed it to 33,000 gigawatt hours. He was not for turning on the petrol excise—until he is.

We need a vision for Australian transport that is about reduced greenhouse gas emissions and modern, healthy cities. That is what this should be about, and looking after the poorest in our community. That is what the Greens were trying to do, and that is what has not been achieved in this deal which simply confirms both Labor and Liberal want bitumen. (Time expired)

11:11 am

Photo of David LeyonhjelmDavid Leyonhjelm (NSW, Liberal Democratic Party) Share this | | Hansard source

I rise to oppose the four fuel indexation and road funding bills before the Senate. Fuel taxes are unjustified. Taxes on goods and services should be limited to a broad based GST. That way, the government would not interfere with people's choices about what to spend their money on—everything would be taxed equally.

The only reason we have fuel taxes is that taxing fuel used to be one of the few ways governments could reliably extract revenue and, once a government starts taxing something, it finds it hard to stop. Fuel taxes are not directed to funding road construction and maintenance, and fuel tax revenue exceeds spending on road construction and maintenance. Fuel tax revenue last financial year was $19 billion, whereas total Commonwealth and state government spending on road transport was $16 billion.

We should also remember that fuel tax is not the only way that governments extract money from motorists. We face registration, licence fees, insurance taxes, and road tolls. This is not just double dipping; it is triple and quadruple dipping. Road users should certainly pay for the roads they use one way or another, but not every way.

Fuel taxes are also not a proxy for a carbon tax. Our current fuel taxes represent a carbon price of over $150 per tonne of carbon dioxide. No emissions trading scheme or carbon tax proposes the imposition of such a carbon tax, particularly when it is just on one product and not on the great bulk of products that generate greenhouse gas emissions.

More broadly, the Commonwealth government should not fund roads. There is no constitutional basis for Commonwealth involvement. And there is no policy reason for Commonwealth involvement. After all, roads are not like railway lines—we do not need to coordinate rail gauges. Commonwealth transfers to the states should be abolished, including for roads. The states can reduce their spending, for example, by means-testing access to government-run schools and hospitals. And if they do not want to do that, the states have the power to impose taxes that are less damaging than a lot of Commonwealth government taxes.

If Commonwealth transfers to the states are not abolished, they should at least not come with strings attached. The idea that public servants in Canberra have any idea about how to divvy up spending between particular roads, particular schools and particular hospitals is ridiculous.

On budget day I moved a motion calling on the Senate to express its opposition to the government's fuel tax increase. The motion passed with the support of Labor. Six weeks later, Labor has changed its mind. Labor, the coalition, and the Greens all support higher fuel taxes, provided the booty is spent to their liking. It is becoming clearer by the day to motorists, taxpayers and voters that the only true small-government, low-tax party in Australia is the Liberal Democrats.

11:14 am

Photo of Jacqui LambieJacqui Lambie (Tasmania, Independent) Share this | | Hansard source

I rise to register my strong opposition to the package of four bills including the Excise Tariff Amendment (Fuel Indexation) Bill 2014 and affecting fuel excise. The Bills Digest describes this bill, the Excise Tariff Amendment (Fuel Indexation) Bill 2014, and the three associated bills as providing 'for the reintroduction of biannual indexation by the consumer price index of excise and excise equivalent customs duty for all fuels except aviation fuel, crude oil and condensate'. If this bill passes the Senate, Tasmanian motorists will pay more for their fuel. For that simple reason, I cannot support this legislation.

At a time when the average price of fuel in Launceston, Hobart, Devonport, Ulverstone, Burnie et cetera is 10c to 15c a litre dearer than on the Australian mainland, this government and its Tasmanian members want to guarantee that it costs more to fill up the car. This is lunacy. This means there will be less money in the family budget to pay for food, electricity, insurance, rates, rent and school fees. So I cannot support this unfair measure—not at a time when oil companies are making massive profits, when the watchdog, the ACCC, has turned into a watch poodle; and when Tasmanian families, the sick and the unemployed are struggling to keep a roof over their heads and food on the table. Many people already pay for fuel on credit cards. They are not putting luxury items on credit; they are forced to put essentials on credit cards.

The increased fuel cost will have a serious impact on my Tasmanian communities which are already doing it bloody tough. Recent media reports show that we have some of the highest unemployment rates in Australia. The Advocate, my local paper, reported higher jobless rates in Devonport and Burnie recently. Devonport and Burnie have much higher jobless rates than neighbouring municipalities, as many Tasmanians give up the hunt for work. Devonport's March quarter jobless rate of 9.2 per cent was much higher than Tasmania's 6.9 per cent and Latrobe's 5.2 per cent, according to figures from the federal Department of Employment. The Burnie region, where I am, had a 9.7 per cent jobless rate—significantly more than the neighbouring Central Coast at 6.5 per cent and Waratah-Wynyard at 7.1 per cent, and nearly double that of Circular Head at 4.9 per cent. Jobless rates fell in the March quarter state-wide and in all nine Cradle Coast municipalities, but the total number of jobs in Tasmania has been falling since the start of 2015.

Not only is my community battling high unemployment, we have been challenged by a public health system which was driven into the ground by the former state Labor and Greens coalition. It is hard to justify paying more to fill up the family car when you or your loved ones are sick, and when we have a health system in which, as reported by another local paper, The Examiner, more than 10 per cent of Tasmanian patients waited more than one year for elective surgery in 2013-14. This is in stark contrast to the national average of 2.4 per cent. The recently released Australian Institute of Health and Welfare's Australia's hospitals 2013-14 report revealed that there were 15,000 elective surgery admissions to the state's public hospitals in that period. Of those, 11.5 per cent of patients waited more than 365 days for their procedures. The health minister, Michael Ferguson, on Monday labelled the wait times 'unacceptable'. Imagine being the breadwinner in a Tasmanian family and being sick, and living on credit from week to week—trying to find more money to fill up the car, so you can travel to hospitals in which, The Examiner says: 'Doctors and nurses say they are being stretched to the limit in the face of slashed budgets, joining calls for the state government to reinvest heavily in front-line numbers.' Health analyst, Martyn Goddard, says hospital staff numbers have remained static despite a huge increase in workload. Mr Goddard has warned that, without dramatic workforce changes, safety will be placed at high risk and more patients will be turned away untreated. Mr Goddard wants $223 million in GST revenue injected into the health system. The Tasmanian community is facing greater social challenges, greater government department dysfunction, and dearer fuel than any other Australian community. On top of all those injustices, we should not have to face increased fuel prices caused by the passage of this bill.

In closing, I want to mention the Greens' contribution. Making Tasmanians pay more for their fuel and energy will not stop world climate change. It will just make it tougher for average families to look after their children and to pay their bills. We could stop driving cars, stop using electricity, and go back to living like people in the middle ages—which is the vision that the Greens—and Islamic State—have for the world. And climate change, according to the Greens' own predictions, would still continue even if we all lived in a cave, burnt candles and ate tofu. We cannot stop climate change. We can only prepare for world climate change. We do that by making sure we have the cheapest and most secure fuel and energy supplies in the world.

I oppose this bill and the related bills. They increase Tasmanian fuel prices at a time when we should be driving down fuel prices.

11:20 am

Photo of Janet RiceJanet Rice (Victoria, Australian Greens) Share this | | Hansard source

That was an interesting contribution from Senator Lambie. I rise to speak on the Excise Tariff Amendment (Fuel Indexation) Bill 2015, the Customs Tariff Amendment (Fuel Indexation) Bill 2015, the Fuel Indexation (Road Funding) Special Account Bill 2015, and the Fuel Indexation (Road Funding) Bill 2015. In particular, I rise to speak about the deal that has been done by the government and the Labor Party to increase the fuel tax that is going to be paid by Australians with all the money going to roads. This is an example of the Labor Party completely capitulating and giving the government everything they wanted. In the year that I have been in the Senate, discussion of the fuel excise has been on the agenda constantly. The Greens' position has been strong and firm and consistent—that we were open to negotiations on the increase in fuel excise if that revenue was going to go to two things: one, towards public transport, so that we could support the transformational change that is needed in our communities to be building cities and building country regions that are not dependent upon fossil fuels—so that people would have a choice; so that people would not have to drive their cars, or not have to drive their cars long distances. That was the first of our negotiation points. The second was to address the impact that an increase in the fuel prices was going to have on low income people who currently do not have the choice to avoid spending that money.

Labor have given the government everything they wanted. Right from the beginning, the government have been saying that they want to spend all of this increase in fuel taxes on roads—roads, roads and more roads. They have been completely consistent as well—completely against having a society that is reducing our carbon emissions and is genuinely interested in the welfare of people. But, no; through the deal that Labor did yesterday, they have delivered to the government what they wanted. The government will be popping the champagne corks, because they have completely derailed what was looking, potentially, to be a successful negotiation between the Greens and the government to actually divert that money into something that was going to deliver on transformational change—to deliver some of the fuel excise increase into a fund for public transport and into measures that would mean there would be compensation for the low income people who currently do not have a choice. What a missed opportunity!

The other missed opportunity that we have here is a missed opportunity to begin that transformation of our cities and a missed opportunity to address the impacts of fuel prices on people. It is also a missed opportunity to do something about the fuel security that Australia currently does and does not have. We have had a Senate inquiry into fuel security in Australia which, I understand, is going to report tomorrow. The submissions to that Senate inquiry have been very clear: that Australia's almost 100 per cent reliance on imported liquid fuels leaves the country's industries, and us, as commuters, and our transport systems extremely vulnerable to supply disruption, and exposes our economy to continually rising and volatile world prices for oil. Under the direction that we are heading in, that is the reality that we are facing.

Clearly, what we need to do in order to address this major issue of fuel security is to look really seriously at, and to build, our use of fuels other than fossil fuels. The obvious solution to dealing with our fuel security issues and with the climate change consequences of burning fossil fuels, and to creating a place where low-income earners are not going to be at risk of having to cope with increased oil prices, is to shift towards renewable transport fuels—in particular, to shift to public transport, which can be much more easily fuelled by electricity and can be accessible to a wide range of people. We need to shift our vehicle fleet to electric cars and use other renewable fuels. These are the sorts of directions in which we need to be heading. This is the sort of opportunity that we should be taking at every instance.

We had an opportunity here that has been missed, and the impact on low-income people is going to be massive. I know, from the work that I have done in the transport field over the last two decades, that price matters and that people do find that, with the increasing cost of fuel, they are not able to drive as far. It means that people miss out if they have not got any other options.

I stand here as a Green really quite perturbed at the misunderstanding of the Greens' position on fuel prices and low income people. Yet our position has been very clear over the last 12 months: we have wanted to really work with people, and to give low income people a choice. I know, from having spoken to people all across the country and particularly across the state in the last 12 months, that the people who are suffering the impact of high fuel prices want to have the opportunity to use public transport. Research I have recently seen corroborates other research that shows that, even in outer suburban areas, rural areas and regional areas, if you give people a choice of where they want to see transport funding being spent then their No. 1 priority is public transport, because people realise that they need to have a choice. They want to have the option of using public transport. But, at the moment, where we do not have public transport systems available to people in outer suburban areas, they have no choice. So an increase in fuel prices is going to mean that it is money that they are going to have to put into their petrol tank and are not going to be able to spend on putting food on the table or shoes on their kids. So people realise that that is not a good direction to be heading in. They know that there is another way.

The Greens were negotiating with the government to have a public transport fund. That amount of money could have been spent on many different public transport projects. There would have been a very strong argument that the most efficient way to spend that money on public transport projects, thus spreading the benefits of that $2 billion over the next four years, would have been to make a massive investment in outer suburban bus services and bus services serving regional and rural communities, because they are the people who currently do not have the choice of public transport and for whom any increase in fuel is going to mean less money that they have got to spend on other, essential household and family goods and services. These are the people who we need to be giving the opportunity and the choice to have public transport that works for them and can enable them to travel on public transport and not rely on their cars.

The other opportunity that has really been missed here is this. Not only are we continuing in the direction which is bad for people on low incomes, but also we are absolutely continuing in a direction that is not in the interests of the long-term health and sustainability of our society. We know we have carbon pollution from increasing use of fossil fuels. We have particulate pollution in our cities. We need to be working that out. We need to be shifting away from the use of fossil fuels so that we can get outcomes, which we can do. We know what the answers are. We know where the money needs to be spent. They are outcomes that are going to be good for our climate, shifting us into renewably fuelled transport, good for the shape of our cities and good for the health of the people living in those cities.

Health is another really important factor that, again, is being disregarded here. By our not funding public transport, people are having to rely on their cars. Having to drive means that they are missing out on the health opportunities of the exercise that could be available. We know that with every public transport journey there is a walk, whether it is to the bus, to the train or to the tram. Just having that regular walk in people's days will reduce their risk of heart disease, reduce issues of weight problems and reduce the risk of cancer. These are the sorts of issues that would all come together if we were to take a holistic look at creating healthy cities. Yet it is this direction that the government and the Labor Party are ignoring, totally missing that opportunity.

I will finish on the deal that has been done to put this money into Roads to Recovery projects. As I said, this is exactly what the government wanted. They would have spent the money on roads anyway. As a former councillor, I know the benefits of Roads to Recovery. I know that councils really need that money to be spent on their local roads. But they also need money to be spent on their public transport initiatives. They also need to spend money on walking and cycling initiatives, and they are not being given the choice.

We need to work out where a balanced transport budget is. Over the last 50 years the bulk of funding has gone into road projects. We can never catch up. You are always fighting to catch up because the more money you put into the road projects the more people use those roads. The less money you put into public transport the less opportunity there is for people to use public transport and the more they have to use the roads. It is a completely endless cycle, and it is such an inefficient way to be funding our transport networks.

If we were to have affirmative action for public transport, it would mean that we could break out of that vicious cycle. We could give people the opportunity to shift their transport away from expensive car transport into public transport. If we give local governments the opportunity of funding sources not just to fund roads but also to fund walking and cycling, we are giving people the opportunity to be able to travel their journeys—and particularly the short journeys under five kilometres, which, in fact, are the majority of journeys that people take—by walking and cycling, and this would improve their health.

Doing all of these things leads to a positive, healthy situation both for the people of Australia and for our climate. Roads to Recovery projects are all very well, but we need to have a much better balance. We need to have a balance in transport funding so that we can reach a situation where I reckon we could have approximately a third of all journeys being made by walking and cycling, a third of all journeys being made by public transport and a third of all journeys being made by private vehicle transport, with those private vehicle trips increasingly being made by cars that are being fuelled by renewable fuels. That would be the sort of balance that would be heading us into a positive future that would be really addressing the issues of fuel security, of climate change, of unhealthy people and of the impact and the cost of transport on low-income peoples. We have missed that opportunity completely today, but we know that the Greens will continue to fight for it. We know that we have the support of the Australian community for healthy communities, for actively encouraging walking and cycling and for public transport. We know the fight is going to go on, but I am just so disappointed that today we missed such an incredible and important opportunity to further our progress on these issues.

11:34 am

Photo of Bob DayBob Day (SA, Family First Party) Share this | | Hansard source

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.

11:48 am

Photo of Ricky MuirRicky Muir (Victoria, Australian Motoring Enthusiast Party) Share this | | Hansard source

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.

11:56 am

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Minister for Finance) Share this | | Hansard source

I thank all those senators who have contributed to this debate. These bills validate the tariff proposals currently in operation and give effect to the government's 2014 budget measure to reintroduce biannual indexation of fuel excise.

Indexation of fuel excise was first 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. The rate of excise on most fuels was frozen between March 2001 and November 2014. Petrol maintained an excise rate of 38.143c per litre during that period, which meant that the real value of the excise duty was eroded by inflation.

The government have made significant progress in repairing the budget, however more work needs to be done to return the budget to surplus as soon as possible. The 2015-16 budget maintains a steady and credible trajectory towards surplus despite a significant write-down in tax receipts and the iron ore price having more than halved since we came into government.

The reintroduction of fuel excise indexation will provide a predictable and growing source of revenue, which will be used to deliver the vital road infrastructure that Australia needs. Indexation of fuel excise will raise approximately $3.6 billion over the 2015-16 forward estimates period and over $23 billion over the next decade. All the revenue raised through this measure will be linked by law to funding roads. Importantly, businesses using fuel in off-road operations or operating an on-road vehicle with a gross vehicle mass in excess of 4.5 tonnes will not face an increase in their business costs due to the continuing operation of the fuel tax credit arrangements.

These bills include consequential amendments to the Excise Tariff Act 1921 in order to simplify the burden on businesses by rounding the applicable duty rate of indexed fuels from three decimal places in the cent to one decimal place. The passage of this significant structural budget reform demonstrates how the government is continuing to methodically and progressively implement our budget repair measures.

In this context, I would like to pause and thank the Senate for its support over this past fortnight for the government's plan to strengthen growth, create more jobs and repair the budget. The Senate will be well aware that, when we came into government, we inherited a weakening economy, rising unemployment and a budget position which was rapidly deteriorating. That rapid deterioration, in the main, was as a result of unsustainable and unaffordable spending decisions in the period of the previous government. Yes, we had the global financial crisis and we at the time supported a level of fiscal response to that, but the fiscal response deployed by the government at that time was manifestly excessive. Furthermore, at a time when the terms of trade for Australia were starting to come off from their record levels and the price of our main export commodity, iron ore, was starting to come off, instead of trying to control expenditure moving forward, the previous government made a series of decisions to lock in permanent increases in spending, in particular in the period beyond the published forward estimates. That, of course, has put Australia on a more risky trajectory moving forward. These sorts of decisions have put our future economic growth opportunities and our future living standards at risk, which is why the government came into office with a plan for stronger growth, for more jobs and to repair the budget.

As I have been able to indicate to the Senate before, that plan is working—it is starting to have effect. Economic growth is now strengthening. Growth last year was better than the year before. Growth this year has started very strongly. Growth in the first quarter of 2015, at 0.9 per cent, was one of the strongest growth rates anywhere in the developed world. It was stronger than any of the G7 economies' growth in that same period. Our employment growth in 2015 is much, much stronger than the employment growth rates that we inherited on coming into government. In fact, employment growth in the first five months of this year is about six times the rate that it was in the last 12 months of the previous government. And so it goes on.

Budget repair is a very important part of our plan to strengthen growth and create more jobs, because we need to ensure that government is able to live within its means—that spending growth and spending overall do not exceed revenue. Our objective is to get the budget back into surplus as soon as possible, as we have articulated on many occasions. On that front also we are making progress. In this fortnight, we have been able to pass budget repair measures—measures to improve the budget bottom line—to the tune of nearly $11 billion over the forward estimates. Many of these measures, of course, will have a structural effect beyond the forward estimates, improving the budget bottom line in an ever-increasing way in the period over the medium to long term. That is excellent progress.

We still have more work to do. We cannot rest on our laurels. When we come back after the winter break, we do hope that the constructive approach taken by the Senate in recent weeks will be continued and that we will continue to be able to get some of the very important reforms through the parliament. In this fortnight, we were able to get the small business and jobs package through the parliament. We would like to think that, when we come back, we will be able to get the jobs for families package through the parliament, with, at its core, our proposals to make access to more affordable child care simpler and more flexible. We understand that simpler, more affordable and more flexible access to childcare arrangements is a very important part of helping families get into work, stay in work and be in work.

Getting back to the issue of fuel excise indexation, the government always said that our intention was to reinvest the additional revenue raised through this measure into our road infrastructure. At various times over the past year, as we were working through the issues and seeking a majority in this chamber, we explored the option—and we offered this to the Greens—to potentially decouple that hypothecation to road funding if it would help secure the Greens' support. We also made an offer to the Greens in August last year that we would be prepared to make an additional investment in public transport infrastructure if it helped facilitate passage of this measure. But, of course, the Greens were not prepared at that time to properly engage with us and made various demands of the government that, clearly, they would have known were never able to be accepted by the government as responsible economic managers. It is true that, with the election of Senator Di Natale as leader of the Greens, we felt that there was a better prospect of perhaps reaching a consensus, understanding that we have different policy perspectives on the matters at hand but, obviously, working in the pursuit of the national interest and, hopefully, being able to find common ground.

But then, of course, the Labor Party came in with an offer that was too good to refuse. The Labor Party offered to support this very important structural reform, which helps us repair the budget, and asked in return for us to boost the investment in road infrastructure through our own Roads to Recovery Program. Given that we well understand on this side of the chamber the excellent contribution the Roads to Recovery Program makes to our road network, to local governments and to our communities across Australia, we of course were only too happy to enter into that understanding and that agreement with the Labor Party. I heard today from Senator Rice during the debate that she also, as a former local councillor, understands the value of the Roads to Recovery Program—and so there is a tripartisan consensus that the Roads to Recovery Program is a very good program. I am very pleased that Senator Rice supports our additional investment in our Roads to Recovery Program as a very important initiative.

During the debate, various people have raised the question of the implications for rural and regional Australia in particular. I thought I would place on the record that the majority of Commonwealth investment on road infrastructure has been directed to rural areas in recent years. On a per capita basis it is very significant. Even in absolute terms, if you look at Commonwealth spending on roads, overall, more than 60 per cent of Commonwealth investment in road infrastructure, over the last three years, has been invested in regional areas.

In the years 2010-11 to 2012-13 spending per capita in rural areas has been significantly in excess of that of urban areas. In relative terms, rural funding per capita has been at least three times that of urban areas. It stands to reason. They have a lower population but there are significantly larger road networks. From that point of view, we do understand that people in rural areas have to drive longer distances. There is also a commitment by the government to continue to invest, very strongly, in the necessary road infrastructure that regional Australia needs.

With few those remarks I am pleased to commend this bill to the Senate.

Photo of Gavin MarshallGavin Marshall (Victoria, Deputy-President) Share this | | Hansard source

The question is that the bills now be read a second time.

Question agreed to.

Bills read a second time.