Bills Digest no. 115 2007–08
Excise Legislation Amendment (Condensate) Bill
2008
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage history
Purpose
Background
Main provisions
Contact officer & copyright details
Passage history
Excise Legislation Amendment
(Condensate) Bill 2008
Date introduced: 15 May 2008
House: House of Representatives
Portfolio: Treasury
Commencement:
On date of the Royal
Assent.
Links: The
relevant links to the Bill, Explanatory Memorandum and second
reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
The purpose of the Bill, in
conjunction with the Excise Tariff Amendment (Condensate) Bill
2008, is to impose excise on condensate, which is currently
excise-free.
Condensate is a light crude oil. It is extracted from so-called
wet gas, and is processed mainly to produce petrol. Whereas some
crude oil technically called stabilised crude petroleum oil is
subject to excise, condensate is excise-free. The exemption of
condensate from excise was introduced in the 1977-78 Budget when
the then Treasurer, the Hon. Phillip Lynch, announced:
The levy will not apply to condensate marketed
separately from a crude oil stream; such condensate may now be sold
at commercially negotiated prices. Nor will the levy apply to
liquefied petroleum gas fields not yet in production. This will
assist the marketing of L.P.G. and condensate from fields already
discovered but not yet developed in the North West Shelf and the
Cooper basin. Condensate sold commingled in a crude oil stream will
continue to be treated as crude oil for pricing and levy
purposes.[1]
The exemption was intended to encourage the development of the
liquefied natural gas industry in the North West Shelf.
For further background, the reaction of the industry to the
proposal, arguments for and against the proposal, and financial
implications, see the Bills
Digest for the Excise Tariff Amendment (Condensate) Bill
2008.[2]
Part 1 of the Schedule of amendments in the
Bill contains provisions which amend the Excise Act 1901
(the Excise Act), the Petroleum Excise (Prices) Act 1987
(the Petroleum Excise Prices Act), and the Petroleum Revenue
Act 1985 (the Petroleum Revenue Act). Part 2
of the Schedule of amendments contains application and transitional
provisions.
The amendments to the Petroleum Excise Prices Act are intended
to ensure the method for determining the price of condensate for
calculating the crude oil excise payable in relation to the
production of condensate is the same as the method for determining
the price of stabilised crude petroleum oil. The amendments to the
Excise Act and the Petroleum Revenue Act are intended to ensure
consistency of the treatment of condensate with stabilised crude
petroleum oil for the purposes of the crude oil excise.[3]
Items 1 to 3 amend the Excise Act.
Item 3 inserts proposed
section 164A. Under proposed
subsection 164A(1) regulations relating to condensate are
able to take effect from a date before the regulations are
registered under the Legislative Instruments Act 2003.
However this does not apply in circumstances where the regulations
create, modify or otherwise affect a provision that makes a person
liable to an offence or civil penalty: proposed subsection
164(2). Although the Explanatory Memorandum for the Bill
notes this amendment (and the similar one made by item
6 below), it does not appear to provide any policy
rationale for the need for relevant regulations to take effect
before registration.[4]
Items 4 to 10 amend the Petroleum Excise Prices
Act.
Item 5 inserts a new definition of excisable
condensate in existing subsection 4(1).
Item 6 inserts proposed
subsection 4(1C). Like proposed
subsection 164A(1), it provides that regulations relating
to condensate are able to take effect from a date before the
regulations are registered under the Legislative Instruments
Act 2003. However this does not apply in circumstances where
the regulations create, modify or otherwise affect a provision that
makes a person liable to an offence or civil penalty:
proposed subsection 4(1D).
Item 7 inserts proposed Part IA
Determination of prices for condensate.
Proposed subsection 5(1) provides that the
purpose of Part IA is to allow the Minister to
establish prices of condensate, which are used in imposing excise
on condensate. It does so partly by treating references to
excisable crude petroleum oil as if they were references to
excisable condensate: proposed paragraph 5(2)(a)
and as if references to stabilised crude petroleum oil, crude
petroleum oil and oil were references to condensate:
proposed paragraph 5(2)(b).
Proposed section 5A of Part IA extends the
Petroleum Excise Prices Act to enable interim and final VOLWARE
prices to be set for condensate.[5] It does so by treating:
- references to excisable crude petroleum oil as references to
excisable condensate : proposed subsection 5(2)
and
- references to stabilised crude petroleum oil crude petroleum
oil and oil as references to condensate: proposed
subsection 5(3).
Items 11 and 12 contain consequential
amendments to the Petroleum Revenue Act
Subitem 13(1) provides that the amendments to
the Excise Act, the Petroleum Excise Prices Act, and the Petroleum
Revenue Act in Schedule 1 of the Bill come into
effect on midnight, 13 May 2008, Australian Capital Territory
time.
Subitem 13(2) gives condensate producers a
grace period of three months during which time the producers do not
have to provide information which they would otherwise have to
provide under subsections 6(1A) to 6(1G) and 7(3A) of the Petroleum
Excise Prices Act.
Item 14 also provides a grace period as a
transitional measure. In this case, the grace period applies to a
person who does not have a licence to manufacture condensate.
During the grace period, the person is allowed to enter condensate
for home consumption thus allowing excise to be imposed on the
condensate. The purpose of this provision is to allow condensate
producers, who previously did not have to enter condensate for home
consumption because it was excise-free, to apply for a manufacturer
s licence.
Richard Webb
27 May 2008
Bills Digest Service
Parliamentary Library
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