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Thursday, 11 September 2003
Page: 19816


Mr SLIPPER (Parliamentary Secretary to the Minister for Finance and Administration) (9:12 AM) —I move:

That this bill be now read a second time.

The Energy Grants (Cleaner Fuels) Scheme Bill 2003 establishes the Energy Grants (Cleaner Fuels) Scheme that provides for payment of a cleaner fuels grant to importers and manufacturers of cleaner fuels.

This bill delivers on two measures in the 2003-04 budget. The first of these relates to fuel tax reform and the second to the cleaner fuels component of the Energy Grants (Credits) Scheme in line with the Measures for a Better Environment commitment to encourage conversion from the dirtiest fuels to the most appropriate and cleanest fuels.

Under the provisions of the bill, an entity will be entitled to a cleaner fuel grant if it imports or manufactures biodiesel or certain other cleaner fuels.

The cleaner fuel grant will offset the customs excise duty payable on biodiesel, such that the current effective excise rate of zero for pure biodiesel is continued, with this being extended to the biodiesel components of blends, until 30 June 2008. The grant will be reduced in five even annual instalments from 1 July 2008 to 1 July 2012, raising the effective excise rate from zero, before 1 July 2008, to its final rate.

A cleaner fuel grant will also apply to domestically produced and imported ethanol from 1 July 2008. The grant rate for ethanol will also be reduced in five even annual instalments from 1 July 2008 to 1 July 2012, raising the effective excise rate from zero, before 1 July 2008, to its final rate.

These measures are part of the government's long term reform of existing fuel tax arrangements whereby all currently untaxed fuels used in internal combustion engines will be brought into the excise (and customs) duty system by 1 July 2008. The reforms establish a broad sustainable taxation framework for fuels by addressing a number of anomalies in the current fuel tax system and providing increased long-term certainty for investors while meeting government commitments and providing time for industry to adjust.

The reforms will establish a fairer and more transparent fuel excise system with improved competitive neutrality between fuels. They will provide the opportunity for currently untaxed fuels to establish their commercial credentials in the marketplace. The reforms fulfil the government's commitments concerning the tax treatment of fuels and deliver on the Measures for a Better Environment commitment to encourage the production of alternative and renewable fuels.

From 1 January 2006, the government will provide grant payments for the production or import of premium unleaded petrol with less than 50 parts per million sulfur for a period of two years. Similar arrangements will be implemented for diesel with less than 10 parts per million sulfur from 1 January 2007.

These measures will encourage the production of higher quality fuels before they are mandated under the provisions included in the Fuel Quality Standards Act 2000. The initiative will be reviewed in the period prior to implementation to ensure that it aligns with the timing of new fuel standards and market conditions.

The Energy Grants (Cleaner Fuels) Scheme will be administered under the administrative and compliance framework contained in the Product Grants and Benefits Administration Act 2000. Claimants will be responsible for correctly self-assessing their entitlements and maintaining records to substantiate their entitlements.

The Energy Grants (Cleaner Fuels) Scheme will apply from 18 September 2003.

Full details of the measures in this bill are contained in the explanatory memorandum.

I commend this bill to the House and present the explanatory memorandum for the Energy Grants (Cleaner Fuels) Scheme Bill 2003 and the Energy Grants (Cleaner Fuels) Scheme (Consequential Amendments) Bill 2003.

Debate (on motion by Mr Swan) adjourned.