House of Representatives

Fuel Tax (Consequential and Transitional Provisions) Bill 2006

Second Reading Speech

Mr Dutton (Minister for Revenue and Assistant Treasurer)

I move:

That the bill be now read a second time.

This bill is a companion bill to the Fuel Tax Bill 2006.

The bill provides the transitional arrangements to phase in the fuel tax credit scheme while phasing out the Energy Grants (Credits) Scheme, Fuel Sales Grant Scheme and the states-administered Petroleum Products Freight Subsidy Scheme. Changes to implement the fuel tax credit system will be phased in from 1 July 2006, with final changes taking effect from 1 July 2012.

Entitlements under the Fuel Sales Grant Scheme and the states-administered Petroleum Products Freight Subsidy Scheme will cease to exist for fuel sales or deliveries made after 30 June 2006.

The purpose of the transitional provisions is to ensure that claimants receiving a grant continue to benefit from fuel tax concessions and to phase in the extension of eligibility for off-road business use of fuel over time. Currently ineligible off-road activities will become eligible for a 50 per cent fuel tax credit from 1 July 2008 and a full credit from 1 July 2012.

The bill also makes consequential amendments to other legislation. The consequential provisions primarily amend the Taxation Administration Act 1953 to bring the administration of the fuel tax credit system within the administrative framework of other indirect taxes under that act. Amendments to the Taxation Administration Act 1953 are also part of a rewrite of the provisions affecting indirect taxes in a drafting style adopted by the tax laws improvement project aimed at making tax legislation more comprehensible.

The legislation also clarifies the extent of eligibility for off-road credits provided for 'mining operations' under the Energy Grants (Credits) Scheme. 'Mining operations' is intended to only cover the extraction of naturally occurring minerals. The legislative changes clarify that the:

synthetic production of minerals, and
extraction of limestone or other materials for use in the manufacture of products to be used for the purposes such as construction, road making or landscaping
do not constitute mining operations. These changes take effect from today.

The bill will fully implement the fuel tax credit system by 1 July 2012 and the existing Energy Grants (Credits) Scheme will be abolished by that date.

Full details of the measures in the bill are contained in the explanatory memorandum already presented.

Debate (on motion by Mr Murphy) adjourned.