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Tuesday, 14 June 2011
Page: 5884


Mr STEPHEN JONES (Throsby) (17:39): I am pleased to stand and relieve the member for Wright, whose company I enjoy but whose policy advice I rarely follow, from his frustration. I have within my grasp a statement from the then Treasurer in 2003. It is under the heading, 'Fuel tax reform for the future'. I would like to quote from this statement from the Treasurer:

An efficient and competitive energy sector is a key priority for the Government's strategic policy agenda. With advances in technology producing cleaner vehicle engines and with the continued emergence of alternative fuels, it is clear that Australia must have a more consistent and sustainable fuel tax regime. The existing arrangements have created taxation distortions in the fuel market leading to inefficient investments in fuel production and equipment and uncertainty for users of fuels.

As the member for Herbert, who has a keener eye and ear for political history than he does for economic policy, has correctly identified, this was a statement issued by the then Treasurer on 13 May 2003. I am not one who says that the touchstone of all good economic management was the Treasurer of the former Howard government. However, I am willing to say that with his statement he was absolutely right. He was absolutely right and this House should support the four bills that form part of this package—the Taxation of Alternative Fuels Legislation Amendment Bill 2011 and cognate bills—not because the then Treasurer in 2003 set a clear pathway for reform of taxation in this area but for four reasons.

The reason first is that it provides equity between fuels and a rational and reasonable basis on which we provide taxation arrangements for transport fuels. That is a tax based on the energy content of those fuels. The second reason is that it provides some certainty in an industry which is in much need of certainty. The member for Wright, in his contribution to this debate, talked about the evidence that was received by the parliamentary committee which inquired into these bills. I too as a member of this committee listened to the evidence of many from the industry who said they were crying out for certainty and this bill and the legislation and the amendments to the legislation would provide certainty which would enable long-term investments to be made into the biofuels industry.

The third reason—and we do not shrink from this—why we should support this bill is that it provides revenue. We on this side of the House know that these fuel excise arrangements are a proxy for road user taxes. It is a road user charge and it enables the Commonwealth government to invest much needed funds into our national highways.

I would have thought members of the National Party, and those who used to represent the National Party in this place, would stand foursquare with those of us on this side of the House who say that we should be providing as much revenue as we possibly can and gathering as much revenue as we can to invest in our national highway system. It is good for the economy; it is good for the social fabric of regional and rural Australia. The revenue source, which is provided somewhere in the vicinity of $500 million over the forward estimates, is an important contribution to the revenue for rebuilding our roads.

The fourth reason goes to the issue raised by the member for Wright, who asked us to identify one job that was going to be created or saved by this legislation. There are thousands of jobs that are going to be saved by this legislation because what the member for Wright has omitted to mention in his passionate contribution is that, unless this legislation is passed, the subsidies that are currently provided to the biofuel industries will drop dead on 1 July.

As the representatives from Smorgon testified to the parliamentary committee, that will lead to the end of their business and their industry. They will close down overnight, because their industry is reliant upon the subsidies and the grants scheme, unless these bills find their way through parliament. It is not one job but several thousands of jobs which will be saved, if not created, through the passage of this legislation. The legislation is about providing some equalisation of the taxation arrangements on a rational basis for alternative fuels, including liquefied petroleum gas, liquefied natural gas and compressed natural gas. These bills also clarify the tax treatment of renewable fuels, some of which I have already mentioned: ethanol, methanol and biodiesel. Through this legislation each of these alternative fuels will, after probably one of the longest phase-in periods in federal taxation history—that is, notice was firmly given in 2003 that this change was to occur and through the passage of the legislation a five-year phase-in period to the new taxation arrangements will be put in place—finally be brought within an equalised taxation arrangement reflecting the energy content of each of the various fuels.

However, to reflect the important role that alternative fuels will increasingly play in Australia's low-carbon future, the rate of taxation applied to these alternative fuels will be discounted by 50 per cent. This 50 per cent discount recognises the environmental benefits of these alternative fuels and provides them with a fuel tax advantage over conventional fuels without completely removing from them that component of this fuel excise which relates to a road user charge. That is to say, just because they are more environmentally efficient to produce and to use, that does not mean that when they are placed in cars and those vehicles are driving on the road it does not have a wear and tear impact on the road and therefore the drivers of those vehicles so equipped with alternative fuel systems should not make a contribution to the maintenance, repair and building of those roads.

With regard to ethanol, it is important to note that it is subject to the full fuel tax rate that applies to petrol and diesel. However, at present, qualifying producers are entitled to a grant under the Ethanol Production Grants program that covers the cost of this tax. It is in effect a full rebate. Legislation in this package of bills will maintain and extend this grant, which would otherwise drop dead on 1 July 2011. In their contributions to this debate I have not heard one speaker from the opposition suggest an alternative which would provide some certainty to businesses and workers in the critical ethanol industry. We can only presume that it is their policy that the industry should drop dead over night along with the Ethanol Production Grants program. This measure will ensure continuity of support for this important regional industry.

As a member of the Standing Committee on Economics, I participated in the recent inquiry, as did some other members who are currently present in the chamber. In considering this legislation, I believe it is important to understand one of the reasons why this government, or indeed any government, puts taxes on fuel—that is, fuel taxes, on either conventional or alternative fuels, are a proxy for road user charges. Every time we drive on any road, we have contributed to the wear and tear on that road and therefore we need to make a contribution to the maintenance of roads. This is a simple user-pays principle. Every time fuel is put into a vehicle, some of what you pay goes towards the cost of the roads we then drive on. People who do not own vehicles or who do not drive their cars on the road do not make this contribution towards road building and maintenance in the same way. It may be paid instead as a part of a bus fare or indeed a taxi fare, but it is not paid through the bowser. The more you drive on our roads, the more fuel you purchase, the more fuel tax you pay and the more you contribute to the cost of those roads. This is an equitable principle.

We all know that the costs of repairing existing roads and constructing new roads are enormous. It is therefore untenable that LPG remains untaxed and that those driving vehicles powered with LPG do not make any contribution towards the cost of the roads that they use each and every day. The taxation of LPG in this legislation represents the largest part of the increase in the revenue the government will receive. Vehicles powered with LPG represent some of our heaviest road users. It is important to maintain the integrity of our fuel tax system, to ensure that it is sustainable for the long term and to ensure that it represents good economic policy.

It is also important that when we put so much emphasis on investing in our infrastructure—and roads are an important part of that infrastructure—we do this in a way that enables us to balance the budget. We have heard many contributions to debates in this place about the importance of spending on regional infrastructure. In fact, if you listened to speaker after speaker in debates on this legislation, you would have heard them making passionate pleas about the need for improved spending on road infrastructure in their electorates. Here is just a small sample from the speeches in reply to the Treasurer's budget speech: the member for Wide Bay made a passionate plea on behalf of his electorate for the Ipswich Motorway and Bruce Highway from Cooroy to Curra to be upgraded at a cost of $325 million; the member for Hasluck called for the upgrading, uncosted I might add, of the Perth to Darwin Highway and the Roe Highway and Berkshire Road interchange at a cost of $11 million; closer to my own electorate, the member for Gilmore called for an upgrade to the Princes Highway from Nerriga to Tarago, and the upgrade of Picton Road. All of these are worthy projects, but if we are to have the revenue on a sustainable basis to fund these new roadworks together with the revenue to ensure that we are able to upgrade and maintain our existing roads then we need to ensure we are doing that in a way that enables us to balance the budget. The $500 million that will be raised through this package of legislation over the forward estimates is an important contribution which will, I hope, go some way to assisting us to meet the deficit in infrastructure spending that we inherited when we came to office.

In confused contributions to this debate from the member for Wright we heard the preposterous proposition which justifies their backflip on supporting this policy—that they supported it when it was proposed by the former Treasurer because at that point in time they had plenty of money in the budget and they had a whopping great surplus but they do not support it now because we do not have a big surplus. This beggars belief because what it says to the ordinary person in the street, if you follow that economic logic from the member for Wright through, is, 'At a time when we are collecting too much in taxation revenue we should increase taxation revenue because we have whopping big surpluses. We should be taxing and collecting more revenue than we are able to spend.' When you are collecting too much money in taxation revenue—

Mr Ciobo: You'll never have to deal with a surplus.

Mr Ewen Jones interjecting

The DEPUTY SPEAKER ( Mr Murphy ): Order! The member for Moncrieff and the member for Herbert will cease interjecting.

Mr STEPHEN JONES: They do not like it. The member for Moncrieff and the member for Herbert do not like it because they know it is a devastating blow to their feeble backflip on this policy. But if you follow the logic of their argument it is that when you are collecting too much tax you should up the tax and when you are trying to bring the budget back into surplus you should do the opposite. It is appalling logic. (Time expired)