Mr ROSS CAMERON (Parliamentary Secretary to the Treasurer) (10:00 AM) —I move:

The Customs Tariff Amendment (Fuels) Bill 2004 contains amendments to the Customs Tariff Act 1995. Those amendments were previously tabled in Customs Tariff Proposal Nos 3, 4 and 5 of 2003 and now require incorporation in the Customs Tariff Act. Complementary changes are being made to the Excise Tariff Act 1921 through the Excise Tariff Amendment (Fuels) Bill 2004.

First, the bill provides new differential rates of customs duty for high sulphur diesel, and introduces ultra low sulphur diesel as a new tariff item.

As part of the Measures for a Better Environment package announced by the Prime Minister on 31 May 1999, the government made a commitment to apply to high sulphur diesel a customs duty of 1c per litre on top of the normal diesel rate of 38.143c per litre from 1 January 2003, and 2c per litre from 1 January 2004. The government deferred the introduction of the first differential until 1 July 2003 because of concern about the possibility of raising costs to diesel users when the farm sector was facing serious drought conditions.

Customs Tariff Proposal No. 3 (2003), which was introduced in the parliament on 25 June 2003, gave effect to this commitment.

Secondly, the bill increases the customs duty on aviation fuels by 0.306c per litre to 3.151c per litre for aviation kerosene and to 3.114c per litre for aviation gasoline from 1 July 2003. This measure was announced in the 2003-04 budget, and was necessary to provide supplementary funding for the Civil Aviation Safety Authority to ensure that it is adequately resourced to continue to carry out its safety regulatory responsibilities.

Customs Tariff Proposal No. 4 (2003), which was introduced in the parliament on 25 June 2003, gave effect to this measure from 1 July 2003.

Thirdly, the bill amends the Customs tariff to introduce a customs duty on biodiesel for use as a fuel in an internal combustion engine, from 18 September 2003. The duty will be equal to that currently applying to ultra low sulphur diesel (38.143c per litre).

These changes were announced in the 2003-04 budget and form part of the government's fuel tax reform arrangements to bring all currently untaxed fuels used in internal combustion engines into the excise and customs duty system.

Customs Tariff Proposal No. 5 (2003), which was introduced in the parliament on 16 September 2003, gave effect to this measure, from 18 September 2003.

The Customs Tariff Amendment (Fuels) Bill 2004 contains three schedules. The above amendments are drafted in both schedules 1 and 2 of the bill, as the enactment of Customs Tariff Amendment Bill (No. 2) 2003, which is awaiting passage through the Senate, impacts on the provisions of this bill. Schedule 2 of the fuels bill will take effect only if the Customs Tariff Amendment Bill (No. 2) 2003, which validates a customs tariff proposal imposing a customs duty on fuel ethanol, is enacted.

Finally, schedule 3 of the bill contains a number of minor consequential tariff amendments.

I present the explanatory memorandum to the bill.

Debate (on motion by Mr McClelland) adjourned.