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Friday, 10 May 1985
Page: 2053

Mr BRUMBY(10.34) —It is a pleasure to rise in support of the three Bills before the House in this cognate debate, the Customs and Excise Legislation Amendment Bill, the Excise Tariff Amendment Bill, and the Customs Tariff Amendment Bill. I commence my comments with the Customs and Excise Legislation Amendment Bill. I say by way of introduction that it is a general Bill, but, in particular, it will provide in the area of diesel fuel for the automatic indexation of the rate of rebate which is payable to those people who have paid duty on diesel fuel which is being used for certain off-road purposes. One of the other parts of that legislation is to amend the Excise Act and various other Acts to increase the level of penalties that currently apply and to update the prosecutions. The honourable member for Bradfield (Mr Connolly) referred to those two aspects.

In looking at this legislation, it is particularly important, from my point of view in the electorate of Bendigo, to look at the aspect regarding the indexation of the diesel fuel rebate. That was a commitment given by this Government, primarily to the farming sector, late last year. The official announcement was made in the Budget Speech of that year. The purpose of the amendment that we are making through this legislation is to permit that automatic indexation of the rate of rebate which is payable, as I said previously, to those who have already paid duty on diesel fuel but which fuel is purchased for what we call off-road use-in agriculture, mining, fishing, forestry, household, hospitals, and nursing and aged persons homes. As I have indicated, the decision to do that was announced by the Treasurer (Mr Keating) last year in the Budget Speech. The Government has decided that the rate of rebate will be adjusted at six-monthly intervals, and that commenced from February of this year, and that the Minister will, as soon as practicable after the passing of this legislation, publish that information in the Commonwealth of Australia Gazette, advertising the new rate of rebate.

The decision entailed in this legislation has been welcomed, as I have said, by primary producers and by all off-road users of diesel. In principle, it follows discussions held last year between the National Farmers' Federation, the Prime Minister (Mr Hawke) and the Treasurer.

The second aspect of the Bill that I mention is the increase in penalties. There has been some debate about that. The question of why the increase in the level of penalties under this legislation is so severe needs to be addressed. I think there are two good reasons for that. First, the Government desires to ensure that the level of penalties in these pieces of legislation is sufficient to act as an effective deterrent to potential offenders. Secondly, the penalties are being increased because of the fact that there has been little, if any, increase in the level of penalties in these Acts since their respective enactment, which in some cases was during the first decade of Federation, so we are going back 80 years. I should like to give an example, Madam Acting Speaker, which I am sure you will appreciate. The proposed increase in the penalty for an offence against section 30 of the Excise Act is from $40 to $5,000. Some would say that that is an horrific increase to be putting on the commercial sector. But the matter must be put in context. The significant factor is to remember that the penalty has not been increased since 1901. There has been no increase over the last 84 years. It was set at #20 in 1901. When decimal currency was introduced, that converted to $40. There has been no increase since that time. Therefore, it is appropriate that it reflects a proper level of penalty.

Mr Barry Jones —Like the increase in a member's salary.

Mr BRUMBY —The Minister for Science may be able to comment later on that aspect and that comparison in his summing up. It is not something on which I should like to dwell for too long. The fact is that the relationship is there. There has been very little increase in the penalties to which I am referring, and I think the Minister makes a relevant point. With any penalty, it is important that it be set at a level so that it is actually a deterrent. It does not matter whether it relates to Customs legislation, tax avoidance or any other aspect of legal sanctioning; the deterrent must be at a reasonable level if it is to be effective. That is why the increase is of the order stated in the legislation.

As the Opposition has noted, some concern has been expressed by the Law Council of Australia and a number of trade consultants about aspects of the legislation. One of those has been mentioned. I was pleased that the Minister indicated that there would be amendments to certain sections of this legislation to reflect some of those concerns, and I look forward to hearing the Minister's remarks in his summing up.

I do not wish to say a great deal about the Customs Tariff Amendment Bill, except that a number of the amendments contained in the Bill arise from government decisions on Industries Assistance Commission reports such as those on certain consumer electronic equipment and components, separate articles and so on. That is really all I have to say on that Bill.

I wish to spend some time talking to the Excise Tariff Amendment Bill 1985 because it is a most important Bill. Basically, it proposes two things. Firstly, as part of a package of incentives for the oil industry, this legislation reflects the announcement last year by the then Minister for Resources and Energy of the introduction of special excise arrangements for crude oilfields discovered on or before 17 September 1975 but which had not been developed before 23 October 1984. Under this legislation those fields are now eligible for concessional excise treatment under what is called an intermediate excise scale. The second aspect of this legislation seeks to adjust pricing mechanisms for liquefied petroleum gas. I will come to that in a moment.

Clauses 3 to 8 cover the intermediate excise scale and clauses 9 to 11 cover LPG. I will comment briefly on those clauses. As I have said, the basic intention of clauses 3 to 8 is to introduce an intermediate excise scale to apply to old oil, that is, oil discovered before September 1975 but which was not in production by October 1984. That intermediate excise scale will apply to oil produced on-shore and from off-shore areas specifically excluded from the greenfields resource rent tax, that is, the Bass Strait area and the North West Shelf. The excise rates that apply to new oil and old oil from fields which have been developed-this is an important point-as at 23 October last year remain unchanged. We are really looking at this new intermediate scale.

The new scale imposes excise at rates below that of old oil but less concessional than those applying to new oil. Under the intermediate excise scale, oil production in the range of 300 to 400 megalitres per annum attracts excise at the rate of 15 per cent of the Bass Strait import parity price, which compares with rates of about 40 per cent on old oil and zero on new oil. At the top of the intermediate scale the rate will be 55 per cent, compared with 87 per cent on old oil and 35 per cent on new oil.

The selection of these rates reflects the Government's view of the need not to discourage the development of marginal fields. Following the announcement of this decision, the Bass Strait producers, Esso Australia Ltd and the Broken Hill Proprietary Co. Ltd announced development plans which involve an investment of about $1.8 billion on projects that would attract either the intermediate excise or the revised allowance. It is my view that those projects certainly would not have proceeded had the existing excise arrangements continued to apply. As a result of this change, we are seeing the proof of additional development brought about by a more reasonable rate of return and the benefits that that additional development brings in terms of increased self-sufficiency in oil production and greater investment and jobs for Australian people. It is an important decision. Another point I wish to make is that excise from oil produced under the intermediate scale is not expected to be paid until 1988-98. In a financial sense, it is the Government's view that collections would peak around 1991-92.

I mentioned that the other aspect of this legislation was the fairly simple procedural change with relation to the pricing of LPG. The legislation provides for changes in excise on nationally occurring LPG in accordance with the LPG pricing and excise policy originally announced in April 1980, and subsequently amended. The net impact is to reduce revenue from that change by about $1m a year.

I conclude by making a couple of brief points on the very important question of the excise on oil. The question is often asked: Why is the Government introducing another tax on oil production? The answer is that the Government believes that the introduction of an intermediate excise scale on old oil production will encourage the development of a number of old oilfields which have not been developed to date, at least partly-and perhaps more than partly-because of the inadequate returns under the old oil excise scale. The excise will provide a higher rate of return and will bring back into production some of the old oilfields, if we can call them that. There is evidence that that has already occurred. I know that the Government is keen to have the Bills proceed as quickly as possible so I will conclude my remarks and indicate my support for the Bills.