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Carbon Pollution Reduction Scheme (CPRS Fuel Credits) (Consequential Amendments) Bill 2009 [No. 2]



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Parliament of Australia Department of Parliamentary Services

Parliamentary Library Information, analysis and advice for the Parliament BILLS DIGEST

www.aph.gov.au/library

29 October 2009, no. 56, 2009-10, ISSN 1328-8091

It should be noted that the name of this Bill as introduced on 22 October 2009 is actually the Carbon Pollution Reduction Scheme (CPRS Fuel Credits) (Consequential Amendments) Bill 2009 [No. 2]. This Bill is identical to the earlier Bill of the same name which was first introduced in the House of Representatives on 14 May 2009, passed unamended on 4 June 2009, but then negatived by the Senate on 13 August 2009.

The addition of the reference ‘[No. 2]’ has been made by the Department of the House of Representatives Table Office to indicate that the Bill is introduced for a second time.

Carbon Pollution Reduction Scheme (CPRS Fuel Credits) (Consequential Amendments) Bill 2009 [No. 2]

Richard Webb Economics Section

Contents Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Reintroduction of the Carbon Pollution Reduction Scheme Bills and this Digest . . . . . . 2 Fuel and the CPRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Basis of policy commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Committee consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Position of significant interest groups/press commentary . . . . . . . . . . . . . . . . . . . . . . . 4

Financial implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Standing appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Main provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Schedule 1—Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Concluding comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

2 Carbon Pollution Reduction Scheme (CPRS Fuel Credits) (Consequential Amendments) Bill 2009 [No. 2]

Warning:

This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments.

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Carbon Pollution Reduction Scheme (CPRS Fuel Credits) (Consequential Amendments) Bill 2009 [No. 2]

Date introduced: 22 October 2009

House: House of Representatives

Portfolio: Treasury

Commencement: The main operative sections (Schedule 1) commence when section 2-1 of the proposed Carbon Pollution Reduction Scheme (CPRS Fuel Credits) Act 2009 commence.1 All other sections commence on the day of Royal Assent.

Links: The relevant links to the Bill, Explanatory Memorandum and second reading speech can be accessed via BillsNet, which is at

http://www.aph.gov.au/bills/. When Bills have been passed they can be found at ComLaw, which is at http://www.comlaw.gov.au/.

Purpose

To amend the Fuel Tax Act 2006, the Income Tax Assessment Act 1997 and the Taxation Administration Act 1953 consequent to the introduction of the proposed Carbon Pollution Reduction Scheme (CPRS) fuel credits scheme.

Background

Reintroduction of the Carbon Pollution Reduction Scheme Bills and this Digest

The Carbon Pollution Reduction Scheme (CPRS Fuel Credits) (Consequential Amendments) Bill 2009 (the original Bill) was first introduced into Parliament on 14 May 2009 as part of the 11-Bill Carbon Pollution Reduction Scheme (CPRS) package of legislation. Along with the other CPRS Bills, the original Bill was passed by the House of Representatives on 4 June, but negatived in the Senate on 13 August 2009.

The content of the current Bill, the Carbon Pollution Reduction Scheme (CPRS Fuel Credits) (Consequential Amendments) Bill 2009 [No.2], is identical to the original Bill. As

1. This Act will come into force upon the passage of the Carbon Pollution Reduction Scheme (CPRS Fuel Credits) [No. 2], as that Bill has been titled by the House of Representatives Table Office.

Carbon Pollution Reduction Scheme (CPRS Fuel Credits) (Consequential 3 Amendments) Bill 2009 [No. 2]

Warning:

This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments.

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

such, this Digest is unchanged from the Digest produced in June for the original Bill. For commentary on recent developments regarding the proposed CPRS, including the reintroduction of the CPRS Bills, see relevant sections in the Digest on the Carbon Pollution Reduction Scheme Bill [No.2] 2009.

Fuel and the CPRS

The implementation of the CPRS is likely to result in a rise in the price of fuels such as petrol and diesel. To help businesses adjust to the price rises, the government pledged to provide temporary assistance. This will take the form of a reduction in fuel excise, which will offset the expected rise in fuel prices.

Under the Fuel Tax Act 2006, eligible businesses receive ‘fuel tax credits’ which offset, fully or in part, the excise on fuel that they use. These businesses would not, therefore, benefit from the proposed excise reductions. To assist these businesses, the government proposes to establish the ‘CPRS fuel credit’ program. This will provide credits, equal to the excise reductions, to offset the expected rise in fuel prices. These businesses will, therefore, receive both the fuel tax credit and the CPRS fuel credit.

Liquid petroleum gas (LPG), liquid natural gas (LNG) and compressed natural gas (CNG) will incur an emissions unit obligation. These fuels are now not subject to excise so they, too, would not benefit from the excise reductions applying to other fuels such as petrol and diesel. To ensure price relativities are maintained, that is, so that no fuel is advantaged or disadvantaged relative to other fuels by the excise reductions, LPG, LNG and CNG will also be eligible to receive CPRS credits.

For details of the CPRS fuel credits scheme, see the Bills Digest for the Carbon Pollution Reduction Scheme (CPRS Fuel Credits) Bill 2009 (No. 2].

The Carbon Pollution Reduction Scheme (CPRS Fuel Credits) Bill 2009 implements the CPRS fuel credits scheme. The Carbon Pollution Reduction Scheme (CPRS Fuel Credits) (Consequential Amendments) Bill 2009 (the Bill) implements consequential amendments to three Acts—the Fuel Tax Act 2006 (Fuel Tax Act), the Income Tax Assessment Act 1997 (ITAA 1997), and the Taxation Administration Act 1953 (TAA 1953)—needed to ensure that the CPRS fuel credits scheme can go into effect.

Basis of policy commitment

The government announced that it would provide assistance to the agriculture, fishing, and heavy on-road transport industries in its White Paper, Carbon Pollution Reduction Scheme: Australia’s Low Pollution Future.2

2. Department of Climate Change, Carbon Pollution Reduction Scheme: Australia’s Low Pollution Future, White Paper, December 2008, pp. 17-16 and 17-17, viewed 28 October

4 Carbon Pollution Reduction Scheme (CPRS Fuel Credits) (Consequential Amendments) Bill 2009 [No. 2]

Warning:

This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments.

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Committee consideration

The Bill has been referred to the Senate Economics Legislation Committee for inquiry and report by 15 June 2009. Details of the inquiry are at http://www.aph.gov.au/senate/Committee/economics_ctte/cprs_2_09/index.htm

Position of significant interest groups/press commentary

See the Bills Digest for the Carbon Pollution Reduction Scheme Bill 2009.

Financial implications

The Bill itself does not have any direct financial implications. However, in so far as it supports the implementation of the CPRS fuel credits scheme, it indirectly will reduce revenue from excise and increase expenses under the ‘fuel and energy’ functional category.

Standing appropriations

The Bill is not a special appropriation and does not appropriate funds.

Main provisions

The Explanatory Memorandum notes:

The measures in the CPRS Fuel Credits (Consequential Amendments) Bill are mechanical in nature, necessary to update the Fuel Tax Act, the ITAA 1997 and the TAA 1953 for the introduction of the CPRS Fuel Credits Bill and the administrative arrangements announced by the Government.3

Schedule 1—Amendments

Items 1 to 17 amend the Fuel Tax Act.

Item 4 repeals the formula for the ‘net fuel amount’ in subsection 60-5(1) while item 5 substitutes a new formula in subsection 60-5(1) which incorporates both the fuel tax credits and the CPRS credits. The new formula is:

2009, http://www.climatechange.gov.au/en/publications/cprs/white-paper/cprs-whitepaper.aspx

3. Explanatory Memorandum, Carbon Pollution Reduction Scheme (CPRS Fuel Credits)(Consequential Amendments) Bill 2009 [No. 2], p. 26,

Carbon Pollution Reduction Scheme (CPRS Fuel Credits) (Consequential 5 Amendments) Bill 2009 [No. 2]

Warning:

This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments.

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Sum of Sum of total Sum of total

total fuel increasing fuel tax decreasing fuel tax Total tax credits adjustments and fuel tax and total total increasing

CPRS fuel CPRS fuel credit credits adjustments

adjustments and total decreasing CPRS fuel credit adjustments

This amendment is necessary because applicants are entitled to claim both the fuel tax credits and CPRS credits.

Concluding comments

See the Bills Digest for the Carbon Pollution Reduction Scheme (CPRS Fuel Credits) Bill 2009 [No.2].

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