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Wednesday, 25 September 2002
Page: 4854

Senator HUTCHINS (2:33 PM) —My question is directed to Senator Coonan, the Minister for Revenue and Assistant Treasurer. Does the minister agree with the statement by Lachlan McIntosh of the Australian Automobile Association that the rural fuel tax subsidy `has been a failure'? What action does the minister propose to take in response to Mr McIntosh's criticism that `it is a pity that the government won't seriously look at fuel tax reform'?

Honourable senators interjecting

The PRESIDENT —Could honourable senators come to order.

Senator Conroy —His name's Kemp.

The PRESIDENT —Senator Conroy, I was on my feet and you interjected once again. I call Senator Coonan.

Senator COONAN (Minister for Revenue and Assistant Treasurer) —I thank Senator Hutchins for the question. No, I do not agree with the statement. In fact, as those opposite would well know, as indeed those on this side of the chamber know, the government has made a commitment to introduce an energy grants credit scheme by 1 July next year. We intend to meet that commitment, which involves a serious rethink of how to approach this issue of energy grants. That scheme builds on the clean fuel and environmental initiatives contained in the Measures for a Better Environment package that was announced in 1999. It provides a context for considering a number of issues about alternative fuels.

The Measures for a Better Environment package, which I assume is supported by those on the other side of the chamber, and certainly by the Democrats, contains a range of fuel and environmental initiatives, including the Alternative Fuels Conversion Program and the phased introduction of Euro vehicle emission standards for new diesel and petrol vehicles. I am sure Mr McIntosh would agree with that. It also includes the introduction of an excise differential for ultralow sulfur diesel from 1 January 2003 and the mandating of it from 2006.

We do want to seriously consider alternative fuels. The issue of ethanol was predicated on the basis that we would continue to develop a view about other fuels and more environmentally friendly ways of looking at the matter. There are some problems with issues such as LPG, which cannot be mixed with petrol. That is a difficult issue but obviously we are keen to look at all reasonable alternatives in order to develop biofuels and to find a way forward so that this country can have world's best practice in relation to fuel and fuel policy.

Senator HUTCHINS —Mr President, I ask a supplementary question. Minister, you ignored my first question; you might try to answer this one. Can the minister indicate the likely effect on Commonwealth revenue of the current rising world price of oil, and how much of this additional Commonwealth tax take will come from non-metropolitan areas now that the rural fuel tax subsidy has been widely recognised as a complete failure?

Senator COONAN (Minister for Revenue and Assistant Treasurer) —I thank Senator Hutchins for the supplementary question. I do not accept, and will continue not to accept, that the policy has been a failure. The whole issue in relation to the impact on oil prices is, once again, very much one of speculation—as indeed Senator Hutchins would know. It is very difficult, because of the current volatile situation, to in any way predict how it will go. (Time expired)