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Monday, 20 June 2011
Page: 3310


Senator MILNE (TasmaniaDeputy Leader of the Australian Greens) (18:22): I rise to indicate that the Australian Greens will be supporting this legislation.

Senator Brandis: Of course you do. It's a tax on people.

Senator MILNE: I just note, Senator Brandis, that in May 2003 the then Treasurer, Peter Costello, announced the alternative fuel tax arrangements as long-term important reforms. He said at the time that Australia must have a more consistent and sustainable fuel tax regime. In December 2003, when Senator Brandis was in the Senate, the then Prime Minister, John Howard, said the reforms would result in a more consistent neutral tax regime for fuels used in vehicles, and the Deputy Prime Minister at that time, John Anderson, emphasised the importance of investment, certainty, and so on and so forth. So let's have less of the hypocrisy. The hypocrisy here is coming from the coalition, because, indeed, these reforms were announced by the coalition in the 2003-04 budget when they were in government.

I want to address my remarks today first of all on the importance of finally getting to a proper fuel excise arrangement. This is something I have been arguing since I have been in the Senate. It is time, if we are considering that we need to move to a low-carbon economy, that we had an internally consistent set of policies that mean that we encourage people to drive less, and when they do drive they should drive more efficiently.

At the same time we need to look at what is happening globally in terms of transport. What we are seeing is the rapid electrification of the transport fleet. You only have to see what is happening in countries like China, where they are rolling out something like 10 million charging stations for electric vehicles and massive investment, even when there are popular driving and car shows saying that this is the end of motoring as we know it. There is such a revolution going on in cars and a whole range of different kinds of engines in cars, but essentially it is all about fuel efficiency.

If we go to the notion that we want people to drive less and have more public transport, better designed cities and so on, and that people should drive more efficiently, one way to ensure that is to make sure we have mandatory vehicle fuel efficiency standards that are futuristic, not backward as those announced by the government during the recent election campaign. Not only do we need high mandatory vehicle fuel efficiency standards; we also need to make sure we have a fuel excise system that genuinely reflects the energy content of the fuel. Whilst we now have essentially three broad categories of fuel excise, we think we need to have a proper review of fuel excise and we should charge for the level of energy content in the fuel, phased in over time, so that people know when they are buying a vehicle now that in three or four years hence there will be an excise regime which will reflect absolutely the energy content of the fuel. If you want to buy a car that is powered by a fuel with a high energy content, you will know the running costs of that car are going to be considerably more than if you bought an electric vehicle, a fully electric plug-in, which you power from your own sources, if it is renewable. Then you will have a situation where you end up with no fuel excise in the long run. That is why I have talked endlessly about shifting to this kind of system. At the same time you would need to phase in a road user charge, because with electrification of the transport fleet and renewable energy there will come a point when people are not paying fuel excise but using the road system. You will have to have a system which reflects that. You are going to have to have a system which reflects that. This is particularly in the context of bringing in carbon pricing.

We need to have an understanding of how carbon pricing relates to fuel excise and how fuel excise is about shifting the effort onto less emissions-intensive fuels. Or are people intending to run two regimes: a carbon pricing regime on the one hand and a fuel excise on the other? It makes no sense. Over time, we need to get rid of the fuel excise as it currently is, shift it to a fuel excise system based on the energy intensity of the fuel and at the same time phase in road user charges that reflect the transition to fully electric vehicles, which is where the world is going.

I think that is where we need a lot more consistency and thought. In terms of the Australian car industry, it is complete madness to keep on subsidising a car industry which is not making top-of-the-range vehicles in fuel efficiency. Otherwise, you end up with an export market for the old six-cylinder or eight-cylinder vehicles that go to the Saudi Arabian market et cetera. We want to do, in fact, as China did: set the highest mandatory vehicle fuel efficiency standards, create the technology to meet them and then build themselves a competitive position. In reality, if you want to keep building cars that have poor standards you are going to end up with no market and you will be uncompetitive and totally dependent on being subsidised—on having a market with government car fleets and so on. That is not the way to build long-term job security or competitiveness in a car-manufacturing market.

To get to the point of the legislation: I think everybody recognises that liquefied petroleum gas is a fossil fuel. There seems to be some sort of perception that it is vastly superior to petrol and diesel, and that on that basis it should continue to be given a free ride with respect to taxation. In fact, gas is not substantially more efficient than petrol and diesel. It is only about 13 per cent more efficient. That is the mythology around LPG. It is certainly more efficient, but not so significantly that you would say that it ought not to fit into an excise regime. If you had a regime such as that that I am proposing then it would find its natural place in the excise and you would charge with the highest levels of excise for the largest energy content right down to the lowest fuel excise for that with the lowest energy content.

We need to grapple with the reality that we are in a climate change emergency. I am fully aware that there are many people in this chamber who do not believe that. But we do need to move as rapidly as we can to a zero-emission energy sector, and that includes transport. It means we need to switch to those ultraefficient vehicles, including the plug-in hybrids like the Chevrolet Volt or the Audi A1 e-tron—even over conventional engine vehicles like the Fiat 500 Twin Air—over the next few years. If gas powered vehicles can compete with this new technology, well and good, but we think that subsidising LPG and other gaseous fuels in a way that reduces the competitiveness of this new technology is not exactly a very good thing to do. Fundamentally, we have the view that there should be a level playing field and that the LPG industry, in particular, ought to fit in on that line on the level of emissions, as I said.

I have had a lot of representations from the LPG industry in Tasmania, I have to say. They are very concerned that they will be particularly adversely impacted by this bill because of the additional cost of transporting LPG to Tasmania. I have raised these concerns with the minister, and I just reiterate a bit further that Tasmania does rely on LPG auto gas with domestic, commercial and industrial customers. The federal government has yet to bring out its energy White Paper. It has no alternative fuels policy in place generally, and we know that Tasmanians suffer because of the freight impost. The taxi industry in Tasmania is arguing that it will suffer more so than the rest because of that. Of course, the taxi industry across Australia is arguing that there will be a greater impost and higher fares.

The cost of shipping to Tasmania is approximately 12.5 cents per litre. The question here becomes: will the adverse impact that the industry anticipates actually put it out of business? It is a question of critical mass for Tasmania, and it is true that it has taken the industry a long time to get a number of outlets around the state so that it is actually competitive to use this in Tasmania. Up until a while ago there were areas of Tasmania where you just could not get LPG. It was difficult for people with hire cars and all the rest of it. Now that has changed; there is a network throughout Tasmania. But the issue here is: if the price goes up, and with the additional costs of the transport of fuel, the freight, are they going to have a significant adverse impact?

As I indicated, I have raised that with the minister. The government believes that these concerns are unfounded, but nevertheless what the minister has undertaken to me is that they will monitor the industry in Tasmania closely and if a problem arises then steps will be taken to rectify the situation. I do not know what those steps might be, but they may well be that the government would have to look at the additional freight arrangements into Tasmania. I just want to put on the record that I am aware of the effort that has gone into Tasmania to build the network in recent times. I will be coming back to the government on this issue if, indeed, the combined freight and extra costs have the adverse impacts that people are saying they may at this point.

As to the taxi industry: I know that I have seen quite a few of the articles around Australia about that. I am yet to be convinced that there will be a significant increase in taxi fares as a result of this. I am pleased to see that wherever I go now the taxi fleets are starting to employ a lot more hybrid vehicles and recognising the value of getting highly efficient cars into the taxi fleet. That is one of the advantages, of course, of having more hybrids in Australia: they are getting into the second-hand and taxi markets.

We have also received representations from manufacturers and LPG system installers, and we have listened to their concerns. But we also note that these changes to—

Sitting suspended from 18:30 to 19:30

Senator MILNE: Before the dinner break I was pointing out that the Greens support this legislation, recognising that the LPG, LNG and CNG industries are right to be concerned that we do not have a systematic fuel excise system in Australia that recognises the energy content of fuel and charges in an appropriate and systematic manner. That is something I will be working for in this period of government. I have been campaigning for that, together with higher vehicle fuel efficiency standards, for a long time and will continue to do so.

The bills also deal with biofuels, and this is a particularly complex and vexed issue. When biofuels were first talked about there was huge excitement about the possibility of replacing the oil based industry with a biofuel industry to drive and meet the transport task. It caused massive distortion in the market, and when the Europeans brought in a law that required 10 per cent of all fuels to come from biofuel it created a disaster around the world. The European insistence on this 10 per cent figure resulted in massive conversion of tropical forests, particularly in Indonesia. But we are also seeing massive conversion of tropical forests around the world as a result of this.

We have also seen massive displacement of food production by biofuel production, with a significant impact on food prices, which in turn has impacted on the poor around the world. You have only to look at what happened in Brazil, with a massive changeover to biofuels, and in the United States, with a big push for energy security. They have a real concern about being so dependent on foreign oil and so they have moved massively to biofuels, which have displaced food production. All this has combined to drive food inflation and appalling problems of food scarcity.

We are facing a climate crisis, a water crisis, a fuel crisis and a fibre crisis all at once. Agricultural land is now subject to competition between those who want the land to grow biofuels, those who want it to grow food and those who want it to grow fibre crops. As we move away from petrochemicals, because we have reached peak oil, there is a recognition that you can grow for biodiesel and you can use agricultural waste for ethanol and the like, which is happening in some places, but the real problem we have is the question of sustainability. I have argued endlessly that, where you have a conflict for agricultural land, you will get perverse outcomes if you put incentives in the system for one use of agricultural land versus the rest.

That is exactly what has occurred with biofuels, which is why the Greens have taken a policy position that we should be supporting only second- and third-generation biofuels and the use of wastes for biofuels, not growing primary crops for the purpose of biofuels. We are told that ethanol produced in New South Wales is produced using food-grade starch. No doubt there will be others who deny that is the case; nevertheless, that is the information that has come to us.

I have spoken to the minister about this issue of sustainability and the use of biofuels into the future. To the minister's credit he has considered the position that I put to him in pointing out the perverse outcomes. This was particularly highlighted in the recent Productivity Commission report looking at the competitiveness of Australian industry and the impacts of a carbon price. It too points out that there is now real concern around the world about subsidies that drive biofuels to the detriment of food production and about a failure to consider, with ethanol and biodiesel production, that you need a full life-cycle analysis of the real carbon cost of growing these fuels. You cannot just test the final product; you have to look at everything from the growing of the crop, through the harvesting and transport, to the processing and so on. With biofuels you need a full life-cycle analysis to make sure you are getting an accurate reflection of the carbon cycle.

At the G20 leaders' summit in November 2010 they asked the International Monetary Fund, the OECD, the World Bank, the WTO and other international organisations to develop options for G20 consideration on how better to mitigate and manage the risks associated with the price volatility of food and other agricultural commodities, which is largely the result of the disproportionate influence in the market of biofuels and the impact on global food security.

To the minister's credit he has taken on board what I raised with him and has indicated that Australia will be moving to some kind of certification. I note that it is likely to be a voluntary or self-managed regulatory approach. I doubt that works on most occasions; nevertheless, we are recogĀ­nising that you need to have sustainability criteria, that you need accreditation and that dealing with biofuels in the absence of other issues around food security gives you perverse outcomes. This is particularly so with the carbon farming initiative as well. That is another reason why I am grateful to the minister for recognising we actually have to move on the sustainability issues of biofuels. I put on the record that I am pleased that we are going to move to some system of accreditation in this regard and start getting the issue of sustainability onto the agenda.

Many years ago when I did the Senate inquiry into alternative fuels to get us off petrochemical fertilisers, there were young people working on all kinds of quite exciting technologies. There are risks and opportunities associated with biofuels, especially second and third generation. I hope that, as we move to a more logical fuel excise system that actually charges for the embodied energy in that fuel, we will start to get some incentives in place to see some of this brilliant innovation by young people come to market.