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Thursday, 7 September 2000
Page: 17527


Senator IAN CAMPBELL (Parliamentary Secretary to the Minister for Communications, Information Technology and the Arts) (9:42 AM) —I table the explanatory memorandum and move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

The Fuel Quality Standards Bill 2000 is the first step in implementing quality standards for fuel supplied in Australia. The bill establishes the framework for setting national standards. The second step will be the progressive setting of standards for a range of fuels that are used in Australia. The first standards, for petrol and automotive diesel, will be on the books shortly after this bill is enacted.

This is important legislation for Australia. The enactment of the Fuel Quality Standards Bill 2000 will permit the first mandatory, national fuel quality standards for Australia. Standards do exist already. However, they are not mandatory or seriously monitored, and, in the case of petrol, they have not been reviewed in 10 years. If Australia is to reap the environmental benefits of evolving emission control and fuel efficiency technologies, fuel standards need to keep pace with vehicle standards.

This legislation arose from commitments, which were made by the Prime Minister as part of the Measures for a Better Environment (MBE) component of the new tax system. In May 1999, the Prime Minister announced a package of incentives to encourage the switch to lower sulfur diesel fuels, and to facilitate the harmonisation of diesel vehicle emission standards with international standards. The package also included a commitment to bring forward the introduction of new petrol vehicle standards. Changes to petrol standards would also be needed, to support new engine technology.

Changes to fuel quality to support new emission standards are only a part of the story, however. The Commonwealth commissioned a review of the fuel quality requirements for Australian transport to assess the benefits to be gained by introducing fuel quality standards. The Fuel Quality Review took a number of fuel quality scenarios and modelled the changes in emissions of pollutants, air toxics and greenhouse gases from 2000 to 2010 and 2020.

In short, the Review found that the combined effect of cleaner fuel and the progressive tightening of vehicle emission standards would produce dramatic reductions in emissions of pollutants and air toxics from vehicles, over time.

This legislation does not take Australia out on a limb. Australia's move towards higher quality fuel is part of a global push for cleaner, more efficient transport. The findings of the Fuel Quality Review only reinforced the Government's commitment to achieve Prime Minister John Howard's goal of harmonisation of Australian vehicle emission standards with international standards by 2006.

It is pleasing to be able to say that Australia has relatively good air quality on average, even in our major cities. This is, however, no reason for complacency. We have episodes where levels of pollutants in the major eastern cities and Perth exceed pollutant levels in London, Toronto and similar cities. If we are to meet the air quality standards specified in the National Environment Protection Measure for ambient air quality, particularly the ozone standard, we need to address motor vehicle emissions.

The Fuel Quality Standards legislation is also intended to assist with the abatement of Australia's greenhouse gas emissions. It is now widely recognised that greenhouse gas emissions cause global warming, with serious long-term and worldwide implications for urban and rural infrastructure, health, land management and agriculture. Under the Kyoto Protocol, the Government has a target of limiting Australian greenhouse emissions to 8% above 1990 levels by 2008-2012 - this represents a 30% reduction against current business as usual projections for 2008-2012. By 1998, the transport sector was responsible for about 16% (72.6 million tonnes) of total greenhouse gas emissions, of which about 89% of emissions were from road transport. Projections indicate that, without significant and sustained abatement measures, transport emissions will increase by 50% (to 110 million tonnes) of 1990 levels by 2015. This is of serious concern to the Government.

Although the task of reducing greenhouse emissions from road transport is difficult, particularly in view of Australia's high dependence on motor vehicle transport, it is one that the Government is tackling through a package of strategic measures. One element of our approach is to improve the fuel efficiency of motor vehicles. The Fuel Quality Standards legislation will pave the way for ensuring the provision nationwide of cleaner fuels that not only reduce air pollution but also help reduce greenhouse gas emissions from motor vehicles. Legislated fuel quality enhancements, such as higher octane and lower sulfur content, will provide the certainty required for the deployment of advanced engine and vehicle technologies by automotive manufacturers and their uptake by consumers. Advanced engine technologies will result in improved fuel consumption, which in turn will translate to greenhouse benefits. The Fuel Quality Standards legislation will help realise the maximum potential greenhouse benefit from fuel use in vehicles by complementing fuel quality and vehicle technology.

Further, this bill provides the framework for determining the fuel specifications of alternative and renewable fuels, thereby paving the way for these fuels to take a bigger share of the transport task in the future.

Alternative transport fuels, or fuels beyond the traditional petrol and diesel, are a major priority of this Government. This is reflected in the Renewable Energy Action Agenda launched in June this year, which includes an initiative to promote the development of the renewable transport fuel industry. In recognition of the important role that alternative and renewable transport fuels will play in minimising the greenhouse impacts of the transport sector, this Government has provided unprecedented funding for the uptake of these fuels. The Measures for a Better Environment Statement provided $75 million for the Alternative Fuel Conversion Program over four years, and $9 million for alternative fuels under the Diesel and Alternative Fuels Grants Scheme in 2000-01, increasing to $12 million in 2001-02.

The focus of fuel quality initiatives needs to be broadened to cater for the changes occurring in fuel use. While we are promoting alternative transport fuels for the benefits they have in terms of the common pollutant and greenhouse emissions, we do not want to create alternative pollution problems. This legislation provides a robust framework on which future fuels - whatever their properties, source or mix - can be regulated in a manner that promotes vehicle safety and performance and benefits the environment.

While the main driver for the legislation is to achieve improvements in air quality by reducing pollution from motor vehicle use, the legislation will also enable the Commonwealth to achieve a number of other objectives.

The objects of the bill spell out the intention to enable the effective operation of engines. During the public consultations on setting petrol and diesel fuel standards, stake-holders have repeatedly called for standards to ensure that fuel sold in Australia is safe and suitable for vehicles.

Following the finalisation of petrol and diesel standards with an `environmental' focus, the next priority will be to include standards relating to the operability of vehicles using these fuels.

The Fuel Quality Standards bill is not intended to address consumer protection as such, although it does include substantial penalty provisions. For example:

the bill creates two fault element offences, punishable by up to 500 penalty units for an individual and 2500 penalty units for a corporation, for the supply of fuel that does not meet a relevant standard under the Act;

the bill creates a fault element offence prohibiting the alteration of fuel covered by a standard. This carries a maximum penalty of 500 penalty units for an individual and 2500 penalty units for a corporation;

the bill creates two fault element offences concerning the supply and import of prohibited fuel additives. These carry a maximum penalty of 500 penalty units for an individual and 2500 penalty units for a corporation; and

a failure to provide documentation certification that fuel being on-supplied complies with relevant fuel standards carries a maximum penalty of 60 penalty units for an individual and 300 penalty units for a corporation.

These offences and significant penalties are consistent with Commonwealth criminal law policy and are entirely justified by the adverse effects of motor vehicle emissions on urban air quality, human health and enhanced greenhouse effect.

Most recent cases of large-scale fuel adulteration have been about excise evasion or cost cutting, and there is legislation in place to address tax evasion. The Fuel Quality Standards legislation will, when it commences, provide an additional means to address deliberate or reckless supply of fuel that does not meet the standards.

Clearly the Commonwealth legislation is limited in scope. Constitutionally, the Commonwealth has no direct control of fuels. The focus of this legislation is therefore on corporations who supply fuel in Australia, whether importers or producers. This will capture the bulk of fuel sold in Australia.

Our next step will be to work with the States and Territories. The national standards will provide a benchmark for fuel quality, a starting point from which State consumer protection agencies can work. The Commonwealth will continue to involve the States in the development of fuel standards with a view to achieving a seamless national regime.

Vehicle manufacturers and refineries have been generally enthusiastic about creating single, uniform national standards. They have legitimate concerns about the potential compliance costs if different standards proliferate in the absence of national fuel standards.

Some states have, or are in the process of developing state regulations for petrol and diesel. This is a positive step, and has benefits as an interim measure leading up to the commencement of the Commonwealth standards. The vehicle and fuel markets are, however, essentially national. There should be no uncertainty about when a standard applies. It is also irrational for refineries to produce differently for different states, unless there is a strong justification.

The bill is therefore intended to override a State standard on the same matter. The Commonwealth recognises that there may be circumstances in which a more stringent standard is desirable for a particular area. For example, elevated levels of a particular pollutant which threaten environmental or health quality may be best addressed through a stricter fuel standard. The process for setting such an area-specific standard must, however, be objective and transparent. The bill provides for this by permitting standards to apply differentially, provided they do not breach the Australian Constitution by discriminating in favour of a region, or impeding interstate trade. Under the bill, the Minister responsible would be required to publish guidelines to be followed in making such a standard.

The bill creates a consultative committee made up of representatives of each State and Territory, the Commonwealth, fuel industry representatives, environment and consumer representatives. The Minister may add further members as there is a need, for example to cover the interests linked to a type of fuel being regulated.

The Committee will advise the Minister before he or she creates a standard. This mechanism will ensure that the Minister has available to him/her the views of the major stakeholders.

The Fuel Quality Standards Bill has been drafted with the intention of providing the flexibility necessary to address fuel quality issues arising in relation to any fuel supplied in Australia, for any use. Fuels used in road transport are the obvious initial target, because of the significant role that vehicle emissions play as a source of pollution, and the increasing concern that fuels are available which don't meet the operational requirements of vehicles. The legislation has the potential, however, to be used to manage the environmental, health or performance characteristics of fuels used for domestic, marine, industrial or other purposes.

This will be the first national legislation designed to make fuel suppliers legally responsible for the quality of fuel that they provide.

The new fuels legislation should not be considered as a measure being taken in isolation from the Government's industry policy objectives as they relate to the refining sector. Rather, it provides a mechanism for continuing the move to cleaner fuels that the industry itself recognises as necessary and to which it has already begun to contribute.

The Downstream Petroleum Products Action Agenda launched last November by Senator Minchin, has as its vision a strong and efficient refining industry that is environmentally responsible and supplies the majority of the nations refined petroleum product needs. This legislation is consistent with that vision.

In the process of delivering Australians cleaner fuels it is important, however, to ensure that the refining sector is provided with sufficient options to restructure their activities. The provision of flexibility in the transition to mandated fuel standards is therefore being given careful consideration in the standard setting consultative process currently under way for petrol and automotive diesel.

The Government wants to have a local refining industry that can supply high quality, clean fuels to Australia at the lowest possible cost.

Conclusion

Passage of the Fuel Quality Standards Bill 2000 will play a significant role in giving effect to the Government's commitment to improve the environmental and greenhouse performance of the transport sector.

The bill will allow the Commonwealth to set the benchmark for fuel quality in Australia, and provide national leadership as fuel quality issues emerge.

Passage of the bill will also remove uncertainty, equity and trade concerns that may arise from different fuel standards applying in different States.

Ordered that further consideration of this bill be adjourned to the first day of the 2000 summer sittings, in accordance with standing order 111.