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Monday, 26 May 2003
Page: 14966

Mr WILKIE (9:09 PM) —I wish to speak about measures in the 2003-04 budget, put forward by the Treasurer on 13 May. The particular proposal I refer to is the one that brings all current untaxed fuels into the excise and customs duty systems from 1 July 2008. These proposals fly in the face of the government's subsidy program for the conversion of vehicles to LPG announced in May 1999. The Trebeck fuel taxation inquiry, announced by the Prime Minister on 1 March 2001, was asked to examine the existing structure of fuel taxation in Australia, including rebates, subsidies and grants. One of the issues identified in the Trebeck report was budget neutrality for all petroleum products. Essentially, the Trebeck report suggested the removal of the various excise exemptions and subsidies that influence the choice of fuel that people put into their vehicles. Because the measures would have dramatically increased the price of fuel, the recommendations of the report were judged to be too politically difficult to implement. The report was buried by the release of the 2002 budget papers and promptly forgotten.

Liquid petroleum gas accounts for about eight per cent of the fuel used for road transport each year. It would be nice to think that most people who buy LPG for their vehicles do so because it is a cleaner fuel and therefore better for the environment. In fact, it is probably more likely that they choose this fuel because it is approximately 38c a litre cheaper than petrol or diesel. Perth based Westfarmers, a distributor of LPG autogas through its Kleenheat subsidiary, and Unigas joint venture in eastern Australia said that the proposed LPG excise changes would reduce the incentive to use autogas and would be unfortunate for the environment. This proposal to tax LPG will have implications for the LPG retail fuel industry, LPG conversion businesses and the taxi industry. The move will force an increase in taxi fares, with almost all of Australia's taxi fleet currently operating on LPG. The reasoning behind this move is, as the Trebeck report suggested:

To promote efficiency in revenue raising from fuel excise, the fuel taxation system should be designed in a manner which minimises its impact on producer and consumer choices of fuel.

This, of course, is exactly what the Treasurer has moved to do by including LPG and other previously untaxed fuels in the taxation system. This decision to bring LPG into line with other fuels will be a considerable blow to the LPG industry by making LPG uncompetitive in price compared with ordinary petrol, as I stated previously.

Anyone who uses LPG knows that, at the moment, it is attractive as an alternative fuel only because it is so much cheaper at the pump. However, due to the lower efficiency of LPG in relation to litres consumed to kilometres travelled, if it were a similar price at the pump it would, in real terms, be an unrealistic option compared with unleaded petrol. My vehicle, for example, has duel fuel. I will get over 450 kilometres to a 90-litre tank of unleaded petrol compared with a maximum of 320 kilometres to a 90-litre tank of LPG. Gas from Western Australia's North West Shelf project goes by pipeline directly from Karratha to Perth, where it is processed and the LPG is separated out and trucked to service stations. This is an environmentally better option than either petrol or diesel. It is a resource that is wholly owned by Australia and used by 550,000 drivers of LPG vehicles across the country. This action by the Treasurer will cause the demise of alternative fuels and create the loss of proven benefits such as lower greenhouse gas emissions and improved urban air quality.

This is yet another indirect tax from this highest taxing government in history. In my estimation this will yield approximately $7.05 billion over the next 10 years based on the government's own figures. This, by the way, is only a conservative estimate. The reality, I believe, will be much higher. I say this because the Treasurer has not yet announced the final rate of excise on fuels but has said that it will be lower than the present rate of 38.143c per litre. However, he has also announced that, from January 2006, excise on petrol will be increased for two years by the amount needed to fund grant payments for producing or importing premium unleaded petrol with less than 50 parts per million of sulfur. The initial estimate for this increase in excise is that it will be around 0.06c per litre for petrol and 0.07c per litre for diesel. Interestingly enough, the Treasurer failed to announce this new tax on budget night and buried it in the budget papers. I reiterate that this is the highest taxing government in history. (Time expired)