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Wednesday, 10 May 2000
Page: 16210

Mrs DE-ANNE KELLY (5:30 PM) —At the 1998 election, the government undertook, as part of its comprehensive tax reform package, to reduce excise on petrol and diesel at the time of the commencement of the GST. This legislation gives effect to that very significant undertaking. However, it concerns me greatly that there are some who, not living in rural and regional areas, do not appreciate the absolutely fundamental and critical importance of an efficient and cost effective transport industry. Transport networks are the arteries of rural and regional Australia. They take our exports out and they carry our goods in. It is not understood by some that the transport of goods over a considerable distance adds very significantly to the end cost, be that to the customers of our exports or to small communities which require all of their goods and products to be brought in by transport. Sometimes this misunderstanding is simple ignorance. At other times, though, it is a wilful and deliberate attempt to deny rural and regional Australians the huge benefits that cost effective and efficient transport bring.

It is a matter of very deep regret that the benefits that this legislation will bring to regional and rural Australians have been resisted and opposed by a small but vocal minority. This extremist minority, which parades as a responsible environment lobby, believes not only that the government's very positive initiatives to cut the cost of transport for rural and regional Australians should be be abandoned but that the price of fuel should be increased.

I make reference to a speech made to the Senate by Australian Democrats Senator Lyn Allison on 29 March 1999. I use this speech as an example at random because it does demonstrate this rather unusual attitude. Senator Allison spoke about the alleged impact of the new tax package on the environment and the arts. She bemoaned the tax package initiatives which promised so much for those in rural and regional Australia in terms of fuel cost reduction. But the most interesting statement comes from the view that a reduction in tax on fuel will lead to an increased use of fuel. Senator Allison in her speech flirted with that absurd notion and quoted alleged experts who said that Australia was `proceeding along a path which would seriously worsen our air pollution problems.' Are we expected to believe that primary producers, small business operators and other battlers in regional and rural Australia will be so excited over the positive outcomes of this legislation that they will go for long, pointless drives in their harvesters, their utes and their home vehicles, just to celebrate? As I said in my opening remarks, this is a ridiculous and absurd notion and it comes from a group who would want to deny rural and regional Australians equity with those who live in metropolitan areas.

I would like now to talk about international fuel prices and explain that fuel prices largely are not the province of the government. No government can legislate to protect consumers against price rises outside of its own control—a point that was well made by the Deputy Prime Minister and Minister for Transport and Regional Services, the Hon. John Anderson, and the Assistant Treasurer, the Hon. Rod Kemp, in their statement on 12 April last. Mr Anderson said:

I know that the recent rises in fuel prices have been driving transport costs up and I recognise that this must flow through to consumers. However, the New Tax system and the Diesel and Alternative Fuels Grants Scheme will push transport costs in the opposite direction and these benefits will also flow through to consumers and exporters.

Under the government's scheme, there will be a $1.9 billion reduction in petrol and diesel excise, plus a $500 million grants benefit distributed through rural petrol stations in regional and rural Australia. The new on-road Diesel and Alternative Fuel Grants Scheme, combined with the other changes in the tax package, will cut the cost of fuel used in many transport vehicles by 24c a litre. The existing off-road diesel fuel rebate scheme is to be extended, and with the new tax system changes will take about 44c a litre off the cost of rail and marine transport. For a marine tourist operator in my electorate who is finding it pretty tough in the tourist industry at this stage, that is going to be his profit for the year. He runs a game fishing vessel, and it is going to be a very significant contribution to his business and to many others. This is a tremendous boost for the tourism industry at a time when, frankly, it is fairly lean for tourism.

These reductions in the tax package will mean that business, which receives a GST credit for fuel, will enjoy a fall of about 10 per cent in the cost of petrol and diesel. This is a tremendously significant concession and will give a major boost to regional and rural Australia. It will also flow through to many hard-pressed communities, such as those battling in the sugar industry and those in the tourism industry in the north. The $500 million scheme over four years to provide relief for consumers will operate as a tiered grants system and it will help address the divergence in fuel prices between the cities and our rural and regional areas.

As I have said, Mr Deputy Speaker, I often get inquiries—as no doubt you and other members do—from consumers asking why petrol prices have risen in the last few months. I would like to take this opportunity to clarify the background to some of those price rises. In March 1999, the OPEC group of nine oil producing nations imposed a considerable cut in their production. OPEC produces about 26 million barrels or 35 per cent of the world's supply, while key non-OPEC producers such as Mexico and Norway tend to follow their example when it comes to setting prices. OPEC imposed the March 1999 cut because of what it perceived as lagging prices at that time. In March this year, OPEC reviewed that decision and decided to restore production to pre-March 1999 levels, which translated into a production lift of 6.3 per cent or 1.45 million barrels a day. OPEC, however, has announced that it will review that decision in June.

Those of us in rural and regional Australia would know that, just prior to this decision in March, oil prices had reached $US34.37 a barrel compared with a low of $US10 a barrel after the dramatic 1998 oil price slump. We have seen oil more than triple in price in the last two years. Naturally, anything that triples in price in such a dramatically short time provokes community anger and resentment. There is a misconception in some areas that this price rise has somehow been engineered by the government. Of course, nothing could be further from the truth. The government, in fact, is using all of its resources, with regard to excise relief, to give relief to rural and regional areas and to ensure that consumers in the cities also have a much fairer regime for fuel pricing.

I would now like to turn to the opposition. On the eve of these massive tax cuts, which we welcome in rural and regional Australia, let us remember that the Labor Party during their 13 years in office increased the excise on fuel by a staggering 28c a litre, with not one concession for rural and regional Australia. In fact, let me quote the shadow Treasurer, Mr Crean, speaking recently on ABC radio:

...basically our position has always been that there should be this mix between indirect taxes and direct taxes. We always had fuel excise in that mix. We were not proposing to make any changes to the fuel excise regime.

Thus the opposition has clearly stated that it does not believe that rural and regional Australia should benefit by so much as 1c a litre price relief for their fuel. It is an absolutely heartless policy.

Now that the government has brought forward the Fuel Sales Grants Bill 2000, which is going to be such a great benefit to consumers, let us have a look at the amendment to the motion moved by the shadow minister, the member for Wills, Mr Thomson. The amendment reads:

... whilst not declining to give the Bill a second reading, the House condemns the Government for worsening the city/country fuel price differential by imposing a GST; and imposing a costly, complex, and uncertain new layer of compliance burden on fuel retailers.

What a lot of weasel words from a government that three times increased the excise on rural and regional Australia! `Worsening the city-country fuel price'—what absolute rubbish. This was a Labor Party government that had no mercy on rural and regional Australians when they were in government for 13 years. They voted against the tax reform package. They do not want 24c a litre relief for those in rural and regional Australia. They do not want 44c a litre relief for marine operations.

Mr Slipper —They hate country people.

Mrs DE-ANNE KELLY —That is correct. The parliamentary secretary has it right. Basically, they hate country people. That is the truth of it. They are willing to come in here with weasel words in amendments. But when it actually came to doing something during those 13 years it was always the 14th year and it never happened. This amendment is an absolute disgrace. It is entirely misleading; it tries to hide the fact that they took advantage of rural and regional Australians during their period of office. But it is what you expect, frankly, from people who are totally obsessed with walking both sides of the fence. By comparison, the government is making a meaningful contribution towards life in rural and regional Australia. I am very proud of the budget moved by the Treasurer in the last day.

I would now like to speak very briefly about other forms of fuel and bring the House's attention to ethanol particularly. Ethanol is a great option for us in Australia. It is a high octane hydrocarbon produced from the fermentation of sugar or starch. Fuel ethanol is normally blended at five to 10 per cent concentrations called E5 or E10, but it has been used in concentrations as high as 24 per cent—E24. Ethanol blended with petrol serves as an oxygenator, enhancer and extender. Some of the benefits of ethanol blended fuels are a much cleaner environment, cleaner burning engines, lower net carbon dioxide emissions—which, of course, are now mandated by the Kyoto protocol— reduced dependence on imported crude oil and an expanded, diversified and hence marketing and economic opportunity for regional Australia. It is also a renewable resource. A five per cent blend of ethanol in all the fuel used, including diesel, for road transportation in Queensland alone would consume some 16 per cent of the entire Queensland sugar cane crop. Let me tell you of some of the environmental benefits of ethanol. The Canadian Renewable Fuels Association states that a 10 per cent ethanol blended fuel provides a 30 per cent reduction in carbon monoxide, a six to 10 per cent reduction in carbon dioxide and a net reduction in ozone forming emissions. Ethanol has a volumetric efficiency higher than petrol which boosts the octane rating of ethanol blended fuel—in other words, it burns better. This improves the fuel efficiency of vehicles, particularly those designed to use fuel with higher octane ratings. With the signing of the Kyoto protocol in 1998, a very significant reduction in greenhouse gas emissions has been mandated. It would be very good to see Australia take note of the opportunity that ethanol offers.

Mr Nehl —Fuel from crops.

Mrs DE-ANNE KELLY —Fuel from crops, a cleaner environment, a more efficient operation for volumetric efficiency in cars, and an opportunity to give more and, I guess, broader markets for many of those in rural and regional Australia.

I would also like to speak very briefly about shale oil. My electorate of Dawson has the largest shale oil deposit in Australia—at Condor—with some 9.7 billion barrels of oil in situ. The interesting thing about Australian shale oil is that it has one of the lowest sulfur contents in the world. As you would know, Mr Deputy Speaker, burning a low sulfur fuel means that there is less acid rain. Let me speak about some proposals that would assist jobs in my area. If we were to look at mining the shale oil in Condor, in Proserpine, we could look at a direct employment of 550 people in construction, and 130 in operation. Such a project would cost in the order of $350 million to $400 million.

The indirect employment, once the operation was up and going, would be 470 people. Such a project to use our home-grown oil shale would increase income for individuals as well as taxes and charges for governments—$34 million in construction and $13 million during operations. As I have said, there are very negligible detrimental impacts, but there is the very positive benefit of being able to replace some of the 30 per cent of crude oil that we import into Australia and to provide jobs in a very depressed part of Australia. There are a number of very interesting options that I think the government could pursue in terms of ethanol and also in exploiting our tremendous sources of oil shale.

I would like to speak again about the bill, because this is a very significant bill for those of us who represent rural and regional areas. It is not an opinion of just those in the government and of backbenchers like me; it is a policy that has won wide praise. The National Farmers Federation president, Mr Ian Donges, in a statement dated 12 April, said:

It's worth remembering that the all-up savings for the farm sector from the introduction of the indirect tax package including the GST, and consequent reductions in fuel excise, are estimated to be around $900 million—every year—and of course there will be flow-on benefits to the whole community.

Mr Deputy Speaker, $900 million every year. Mr Donges went on to describe the government's Fuel Sales Grants Scheme as another significant boost for agriculture. He added:

In a welcome move, compliance costs for farmers will be reduced by provisions under the extended scheme.

There are others with praise for the government's initiative. Queensland Farmers Federation president, Mr Richard Armstrong, has publicly thanked the Deputy Prime Minister and Minister for Transport and Regional Services, the Hon. John Anderson, and the Minister for Agriculture, Fisheries and Forestry, the Hon. Warren Truss, for their approach. He said:

Rural industry should be confident that the approaching GST arrangements will be good for this industry, good for exporters, and good for the economy.

The NFF president, Mr Donges, made the very valid point on 11 April, when he said:

The effect of high fuel excise taxes has long been an impediment to rural businesses and rural communities, so the new grants scheme will be a significant commitment by the Government and will help reduce the unfair price differential between metropolitan and rural prices.

Hear, hear to that! And yet we have amendments from the opposition, talking about increasing the differential! Obviously they do not read the papers, and they do not listen to the National Farmers Federation. But, of course, they have never listened to anyone in rural and regional Australia.

The government is to be congratulated for this initiative. It is one of the most important planks of the new tax package and has been done with resolve and determination in the face of great opposition from those on the other side of the House and ill-informed comment from other sources. It is a praiseworthy initiative, and we have waited a long time for it.