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Tuesday, 7 September 1993
Page: 1128


Senator WATSON (11.18 p.m.) —I wish to take a few minutes of the Senate's time tonight to explain some of the effects on my state of the cost increases arising from the budget, particularly the fuel excise. Of course, Tasmania is an island state and the freight component is particularly significant. Therefore, any increment to the government freight charges has a significant impact on costs and prices in Tasmania.

  In the past few weeks the comment about the budget has really been quite negative. It was a budget that lacked vision, ducked all the hard decisions on spending cuts and tax reform, and it is definitely not about creating too many jobs, or indeed reducing the budget deficit—despite its misleading title in the Taxation (Deficit Reduction) Bill.

  My own state of Tasmania has been severely affected by this budget in many ways. First, I wish this chamber to take note of the increase in the fuel excise tax, both in petrol and diesel fuel, and the impact of the increase in the wholesale sales tax on Tasmanian industry costs.

  Tasmania is an island state with a small market and an economy reliant on exports. At the end of the day, our ultimate success depends very much on the effectiveness and efficiency of our island's and our nation's transport systems. This government has increased the everyday running costs of our transport system by increasing the basic cost of fuel, tyres, spares and rigs, which will all go up as a result of the increase in the sales tax.

  This afternoon my colleague Senator Boswell mentioned that throughout Australia the transport industry will have to cover a 5c per litre diesel excise and a two per cent wholesale sales tax increase. This means that ordinary Tasmanians—in fact, all Australians—will have to pay at least an extra $2 to $3 for the average trolley of groceries going through the check-outs each week. Why will this occur?

  The National Transport Federation has estimated that it will cost an extra five per cent to transport a raw product, such as fruit, vegetables or other grocery-type products, to the manufacturer. Then it will cost a further five per cent to transport the manufactured product from the manufacturer to the wholesaler, and possibly a further five per cent from the wholesaler to the retailer. That is quite a significant increase in terms of the transport component on the everyday items in the grocery basket. It is interesting to note that the government feels that there will be only a 0.5 per cent inflationary effect from this price increase. This may be the effect across the board, but the government seems to have forgotten the effect industry by industry or even state by state—particularly the effect on the more remote states.

  Tasmania already suffers from lower earnings on average than the rest of Australia. It has the highest unemployment rate, as well as some of the highest grocery prices in Australia. This government is now asking the average Tasmanian family to pay another couple of dollars per week just to put food on the table. Tasmanians will be more adversely affected than perhaps most other Australians.

  Because Tasmania is an island state, it is also an importer of many of the goods it needs. There will be an increase of tens of thousands of dollars for every ship berthing in Tasmania arising from fuel increases alone. The goods carried in these ships will have to bear these costs, and these costs will naturally be passed on to Tasmanian consumers.

  Tasmanians use around 265 million litres of diesel each year. The immediate grab from the proposed budget is estimated to be $7.7 million this financial year, rising to something like $13.2 million once the increase has fully passed through the system. But it will not stop there because the state tax is based on the retail price which includes the federal tax. The state tax of 6.2 per cent per litre will also increase.

  Tasmania is a small, compact island, easy to traverse and covered with fine roads and highways. As my Tasmanian colleague Independent Senator Harradine has noted, we should have the cheapest road and shipping costs in the world. However, this government seems intent on creating a situation where state taxes on fuel are piled upon federal taxes and our hapless exporters then have to recover those taxes from overseas markets. The extra taxation on business inputs should not occur. I remind the Senate that the Fightback GST proposal took off all of these costs.

  Another one of my colleagues from the other House has estimated that the average Tasmanian family of four may have to find an extra $1,360 a year due solely to this budget. So not only are the families and the low income earners the losers in this budget because of the increases in fuel and the wholesale sales tax, but also rural Tasmania will be affected. The increase in fuel, both leaded and unleaded, and diesel will impact on our rural community. On the one hand, the government urges the rural community to become efficient and then, on the other hand, it deliberately increases one of the rural sector's major costs.

  The job market in Tasmania, already devastated by this government's induced recession, will be further affected by the budget. The so-called budget to create jobs will cause Tasmanians to lose their jobs. One example that springs to mind is the Savage River iron ore mine. This north-west mine faces closure at an earlier date than originally intended, and with it will go 300 jobs and the $24 million spent in the state annually by the mine and its workers. Savage River mines has stated that the full impact of the fuel excise increase in 12 months will bring forward the planned 1997 closure of its open cut mine to as early as next year. This will cause an underground expansion which may have prolonged the mine for another 10 years to be abandoned.

  Promising and flourishing businesses have also been hit. Tasmania has seen the development of a burgeoning wine industry over the past 10 years. Many small Tasmanian winemakers fear for their viability as many have just commenced and this 55 per cent hike in sales tax could affect their sales.

  I note the comments by the Treasurer (Mr Dawkins) today to a journalist about an excise on wine. I suggest that this would be a very dangerous path to tread because, although he might be given an opportunity to raise an excise without legislation for perhaps up to 12 months, within that 12-month period it would be assumed that legislation would be brought down. Given the composition of this house, there is no certainty that that would pass. The consequence would be that the government would have to refund such moneys. So it would be brinkmanship and folly for the Treasurer to pursue the line that he was canvassing with a number of journalists today.

  As it is late, I do not wish to take up any more time of the Senate. The coalition has vowed to oppose key elements of the federal budget in both houses of parliament.

  In conclusion, I wish to draw this chamber's attention to the fuel tax. Before the election, the coalition promised to lower fuel taxes; but the government has raised them in this budget. Tasmanian senators, for the benefit of Tasmania, will oppose the fuel tax. Senator Harradine, the Independent from Tasmania, has stated publicly that he will oppose the fuel tax. On the other hand, the Tasmanian Democrat, Senator Bell, has been strangely quiet on this issue. So will the Tasmanian family face extra costs in all facets of everyday living because one Tasmanian senator will not oppose the fuel tax? Put simply, the imposition of the fuel tax on Tasmanians will come down to whether or not Senator Bell is concerned about the effect of this budget on Tasmania. I look forward to seeing how he votes on this issue.