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Wednesday, 28 March 2001
Page: 25812


Mr SECKER (10:42 AM) —I find it very interesting that the member for Hunter ignores the `service' part of a goods and services tax, and that is exactly what it is. Does the member for Hunter think that there should be a service charge for a cup of coffee at his local cafe society outlet but not have a service charge on the beer when he goes to the pub? Does he also think that his children should be paying a service charge for their coke when they go to McDonald's but he should not be paying a service charge for beer at the local pub? That is the reason why beer in pubs has gone up: because there is a service charge on that beer, and so there should be.

It may interest the member for Hunter, and I see the member for Paterson sitting down now, that with the tax cuts that he received on 1 July, which we all benefited very well out of, if beer is his focus he could actually afford over 100 schooners of beer a day and still be better off. I am not sure that the member for Paterson would actually drink 100 schooners a day, but he certainly financially would be better off with the tax cuts that he got. It may interest members here that I, like many other members, received a letter from the Distilled Spirits Industry Council of Australia Inc. It reads:

Dear Mr Secker,

I am writing in relation to the Excise Tariff Amendment Bill (No. 1) 2001 and the Customs Tariff Amendment Bill number (No. 2) 2001 due to be debated in Parliament during the week 26th-29th March.

These Bills will give effect to the Government's commitments on alcohol tax, first made in 1998 and laid out in Not a New Tax, A New Tax System, particularly in relation to ready-to-drink products (RTDs).

By way of background, prior to 1 July 2000 taxes on RTDs were riddled with historical anomalies. Even though a can of beer, pre-mixed spirits or fermented-base designer drink are all basically the same size and alcohol strength, pre-mixed spirits paid excise of about twice that paid by beer, and wine-based designer drinks paid no excise at all. This led to significant price differentials between products, made no public health or policy sense, and unfairly restricted consumers' choices.

To address this, the Government announced that all RTDs (not covered by the Wine Equalisation Tax), with 10% alcohol by volume or less, would essentially pay the full-strength beer excise rate. This change, gazetted with effect from 1 July 2000, put the three categories on a somewhat more equal taxation footing and is a welcome first step to recognising that `alcohol is alcohol' and should be treated on the basis of strength, not the method of production.

The Distilled Spirits Industry Council of Australia (DSICA) strongly supports this reform, and asks for your support for the prompt passage of these two Bills to give legislative effect to it. Should this legislation not be passed before 21st June, not only will it cause significant disruption to the industry and a return to the anomalous taxation regime of the past, but it will also threaten at least $300 million in Government revenue from spirits alone.

So there is very strong support from the Distilled Spirits Industry Council of Australia, and of course there is very strong support from the health bodies around Australia, because it is treating alcohol as alcohol, not on the method of production.

It is always a very good idea, I think, for members to occasionally visit the pub and do the pub test. On 30 June last year, on the Friday night prior to these changes coming into effect, I visited the local Keith Hotel—my local watering hole. I did not have the 100 schooners that I could have afforded with the tax cuts that were coming the next day. I went there again the next night, on 1 July, when these measures had come into effect. On the Saturday after these measures had come into effect, there were actually more people in the pub. Interestingly enough, on the Friday night they were drinking more of the beer in the pub whereas on the Saturday night, after the changes, there had been quite a change to the mixed drinks, such as Bundy and cola and so on because they were about $1 a can cheaper—and so they should be because they are based on an equal amount of alcohol. So consumers, even in one day, had decided to make the change. I took a fair bit of ribbing—as a member of parliament does and should receive when he goes to the local hotel—but, by and by, I have certainly been there in recent times and the local hotel has certainly not noted any lack of clientele because the price of beer has gone up and, of course, the price of mixed drinks has gone down. The average person in Australia, with the tax cuts that they receive, would be able to drink 40 schooners a day and still be financially better off as a result of the tax cuts they receive. Mind you, I think it would put a bit more stress on the health system if everybody took that up.

The Excise Tariff Amendment Bill (No. 1) 2000 and the Customs Tariff Amendment Bill (No. 2) 2001 include a number of measures on fuel and alcohol which were previously introduced by way of tariff proposals. The major amendments proposed by the bill are an increase in the rate of customs duty for imports of kerosene for use as fuel in aircraft, introduction of a new customs tariff structure for beer, wine, vermouth and other wine products, other fermented beverages, undenatured ethyl alcohol and spirits and liqueurs, and a reduction by 1.5c per litre of the customs duty on imports of unleaded petrol, leaded petrol, diesel and certain other petroleum products.

The proposed amendment affecting aviation kerosene substitutes a new rate of customs duty for kerosene used as fuel in aircraft—avtur—and the proposed new rate of excise duty will be 2.795c per litre. That is hardly going to break the back of anyone flying a plane. According to the Bills Digest, in respect of alcoholic beverages:

Item 4 of Part 2 of Schedule 1 of the Bill inserts Additional Notes 3-8 in Chapter 22 of Customs Tariff Act 1995. Each of these notes provides a definition of different types of wine production which are subject to the wine equalisation tax. As noted in the Government's explanatory memorandum to the Bill:

As WET [wine equalisation tax] is applied to the same imported wine and wine products as their Australian equivalents, these Additional Notes replicate the definitions for similar locally made products contained in Subdivision 31A of the WET Act to ensure uniform tax treatment.

The principal effect of items 5 to 12 of part 2 of schedule 1 of this bill is to introduce a new customs tariff structure for beer, wine, vermouth and other wine products, other fermented beverages, undenatured ethyl alcohol, spirits and liqueurs. The proposed structure is based on the percentage of alcohol by volume—that is, alcohol for what it is—exceeding a customs duty-free threshold of 1.15 per cent. The key rates of applicable customs duty are as follows. For alcohol and alcoholic beverages—excluding beer—containing more than 1.15 per cent by volume of alcohol and not exceeding 10 per cent by volume of alcohol, the rate is $30.46 per litre of alcohol. For beer exceeding three per cent but not exceeding 3.5 per cent by volume of alcohol—that is mid-strength beers—it is $35.38 per litre of alcohol. For beer exceeding 3.5 per cent by volume of alcohol, which is normal strength beer, it is $30.46 per litre of alcohol. And for beer not exceeding three per cent by volume of alcohol, it is $41.67 per litre of alcohol. For brandy made wholly from grape spirits, it is $48.17 per litre of alcohol. For alcohol and alcoholic beverages excluding beer and brandy containing more than 10 per cent by volume of alcohol, it is $51.58 per litre of alcohol.

These amendments relating to alcoholic beverages proposed by the bill give effect to the government's tax reform measures, particularly the replacement of the wholesale sales tax with the goods and services tax. In this restructure, new tariff subheadings have been provided for each category of beverage classified within these headings, to apply the requisite excise equivalent rate of duty. This procedure has ensured uniform duty treatment for imported and locally produced alcoholic beverages. These amendments have already been in effect since 1 July 2000.

Most importantly, the good news for my constituents in Barker, and indeed for all Australians, is that the bill contains a reduction in petrol and diesel excise of around 6.7c per litre, which came into effect on 1 July 2000. This was part of the government's commitment—which it has fully met—that petrol pump prices need not rise with the introduction of the GST. In addition to the 6.7c per litre excise cut, the petroleum industry will benefit from substantial cost reductions as a result of the tax changes, estimated at around 1.5c per litre. In total, motorists have received compensation of around 8.2c per litre.

There has been a lot of discussion in the community as to whether the petroleum industry is passing cost savings onto motoring consumers. On this subject, the ACCC, in its fuel monitoring report for the September 2000 quarter, that is, the period immediately following these changes, said:

The commission's analysis suggests that actual fuel prices have not increased as much as expected on the basis of movements in the underlying factors, including historical wholesale and retail margins. This is not inconsistent with the suggestion that cost savings from the New Tax System changes have been passed on.

In addition, a fuel sales grant of 1c and 2c per litre is paid to retailers of petrol and diesel in non-metropolitan areas and remote areas, respectively. Fuel prices are generally higher in these areas. On Kangaroo Island, in my electorate, all fuel outlets receive a 2c a litre subsidy, and every other petrol station in my electorate receives a 1c a litre subsidy. It may be interesting to note that, because fuel has been an issue out there in my electorate, I have consistently been checking the fuel prices in my travels around the electorate. It is a pretty large electorate, so I get to see many of the differences.

On the Friday, Saturday and Sunday of three weekends running, the fuel was actually cheaper at Coonalpyn, Tailem Bend, Murray Bridge and Victor Harbor than it was in Adelaide. As often happens in city areas, there are discounts from about Monday to Thursday, then all of a sudden on Thursday night the prices go up, whereas those prices do not fluctuate in the country. So we actually had cheaper fuel prices in many areas of my electorate than in the city. That is due in part to the fact that we give a direct subsidy to the fuel stations.

By contrast, the ALP, who really have no leg to stand on—they are really like a dog between four trees; they certainly do not have a leg to stand on—increased excise on petrol and diesel from 6.155c per litre in 1983 to 34.183c in March 1996. That is an increase of over 28c per litre, or over 450 per cent. That is the Labor Party's record. Of that 28c increase in excise, 10c of it resulted from Labor's budget increases, which occurred without providing any compensation whatsoever to motorists. Five cents of those budget rises came through the 1993 budget—after Labor went to the election promising not to increase taxes. You might recall that Kim Beazley, the present Leader of the Opposition, was the finance minister at the time. He called the 5c excise hike—and it was actually 7c for leaded petrol—a `small adjustment'. This highlights just how hypocritical the opposition leader is on this issue.

This bill also contains the 1.5c per litre reduction in petrol and diesel excise that came into effect on 2 March 2001. The reduction applies to unleaded and leaded petrol, diesel and other petroleum products that attract an equivalent rate of duty. Duty on aviation fuels and those petroleum products attracting concessional rates of duty is reduced in a proportional amount. This is great news for all Australians, particularly for those who live outside the metropolitan areas, such as in my electorate of Barker, who, by necessity, are greater consumers of petrol and diesel. Whilst I am one of the first to acknowledge that the recent steep increases in petrol prices have been the result of rises in the world price of crude oil, I am well aware of how much this was hurting people in my electorate. I certainly raised the issue on many occasions and was delighted that the government that I am a part of listened to the concerns of the Australian public and helped to ease the burden by reducing excise by 1.5c per litre from 2 March 2001. Of course, we have got rid of Labor's continual CPI excises and that is another benefit to motorists in my electorate of Barker.

The benefits of these reductions in Barker and throughout country and remote areas of this great country are very significant because of the necessity of fuel to so many people. Whether it is to carry on their business or take part in everyday life, fuel is the lifeblood of the people of the bush. For many people in rural, regional and remote areas, there is no such thing as the option of a taxi, a bus or a suburban train. If you want to access education or health services, or simply have a social life, you are totally dependent upon the motor vehicle. To these people, the cost of fuel is a very sensitive issue. The very significant reduction in fuel taxes on the trucking industry is incredibly important, for example, to the cattle producers, the sheep producers and the grain producers in the south-east of my state where transport can constitute about one third of their operating costs. Compared with the old system set up by Labor, they are getting their fuel 24c a litre cheaper.

Country people in our export industries are well aware of the realities of world markets. In the past fortnight I have travelled through my electorate talking to people at Keith, Bordertown, Naracoorte, Coonawarra, Mount Gambier, Millicent, Padthaway, Gawler, Yankalilla, Karoonda, Pinnaroo, Lameroo, Tailem Bend, Murray Bridge, Kingston and many more places. Everywhere I went, the people I talked to recognised the realities of global markets in relation to oil and the impact that high crude prices have had on the cost of their fuel. But, at the same time, the reality is that they welcome the action taken by the government to share some of that burden.

I welcome the responsible way in which this government has brought relief to help preserve the very foundation of business and trade as well as to the ordinary bloke in my electorate. Our record stands in stark contrast to that of the ALP. They have sought to make cheap opportunistic points out of the plight of ordinary Australians in the petrol debate. They go running, bleating to the media and the electorate in mock horror at the price of fuel when in reality it is all a pretence. When they were in government, they presided over a 500 per cent increase in excise, not only were they responsible for the brainchild of indexation but they also regularly introduced one-off discretionary increases in fuel excise. In fact, the opposition has not given any commitment whatsoever to get rid of their own indexed CPI increases in excise. Not once did they compensate country people for the impact their decisions made on their lives. In fact, they made the burden on the battlers worse because they penalised those who were running older cars on leaded fuel. Prime Minister Howard estimated that cutting petrol excise and abandoning excise indexation increases would cost the budget about $550 million in 2001-02 and more thereafter. As petrol consumption grows, the cost of the government's price relief package will grow.

Let me also dispel some of the other misconceptions that have been peddled by those opposite. Did oil companies cut their prices? Yes. Every Australian oil refinery operator cut wholesale delivery prices. Did petrol retail prices fall? Yes, the day after the announcement the ACCC said that surveys in major capital cities showed prices had fallen by an average of 1.7 per cent. I challenge the Senate to pass these bills so that consumers are not denied the ongoing benefit of the petrol and diesel excise reductions. It is vital that the Senate passes these bills before 29 June 2001 or the pre A New Tax System petrol excise rates will apply. (Time expired)