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Tuesday, 21 May 1985
Page: 2283


Senator CHANEY (Leader of the Opposition)(10.19) —I move:

(3) Page 14, clause 37, leave out the clause, insert the following clause:

'37 (1) Section 78A of the Principal Act is amended by omitting sub-section (5) and substituting the following sub-section:

''(5) Where a rebate is payable under sub-section (1) to a person in respect of any diesel fuel, the amount of the rebate payable to that person is equal to the amount of duty paid by that person upon that diesel fuel.''.

(2) Sub-section 78A (5) of the Principal Act as amended by this Act applies in respect of diesel fuel purchased after the commencement of this Act.'

The effect of this amendment is to provide for a new sub-section which states:

Where a rebate is payable under sub-section (1) to a person in respect of any diesel fuel, the amount of the rebate payable to that person is equal to the amount of duty paid by that person upon that diesel fuel.

I touched on the reason behind this in the second reading debate. However, for the purpose of the Committee I should very quickly outline again what is being pursued by the Opposition. Until 1982 the people who were exempt from excise because they came within the list of users who were exempt were entitled to purchase fuel free of the excise duty. There were problems with respect to enforcement and it was thought that there was widespread abuse of those exemptions, in the 1982 Budget the previous Government altered the system to require all diesel fuel to bear the full rate of excise duty irrespective of its end use and, at the same time, introduced a system to allow users to claim rebates of the excise in respect of certain categories of off-road use. Broadly they were domestic use, hospitals, nursing and convalescent homes and in the agricultural, mining, fishing and forestry industries.

It is important to note that what happened was essentially an anti-avoidance change. To that point the relevant categories of users had been able to purchase fuel without the payment of the excise, and purely to prevent abuse of that exemption the system was turned around and the relevant users had to purchase diesel fuel bearing the full rate of excise duty but were entitled to claim a rebate.

Under this Government what in effect has happened is that the value of that rebate has been reduced because, as I indicated in the previous debate, in the 1983 Budget the Government did two things: Firstly, it added 1.5c to the rate of excise and, secondly, it indexed the then rate of excise to bring about a further increase. At the same time it left the rebate where it stood so that the excise, which had been 7.155c per litre, was increased by 1.5c per litre plus an amount which allowed for indexation. Then there were successive indexation changes six months later and again 12 months later. That, of course, caused some dismay on the part of the exempt users because this meant that their exemption or rebate ceased to be for the full amount. The Government partially moved to remedy that in the last Budget when it announced that the 7.155c per litre rebate would thereafter be indexed. Effectively the users missed out on a rebate of the 1.5c per litre rise and three half yearly indexation changes.

The effect of the amending legislation that the Government has put before the chamber is to leave a gap and to ensure that that gap will gradually widen at six-monthly intervals because the indexation factor will apply to the full amount of the present excise as well as to the 7.155c per litre, but it will not cure the gap and that gap will, by the application of arithmetic, widen at six-monthly intervals for as long as there are any increases in the consumer price index. The wish of the Opposition is to pass this amendment, which would henceforth require the Government to rebate the full amount of excise payable.

The issue before the Committee is not one of whether or not what we are proposing is desirable, but rather whether or not what we are proposing is affordable. As to whether or not it is desirable, I think it is quite clear that if it is the view of Parliament that this rebate should apply to the sorts of users I have talked about, it is a little illogical to have it in the form of a partial rebate. The Government has indicated, through its officials, that there will be a fairly extensive cost on the Budget if this amendment is carried, and obviously the Opposition has had to look at this amendment in light of the cost which it would incur. However, the Opposition wishes to put the amendment for the simple reason that the bulk of those who benefit by the rebate are in fact in a situation of very considerable difficulty. I do not think there could be any doubt that Australia's primary producers are under a very great deal of pressure at the moment. They are, of course, forced to sell on the international market, they are forced to sell at world prices and they are forced to operate on Australian costs. The reality is that the industries which gain the benefit of this exemption have been subjected to a very severe cost pressure at the same time as many commodities are not being sold on the world market at increased price which would compensate for those cost pressures.

In the broad, the Opposition supports the call which was made by the National Farmers Federation for the removal of excise paid on diesel fuel used for off-road purposes. What we are seeking in this amendment is to restore the real position which existed up until the time of this Government's 1983 Budget and give the defined users the benefit of excise free fuel. Western Australian wheat growers are facing an extraordinarily difficult situation. I attended a meeting a few months ago in the electorate of O'Connor at a town called Cadoux, where I was told that not a single farmer in two of the local towns was submitting a budget which was positive. The costs that are being incurred are very severe. The industries are in very real difficulties and of course this Government has exacerbated those difficulties by the recent decisions it made in the mini-Budget which remove the fuel subsidy except insofar as the cost of transport exceeds some 4c or 5c. The Government has made a series of changes which have very considerably added to the costs of primary producers in particular. We believe it is vitally necessary that the industries which have the benefit of this rebate get the full rebate and not some partial and diminishing proportion of the excise rebate, as is provided for in the Government's legislation.

We welcome the fact that the Government was making some move to improve the position, but we believe that the matters should be dealt with in a way that the Opposition amendment would require. The fact is that industries, such as the wheat and sugar industries in particular, are finding it very difficult to absorb the heavy fuel price increases. They are losing their competitive edge and we believe that this relief is, in fact, necessary. In terms of the Government's overall Budget, it is a relatively minor matter and we would say that in the vast reorganisation of the taxation system which the Government is currently undertaking it ought to bear in mind the fact that this rebate has been distorted by the Government's decisions and it should in its redesign of the system be prepared to restore the true value of this rebate for those categories of users who have been identified as particularly requiring it. I commend the amendment to the Committee. I hope that it will receive the support of the Australian Democrats as well as the support of the Government.