House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

General outline and financial impact

Diesel and Alternative Fuels Grants Scheme

The Diesel and Alternative Fuels Grants Scheme Bill 1999 (this Bill) introduces a grant for certain road transport. It is intended that the grant will be available from 1 July 2000 until 30 June 2002. The grant will be available for the use of diesel fuel. The grant will also be available for the use of other fuels as alternatives to diesel fuel. These alternative fuels are compressed natural gas, liquified petroleum gas, recycled waste oil, ethanol, canola oil, and other fuels as prescribed.

The grant will be available for all on road use of these fuels in vehicles with a gross vehicle mass of 20 tonnes or more.

The grant will be available for on road use of these fuels in vehicles with a gross vehicle mass of 4.5 tonnes to 20 tonnes used for transporting goods or passengers. However, for vehicles under 20 tonnes, the grant is not available for sole use of the relevant fuels in the following metropolitan areas:

•

Newcastle-Sydney-Wollongong;

•

Melbourne-Geelong;

•

Sunshine Coast-Brisbane-Gold Coast;

•

Perth;

•

Adelaide; and

•

Canberra.

Date of effect: This Bill will commence on the commencement of the Diesel and Alternative Fuels Grants Scheme (Administration and Compliance) Act 1999 unless certain vehicle emission standards have not been implemented. The grant will not be available for fuel used after 30June2002. It is intended that a new Energy Grants (Credits) Scheme will operate from 1July2002.

Proposal announced: Announced by the Government on 28 May 1999.

Financial impact: The grants will cost $600 million in the 2000-01 financial year, $690million in the 2001-02 financial year.

Compliance cost impact: Medium.

The grant for vehicles with a gross vehicle mass of 20 tonnes or more will require little record keeping additional to mileage, litres used and receipts. Eligible fuel use in vehicles between 4.5 and 20 tonnes outside the metropolitan areas will have these same requirements. Where there is some use of vehicles between 4.5 and 20 tonnes inside and outside the metropolitan areas, more extensive records will be required to substantiate the grant claim.

Application: It is intended that the grant will be available for fuel used on and after 1July2000 and before 1July2002. It is intended that from 1July2002 the Diesel and Alternative Fuels Grants Scheme will be replaced by an Energy Grants (Credits) Scheme.