Senator JOYCE (Queensland) (7.35 pm)—For the biodiesel, where it is 49 per cent organic and 51 per cent hydrocarbonate, your production grant now is for the litre mixed, that is 38.14c for the litre mixed. Is that
the case now?

Senator COLBECK (Tasmania—Parliamentary
Secretary to the Minister for Finance and Administration)
(7.36 pm)—No, Senator Joyce. The production grant is for the litre produced of biodiesel. The biodiesel attracts the grant and so that is totally independent of any blending or mixture process that would follow
on. The manufacturer of the biodiesel would produce biodiesel and then claim back the cleaner fuel grant.

Senator JOYCE (Queensland) (7.35 pm)—So on
B5—the standard diesel—will there be allocated a production grant for the five per cent in standard diesel afterwards?

Senator COLBECK (Tasmania—Parliamentary
Secretary to the Minister for Finance and Administration)
(7.37 pm)—No. It goes back to the definition of diesel and the standard for diesel. The description of diesel and the standard have a range of parameters; I am not fully aware of what all of those are, but there is a standard for diesel. My understanding is that B5 fits within that standard. The producer of the biodiesel would receive a grant for the production of the biodiesel. It would then be blended with the mineral diesel and, because it fits the definition of diesel under the standard, the full volume of the final product would attract an excise rebate according to its use. If it was used off road it would attract the full diesel fuel rebate for off-road use; if it was used on road it would attract
the full diesel fuel rebate less the road user charge.

Senator JOYCE (Queensland) (7.38 pm)—So afterwards, would the following be the case? Let us give it a number so it paints a picture for us. Let us talk about 100 litres of diesel. Five litres of that will collect
the production grant. That is mixed with 95 litres of mineral diesel, which obviously will not have collected the grant. So you have a production grant on the five litres. When they sell that mixed product are they still going to be able to claim the full tax rebate?

Senator COLBECK (Tasmania—Parliamentary
Secretary to the Minister for Finance and Administration)
(7.39 pm)—Yes, that is correct.

Senator JOYCE (Queensland) (7.39 pm)—
Therefore, even after this case—if it was an anomaly before—they are still getting a form of double dipping?

Senator COLBECK (Tasmania—Parliamentary
Secretary to the Minister for Finance and Administration)
(7.39 pm)—In a pure sense you might like to put it that way, but it conforms with the definition or the standard for diesel. That is the criteria under which this is recognised. There is not a percentage mentioned in the standard. It is determined on the characteristics of
the product within the standard.

Senator JOYCE (Queensland) (7.40 pm)—The point I am getting at—and everybody is obviously flummoxed as to where on earth I am heading—is this: the real issue is the terminology, that is, what you call standard diesel. Standard diesel is a completely interlocking product—it does exactly the same whether it is five per cent mineral diesel or 100 per cent organic diesel. You do not have to change any of the components of the engine. If we were to say that standard diesel could be up to 49 per cent organic diesel then following the rule of what is happening with five per cent organic diesel, we would be back in the exact situation which we are now legislating against. The issue is just what has determined the standard. I suggest there has been some strong lobbying by the major oil companies to determine what that standard is. In essence, they are still getting a form of double dipping.

Senator COLBECK (Tasmania—Parliamentary
Secretary to the Minister for Finance and Administration)
(7.41 pm)—No, Senator Joyce, that is not correct. The definition of diesel goes back to the Fuel Quality Standards Act 2000. To claim that there might have been some particular arrangements or lobbying to deal
with this is not reasonable and fair seeing as that act is nearly six years old. It is an Australian standard for diesel that is described as part of that act. If you look at, for example, B20 as a blended fuel, there is not a standard to describe that anywhere in the world. We are
talking about a recognised legislated standard. It is not in fact the fuel companies that are double dipping because they are not producing the biodiesel; I think there is an opportunity, again, for the biofuels industry to take advantage of that margin that might exist under
the standard.