Second Reading Speech
By Costello, Peter, MP (Higgins, Treasurer, LP, Government)-I move:
That the bill be now read a second time.
At the last election the government announced in its policy `Tax Reform: Not a New Tax, a New Tax System' that it would reduce the excise on petrol and diesel on the introduction of the goods and services tax.
For businesses, which will get an input tax credit for GST, this means the cost of petrol and diesel will fall by around 10 per cent.
The government is also, through a grants scheme, reducing diesel excise on medium and heavy transport from around 45c per litre to 20c per litre-of direct benefit to rural and regional Australia.
Rate of excise must, under the Australian Constitution, be set at a uniform rate. By reducing the excise before applying GST, based on the metropolitan price, the price to the consumer need not rise. To ensure that petrol prices need not rise for the consumer in regional or remote areas who pay higher prices than the metropolitan price, the government is introducing a new grant system targeted to consumers in non-metropolitan and remote areas. It allows a tiered system of grants to be paid for sales to consumers in non-metropolitan areas, with a higher rate of grant provided for sales in remote areas.
As a consequence of this grant scheme, for consumers in regional and remote Australia fuel prices as a consequence of GST need not rise. And, in addition, for business users costs of the use of fuel in their business will fall by around 10 per cent, and for transport to rural and regional areas the diesel excise will fall from 44 to 20c-direct benefits to rural and regional Australia.
The government will continue to monitor fuel prices in the lead-up to 1 July 2000 to set the grant rates, and fuel retailers will be expected to pass on to consumers in full the benefit of the fuel sales grant.
Details on the grant rates, entitlements and payment mechanisms will be prescribed in the regulations to the legislation.
The scheme is expected to cost around $500 million over the next four years and will provide major benefits to users of petrol and diesel in remote and non-metropolitan areas. This is in addition to the significant fall in the fuel cost to businesses in these areas under tax reform due to the availability of GST input tax credits, the expansion of the Diesel Fuel Rebate Scheme and the introduction of the diesel and alternative fuel grants scheme.
This bill, the Fuel Sales Grants Bill 2000, is one of three bills that are required to implement the fuel sales grant scheme. Together with regulations contemplated by the bill, it will confer the entitlement to the grant on eligible claimants.
The provisions of the Fuel Sales Grants Bill 2000 are to commence from royal assent. The government anticipates that the bills will be enacted well before 1 July 2000 so as to avoid any undue delay in implementing the scheme.
Full details of the measures in the bill are contained in the explanatory memorandum. I commend the bill to the House and present the explanatory memorandum.
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