Mr KELVIN THOMSON (10:19 AM) —I move:

The Fuel Sales Grants Bill 2000, the Product Grants and Benefits Administration Bill 2000 and the Fuel Sales Grants (Consequential Amendments) Bill 2000 operate as a package to provide a tiered system of grants for petrol sales to consumers in non-metropolitan areas with a higher rate of grant to be provided for sales in remote areas. They operate to standardise the administrative framework for grants and benefits administered by the Commissioner of Taxation and ensure that the grants are covered under the Taxation Administration Act 1953 like other taxes in such areas as prosecutions and offences, collection and recovery, and so on. The bill talks about the scheme being estimated to cost $500 million over four years from 2000-01. There was an update of that in the budget last night: the cost over four years will be $562 million. This is a cost to the budget that was not factored into the ANTS package. This scheme represents a vindication of the position argued by Labor going back to before the last election when we pointed out that including petrol in the goods and services tax would widen the city-country petrol price differential. For a long time, the government resisted this argument and claimed it was not so, but we see legislation before the House which is an admission and acknowledgment by the government of the fact that it is so.

The government's plan involves reducing the excise on fuel by a set amount, such as 7c or 8c per litre, and then imposing the 10 per cent GST on fuel. The formula will have effect depending upon the retail price at the time. For example, if the existing retail price of petrol were 77c, removing 7c of excise and imposing a 10 per cent GST—that is, 7c—would have no effect on the retail price. However, as anyone who has driven around the country or spent any time in country areas will readily understand, at various petrol stations around the country there will be prices in excess of 77c. Generally, the further away you get from the metropolitan area the higher that price differential becomes. For example, if you have a petrol station in country New South Wales which currently charges 87c, there will be a price effect whereby it reduces the price by 7c a litre for the excise reduction but then the 10 per cent GST kicks in. It would add 10 per cent of 80c—that is, 8c. The retail price in that country service station would increase from 87c to 88c because of the GST. Therefore, the city-country price differential also increases. Where a petrol station is very remote—we are all aware of examples in the Northern Territory, Western Australia and so on—the price will be even higher, which will mean greater than 1c increases. That price effect is an inescapable mathematical fact, despite the weasel words in the ANTS package that no petrol price need rise.

To overcome the problem, various government ministers—the Prime Minister, the Treasurer and the former Deputy Prime Minister, Tim Fischer—were saying that no petrol price would rise. Despite their claims, Labor continually pointed out that this promise was undeliverable under the original ANTS package. Motoring organisations, and in particular the Australian Automobile Association, consistently confirmed Labor's argument, as have respected and prominent commentators such as Terry McCrann. Indeed, at one stage Treasurer Costello actually attempted to walk away from the promise when he told Laurie Oakes on the Sunday program that there were limits on the promise. This jettisoning of the bush caused outrage in regional Australia, together with Treasurer Costello's other observation—indicating his concern for the wellbeing of rural Australians by saying that the way to resolve some of their unemployment problems might be to see rural wages fall. Those two statements by Treasurer Costello did a great deal of damage to his aspirations to become leader of the Liberal Party at some stage and caused him to lose quite a lot of support amongst country members of parliament. The Prime Minister was not going to have any of Treasurer Costello's observation that there were limits on this promise. The Prime Minister said, `The promise will be honoured in full.' This led to the announcement last month of this grants scheme which constitutes the legislation before the House.

To look at these measures in a little more detail: the bill establishes a grants scheme to fuel retailers in respect of sales in non-metropolitan and remote areas to end users. A grant will apply to all such sales after 1 July. A sale is when the fuel is delivered, not when it is paid for. This bill is particularly light on detail. What it really does is establish a registration system for the grants but precious little else. It merely establishes a framework for the grants. To obtain a grant a person has to register under the scheme and there is simply no detail provided about the key points. For example, where are the non-metropolitan locations that qualify for the grants? The government cannot tell us. Which service stations, which areas, will be able to apply for and receive these grants? Secondly, where are the remote locations that qualify for the higher level of grant? Once again, we do not have any information about this. What is the rate of grant at the various places? No information is provided about that at all. All of these absolutely basic, fundamental points are to be given to us in the form of regulations to the bill. There is nothing here. The parliament and the community are not being told anything in the way of detail concerning this legislation. In my book, that is a very unsatisfactory situation.

It is also intriguing that in last night's budget we were given some figures about the size and the cost of this scheme. When we turn to the budget papers—and I will come back to this a little later—we see the Fuel Sales Grants Scheme being costed at $121 million for the financial year 2000-01, $120 million for the financial year 2001-02, $125 million for the following financial year and $135 million for the financial year after that. In order to make these calculations, you would think, expect, hope that somebody within the government would know something about which locations are going to qualify for the grants and what the rate of grant is going to be. If you do not know something about those sorts of things, how on earth can you provide budget figures which go down to the last million dollars? If the government knows which areas are going to be dealt with—it is high time it did know because the GST is scheduled to come into effect on 1 July and the problem we are talking about here will come into effect from 1 July—it should come clean with the parliament and the community and tell us which areas are to be the subject of these grants, rather than expect the parliament to debate and pass this legislation in ignorance.

Put simply, the bill is a farce. It does not clarify any of the details which are necessary to evaluate the effectiveness of this scheme. We are most concerned that the government either has not yet actually settled the detail of the boundary changes, in which case it is extraordinary that they could provide that sort of information in the budget—and that information would be highly unreliable—or, if they have settled the detail of the boundary changes, that they are not prepared to come into the parliament and come clean concerning which areas will be eligible for the grants. So all we have is the Treasurer's announcement that non-metropolitan locations will get 1c per litre grants and remote areas will get 2c or possibly more. It is clear that this is a proposal arrived at on the run in the government's panic about being caught out yet again on another undeliverable GST promise. So we have to register our concern about the uncertainty and confusion of the new scheme.

Let me also make the observation that this scheme is not a benefit, as the government would portray it and would have you see it and believe. It is simply an attempt to offset the adverse impact of the GST on the city-country price differential. So, as I explained to the House, given the history of the thing, you can see that this is simply offsetting a situation where otherwise prices would rise and the city-country petrol price differential would arise as a result of the imposition of the GST.

I also note that we have before us the Product Grants and Benefits Administration Bill 2000. This scheme will impose a further compliance task on fuel retailers. Presumably the cost of compliance will be able to be retained by the retailer, although this is unclear. If not, retailers would make a loss through participating in this scheme. The details about the full compliance burden are non-existent, as are almost all of the other administrative details. So the obvious questions are: how often are grants paid; what is the base for calculating grants—is it past sales or is it anticipated sales; is the grant subject to income tax for the recipient; what records have to be kept in order to satisfy the requirements of the scheme? We can see that the bill covers administrative matters such as method of registration and cancellation of registration; assessments and payments of claims; record keeping requirements; compliance enforcement measures such as those against schemes which attempt to abuse the grants scheme; recovery of unpaid debts; penalties for false statements, et cetera, and information gathering and access powers for the Commissioner of Taxation, including secrecy provisions. This particular bill standardises the administrative framework for grants and benefits administered by the commissioner.

The final bill in this particular trifecta, the Fuel Sales Grants (Consequential Amendments) Bill 2000, will amend the Taxation Administration Act 1953 to ensure that the administrative provisions which apply generally to acts administered by the Commissioner of Taxation will apply appropriately to the new grants and benefit laws. These include those relating to prosecutions and offences, the general interest charge which applies to outstanding amounts, and the collection and recovery of tax related liabilities.

Labor will not be opposing any of these bills. But we note that there is a range of concerns about the lack of detail in them, and we note that there is a key issue of consumer protection here: the question of the effectiveness of the mechanism to ensure that these grants are indeed passed on to consumers. The ACCC will be tasked with enforcing that but in practice this would appear very difficult. I have no doubt senators who are very good at pursuing some of these issues will take an interest in this area. So Labor understands that this scheme represents compensation for the GST. It has been our consistent position throughout the GST debate that, while we oppose the GST and believe that the compensation measures are inadequate, they should not be opposed, and we will not be opposing them.

Let me now turn to last night's budget papers which contain some detail, as I have indicated, about the cost of the Fuel Sales Grants Scheme. Quite a lot of media reporting this morning has focused on this budget being one of assistance to rural and regional Australia and has focused on the government's table 5 in the budget papers, headed `Additional Assistance to Rural and Regional Australia'. But if you have a look at this first financial year, the year 2000-01, and go to this much-trumpeted additional assistance to rural and regional Australia, what do you find is the biggest line item here? It is in fact the item we are debating, the Fuel Sales Grants Scheme, $121 million out of a total of $327 million. So more than one-third of this so-called additional assistance to rural and regional Australia is in fact merely compensation for a GST based price rise which they had claimed all along would not happen. It is not assistance of any kind whatsoever, yet it is included in the budget papers and is being trumpeted around as some benefit to rural and regional Australia.

If you look at the total of the four-year period, you find in that total additional assistance of $1,800 million over a four-year period that the Fuel Sales Grants Scheme constitutes $500 million of that—$501 million to be precise—and that it comes second to the health package which costs $562 million. So, to give people an idea of the magnitude of this, it has been costed at $500 million and trumpeted as part of assistance to rural and regional Australia, but it is simply there in order to endeavour to ensure that you do not go backwards, that you do not end up paying more for your petrol in country areas as a result of the GST, and that the city-country price differential does not increase still further. So this is a piece of trickery, a sleight of hand on the part of the government, endeavouring to claim that it is providing this additional assistance to rural and regional Australia when it is nothing of the kind. It will simply, at best, enable country people to stand still and not go backwards. This is just one of the many fiddles in a budget which I think the shadow Treasurer described as having more fiddles than the Tamworth Country Music Festival.

We also want to express concern about the cost of the administration of this scheme, and the cost both to government and to the small retailers—the service station operators—who will be part of this scheme. Once again, in looking at Budget Paper No. 2, we can see that there is an allocation to the tax office of an additional $9.5 million in order to implement this tiered grants scheme—that is, $9.5 million to administer a grants scheme which is a little in excess of $100 million each year. That must be something close to world's worst practice in cost of administration. It really is an extraordinary amount of money.

We are going to see not only a substantial compliance burden for the government with additional costs involved there but also a substantial compliance burden on fuel retailers. I mentioned earlier that there are a whole series of questions which have not been answered by the government about how often grants are paid, the basis for calculating them, whether it is past sales or anticipated sales, what records have to be kept in order to satisfy the requirements of the scheme, issues to do with assessing and paying claims, method of registration, cancellation of registration and so on. It is quite clear that there will be a very substantial compliance burden on petrol station retailers as a result of this. We have yet more administrative complexity and bureaucratic red tape for small business all because of the goods and services tax. This is yet another set of bills before the parliament necessitated by the goods and services tax. This complicated scheme is yet another example of the price tag that comes with the goods and services tax.

Treasurer Costello has talked about simplifying Australia's taxation system. He would have to be joking. Peter Costello has done for the cause and reputation of tax simplification what Mike Tyson did for the gentle art of dating. It is not simply a question of the compliance burden; we also have to be sure that the tax office is up to it. Can the tax office police this scheme and prevent it from being rorted? Can it make sure that people who claim the fuel grants are eligible for the fuel grants and that petrol which attracts the fuel grants is sold in country areas and that country consumers do indeed benefit?

I want to express concern about that in light of the very unhappy experience we have had recently concerning the fuel substitution scandal. Just this week, in a hearing before the Senate Economics Legislation Committee, we heard further evidence concerning the fuel substitution scandal. Liberty Oil provided evidence which suggested that something like $400 million was lost in excise last year due to fuel substitution rorts going on and that the government was remiss in catching up with it. They pointed out that it had cost them something like $5 million to $7 million in lost profits. As an indication of the seriousness of these issues, Mr Kevin from Liberty Oil said that Liberty personnel had been subject to death threats and so on, for daring to raise this issue. He went on to express great disappointment about the failure of the government and the tax office to act sufficiently to prevent these rorts. He said:

He went on to say:

Mr Kevin is referring, of course, to the GST. That is precisely our concern: as a result of GST, the tax office have not been addressing these sorts of issues properly. You have to wonder about their capacity to police a system like the Fuel Sales Grants Scheme, given that they have been such a conspicuous failure in relation to fuel substitution. Indeed, Mr Kevin pointed out to them Liberty's belief that there is a new fuel substitution racket in process, involving naptha. He pointed out that naptha is a hydrocarbon—which comes out of a distillation process—which is being mixed with petrol. In order to try and combat this—and it is Liberty's belief that there is not a legitimate use for naptha; that it is just a product used in the refining process—Liberty had sent personnel out to west of Quilpie in Queensland, near the South Australian border, which they believe is one of the sources of naptha. Mr Kevin said:

It is really quite inappropriate that a company like Liberty Oil should have to be playing private investigator. That is the sort of thing that the tax office ought to be doing itself. Even more disconcerting was the evidence from the tax office before the Senate committee when it was asked what it was doing about naptha. Mr Charleston from the tax office said:

The Senate committee went back to Mr Kevin, who said:

He went on to say:

Mr Charleston responded:

It is very disconcerting for companies like Liberty who have talked to the tax office and then heard that this area of the tax office is not talking to another area of the tax office. Mr Kevin said something later on like, `Perhaps every time I have a conversation with the tax office, I will have to write it down and send it in a letter.' I can understand that concern—that, when companies are identifying these fuel substitution scandals and drawing it to the attention of the tax office and the government, nothing is being done about it.

It is not simply a question of letting the tax office know, and finding that there has been inadequate response to that. Both Liberty Oil and the Apco service stations company in Geelong wrote to four separate ministers: the Assistant Treasurer, the Minister for Justice and Customs, the Attorney-General and the Treasurer last year, in letters dated 31 May and then on 6 July, drawing attention to these fuel substitution rackets, only to have the government and the tax office claiming after these things blew up earlier this year, `Oh well, the first time we heard about this was this year.' Tax Commissioner Carmody said in a press release on 3 March:

In trying to defend this proposition before the Senate committee, the tax officers were reduced to arguing that toluole was a different substance from toluene. Senator George Campbell asked Mr Jackson:

Mr Jackson replied:

He said that the letter just talked about solvents as a generic substance. When Senator Campbell asked about the letter from Apco to the Attorney-General on 31 May, which expressly mentions imported toluole, Mr Jackson said:

This is a pathetic defence. Toluole and toluene are the same thing. I have here a chemical analysis from the Environmental Health Center of the United States, which describes toluole as a synonym for toluene. Indeed, when I raised this issue with both Liberty Oil and Apco, they laughed. They said, `We have been pointing out this racket to these ministers.' When they used the word `toluole', they were expecting action on the part of the government to combat these fuel substitution scams. So, given the government's failure to act satisfactorily in relation to this matter, you really have to wonder about its capacity to satisfactorily handle the administration of the Fuel Sales Grants Scheme.

The other point I would make in the last minute available to me concerns petrol. Back in 1998, the Treasurer deregulated the price of petrol and claimed that this would lead to lower petrol prices. Anyone who wants to have a look at the bowsers out there will see nothing of the kind. Unfortunately, the Treasurer's taking the ACCC out of price monitoring has had the opposite effect. Labor wants to do something to try to fix these problems at source, and my colleague the member for Hunter has moved a private member's bill to try to address this—to address the lack of wholesale competition in the industry by giving service station franchisees a legislatively guaranteed right to shop around for up to 50 per cent of their petrol. (Time expired)

Mr DEPUTY SPEAKER (Mr Jenkins)—Order! Is the amendment seconded?

Ms Macklin —I second the motion and reserve my right to speak.