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Wednesday, 29 May 2002
Page: 2597

Mr SLIPPER (Parliamentary Secretary to the Minister for Finance and Administration) (12:58 PM) —The government wishes to thank all honourable members who were listed to speak and indeed the honourable member for Kennedy for his surprise contribution. The Diesel Fuel Rebate Scheme Amendment Bill 2002 gives effect to the government's election commitment to extend the Diesel Fuel Rebate Scheme to those outback retail and hospitality businesses which have to use diesel to generate power because they do not have access to mains power. The government cannot accept the second reading amendment moved by the honourable member for Rankin, and I would like to touch briefly on each of the three points mentioned by the honourable member in his second reading amendment.

Firstly, the member for Rankin, as point one of his proposed amendment, queried that the government had delayed the implementation of the Energy Grants Credit Scheme. I want to reassure both the honourable member for Rankin and the House more generally that the government is indeed committed to introducing the Energy Grants Credit Scheme by 1 July 2003. The scheme will maintain entitlements equivalent to the Diesel Fuel Rebate Scheme and the Diesel and Alternative Fuels Grants Scheme while providing greater incentives for cleaner fuels.

The recommendations of the inquiry did not support this approach, and the scheme will now be developed in the context of normal government business. We anticipate bringing forward legislation in due course, but with a view to starting the new scheme from 1 July 2003. Members of the opposition—in particular, the member for Wills—referred to renewable energy and had the audacity to seek to criticise the government for, in their words:

failing to prioritise support for the accelerated uptake of renewable energy generation as a viable alternative to diesel rather than extend the diesel rebate that would lead to long term greenhouse gas reductions ...

Members of the opposition are so far from the truth it is amazing. As the minister for the environment pointed out, the budget which was just brought down was the greenest budget this country has ever seen. Dr Kemp has indicated that the Howard government is strongly committed to increasing the use of renewable energy in Australia as a way of meeting our increasing energy needs without adding to our greenhouse gas emissions. To this end we have committed over $300 million for renewable energy support focused on three areas. Key achievements include the Mandatory Renewable Energy Target—world first legislation—that guarantees that enough new renewable electricity is generated over the next 10 years to supply the residential needs of a city of four million people. This initiative is being achieved by establishing an innovative market in renewable energy certificates and is expected to deliver in excess of $2,000 million of new investment in renewable energy in Australia.

Another key achievement is the development, with industry, of a strategic action agenda to guide the development of a sustainable and internationally competitive renewable energy industry in Australia with target annual sales of $4 billion by 2010. Other initiatives include $6 million of targeted grants funding to address financial institutional barriers to the uptake of renewable energy, assessment of renewable energy resources, development of standards for equipment and training and accreditation of system designers and installers. A further initiative is increasing the uptake of renewable energy technologies in remote areas, with funding for rebates on equipment of around $20 million, saving over 50 million litres of diesel fuel each year. For many remote households in Australia these rebates will make affordable 24-hour power for the first time, substantially improving their quality of life. An initiative of increasing the use of photovoltaic technology will enable around 6,000 householders and owners of community buildings such as schools to convert sunlight into electricity and run valuable education programs.

Another achievement is grant and equity programs worth over $70 million to support commercialisation of new technologies and applications that generate and use renewable energy. Over 60 projects have been funded for a wide range of renewable technologies, including solar photovoltaic, solar thermal, biomass, hot dry rock, wave, hydro and wind. These projects are delivering additional benefits such as job creation in regional areas and addressing environmental issues such as waste minimisation and salinity. So the government has a proud record in the area of renewable energy. It is an absolute joke to see paragraph (2) included in the second reading amendment.

I would also like to mention, given the fact that opposition members referred to climate change and greenhouse policies, that in 2001 the Intergovernmental Panel on Climate Change released its third assessment report on the science of climate change. It found increasing evidence that human activity is already altering the global climate system and projects further changes, including average global temperature rises of 1.4 to 5.8 degrees celsius during the 21st century, increased frequency of extreme weather events such as floods, droughts, bushfires and cyclones, decreased snow cover and sea ice and, over the longer term, an associated increase in the sea level.

The Howard government has played a significant role in international efforts to respond to the threat of climate change and we reject any suggestions to the contrary. Australia under this government has been prominent in negotiations to settle rules for the operation of the 1997 Kyoto protocol which were finalised in Marrakesh in late 2001. It remains the view of the government that a framework of climate change agreement requires the participation of all major emitters, including developing countries, to be effective. The Howard government recognises the importance of sensible greenhouse policies which will enable Australian industry to remain competitive and grow. Australia is undertaking significant mitigation of greenhouse gas emissions. Since 1997 the government has committed almost $1 billion to Australia's greenhouse response, which indicates how thin are the criticisms sent in our direction by members of the opposition. The government has established the Australian Greenhouse Office, still the world's only national agency specifically tackling climate change.

The government's response embraces strategic investment, regulation, voluntary approaches and market based measures for abating greenhouse emissions. Overall, current Australian greenhouse mitigation actions are expected to reduce greenhouse gas emissions by about 60 million tonnes per annum during the first Kyoto commitment period—from 2008 to 2012. Particular programs include the $400 million Greenhouse Gas Abatement Program, targeting opportunities for large scale, cost-effective and sustained abatement, with an expected reduction of up to 11 million tonnes in 2010; the Mandatory Renewable Energy Target, which requires the electricity generation to source an additional 9,500 gigawatt hours of renewable energy per year by 2010, an expected reduction of up to seven million tonnes in 2010; promoting energy efficiency, including by changing residential and commercial building codes, and introducing generator efficiency standards and minimum energy performance standards for appliances and equipment, an expected reduction of up to 14 million tonnes in 2010; and the Greenhouse Challenge Program, a joint voluntary initiative between the government and industry to abate greenhouse gas emissions, an expected reduction of up to 16 million tonnes in 2010.

Is it any wonder that the Howard government is the greenest government in Australia's history and the budget which was delivered by the Treasurer a couple of weeks ago is the greenest budget in Australia's history? I was very curious as I listened to the speech by my friend the honourable member for Rankin. He criticised the government's fuel inquiry and he outlined to the House how much that particular inquiry cost. He sought to draw a connection with the cost of the inquiry and then suggested that the government should, simply because we had an inquiry, accept the recommendations. He is a very great worry for the Australian Labor Party if he would say, in government, that whenever a report of an inquiry is brought down the government of the day should accept its recommendations—whether or not those recommendations are appropriate for the advancement of the Australian people.

For those listening, I think I should answer the query, `Why did the government have a fuel taxation inquiry if it rejected all of its recommendations?' The facts are as follows. In response to community concerns about high fuel prices, the government established an inquiry into the total structure of fuel taxation and related issues in Australia. The fuel taxation inquiry conducted a rigorous review of a number of key fuel taxation issues, including the complex interface of the various grant and rebate schemes. We did get a lot of submissions for the inquiry, and that is very positive. The government has, however, decided against implementing the main recommendations of the inquiry, as the government considers they would have negative implications for the fuel industry and for consumers.

The government will carefully consider the recommendations of the inquiry for a production subsidy for ultra low sulfur diesel funded by an increase in the excise for all diesel. The government has already made a commitment to apply an excise differential to encourage the early introduction of ULSD with sulfur content of 50 parts per million or less. This excise differential will consist of an additional excise on regular diesel of 1c per litre from 1 January 2003, rising to 2c per litre for 2004-05. A production subsidy would be aimed at easing the administrative requirements of applying the DFRS and DAFGS to differently taxed types of diesel.

The proposal to tax all fuels based on their relative energy content would impose tax on previously unexcised fuels such as ethanol and LPG. The member for New England mentioned the importance of ethanol. This would have implications for the LPG retail fuel industry and LPG conversion businesses, and it is also contrary to the government's election commitment to maintain excise exemptions for fuel ethanol and biodiesel. I am pleased to be able to assure the honourable member for New England on that particular point, which he raised in his contribution. The government will not be implementing that recommendation. The government will not reintroduce fuel excise indexation. You have to remember that this is Labor's tax and it was pricing fuel in Australia out of the reach of ordinary decent Australians. The indexation of fuel excise was abolished in March last year in response to community concerns about high petrol prices, and the government are pleased to be able to assure the Australian community that we will not be revisiting this issue. The replacement of the existing Diesel Fuel Rebate Scheme, Diesel and Alternative Fuels Grants Scheme and excise concessions and remission systems with a business fuel credit scheme for on-road and off-road users is similar to the government's policy in A New Tax System. One of the concessions agreed with the Democrats to secure support for the new tax system legislation was that full rebates had to be restricted to certain classes of on-road and off-road use.

The Energy Grants (Credits) Scheme, announced in the government's Measures for a Better Environment package in 1999 to replace the existing DFRS and DAFGS, is proposed to be implemented by 1 July 2003. The purpose of the EGS will be to provide active encouragement for the use of cleaner fuels while at the same time maintaining entitlements that are equivalent to those under the DAFGS and the DFRS, including for use of alternative fuels. Under the fuel taxation regime proposed by the inquiry, the Fuel Sales Grants Scheme and the Petroleum Products Freight Subsidy Scheme were to be discontinued. Both of these schemes were designed to assist regional and remote consumers, and people in these areas would be affected by the removal of the schemes. Therefore, the government has decided to maintain the FSGS and the PPFSS. We are certainly not going to apologise for that. In summary, the fuel inquiry provided a valuable insight to the situation. The government has considered the report, and I have outlined the government response.

In the brief amount of time I have available, I want to thank the member for Barker for highlighting the tourism benefits of this measure and the benefits for regional Australia. As honourable members would appreciate, prior to 11 September last year Australian tourism had record numbers of international visitors. The Minister for Small Business and Tourism delivered on the coalition's election package on tourism, which will help the tourism industry to get back on its feet. I must say that I am privileged to represent Australia's premier tourist area, namely the Queensland Sunshine Coast.

The delivery by Minister Hockey of the government's election package was warmly welcomed by the Tourism Task Force, interestingly headed by former Labor tourism minister John Brown. We thank Mr Brown for his very strong support of the government in this area. I suppose he is living proof that, when one stays around for a while, one can learn as one goes on. I just want to assure honourable members that the Howard government remains totally committed to small business and tourism.

The member for New England brought forward a thought-provoking suggestion. In effect, he queried why the Diesel Fuel Rebate Scheme did not include industries such as foundries and crash repair businesses. As I have indicated before, the original government proposal under the new tax system was to provide a comprehensive credit for all off-road diesel use. This approach was supported by the fuel tax inquiry. The government, in their negotiations with the Democrats over the ANTS package, agreed not to pursue that approach, and the government stand by this agreement. We are still working through the design of the Energy Grants Scheme and will be re-examining this issue in that light. I am pleased to advise the honourable member of this fact.

The extension of the Diesel Fuel Rebate Scheme originated from the recognition of some of the difficulties suffered by small outback tourism operators. The National Party's policy document Securing Australia's tourism future states:

Another measure which will help tourism operators is the extension of the Diesel Fuel Rebate Scheme. A re-elected Coalition Government will extend the eligibility for the Diesel Fuel Rebate Scheme to small retail/hospitality businesses producing their own electricity from diesel, provided there is no access to grid power. Businesses such as caravan parks, tourist resorts and road houses will benefit from the Scheme ...

This measure compensates such businesses for the considerable costs of power generation in regions where there is no access to the power grid and where excise imposts can disadvantage isolated communities. This government has constantly indicated its commitment to rural and regional Australia, including those people resident in isolated communities. The government does this by providing a rebate of excise or customs duty on fuel used by retail and hospitality businesses—not just small retail and hospitality businesses—to generate power for use in the business after 1 July 2002.

The member for Rankin said that the opposition were supporting this bill because the government were delivering on an election promise. I call on the Labor Party to support the government with all legislation delivering on our election promises. They ought not thwart the will of the Australian people. I am particularly pleased to recommend that the House support this very important bill, and I thank honourable members for their indication that this will occur. I commend the bill to the House and oppose the second reading amendment moved by the member for Rankin.

The DEPUTY SPEAKER (Ms Corcoran)—The original question was that this bill be now read a second time. To this the honourable member for Rankin has moved as an amendment that all words after `That' be omitted with a view to substituting other words. The question now is that the words proposed to be omitted stand part of the question.

Question agreed to.

Original question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation for the bill and proposed amendments announced.