Senator CONROY (9:33 PM) —The Energy Grants (Credits) Scheme Bill 2003 and the Energy Grants (Credits) Scheme (Consequential Amendments) Bill 2003 establish a new unified scheme to replace two existing fuel schemes—the Diesel Fuel Rebate Scheme and the Diesel and Alternative Fuels Grants Scheme—which cover off-road and on-road fuel usage respectively. The opposition have made it clear that we support these bills in principle as far as they go. We still believe that the government has missed an opportunity for real and significant reform in this area, which is a burden that will now undoubtedly fall to future governments. We still have some remaining concerns with some detailed aspects of the limited scheme contained in these bills, especially with regard to how it impacts on the shipping industry. I commend the Hansard of the Senate Economics Legislation Committee to anybody who is interested in this bill. They should have a discussion about what ships do because, as I am sure those who attended the committee process will agree, we learnt an awful lot about what ships do— they sail, up and down the coast, we discovered. And I was particularly gratified by that information.

Of course, we are still amazed that a scheme that was originally conceived specifically to deliver incentives for cleaner fuels has come forward without providing anything of the sort. I foreshadow that I will be moving amendments in the Committee of the Whole to address two of these issues to improve the bills before us. However, overall we still support the bills because they seem to create a scheme that will maintain equivalent benefits to the existing schemes and they also achieve some rationalisation at the edges of the current system. Nevertheless, this support is still, as it always has been, conditional on the opposition being satisfied about the content of the regulations accompanying the bills. Once bitten, twice shy— and the Democrats have been bitten. There is no question that these bills represent a fundamental—as we would say in the Labor Party—ratting on a deal. To ask us to swallow these bills without fronting up with the regulations is just a step too far.

I see Senator Brown is in the chamber, so I am sure we will be hearing a lot more about this aspect of the bills. A promise was made, and to provide the parliament with just this part of the bill—to treat it with such contempt—does the government no credit. We were assured by the government in prior briefings on the bills that these regulations would be provided in time, but they still have not turned up. We have given the government until the last possible minute to produce these regulations but, as we stand in the Senate today, there is still no sign of them.

It really does seem absurd to be assured by the government that on the one hand there is nothing tricky about them, that they just replicate the existing schemes, and on the other hand they are far too complicated to produce in a timely fashion for the parliament to have a look at them. I foreshadow that, unless we receive some more satisfactory answers on this issue by the end of this debate, the opposition will be moving a motion to adjourn consideration at the Committee of the Whole stage until such time as the regulations actually turn up. It only seems fair, Senator Brown. Let me repeat that: we still stand ready to pass these bills after consideration of our amendments, subject only to the regulations turning up and being in a satisfactory form. But voting for them sight unseen is a big stretch, especially given this government's previous record of welshing on explicit promises made to the ALP in writing and signed by the Treasurer on business tax reform, and the critical nature of the matters left to those regulations, such as the quantum of the benefit.

Let me now turn to the substantive provisions of the bills. As I stated earlier, the new scheme will replace two existing fuel schemes: the Diesel Fuel Rebate Scheme and the Diesel and Alternative Fuel Grants Scheme. The Diesel Fuel Rebate Scheme provides a rebate of fuel excise for diesel used in certain off-road business activities, including mining, primary production, electricity generation, hospitals and nursing homes, rail and the now infamous marine transport. The Diesel and Alternative Fuel Grants Scheme provides grants for on-road use of diesel and alternative fuels, such as ethanol, compressed natural gas and liquefied petroleum gas to maintain previous price relativities with diesel.

If we go back to what the Trebeck fuel tax inquiry had to say about these schemes, they made it very clear that there were some very significant concerns about compliance costs imposed by these schemes. With regard to the DFRS, the fuel tax inquiry noted that the main issue seemed to be why only some off-road diesel users should be eligible for the DFRS, when often eligible and ineligible activities used very similar production processes and served very similar markets. With regard to the DAFGS, the inquiry reported that concerns centred on geographic boundaries that limit the eligibility of diesel used in 4.5-tonne to 20-tonne vehicles in urban areas. According to the inquiry, the consequence of this was that many businesses complained of the high compliance costs required to substantiate claims made under the DAFGS and the DFRS. Only about half the businesses claiming under both those schemes are able to claim all of their diesel as being eligible. Consequently, compliance costs are incurred by businesses to track, categorise and quantify their diesel use. This was considered to pose a major problem for businesses that use diesel in a variety of eligible and ineligible activities, as they are required to install additional compliance systems and, in some cases, fuel measuring devices.

That seems pretty unequivocal to me. Compliance costs have been a big problem with the existing schemes. That is also consistent with representations made to me by those in the industry over a very long period, yet the Senate legislation committee inquiry on these bills produced some very interesting evidence from the industry associations that seems to suggest the contrary. If the compliance issues associated with these schemes have indeed settled down, then that is a good thing. But I cannot help but be a little sceptical that something that has been such a major problem for so long has suddenly disappeared overnight, and just at the time that pressure was on about funding the new schemes. As I say, I hope that the compliance cost issue has really been bedded down but, with the government electing to take a business as usual approach in the new scheme, it seems to me unlikely to be the case. The true test will surely be to see how long it takes for the various industry associations and their members to renew their calls for simplification of administration once the new system is in place. We note that evidence to the committee suggests that the industry associations and other witnesses considered that the promise to maintain the existing level of entitlements will be met if the regulations do indeed look as they were promised to. This just reinforces the critical need for the government to make the draft regulations public as soon as possible.

I would now like to turn to the timing of the new scheme. The Energy Grants (Credits) Scheme was originally a promise outlined as part of the government's deal with the Democrats in May 1999 to pass the GST. The government committed to putting a sunset clause of 30 June 2002 on the existing fuel schemes and then replacing them with a scheme that would have measures to promote cleaner fuels but maintain equivalent benefits. This commitment was put into legislation in the Diesel and Alternative Fuels Grants Scheme Act 1999, which stated:

The government did not do the work to meet that original deadline, so Labor reluctantly supported an extension of this deadline by 12 months, to June 2003. When legislating the extension to 30 June 2003, the government promised that the fuel taxation inquiry would address the design of this new scheme—I am sure that sounds very familiar to you, Senator Allison. But of course we know what happened to that exercise. The government equipped the inquiry with an oversight committee, a secretariat and a budget of $4 million, and asked it to take submissions and hold public hearings across the country and to then prepare a detailed report on these issues. This they dutifully did. Stretching to over 250 pages of detailed analysis and recommendations, it is a report with which I do not entirely agree, but I do think it was a good contribution to public debate and it deserved to be taken seriously.

Instead, the government dumped it unceremoniously on budget night last year, showing an utter contempt for all of those who had put so much time and effort into putting their submissions to the inquiry—all of those people, all of those hearings, all of the effort, time and money that people put into trying to communicate with the government. It was thrown out; just completely ignored. But fundamentally they were conned, because the government was just looking for something to avoid delivering on this. All these people were conned by the government's rhetoric and promises.

It revealed once and for all that people were right to be cynical about the real reasons behind the setting up of the fuel tax inquiry. It was set up for one reason, and one reason only: for the government to hide behind it during an election campaign. That is right—this was one of those big pre-election initiatives. `It's all right,' they told everybody, just quietly behind the scenes, `we'll fix it up after the election in the fuel tax inquiry. Don't you worry, your concerns will be looked after.' That was the con that everybody got sucked into before the election. This appalling act of cynicism was damaging in its own right. Why would people bother to get involved in a serious policy debate if they are going to be treated with such contempt at the end of it?

This government have got form. They just did it again to all those poor people who spent their entire Christmas period working on submissions to a Telstra inquiry—a cheap undergraduate stunt pulled by the Minister for Communications, Information Technology and the Arts, Senator Alston. He phoned them up; his office, his department, got on the phone and told all these people, `Look, we want you to put in submissions to this House of Reps Telstra inquiry.' So a lot of people spent a lot of time and money over the Christmas and January holiday period only to find that, in a complete act of cynicism, Senator Alston dumped the inquiry almost on the first day of the parliamentary sitting.

Senator Ian Campbell —Just like you dumped your policy!

Senator CONROY —I am glad you are awake there, Senator Campbell: welcome. It is extraordinary to see that they can get away with it, not once, not twice, but three times. But it is also damaging in setting back the progress of important fuel tax reform yet again. Evidence provided to the Senate committee made it clear that policy work on this issue was all put on hold while the fuel tax inquiry did its work. This seemed a fairly sensible response, given that the design of the new system was explicitly part of the terms of reference for the inquiry. By dumping the report in its entirety, the government essentially required that work on the new scheme to begin all over again. So perhaps it is not surprising that, yet again, they are way behind time in bringing the bill forward. Remember that it is now nearly four years since the original commitment, and the deadline has already been extended by a full 12 months. The good news is that people are not falling for it twice.

I am just trying to remember the name of the new cabinet subcommittee or IDC that they are putting it all to—the Energy Task Force, I am reminded by Subho Banerjee. Thank you for that. The Energy Task Force: that is the new scam, that is the new game. Everybody's concerns will be fixed, don't you worry—another nod and a wink. It will all be fixed in the Energy Task Force. There is only one problem: the department are unable to tell us the terms of reference for the Energy Task Force. Apparently that is a secret, or—what I suspect to be the truth—they do not have any because it is just another political scam.

Even now, after all the delays and procrastination, we only have this damp squib of an attempted reform. It is basically business as usual on the existing schemes despite their manifest problems. It contains no measures—I repeat: no measures at all—on cleaner fuels, which was the original point of the new scheme. In addition, we are still waiting for the regulations to see how the scheme will operate in practice. It really is a disgrace, but one that reflects again the quintessential combination of arrogance and incompetence that lies at the heart of this government's performance.

The issues raised during consideration of these bills simply add to the other failures of the government's Measures for a Better Environment package negotiated as part of the GST deal in 1999. In this regard, the Senate Economics Committee may wish to consider the various tax and expenditure incentives in the MBE package as part of its broader reference to look at the structure and distributive effects of the Australian taxation system. In addition, the Senate may wish to take up the egregious failures of implementation of the broader MBE package in a broader reference to the Senate Environment, Communications, Information Technology and the Arts Committee. The opposition will explore these options further in consultation with minor parties before making a final decision as to the best way to proceed.

I will conclude my remarks there in this second reading debate. We support these bills in principle. However, as foreshadowed in the House and in the Senate committee hearing, we consider that the bills should remain before the Senate until the accompanying regulations are available for parliamentary scrutiny. As I mentioned earlier, I will be moving two amendments in the committee of the whole stage to improve the bills before us. The first amendment deals with retaining the legislative commitment to cleaner fuels in the current legislation. The second amendment deals with denying grants or credits under the new scheme to vessels voyaging under a single or continuing voyage permit. That will come as no surprise to some people, I am sure. I will speak further on these amendments at that later stage.