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Thursday, 14 November 2002
Page: 6413


Senator CONROY (4:15 PM) —The Excise Tariff Amendment Bill (No. 1) 2002 and the Customs Tariff Amendment Bill (No. 2) 2002 propose equivalent amendments for two acts: the Excise Tariff Act 1921 and Customs Tariff Act 1995. These cognate bills implement a national excise scheme for low-alcohol beer, remove the excise on the water component of emulsified diesel-water fuel blends and remove excise on certain non-recyclable oils and lubricants now subject to excise under the product stewardship oil scheme.

The decision to implement a national excise scheme for low-alcohol beer is welcomed by Labor. The key feature of this scheme is the cessation of state subsidies for low-alcohol beer, with assistance to be delivered instead through lower excise rates. Labor consider that there is merit in these proposals to simplify the excise system and eliminate the requirement for wholesalers to claim rebates for excise that they have paid. Labor commend this initiative and will support it. However, it is interesting to note that the excise rates for both low-alcohol and mid-strength beer will be reduced. For low-alcohol beer, it will be for both the draught and packaged product, while for mid-strength it will be for the packaged product only. This is expected to result in reduced prices for low-alcohol draught and packaged beer in all states and territories except Tasmania. However, the price of mid-strength draught and packaged beer will increase in all states and territories except Queensland and the Northern Territory. This is because the reduction in the excise rate will not compensate fully for the abolition of previous state and territory subsidies for this product.

This bill also contains amendments to the excise treatment of emulsified diesel-water fuel blends produced by licensed excise manufacturers. There is evidence to suggest that such blends offer a cost-effective way to reduce harmful emissions from heavy-duty engines without expensive modification to vehicles. At present, there is an anomaly in the excise treatment of these blends in that the water component of these blends is excisable in addition to the diesel component. To my knowledge, the Australian Taxation Office has never managed to levy a direct excise on water anywhere else in the taxation system, nor should it begin now. Instead, these amendments will properly address this anomaly by making the water component of blends produced by licensed excise manufacturers excise-free. Labor supports the removal of this anomaly.

The bill also contains some changes to the government's product stewardship oil levy. This scheme seeks to reduce the impacts of waste oil through imposing an excise style levy on virgin oils and lubricants, and providing grants for the recycling and reuse of the oils. Labor supported the product stewardship oil scheme at the time of its inception. It attempts to address a serious environmental issue—namely, the current large-scale leakage of toxic waste oil into the environment. By providing an economic incentive for recycling and reusing this oil, it aims to prevent environmental damage by reducing the waste oil stream rather than having to remedy the damage after such waste oil is dumped into the environment. Given this intention, it is reasonable that, where oils do not enter the waste stream, they should be considered for exemption from the levy. The government sets out criteria in the bill for such exemptions—namely, where the oils are used in the manufacture of another product and are not contributing to the waste oil problem and are clearly distinguishable from other oils that do.

On this basis, this bill excludes certain food grade white mineral oils, certain polyglycol brake fluids and certain aromatic process oils. We consider that the government's criteria for considering the exemption of oils from the levy are reasonable. On these grounds, Labor will support the exemptions proposed, on the understanding that they meet the technical criteria set out in the bill. Finally, the bill also abolishes the automatic indexation of the PSO levy, to bring it into line with other petroleum fuels. Labor are opposed to automatic indexation of the excise of petroleum products; therefore, we support the removal of automatic indexation of the PSO levy. Labor support the bill.