Senator JOYCE (Queensland) (5.24 p.m.)—We have heard some interesting speeches here tonight. I believe in the overall sentiment of the Fuel Tax Bill 2006 and the Fuel Tax (Consequential and Transitional Provisions) Bill 2006, but there are particular areas that I disagree with. I hear the arguments for renewable and photovoltaic energy. Unfortunately, in regional areas we are not going to have photovoltaic tractors. We are not going to have photovoltaic fishing boats or solar driven mining plants. I do not think it will work. We have just finished putting a wheat crop in on the property I own, and I cannot imagine how many solar panels you would need to have driven it. So we have to accept the fact that we will have to rely on a hydrocarbon based or a liquid based fuel to drive our industry.

Senator Ian Macdonald brought up some issues. He has clearly put on the record that he has some concerns and that he will be taking up those concerns in the committee. I look forward to an active engagement by Senator Macdonald in getting some direction on some of those issues that he brought up. We should come up with results and amendments that deal with the issues that Senator Macdonald has put on the agenda in this second reading stage.

Senator Boswell gave a very good outline of the benefits of the bills and, all in all, I agree with him. He also brought to our attention one area about which I am particularly concerned. Since everybody else has covered so many aspects of these bills, I will concentrate specifically on this one—that is, the argument about the biodiesel industry, which, whether by an anomaly or for whatever reason, since 2003-04 has been in place and has been developing and which, after the passage of this piece of legislation, will be severely affected. I know that because of the representations the peak industry body has made to my office.

We can sit down and have an argument about semantics—about who knew what when and what was the purpose of it. It is completely irrelevant. The purpose is for us to drive for a renewable biofuel industry through ethanol or biodiesel. That is an objective of the government; it is an objective of the National Party. The passage of this piece of legislation—and I refer particularly to section 43-5(3)(b)—will inhibit the development of the renewable biofuel industry. There is no transitional arrangement that has been worked out to talk to the people who have made multimillion dollar investments in this part of the industry, to take them from where they are now to a position that is not going to send them bankrupt. There is no discussion of a partial offset to deal with this issue. I understand the argument that people are making: ‘Look, it is excise free. You cannot claim a rebate on something you never paid a tax on.’ But the position is clearly argued—and it is certainly up for debate—that they saw the cleaner fuels grants scheme as a production grant and something to enhance the development of the industry.

Since that time, by reason of a regulatory instrument, there was the power to change it if that were not the case. There was the capacity to change it and it was not changed. By custom and practice, these people believed that they had an industry that they could develop, and they invested in it—not just small investors but also big investors. We have got Transfield and we have had letters from ANZ Bank talking about $40 million investments in this sector of the industry. So there is a major concern that this change is immediate and abrupt. Good government does not bring about immediate and abrupt changes; good government, even if it wants a change of direction, brings about a transitionary process so as to bring the least amount of pain that they can to the people involved in the industry.

However, apart from that, I believe that this is an example of a renewable biofuel section of the market which is actually going ahead, where we are achieving our objectives and where we are developing a biorenewable component. There is a range of reasons why this is good. I am going to go through a couple of the reasons. Tonight we heard one of the other speakers mention that he was one of the only senators from regional Australia. Well, I beg to differ. That might have been true in the past, but it is certainly not the case now. I can assure you that I live further from the coast than any other senator in this nation. I have a clear understanding of regional issues. Sitting in front of me is Senator Nash, who I would suggest comes second.

Regional development is a driver of the requirement for a biorenewable fuel industry, because it is an industry that speaks to our regional areas and to the development and broadening of regional economies. The biodiesel industry talks specifically to the smaller regional towns, which are specifically the areas we want to develop. It has the capacity to be the catalyst for developing those smaller regional areas. Biodiesel is biorenewable, so it has an environmental aspect in respect of our capacity to deal with or be recycling our carbon emissions rather than always putting more into the atmosphere.

There is also an issue in that B5, which is five per cent ethanol and 95 per cent diesel, will be deemed to be something that you can claim a rebate on, but that will not be the case for B49, which is 49 per cent biodiesel and 51 per cent diesel. The issue is, of course, that that plays straight into the major oil companies’ hands. It means that for every one part of biodiesel you need 19 parts of diesel. That means that your production plant is going to be moving from regional areas, if the industry is sustained, in order to be proximate to the refining capacity. That is a bad outcome; that means that the small regional towns which have the capacity to develop a biodiesel plant will become an inhibitor on the industry.

The bottom line is that after the passage of this bill, if you using biodiesel in your tractor, mining plant or fishing trawler, the net result will be that there is no price advantage in buying it. Because the industry is still developing its plants, it is still in a development phase and has to make capital payments to cover that capital overhead, so biodiesel becomes an uncompetitive product. It becomes uncompetitive because the farmer turns up and says, ‘I can get the diesel fuel rebate if a buy this product off the oil company and I can’t if I buy the biodiesel product, so I am going to buy the oil company’s.’ And that will be the end of the biodiesel line.

The biodiesel line relies on the fact that the industry has believed that the position of the government has been to enhance the roll-out of the industry. The industry have seen what is, by custom and practice and regardless of the semantics, a production grant to help develop the industry. That is what we want to do. That is what we intended to do. We intended to develop a biorenewable fuel industry. And now that we have started down the path of developing one, unless we get some amendments to this bill, we are going to chop it off at the knees.

There is argument and contention about whether Treasury clearly communicated their intentions. Treasury says they did. Others say they did not. It goes round and round in circles and never goes anywhere. But it is clearly on the record that in the past there was the capacity to put forward a regulatory instrument that would have dealt with this issue. There was conjecture that there was the capacity to deal it via regulatory instrument, but that was not done; and that was deemed by or seemed to most to be an imprimatur that that was the position that would go forward.

The issue, really, is this: we have a bill that I beli