Explanatory Memorandum(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)
Chapter 1 - Energy Grants (Cleaner Fuels) Scheme
1.1 This chapter explains the Energy Grants (Cleaner Fuels) Scheme Bill 2003 that determines entitlement to a cleaner fuel grant.
1.2 Important terms used in this bill are listed and in some cases defined in Part 1. These definitions are generally self-explanatory.
1.3 Cleaner fuel is defined to mean biodiesel and other fuels including particular blends of fuels as are prescribed by regulation. In keeping with the progressive nature of the scheme the regulations will prescribe fuels as they become eligible for a grant. It is proposed that the regulations will prescribe ethanol, premium unleaded petrol with less than 50 parts per million sulphur and diesel with less than 10 parts per million sulphur as cleaner fuels at a future date. [Clause 4]
1.4 In order to be eligible for a grant the fuel in respect of which the grant is claimed must meet the relevant fuel standard as determined by the Department of the Environment and Heritage under the Fuel Quality Standards Act 2000. A grant will not be paid in respect of a cleaner fuel that does not comply with the fuel standard or conditions that are specified in the regulations. [Clause 4]
1.5 Biodiesel is the first cleaner fuel to be specified for the purposes of this bill. The term biodiesel is broadly defined in clause 4, however in order to be eligible for a grant biodiesel must meet the applicable fuel standard. [Clause 4]
Becoming provisionally entitled to a grant
1.6 The provisions in Part 2 of this bill specify the requirements that give rise to an entitlement to a cleaner fuel grant. The provisional requirements for entitlement to a grant are provided in clause 5. These basically require that a claimant for a cleaner fuel grant be an importer, manufacturer or a licensed person in respect of the fuel. A grant will be payable in respect of a cleaner fuel that is imported or manufactured in Australia.
1.7 In order to qualify for a grant the fuel must be entered. The term enter the fuel as defined in Clause 4 means to enter or deliver the fuel into home consumption in accordance with the relevant provisions of the Customs Act 1901 or the Excise Act 1901 [Clause 5, subparagraph 5(1)(c)(i)]. The entry or delivery must occur before the last day that a provisional entitlement can arise for the fuel in respect of which the grant is claimed. The last day on which entitlement for the fuel can arise will be prescribed in the regulations [Clause 5, paragraph 5(1)(d)].
1.8 A provisional entitlement to a grant will generally arise only in respect of a cleaner fuel when it is sold into the market in its final form. Provisional entitlement to a grant will therefore arise when fuel is sold by an importer, manufacturer or licensed person to an end user outside the excise system.
1.9 An importer or manufacturer of a cleaner fuel will therefore not be eligible for a grant where the fuel is sold to another licensed person because the final product will not have entered the market as a final fuel. Conversely where fuel is bought from an entity that is not a licensed person or importer, the sale will have taken place outside of the excise system and a grant will not be payable in respect of that fuel.
1.10 A licensed person is an entity who is licensed under the Excise Act 1901 as a manufacturer or the holder of a storage licence in respect of goods of a kind including the fuel, or an entity specified in a permission given under the Excise Act 1901 or Customs Act 1901 for goods of a kind including the fuel. [Clause 4]
1.11 Provisional entitlement to a grant will also arise where a licensed person consumes or finally sells the fuel that has already been entered. This must also occur before the last day that a provisional entitlement for the fuel can arise. [Clause 5, subparagraph 5(1)(c)(ii)]
1.12 In order to be eligible for a grant, a cleaner fuel must be imported into Australia or manufactured in Australia on or after the fuel's start day [Clause 5, subparagraphs 5(1)(a)(i) and (ii)]. For biodiesel the fuel's start day will be the day that this bill commences. For other cleaner fuels the start day will be the day prescribed by the regulations as the start day for that cleaner fuel [Clause 4].
1.13 Under the provisions of this bill the term manufacture includes petroleum blending as described in section 77H of the Excise Act 1901 [Clause 4]. A grant will be paid on the importation or manufacture of fuel blends only if the blend or the cleaner fuel component of the blend complies with the determined fuel standard for the cleaner fuel, or the cleaner fuel component of the blend as the case may be.
1.14 The claimant may be entitled to a grant if they import cleaner fuel into Australia or manufacture cleaner fuel in Australia [Clause 5, subparagraph 5(1)(b)(i) and (ii)]. Entitlement to a grant may also arise if the claimant is a licensed person for the fuel who buys cleaner fuel from an importer or manufacturer or a licensed person for the fuel [Clause 5, subparagraphs 5(1)(b)(iii) and (iv)]. If the claimant has a contractual arrangement for fuel to be manufactured in Australia on their behalf they may also be entitled to a grant [Clause 5, subparagraph 5(1)(b)(v)].
1.15 If the claimant decides that the fuel which has previously been entered by another entity will be consumed by them in carrying on their enterprise, they will become entitled to a grant provided that the fuel is not used by them to manufacture a fuel blend, or is not sold or otherwise provided to another entity. [Clause 5, subparagraph 5(1)(c)(ii); Clause 5, Subclause 5(4)]
1.16 If the fuel is entered for home consumption, duty will be paid at the time the fuel is entered and entitlement to a grant will provisionally arise at that time. If the importer or the licensed person is the holder of a permission to deliver the fuel into home consumption, a provisional entitlement to a grant will arise at the time of delivery, although the settlement of duty may occur later in accordance with the conditions of the permission to deliver the fuel.
1.17 A provisional entitlement to a grant will be disqualified where a previous provisional entitlement has arisen in respect of that particular cleaner fuel before the time that the fuel was entered by the claimant, or before the claimant consumed or finally sold the fuel [Clause 5, paragraph 5(1)(h)]. Similarly the claimant will not be entitled to a grant if the fuel contained a blend of one or more cleaner fuels at the time the fuel was entered by the claimant, or before the claimant consumed or finally sold the fuel, and for each of those cleaner fuels a provisional entitlement had arisen [Clause 5, Subclause 5(2)].
Becoming entitled to a cleaner fuel grant
1.18 Provided claimants meet the requirements for a provisional grant in clause 5 they may be entitled to a cleaner fuel grant. In order to be entitled to a grant the claimant must be registered under section 9 of the PGBAA in respect of entitlement to a cleaner fuel grant. The claimant will not be entitled to a grant unless they make a claim for payment of the grant in respect of the fuel for which the grant arose. [Clause 6]
1.19 A provisional entitlement to a grant may be disqualified by a subsequent action such as selling the fuel to a licensed person for the fuel or including the fuel in a fuel blend. The claimant will not be entitled and will be taken never to have been entitled to a grant if any of the disqualifying circumstances apply to them. The regulations may prescribe circumstances, additional to those provided for in clause 7, that will disqualify a claimant from entitlement to a grant. [Clause 7]
1.20 The amount of the claimant's cleaner fuel grant is worked out in accordance with the regulations. Claimants will be required to self-assess their entitlements to a cleaner fuel grant. The regulations will prescribe different amounts of grant for different cleaner fuels and blends of fuels, including that the amount of grant may be nil. The regulations will also prescribe a basic rule for working out the amount of the grant payable and how the grant will be calculated if the regulations set out different amounts in respect of blends. [Clause 8, Subclause 8(1)]
1.21 In certain circumstances a claimant may be entitled to a drawback, refund, rebate or remission of duty under the provisions of the Customs Act 1901 or the Excise Act 1901 for the fuel in respect of which they also qualify for a grant. Where this is the case the amount of cleaner fuel grant payable will be reduced by the amount of any drawback, refund, rebate or remission of duty paid to the claimant. [Clause 8]