House of Representatives

Excise Tariff Amendment Bill (No. 1) 1998

Second Reading Speech

Mr TRUSS (Wide Bay-Minister for Customs and Consumer Affairs)

I move:

That the bill be now read a second time.

he main purpose of this bill is to insert into the Excise Tariff Act 1921 Excise Tariff Proposals Nos 1 and 2 of 1998. As part of its aviation policy, the government reduced the rate of excise and customs duty on aviation gasoline-avgas-to $0.17403 per litre, with effect from 3 July 1997.

On 31 January 1998 the legislation package implementing the fuel substitution reforms, which I will discuss in greater detail shortly, came into effect. Part of these reforms involved a complete restructure of item 11 of the schedule to the Excise Tariff Act 1921. As a result of that restructure, the duty rate for avgas was set at $0.18003 per litre. This rate did not reflect the government's 1997 decision in relation to avgas. The amendments made in this bill reduce the excise duty payable on avgas as from 3 July 1997 to $0.17403 per litre.

On 31 January 1998 a package of nine acts implementing the government's budget decision to combat revenue loss through the minimisation of fuel substitution practices commenced. The prime object was to ensure that petroleum products dutiable at concessional rates of excise duty were not used as fuels in internal combustion engines. Fuel substitution usually avoids paying the correct excise. It also is a fraud on consumers and on the vast majority of those involved in the petroleum products distribution and retail system who follow the rules. Moreover, in many cases, use of petroleum products not designed for use in engines can greatly harm engine performance and expose consumers to great danger as the blends contained in these products may have a different flashpoint than the proper fuel. These acts were passed by the parliament in the 1997 spring sittings.

The petroleum industry was consulted at all stages of policy development and implementation of this package. It was concerned the new structure may create misunderstandings as to how much excise was payable on some petroleum products intended for particular uses, particularly products used otherwise than as fuels. Accordingly, the technical amendments contained in this bill are designed to remove any such uncertainty. The amendments insert new subheadings of `other' in all subitems of item 11, except subitem 11(a) and 11(d), to cover petroleum products used for purposes other than as fuel. These amendments do not widen the intended scope of the fuel substitution minimisation legislation. The other amendments in this bill are technical in nature only and are discussed in the bill's explanatory memorandum. I commend the bill to honourable members and present the explanatory memorandum.

Debate (on motion by Dr Theophanous) adjourned.