Senator JOYCE (Queensland) (8.05 pm)—I think we need to push this point. We do not know how much biodiesel is being produced at the moment; we do not have that information. However, we do know where it is being produced; it is being produced in myriad places, including a lot of regional towns. We know that if all the biodiesel that is currently going to cause the problem of revenue being forgone ends up as part of
standard diesel, being five per cent biodiesel, the revenue position to the Treasury will be exactly the same. Whatever was forgone in the past, it will be exactly the same amount that is forgone the future. It is just that it is going to be done under standard diesel as opposed to
biodiesel. The five per cent of biodiesel that is in standard diesel will have collected the production grant and will also collect the full excise from the end consumer. If that is the case, what is the Treasury argument about the hole that we are trying to cover up with this legislation?

Senator COLBECK (Tasmania—Parliamentary
Secretary to the Minister for Finance and Administration)
(8.06 pm)—I do not accept the premise Senator Joyce makes that the vast majority of production will go into a blend that meets the standard. I think that is a relatively long bow to draw. He might like to draw it, I
will not. On that particular point, we will have to agree that we are on different paths.

Senator ALLISON (Victoria—Leader of the Australian
Democrats) (8.07 pm)—The minister describes the cleaner fuel grant, as I understand it, as a loophole. How is it that as recently as the 2003-04 budget and the subsequent legislation which put in place the Energy
Grants Credits Scheme—that decreasing benefit to biodiesel—that loophole was not discovered given its size and prominence? Clearly the minister disputes this, but this was a great announcement at the time as a way of allowing excise to be introduced by 2011 while making sure that biodiesel was not disadvantage. How come this loophole was not discovered at the time when the payments were very clear? I certainly understood them, I am sure Senator Joyce did. How come
this has suddenly become a loophole, when it was not two or three years ago?

Senator COLBECK (Tasmania—Parliamentary
Secretary to the Minister for Finance and Administration)
(8.08 pm)—I did not say that the cleaner fuels grants scheme was a loophole.

Senator Allison—What was the loophole?

Senator COLBECK—The loophole is in the claiming of excise on a biodiesel blend that has not had excise paid on it for the full value. If you were to buy 100 per cent mineral diesel, you would pay excise on it at the full volume and claim that back. If you were to use a biodiesel blend of B49, you would be paying excise on the mineral diesel component of 51 per cent. But under the tax legislation, there was a capacity to describe it as diesel and therefore claim a full fuel diesel
rebate of whatever the rebate value was at the time on the full volume of the litre of diesel. Therefore, you are claiming 49 per cent of that excise value on the biodiesel value, which had already had a cleaner fuel grant payment and which effectively left it tax-free. That is
where the loophole is. It is not in the cleaner fuels grant; it is in the taxation treatment. That became apparent to the government about 18 months ago, just after biodiesel came into the tax system.

Senator ALLISON (Victoria—Leader of the Australian
Democrats) (8.10 pm)—Can the minister explain then how that works for 100 per cent biodiesel?

Senator COLBECK (Tasmania—Parliamentary
Secretary to the Minister for Finance and Administration)
(8.10 pm)—One hundred per cent biodiesel is charged excise and then claims the cleaner fuels grant scheme, which effectively wipes the excise value out. It is excise free.

Senator ALLISON (Victoria—Leader of the Australian
Democrats) (8.11 pm)—That is my understanding of it too, but now if you compare 100 per cent biodiesel with diesel, for diesel there is a fuel tax credit, which is 18c a litre, compared with a biodiesel Energy
Grants Credit Scheme rebate, which is only 14.8c a litre, and that 14.8c a litre progressively decreases to zero by 2010. That is precisely the problem: diesel goes on getting 18c a litre, but the Energy Grants
Credit Scheme is an ever-decreasing amount. That is what gives biodiesel the great disadvantage.

Senator COLBECK (Tasmania—Parliamentary
Secretary to the Minister for Finance and Administration)
(8.11 pm)—I think this is where we start getting into the complexities of the issue. There is no situation, for either on-road or off-road use, where biodiesel is at a disadvantage to mineral diesel.

Senator JOYCE (Queensland) (8.12 pm)—I want to go back to the cost of this, because it is very important that we know what the costing of this proposed amendment is. We have certainly worked out at this
point in time that it is not going to change how much it costs the Treasury. We have proven that, because we know that in the future, under standard diesel that has a five per cent biorenewable component, they will be getting both the production grant and claiming the full excise. And we know it is going to change who gets it, because now the person who gets it is going to be the major producer proximate to the oil company or the oil company itself that produces it. We do not know how much is being produced, yet we have come up with the
fact that it is going to cost $1.5 billion in so many years time—we do not know how; we just plucked that figure out of the air and put it in the preamble here. Seeing as we know the eventual cost is going to be nil, no difference, and we know that all that is going to change
is who produces the biodiesel, can the Treasury give
any estimation whatsoever of what is the current cost of supporting this new biorenewable fuel industry in biodiesel?

Senator COLBECK (Tasmania—Parliamentary
Secretary to the Minister for Finance and Administration)
(8.14 pm)—I apologise, but I am going to have to ask Senator Joyce to go through that last piece again, unfortunately, because I was grabbing some advice on some figures from my advisers. I apologise, but could
you succinctly run through that last bit again for me?

Senator JOYCE (Queensland) (8.14 pm)—I understand it is a complicated issue, but it is very important because we are about to vote on one issue on the premise that it is going to cost too much. Yet no-one is able to determine what the cost is. In fact, no-one is able to
even tell us the premise for working out how they came up with the cost. It sounds like this cost—the $1.5 billion—was just plucked out of thin air. Ten billion dollars is a better figure; we could have said that.
But if we are to get rid of this so-called production grant so you cannot claim the rebate if you have got the production grant, and if we do it on the current amount of biodiesel that is being produced, has anybody got
any idea what income is being forgone on that? What is going to be the saving because of that? Has anybody in the whole of Canberra got the foggiest about what amount of money we are talking about?

Senator COLBECK (Tasmania—Parliamentary
Secretary to the Minister for Finance and Administration)
(8.15 pm)—Senator Joyce, it goes back to a couple of the points that we have discussed already. It relates to where the ble