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Tuesday, 27 March 2001
Page: 25772

Mr CADMAN (9:46 PM) —Tonight we are debating the Excise Tariff Amendment Bill (No. 1) 2001 and the Customs Tariff Amendment Bill (No. 2) 2001. These bills really set about putting in place the government's policy changes on excise relating to the introduction of the goods and services tax. It is very simple really, despite the confusion of the opposition. The government reduced fuel excise to the value of a 10 per cent goods and services tax. The total government tax take from a litre of fuel remained the same and the government collected two elements of taxation valued at exactly the same amount: one part excise and one part goods and services tax. The tax on fuel did not increase. In fact, after the introduction of the goods and services tax on 1 July, we found that the price of petrol fell. The ACCC in its inquiry examining fuel prices determined that the price of petrol for consumers actually fell. That is what the government predicted would happen. This House is debating tonight the reduction in petrol and diesel excise of around 6.7c a litre which came into effect on 1 July 2000. I do not know why we are debating it so much after the event. I believe one of the difficulties this House confronts is the pressure and activity of a reforming government in making changes—improving the environment and improving the economy—and tonight we are putting into law a situation which has applied since 1 July 2000.

The government has fully met its commitment that petrol pump prices need not rise with the introduction of the goods and services tax. There is a cut of 6.7c per litre in excise and the petroleum industry will benefit from substantial cost reductions as a result of the introduction of the tax changes. The estimated benefit to the petroleum and refining industries is approximately 1.5c per litre, and hence the reduction in excise of the balance of the 10 per cent, which is approximately 6.7c per litre. In total, motorists received compensation of around 8.2c per litre. The ACCC in its fuel price monitoring report for the September 2000 quarter stated:

The Commission's analysis suggests that actual fuel prices have not increased as much as expected on the basis of movements in underlying factors, including historical wholesale and retail margins. This is not inconsistent with the suggestion that cost savings from the NTS (New Tax System) changes have been passed on.

The Labor Party are saying tonight that they do not believe the ACCC made an honest assessment of fuel prices at that time. They are saying, `We do not believe the ACCC.' Where do the Labor Party stand on the consumer protection mechanisms that are law—the ones that they have agreed to since the introduction of the Trade Practices Act, the ones that they have endorsed step by step in every change to the Trade Practices Act? There has been a bipartisan approach to the way in which consumers have been protected in Australia through the changes in trade practices. Yet the Labor Party are saying that the Australian Competition and Consumer Commission was not honest when it monitored for changes in fuel prices after the introduction of the goods and services tax and said that there has been no impact of the goods and services tax on fuel prices. But subsequent to that time, after 1 July, there were changes. Of course there were changes, but they were not changes brought about by the goods and services tax. They were changes brought about by the change in the value of the Australian dollar compared with the United States dollar. All international fuel prices are based in American dollars. There is a disadvantage, but not overall, in a falling Australian dollar because it helped increase fuel prices. There was also the decision by the OPEC nations that they wanted to maximise their profits and returns on oil during the European winter, so they started jacking up prices.

None of this has anything to do with the introduction of the goods and services tax. By comparison, I would like to draw to the attention of the House the changes that were made by the Australian Labor Party. This is not seen by everybody to be a justifiable argument but I think it is a fact that needs to be recognised by the Australian community about the tax rip-off that was introduced by the Australian Labor Party over their 13 years in office. The Labor Party increased excise on fuel—petrol and diesel—from 6.155c per litre in 1983, the year they were elected, to 34.1c in March 1996, an increase of 28c or over 450 per cent in that period of time. That is a rip-off.

The hypocrisy of the Labor Party in saying that there has been a change in petrol prices because of the GST! That is just so much bunkum and rubbish. It cannot be demonstrated. If they keep running that argument, they have to say that they will dump the ACCC, because they are saying that the ACCC was dishonest when it assessed prices after the introduction of the GST; or they have to say, `We're going back to the old days and we're going to jack up prices by 450 per cent.' They have to be prepared to use petrol prices as a taxing mechanism or they have to make a decision about the ACCC. One way or the other they are caught in this argument, because they are trying to come to this with clean hands and they cannot. Kim Beazley, who was the minister for finance at the time, called the 5c jump that they introduced in the 1993 budget a `small adjustment'. Five cents a litre in one hit from the Australian Labor Party—can you imagine that?

This bill includes not only the adjustment, the reduction, of excise by 6.7c per litre but also the reduction of 1.5c per litre in petrol and diesel excise that came into effect on 2 March 2001. The government took that decision and brought in a package. The government said, `We've heard what the community are saying. We want to make sure that we can never be blamed again for effecting increases in fuel prices.' The way we are going to do that is by wiping out the increase of 1.5c indexation that was introduced in January and by cutting out indexation altogether. Indexation was another Labor Party initiative. The Australian Labor Party are brilliant taxers: they love taxing people. We are also going to put the ACCC on to the oil companies to monitor the wide range of price fluctuations—as much as 10 per cent on the same day on the same city road. So the package that the government has put together removes the automatic increase in fuel prices related to indexation, reduces excise by an additional 1.5c, and puts the ACCC on to the oil companies to inquire into the taxing system and to monitor the variations in prices.

The fact of the matter is that, if the Senate does not pass these bills, consumers will be denied the benefit of the petrol and diesel excise reductions and that will lead to a significant increase in prices at the petrol pump. I would like to indicate to the House that unleaded petrol and diesel excise rates on 30 June 2000 were 44.1c per litre; on 1 July, one day later, they were 37.4c per litre; on 1 August 2000, 38.1c per litre; and on 2 March, 38.1c per litre. So the government has been consistent in its approach. It is not grabbing more tax through excise, and it is applying a GST not on top of an excise but as a substitute part of taxation.

The government has acted to take into account the community's concern about the increasing price of petrol and diesel fuel and has given grants and rebates to long distance road transport and to people living in remote areas, together with a one or two per cent subsidy, depending on the distance of more remote areas from a city, to assist with the cost differentiation. The government has also pointed out to the state governments that, if they are serious about their concerns on fuel excise, they also ought to be doing something about them. The difference between the states is quite remarkable. The states levied taxes on fuel, including diesel, but that was knocked over by the High Court in 1997. They were taxing fuel at 8c per litre. The High Court said that they could not do that and that the business franchise fees were unconstitutional, so every state in Australia lost the 8c per litre that they were charging on fuel; that had to be abolished. By agreement the federal government effectively took over these taxes and said to the states, `We will put on the 8c a litre as part of our excise charges and return all of the money gained by that process to the states.' The states agreed.

It is very interesting to look at the ways in which they dealt with the revenue gained from the 8c a litre excise applied for them by the federal government. For example, in Queensland, where there traditionally has been no fuel tax, the Queensland government took all of the 8c per litre that it got back from the Commonwealth and returned it directly to motorists via a subsidy at the pump. That is fairly typical of the Queensland government and the way in which it traditionally has handled taxes of this type. In contrast, the government of New South Wales kept 7.2c per litre of the 8c collected for it by the Commonwealth and returned 0.8c per litre to motorists. You cannot even measure that amount. In proportion to the cost of a tank full of fuel, it is about 50c—if that. If they had returned 8c a litre as the Queensland government did, it would have meant a significant difference in the cost of fuel for motorists in New South Wales. The motorists of New South Wales are concerned, and rightly so, when they see the difference between the cost of fuel in New South Wales, my home state, and the cost of fuel in Queensland, where there is an easily identifiable 8c to 10c a litre difference. That is a matter for the state governments, and they ought to deal with it because they have the money in their pockets, collected for them by the federal government. They ought to return it to the motorists. Victoria kept 6.6c per litre and returned 1.4c per litre. Mr Bracks is pocketing 6.6c per litre of the 8c a litre that he could give back. The New South Wales government is pocketing 7.2c a litre, Western Australia is pocketing 6.2c per litre, South Australia is pocketing 6.3c and the Tasmanian government is pocketing 5.9c per litre. Of course, as far as the GST is concerned, every bit of it, every cent of the GST collected on fuel, goes back to the states and territories of Australia. So the states and territories are the winners in this process.

In this legislation, we have a decision by the federal government to properly and ethically apply the goods and services tax instead of an excise tax to petrol and diesel fuels. I also need to mention a number of other significant changes in the bill. Amendments to the bill relating to aviation kerosene, also known as avtur, give effect to the measure announced in the 2000-01 budget to increase the rate of excise duty of avtur by 0.036c per litre. These regulations came into effect on 13 May 2000 and will provide $900,000 per annum to fund regulatory arrangements within the aviation industry.

I know that there has been interest for some years in the uneven taxing processes on alcoholic beverages. With this legislation, the government has taken the opportunity to tax in absolute equality the alcohol content of all beverages, whether it be wine, beer or mixed drinks. From a health position, that is an impeccable standard. So a three-tiered system has been introduced. It is a reasonable approach and one which has a good health outcome.

I have talked about the petroleum industries, the tax reform package, the way in which the Howard government's plan for a new tax system has been introduced and the ethical manner in which the goods and services tax has been applied as a substitute for the excise collected on petrol and dieseline. Also within this bill is a product stewardship proposal which relates to the oil industry. Also in relation to the fuel tax reductions, there is the announcement made by the government on 2 March 2001 that excise duties were to be reduced by 1.5c per litre. The cost of fuel really does worry all Australians, because we travel long distances and we are dependent on oil and the oil industries for much of our transport and for the movement of goods. The cost of fuel is a dynamic feature of our economy, and every family and every business feels the impact of oil prices.

If the government's original proposal—the proposal that we went to the Australian people with at the last election—had been introduced in full, there would have been considerably more advantages to businesses from the changes in fuel prices and the introduction of the goods and services tax. However, the changes that have been made are very substantial. They mean that prices did not increase for the average motorist. The ACCC verified that within days of the change from the previous tax system to the current tax system. Anybody who says that that is not the case will have to present to me a reason why they should disbelieve the ACCC, because if they disbelieve the ACCC on this issue they will disbelieve it on every issue. The ACCC has been unequivocal in its confirmation of the veracity of the government's contention that the GST was not a cause for any increase in petrol prices or diesel prices. It was in fact other factors: the OPEC countries' decision and changes in the value of the Australian dollar.

Our dependence on oil, petrol and dieseline makes us sensitive to price shifts. The government have heard that concern and have removed any government influence for increasing prices. We have ditched forever the incredibly onerous provision put on the Australian motorist by the Labor Party with the automatic indexation linking inflation with the cost of fuel—a crazy and unreasonable provision which meant that the more expensive things became the more costly the transport component became. (Time expired)