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Wednesday, 16 November 1983
Page: 2825


Mr ROBERT BROWN(7.30) —We are dealing with a package of Bills concerning excise tariffs and Customs duties. I suppose it would be appropriate in a debate of this kind for honourable members to give some consideration to the equity of indirect taxes. I know there is considerable concern among members of the Government in relation to questions of this kind, but most provisions concern amendments to what have essentially become elements of the total tax structure in Australia. It is certainly necessary for adjustments and modifications to be built into those arrangements from time to time. I should indicate the considerable degree of personal reservation which I have about the nature, the equity, the impact and the incidence of indirect taxes, but most of these are simply revenue measures. Until there is a substantial attempt to bring about a major, comprehensive restructuring of the total taxation system which we inherited, taxes of this kind are effective revenue raisers and, presumably, will be with us for some time.

The four Bills we are considering are the States Grants (Petroleum Products) Amendment Bill 1983, the Excise Tariff Amendment Bill (No. 2), the Customs Tariff Amendment Bill (No. 2) and the Customs and Excise Amendment Bill 1983. Each of these Bills provides enabling legislation for Budget provisions which were announced at the time of the Budget and in many cases were also part of the May economic statement of the Treasurer (Mr Keating). The first of the Bills, the States Grants (Petroleum Products) Amendment Bill, was introduced by the Minister for Communications (Mr Duffy) in his capacity as Acting Minister Assisting the Minister for Industry and Commerce on 3 November. This Bill will amend the 1965 Act to provide for changes to the petroleum products freight subsidy scheme, as indicated by the honourable member for Ryan (Mr Moore), and which were announced by the Treasurer in the Budget Speech.

These proposals simply result from a review of the scheme instituted by the previous Government. I know that a number of provisions in these Bills will be the cause of concern on the part of members of the Opposition. Undoubtedly, Opposition members will take advantage of the opportunity to suggest that, were they in government, their approach would be different. With provisions of this kind which, as I have said, are essentially revenue provisions, the approach and attitude of both the Opposition and the Government would not be significantly different. The petroleum products freight subsidy scheme subsidises the cost of tranporting certain petroleum products so that consumers in non-metropolitan areas pay no more than a predetermined amount per litre of the freight cost. Of course, this has been of significant value and benefit to people in isolated areas where the freight cost component represents a substantial proportion of the total cost of petroleum products. The amount at present is 1.1 cents per litre. That scheme has operated since 1 July 1978 and it covered, until the introduction of these provisions, motor spirit, power kerosene, automotive distillate, aviation gas and aviation turbine fuel. One purpose of these amendments is to exclude power kerosene from that freight subsidy arrangement. The reason is quite simple; the extent to which power kerosene is now being used is very limited, and the impact of that change will not be of very much significance.

The collective purpose of those changes is to strengthen the scheme. I hope that the effect of the Bill has not been lost to members of the Opposition who may participate in this debate. The essential purpose of the changes to the legislation is to strengthen the scheme and to make its continued operation more secure than it might otherwise be. The changes are also designed to reduce the complexity of the present operation of the scheme and the administrative difficulties which have been associated with it. The final objective of these changes-this is fundamental if schemes of this kind are to continue-is to remove the opportunities for abuse of the scheme.

Everyone would have to admit, particularly those people who are aware of the way in which the scheme has operated, that it has been subject to abuse. If concessional arrangements of this kind are to be abused the continuation of those schemes must be placed in jeopardy. Anything which reduces the extent to which these quite legitimate concessional schemes are abused should be applauded and welcomed, even if there happens to be some temporary disability or disadvantage associated with them. This package of amending legislation indicates that the Government recognises the importance of the concessional arrangements that have been built into the scheme.

One provision of this Bill seeks to cease the payment of freight subsidy on power kerosene, as I have indicated, because of its very much reduced use. It will also require that eligible petroleum products should actually be delivered to the place in respect of which the subsidy is claimed. Again, that provision is in part designed to overcome previous abuses of the scheme. It will also provide authority to pay the subsidy on the freight of eligible products to places not specified in the schedule, and it will place the Northern Territory on the same basis as the States.

The second piece of legislation is the Excise Tariff Amendment Bill (No. 2) 1983. One main provision of that Bill is to provide for the automatic indexing of certain traditional excise rates at six-monthly intervals. The honourable member for Ryan indicated that those adjustments would take place each February and August. I said earlier that the chief purpose of these Customs and excise duties is to raise revenue. It really does not make very much sense, if that is their chief purpose, if the real values of the revenue obtained from them is allowed to erode as a result of inflation. It is a very sensible and proper proposition that the real value of taxes which are imposed simply for revenue should be maintained. It surprises me that measures of this kind were not adopted in the past. In real terms there will be no increase, although the honourable member for Ryan suggested that as a result of these automatic increases the automatic indexation will represent a continuing twice-yearly increase in the rate of tax. It is not correct to say that there will be an increase in the burden or the incidence of these duties.

This Bill will also provide for a revised excise system for crude oil produced from fields discovered before 18 September 1975. The first provision concerning automatic indexation was designed to maintain the real value of the revenue obtained from those duties. I emphasise at the same time that while that twice- yearly indexation provision is included, it does not in any way preclude the Government from exercising the normal degree of discretion which can be applied by governments in relation to duties of this kind. It is hoped, of course, that there will be less need for the Government to exercise its discretion in adjusting those rates, but having twice-yearly indexation of the rates as is proposed will certainly be less disruptive than those discretionary changes have been in the past. It will be more certain. People will be able to anticipate when the changes will take place and the extent of those changes. They will be able more easily to plan for the changes and, as a result, more easily absorb them into their total cost structure.

I think it is significant that the Minister said in his second reading speech that in real terms the revenue from these traditional excises fell from $4.3 billion to $3.3 billion, a loss in real terms of $1,000m, in the 10 years between 1973-74 and 1982-83. As I have said, it is just unreasonable for revenue items of that kind to be allowed to create such burdens on public revenue.

The second provision concerning the revised excise system for crude oil produced from fields discovered before 18 September 1975 provides for increases in the excise rates as the annual production from the field increases. There is nothing spectacular about this provision either. It represents the application of the normal pay as you earn progressive tax scales to the production of crude oil. The present anomalous situation is such that as a result of the operation of the present scheme returns to some producers in some circumstances can actually be decreasing as their production increases and, in other circumstances , returns to producers can increase while the import parity price is falling. It is quite obvious that anomalies of that kind need to be adjusted or corrected and this legislation is intended to do that. The ultimate solution, of course, to problems of that kind is the introduction of a consistent profit related resource rent tax. I know that people often throw up their hands in horror at the suggestion, but increasingly people are coming to understand the rationale behind that concept, behind the proposal. As people understand it, the support for the concept and for the implementation of a resource rent tax will increase.

I do not want to continue for much longer because I know that we are all operating under major time constraints in the consideration of this group of Bills. In conclusion I emphasise the importance of the attitude of members of the Opposition. I suppose this appeal will fall on deaf ears, but it is important for members of the Opposition, while it is quite legitimate for them to attempt to make political capital out of the types of provisions which have been built into this legislation, at least to attempt some degree of objectivity in their assessment not only of the nature of the changes but also of the purposes for them. I am sure that if they do that with a reasonable degree of honesty and objectivity the changes which are proposed in these Bills will not be too unfavourably received.