Senator JOYCE—I want to ask a question specifically on that issue now that we have got to it. I can understand why the oil industry would want greater regulation; they want to force out the new entrants that are coming into the market at the moment. That would be a good reason to get more regulation into it. With biodiesel, you have 38c that is an investment grant—help me out here—and then you have a 38c per litre excise that the farmer who buys biodiesel can claim. Is it envisaged, now that they are changing that, that you will get the 38c investment allowance but you will not be allowed, if you buy it off someone who creates or sells B50, to claim the excise. What will be the effect on the emerging biodiesel producers, especially in states such as Western Australia?
Ms Harwood—I would have to start by saying that changes to the excise regime are not my special subject. Yes, there are changes. When the new excise regime comes in on 1 July, the arrangements will affect all sorts of fuel, including biodiesel. Some categories of biodiesel have a greater change in the net tax treatment than others. That is, their relative commercial positions will change.
Senator JOYCE—As a departmental official, what do you think will happen to that emerging biodiesel industry in places such as Western Australia? We have lots of cooperative farmers creating a biodiesel industry. The only way you can get a 38c excise is to buy it off the fuel companies as B5 as opposed to buying B49, which has a greater biorenewable component, off the farming cooperatives.
Senator Ian Campbell—It is a live issue. The changes phase in over the next 11 years. I think they phase in until about 2016. It is an issue I have been dealing with with the biodiesel industry in Western Australia and around Australia. It is a live issue. But it is an issue that falls entirely within the Treasury portfolio. I am not trying to send you to another committee, Senator Joyce, but it is entirely a Treasury issue. We obviously have a significant interest in it because personally—and the department holds this view—I believe that biodiesel, of all the alternative fuels, has very beneficial greenhouse and particulate outcomes compared with a range of other alternative fuels. This is an issue that I have a concern about because I do not want to see biodiesel disadvantaged for those exact end consumers you are talking about. It is an issue for Treasury. It is an issue that I am discussing with Treasury.
Senator JOYCE—It is good because this industry has got up on one knee. It will get up and get running. It will be a great alternative industry for Australia. But this could put the lights out on it.
Senator Ian Campbell—Just so you know, Senator Minchin opened a new biodiesel plant in Adelaide a few weeks ago, which was funded by a massive Commonwealth grant. I will be opening another one in Bunbury in Western Australia as soon as we can find a time in my diary that coincides with the company’s. So we have put in a lot of support, as you know, to building up a biodiesel industry in Australia. We certainly do not want to see that compromised by the perverse effects of tax treatment. But it is a live issue and it is a Treasury issue and it is one we are dealing with.
Senator JOYCE—And the oil companies are pushing to get greater regulation as a means of controlling the market again.
Senator SIEWERT—The mob that have been talking to me are actually the biodiesel producers, not the oil companies.
Senator Ian Campbell—We are talking to the same people.
Senator SIEWERT—Probably, yes. If you could get me that information, that would be appreciated.
Mr Borthwick—The biodiesel producers in part are concerned with different biodiesel blends in the marketplace which will inhibit their development of the market.
Senator Ian Campbell—The point that Senator Joyce—
Mr Borthwick—It is a separate point.
Senator Ian Campbell—It is a separate issue. The concern is that after the phase-in in 10 years, biodiesel could be disadvantaged if we do not address the issue. The consumer will not get the same rebate on biodiesel that they would be able to get from potentially B5, for example.
Senator JOYCE—As of 1 July this year, they will not get it for the B49 but they will get it for B5. If they invest 38c, the farmer who buys it is unable to claim the diesel fuel rebate.
Senator Ian Campbell—The producer is getting the producer rebate. There is a producer rebate that the biodiesel manufacturer gets.
Senator JOYCE—The net government assistance will be halved.
Senator Ian Campbell—But what counts is the price when you put it into your tank, basically, be it a tractor or a truck.
Senator JOYCE—That will go.
Senator Ian Campbell—We are on the same wavelength, Senator Joyce. It just does not sound like it.
[8.34 pm]