Bills Digest no. 103 2009–10
Carbon Pollution Reduction Scheme (CPRS Fuel Credits)
(Consequential Amendments) Bill 2010
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
Financial implications
Main provisions
Concluding comments
Contact officer & copyright details
Passage history
Carbon Pollution Reduction Scheme (CPRS Fuel
Credits) (Consequential Amendments) Bill 2010
Date introduced: 2 February 2010
House: House
of Representatives
Portfolio: Treasury
Commencement: The main operative sections (Schedule 1) commence
when section 2-1 of the proposed Carbon Pollution Reduction Scheme
(CPRS Fuel Credits) Act 2010 commences.[1] All other sections commence on the day
of 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/.
To amend the Fuel Tax Act 2006, the Income Tax
Assessment Act 1997 and the Taxation Administration Act
1953 consequent to the introduction of the proposed Carbon
Pollution Reduction Scheme (CPRS) fuel credits scheme.
This is the third time this form of Bill, as part of the
eleven-Bill Carbon Pollution Reduction Scheme (CPRS) legislative
package, has been introduced into Parliament.
The Carbon Pollution Reduction
Scheme (CPRS Fuel Credits) Consequential Amendments) Bill 2009 (the
original Bill), along with the Carbon Pollution Reduction Scheme
Bill 2009 and nine other CPRS Bills, was first introduced into
Parliament on 14 May 2009. On 28 May 2009, an eleventh Bill was
introduced which completed the package. All the CPRS Bills
were passed by the House of Representatives on 4 June
2009—with government amendments made to some of the
Bills. On 13 August 2009, the Senate voted down all of the
Bills at second reading.
Following this, the Carbon
Pollution Reduction Scheme (CPRS Fuel Credits) (Consequential
Amendments) Bill 2009 [No. 2], along with the other Bills in the
CPRS package, was re-introduced into Parliament on 22 October
2009.[2] They were
passed unamended by the House of Representatives on 17 November
2009, thus satisfying the three month ‘waiting period’
required under the double dissolution provisions of the
Constitution.[3] The package of Bills was introduced into the
Senate on 17 November 2009. Following much negotiation, on 24
November 2009, the government released amendments to a number of
the Bills, including the Carbon Pollution Reduction Scheme (CPRS
Fuel Credits) (Consequential Amendments) Bill 2009 [No. 2], and
these were subsequently adopted by the Senate Committee of the
Whole. However, following the Liberal party leadership spill on 1
December 2009, the new leader of the Coalition, the Hon. Tony
Abbott, stated that he would seek to have Senate consideration of
CPRS Bills delayed until Parliament reconvened in 2010 or, in the
absence of a delay, vote against the Bills at that time. With no
delay forthcoming, on 2 December 2009, the Senate voted down the
CPRS Bills for a second time. This provided the government
with a trigger to call for a double dissolution election.
The CPRS Bills, including the Carbon Pollution Reduction Scheme
(CPRS Fuel Credits) (Consequential Amendments) Bill 2010, were
again reintroduced into Parliament on 2 February 2010 and passed
the House of Representatives on 11 February 2010. The content of
the Carbon Pollution Reduction Scheme (CPRS Fuel Credits)
(Consequential Amendments) Bill 2010 (the current Bill) differs
slightly from the original Bill and from Bill [No. 2]. The
Digest for the current Bill highlights these changes.
The implementation of the CPRS is likely to result in a rise in
the price of fuels such as petrol and diesel. To help businesses
adjust to the price rises, the government pledged to provide
temporary assistance. This will take the form of a reduction in
fuel excise, which will offset the expected rise in fuel
prices.
Under the Fuel Tax Act 2006, eligible businesses
receive ‘fuel tax credits’ which offset, fully or in
part, the excise on fuel that they use. These businesses would not,
therefore, benefit from the proposed excise reductions. To assist
these businesses, the government proposes to establish the
‘CPRS fuel credit’ program. This will provide credits,
equal to the excise reductions, to offset the expected rise in fuel
prices. These businesses will, therefore, receive both the fuel tax
credit and the CPRS fuel credit.
Liquid petroleum gas (LPG), liquid natural gas (LNG) and
compressed natural gas (CNG) will incur an emissions unit
obligation. These fuels are now not subject to excise so they, too,
would not benefit from the excise reductions applying to other
fuels such as petrol and diesel. To ensure price relativities are
maintained, that is, so that no fuel is advantaged or disadvantaged
relative to other fuels by the excise reductions, LPG, LNG and CNG
will also be eligible to receive CPRS credits.
For details of the CPRS fuel credits scheme, see the Bills
Digest for the Carbon Pollution Reduction Scheme (CPRS Fuel
Credits) Bill 2010.
The Carbon Pollution Reduction Scheme (CPRS Fuel Credits) Bill
2010 implements the CPRS fuel credits scheme. The Carbon Pollution
Reduction Scheme (CPRS Fuel Credits) (Consequential Amendments)
Bill 2010 implements consequential amendments to three
Acts—the
Fuel Tax Act 2006 (Fuel Tax Act), the
Income Tax Assessment Act 1997 (ITAA 1997), and the
Taxation Administration Act 1953 (TAA
1953)—needed to ensure that the CPRS fuel credits scheme
can go into effect.
The government announced that it would provide assistance to the
agriculture, fishing, and heavy on-road transport industries in its
White Paper, Carbon Pollution Reduction Scheme:
Australia’s Low Pollution Future.[4]
The original Bill, along
with others in the CPRS package, was referred to the Senate
Economics Legislation Committee for inquiry and report by 15 June
2009. Details of the inquiry are at
http://www.aph.gov.au/senate/Committee/economics_ctte/cprs_2_09/index.htm
See the Bills
Digest for the Carbon Pollution Reduction Scheme Bill 2009.
The Bill itself does not have any direct financial implications.
However, in so far as it supports the implementation of the CPRS
fuel credits scheme, it indirectly will reduce revenue from excise
and increase expenses under the ‘fuel and energy’
functional category.
The Bill is not a special appropriation and does not appropriate
funds.
The Explanatory Memorandum for Bill [No. 2] noted:
The measures in the CPRS Fuel Credits
(Consequential Amendments) Bill are mechanical in nature, necessary
to update the Fuel Tax Act, the ITAA 1997 and the TAA 1953 for the
introduction of the CPRS Fuel Credits Bill and the administrative
arrangements announced by the Government.[5]
Items 1 to 17 amend the
Fuel Tax Act 2006.
Item 4 repeals the formula for the ‘net
fuel amount’ in subsection 60-5(1) (formula). In the original
Bill, item 4 appeared as ‘subsection 60-5
(formula)’. Item 5 substitutes a new formula
in subsection 60-5(1) which incorporates both the fuel tax credits
and the CPRS credits. The new formula is:
This amendment is necessary because applicants are entitled to
claim both the fuel tax credits and CPRS credits.
The current Bill adds item 12A, which alters
the Fuel Tax Act 2006. Section 95-10 of the Fuel Tax Act 2006 deals with
its application to the Commonwealth. Subsection 95-10(1)
provides that it is Parliament’s intention that the
Commonwealth and untaxable Commonwealth entities should be
notionally entitled to fuel tax credits and have notional fuel tax
adjustments. Subsection 95-10(2) provides that the Finance Minister
may give written directions to ensure that the intent of subsection
95-10(1) is satisfied. Item 12A adds
subsection 95-10(6) which provides that the
Finance Minister must ensure that a copy of a direction made under
subsection 95-10(2) is available on the website of the Department
administered by the Finance Minister.
Concluding comments
See the Bills Digest for the Carbon Pollution Reduction Scheme
(CPRS Fuel Credits) Bill 2010.
Richard Webb
22 March 2010
Bills Digest Service
Parliamentary Library
Members, Senators and Parliamentary staff can obtain further
information from the Parliamentary Library on (02) 6277 2464.
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