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Thursday, 27 June 2002
Page: 2991

Senator McGAURAN (2:22 AM) —I seek leave to incorporate my speech in Hansard.

Leave granted.

The speech read as follows

I rise to speak on the Diesel Fuel Rebate Scheme Amendment Bill 2002.

The amendments to the bill are aiming to extend the eligibility for the rebate to retail and hospitality businesses that use diesel to generate power when they do not have access to mains electricity. This was announced as an election promise by the Coalition government during the 2001 election campaign and will benefit small business operators in remote areas of Australia by providing a rebate on the customs or excise duty paid on diesel and like fuels used by them to generate power for their own use.

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 had 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.

It is worthy to note that this is the second extension to the Diesel Fuel Rebate Scheme by the Coalition, since it came into government in 1996. The introduction of the New Tax System in 2000 saw an extension of the old scheme of rebate from agriculture, fishing and mining to rail and marine transport, as well as bush nursing homes, hospitals, aged people's homes and the like.

At a time of budgetary constraint, and in a time of surplus budgets, the Diesel Fuel Rebate Scheme, may have been seen as an easy target for Treasury to cut, but the truth is the government sees its value and have in fact extended this tax rebate, it plays a vital role in reducing the costs structures of rural and regional Australia. Not only does the rebate scheme provide major benefits to rural and regional Australians through the lowering of transport and production costs but it also improves Australia's competitiveness in the export market, and export competitiveness is the lifeblood of the rural community. Fuel is probably one of the largest costs for families and business in rural and regional areas.

The Coalition, while being fully committed to the scheme, are only too aware a tight administrative control over the accounting procedures is necessary so that the scheme runs effectively. I know this often leads to complaints from users that the system has more red tape than is necessary, but it is important to keep the integrity of the scheme before the taxpayer and, in particular, those who do not use the scheme. It is important that the scheme does not lapse from a tax incentive to a tax evasion. That is why we moved to make several worthwhile administrative changes following the 1996 Audit Office report on the abuse and misuse of the system.

So, while the government will come down hard on misuse scheme, we are committed to the scheme because we know, as they would be aware, fuel pricing is what is known as an `inelastic' price. In other words, if the price of fuel goes up, the usage does not automatically fall; likewise, if the price of fuel goes down, it does not mean that the usage of fuel automatically goes up. It is with this in mind that the importance of the Diesel Fuel Rebate Scheme can be fully understood. Therefore, it is imperative that rebates are provide on such an `inelastic' cost to those people and businesses that provide the Australian domestic market and also export market consumer products.

Alternatively, the record of the Opposition when in government from 1983 to 1996, saw fuel as nothing more than something to be feasted upon, something for the Treasury coffers. It was the Labor Party in government that introduced indexation on petrol and diesel. We abolished indexation. And it was the Labor Party who increased petrol and diesel excise as a discretionary budget measure. Worse, this was at a time of budget deficits which they tried to plug.

In contrast, this government has not once increased the excise level of petrol and diesel. We do not see fuel as a way of meeting budget demands. We resisted the temptation to use fuel taxes to support our budget surplus aims. I believe it is a credit to our economic management and to the ongoing efficiency and competitiveness of the rural sector as a result.

As for the minor party in the Senate, the Democrats, we know only too well their stated policy is to abolish the Diesel Fuel Rebate Scheme. The Democrats have a somewhat genuine concern regarding the environmental effect of diesel fuel production and greenhouse effect, but their solution is extreme. We believe there is a balance to be struck between a genuine concern for the environment and the reality of the use of diesel.

I rely upon the second reading speech of the parliamentary secretary who introduced this bill in the other house when he said:

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...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.

As part of an agreement made with the Democrats at the time of the introduction of the New Tax System—read GST—improved emissions standards for petrol and diesel vehicles have been introduced with the Diesel and Alternative Fuel Grants Scheme and Diesel Fuel Rebate Scheme being combined into the Energy Grants (Credit) Scheme to commence in July 2003. It is worthy to note this agreement was an effective result-driven use of the Democrats' use of their numbers.

The new standards will means that emissions rates from oxides of nitrogen and particulates in new medium to heavy duty trucks will be 50 per cent and 90 per cent lower respectively after 2006 than in today's vehicles.

I reiterate the essence of the Diesel Fuel Rebate Scheme. Road and rail transport tourism is the very lifeblood of rural and regional Australia. It moves produce to markets and it delivers the necessities of life. Thus, the cost of this transport impacts heavily on the price of that produce on domestic and international market and on the cost of virtually everything needed for day-to-day life. Cheaper fuel means lower costs which, in turn, mean enhanced prospects for our exports and a dampening on the cost of living for regional and rural Australians.

It is with great enthusiasm that I recommend this bill to the Senate.

Question negatived.