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Thursday, 20 May 1993
Page: 916


Senator COLLINS (Minister for Transport and Communications) (11.19 a.m.) —I move:

  That this Bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

  Leave granted.

  The speech read as follows

This Bill proposes amendments to the Excise Tariff Act 1921 to decrease the excise duty payable on gasoline for use in aircraft, or avgas, and to increase the excise duty payable on tobacco and tobacco products.

Avgas

The proposed decreases in avgas occur in two stages. The first is effective from 7 May 1992 and the second decrease is effective from 19 August 1992. The decreases result from two sources. The first is from the Government's policy of transferring Commonwealth owned aerodromes to full local ownership and encouraging aerodrome owners who are receiving funding under the aerodrome local ownership plan to accept full financial responsibility for their aerodromes. The second is from a reduction in Civil Aviation Authority costs.

The resulting reduction in funding is then passed on to the aviation industry in the form of decreases in the rate of excise duty to be paid on the avgas. This Bill proposes a total decrease of 2.1 cents per litre. A decrease of two cents per litre is attributable to the aerodrome cost recovery program. The other 0.1 cents per litre is attributable to the CAA achieving cost savings in the provision of its rescue and firefighting services. These cost savings result in a corresponding reduction to the proportion of excise duty used to fund that service.

Tobacco

The proposed increase in excise duty on tobacco products amounts to $5.00 per kilogram. The Government is concerned about the social costs of smoking. However, it realises a balance must be struck with this concern and placing an unfair burden on tobacco users which may also have an undesirable inflationary impact. The Government considers that the proposed increase is a responsible measure which adequately satisfies this balance.

Both the decrease in the duty payable on avgas and the increase in duty payable on tobacco took effect last year pursuant to Excise Tariff Proposals Nos. 1 and 2 of 1992. These proposals lapsed upon the dissolution of the House on 8 February this year and then their effect was reinstated by Excise Tariff Proposal No. 1 of 1993. Notwithstanding their lapsing, duty collections continued at the rates specified in the proposals and therefore this Bill proposes to validate those collections as well as incorporating Excise Tariff Proposal No. 1 of 1993 into the Excise Tariff Act 1921.

Financial Impact Statement

Gasoline for use in aircraft

The reduction of 2 cents per litre in respect of the Department of Transport and Communication's aerodrome cost recovery program will result in a reduction of revenue in the order of $1.8 million in 1992-93 and $2 million in 1993-94.

The decrease of 0.1 cents per litre requested by the Civil Aviation Authority is balanced by the reductions in moneys appropriated to it, so therefore there will be no net financial impact.

Tobacco Products

The increase in the excise duty on tobacco products, together with the corresponding increase in the Customs duty, was estimated as part of the 1992 Budget to result in an increase of $80 million for 1992-93 and $100 million for 1993-94.

I commend the Bill to the Senate and present its explanatory memorandum.