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Monday, 26 May 1997
Page: 3586

Senator McGAURAN(5.51 p.m.) —Today we are discussing the Customs and Excise Legislation Amendment Bill (No. 2) 1996 (No. 2). The bill gives effect to the 1996-97 budget announcement of the government, and its intention is to amend the diesel fuel rebate legislation. The fact that we have the government's first budget legislation now overlapping with the government's second budget is a fair indication of the sort of log jam this Senate is facing and of the obstructionism this government is facing in the Senate. The guilty party is sitting across the other side on the Greens benches.

The best example of their obstructionism was only about a fortnight ago when we had the delay to the Natural Heritage Trust of Australia Bill. You would have thought that that bill—which was doing no more than setting up a billion dollar trust for the good of the environment—would have been rushed through this chamber with the support of all the parties in the Senate. But the Green senators vexatiously and frivolously delayed it, simply on the grounds of politics. They were very fearful that, with this government on the front foot on the environment, it would put their party out of business.

In discussing this bill, I cannot help but mention the previous three speakers. I was amused by Senator Murphy's detailed and studied contribution. He went in to bat to defend the very industries he has spent a career—particularly under his union hat, let alone his senatorial position at the moment—pulling down: the mining and forestry industry, to say nothing of the farmers. In his contribution he even said something in the defence of the farmers. Of course, his party, when in government, spent 13 years—each budget—ratcheting up petrol taxes.

He was followed by the Democrat Senator Murray. I tried to understand the scheme that he put forward; I really made an effort. He himself admitted that it was complex, and he is dead right about that. It seemed to be a scheme that brought in more restriction, yet also broadened the scheme, to use his words. It broadened and restricted. Isn't that typical of the Democrats? There is something for all. I suggest that the mining industry or any of the industries that at present have the advantage of the diesel fuel rebate study Senator Murray's scheme and not fall for it, because, as usual, it has not only the gloss of the Democrat fairness on it but also the complexity and the uselessness that the Democrats bring to this particular debate.

I think we all had a good laugh at Senator Brown from the Greens party when he seriously suggested that we have sun-powered tractors. This is very relevant to the debate, isn't it! This legislation contains a billion dollar-plus scheme to tighten up eligibility and that wacky Senator Brown walks in here and suggests that the farmers would do well to have sun-powered tractors. I have never heard of the scheme before—

The ACTING DEPUTY PRESIDENT (Senator Crowley) —Senator, I ask you to remove the word `wacky' from your assessment of your colleague.

Senator McGAURAN —I withdraw the word.

Senator O'Chee —Unbelievable.

Senator McGAURAN —To be replaced by `unbelievable'. Thank you, Senator O'Chee. I have never heard of such a scheme before. I do not think it is even on the drawing board. I think it has just come from Senator Brown. Sun-powered tractors! As if the farmers haven't enough problems without taking up that absurd suggestion. But we all had a good laugh and we did not take it at all seriously, Senator Brown, if you thought for one fleeting moment that we did.

Getting to the essence of the scheme before us, which escaped the speakers before me, the scheme does provide rebates of excise or customs duty on diesel fuel purchased for specific off-road users mainly in the mining, agricultural, fishing and forestry operations. The figures from 1994-95 show that there were some 213,000 claims involving some $1.25 billion.

The scheme is pretty clear. There is no mystery to it, as defined by the Australian National Audit Office. The bill gives effect to the government's intention to achieve savings in the scheme by tightening eligibility and containing growth in the outlays. This particular intention is endorsed by the audit office, which recommended that the purpose and objectives of the scheme be somewhat clarified, and that a range of measures be introduced to improve accountability.

According to the government's explanatory memorandum, the amendments fall into three broad categories. The first excludes from mining operations the eligibility for rebate in respect of nearly all light vehicles and certain off-road activities. Further amendments restricting eligibility relate to sea transport, off-site rail, sea and public road use and quarrying.

The second broad amendment has the effect of counteracting the effect of certain AAT and Federal Court decisions, specifically the Dampier Salt decision. In his second reading speech, the Minister for Small Business and Consumer Affairs (Mr Prosser), said:

The particular amendments will ensure the continuation of rebate for diesel fuel used in carrying out mining activities but will preclude from eligibility certain activities, best described as undertaken for economic/marketing reasons, rather than the physical extraction of minerals, and activities which essentially involve the transport of inputs/materials for mining or beneficiation.

As the audit office requested, that certainly does clearly define the purpose of the diesel fuel rebate, if there is indeed any doubt at all. In relation to the Dampier Salt case, the concern of the government was that the interpretation had the potential to substantially widen the eligibility under the scheme. On this matter, the minister said:

The full Federal Court's judgment is considered to be the most far reaching ever delivered in relation to the diesel fuel rebate scheme. It represents a fundamental shift from a scheme based on the concept of an activity (in this case mining) being regarded as a physical act (that is the extraction of a product from the ground) to a concept of the activity being an economic one.

The third broad based amendment relates to accountability and administration. In his second reading speech, the minister said:

A range of amendments are proposed which will improve accountability requirements, assist in enabling a clamp down on misuse of the scheme and improve its administration.

I will not go into too much detail on the third amendments. Given the strict time which we government members are under, I would like to jump to the main point, which relates to the defence of the diesel fuel rebate. It is so often under attack from those on the other side of the house and from many out in the community. We know from those on the other side of the house that, if they could have abolished the scheme in their time in government, they would have. We know they tried—but failed—in their last budget to place a one per cent levy on the administration cost, which would have raised around $12 million, which is about the cost of the administration of this scheme.

This government has no plans to introduce such a levy or to fundamentally change the diesel fuel rebate. We know just how much the major export industries—the mining industry and the rural sector—depend on this scheme and how important it is to their competitiveness to reduce input costs. Why should these two major export schemes not have the advantage of the diesel fuel rebate? The mining industry exports $33 billion a year and claims only some $750 million a year—a very low percentage in regard to the diesel fuel rebate. The rural industry exports $21 billion a year and claims around the $400 million mark, which is a very small price for the government coffers in respect of supporting, giving incentives to and lowering input costs for these major export industries.

The National Farmers Federation, a staunch defender of the diesel fuel rebate—as are the National Party in government; and Senator Crane, from Western Australia, who knows only too well the importance of the diesel fuel rebate to his state—submitted a very extensive report on the importance of the diesel fuel rebate to the farming sector. Part of that report says:

Over the two decade period, consumption has grown on average by about 2.4% per annum. This would, in part, be due to substitution of diesel for petrol—


the wider availability of diesel powered vehicles and equipment—

such as four-wheel drives and grain harvesters.

Over the same period, the area sown to grain has risen by about 3 million ha, about 25% in total, an average annual growth of 1.1% in the area sown to grain.

The relationship of that to the diesel fuel rebate scheme is that it is an important factor in supplying, and giving incentive to, the expansion of the rural sector. In the mining sector, we need only to look at two industries. The Minerals Council has submitted a paper in regard to the importance of this scheme.

I will pick out two major export industries. The first is the major export industry—the coal industry. The paper says that, should the scheme be abolished, it would have an effect on the coal industry. It says:

. . . cancellation in the Rebate will:

(a)   increase input costs by about $1 a tonne for coal with no ability to pass the cost increase on to customers.

For the coal industry, which is the most competitive industry, particularly with exports to Japan, any increase in cost almost means death.

The second industry that would be most affected is the gold industry. The paper says that the abolition of the diesel fuel rebate would:

significantly increase the input costs of Australia's gold industry—

particularly in remote areas where diesel is a major fuel source with virtually no likelihood of alternative fuel sources such as electricity or gas due to the remoteness of mines from the national grids. This has the potential to impact on low grade mining operations. For example, for the remote mine of Telfer in Western Australia, abolition of the Rebate would require the mine head grade to improve by over 70% to maintain mining income.

That is fairly significant in respect of the importance of the scheme. In conclusion, the amendments that the government is bringing to this scheme to tighten its eligibility are necessary and creditable while maintaining our commitment to the scheme.