Legislative Assembly for the ACT: 1998 Week 3 Hansard (28 May) . . Page.. 685 ..
MS CARNELL (continuing):
These arrangements changed following the decision of the High Court in August last year. The court held that ad valorem licence fees imposed on liquor, tobacco and petroleum products by States and Territories were invalid under the Constitution. In response to the High Court decision, and at the request of States and Territories, the Commonwealth increased the excise on tobacco and petroleum products and the wholesale sales tax on liquor products. The Commonwealth did so at a level approximately equal to the existing licence fees. This additional revenue was then returned to the States and Territories under a formula set by the Commonwealth Grants Commission.
Mr Speaker, the ACT Government wished to ensure that the increased Commonwealth sales tax and excise was not passed on to the consumers of low-alcohol products or to consumers of exempt diesel. The ACT and other jurisdictions urgently set in place certain administrative arrangements with liquor and petroleum producers and wholesalers. In the case of liquor, this involved an arrangement whereby a subsidy was paid to the producers of low-alcohol products, particularly the breweries. This was to ensure that they did not pass on the whole of the increased excise to their customers and ultimately to the consumers of low-alcohol products. In the case of diesel, a similar arrangement was entered into with major petroleum companies and their distributors. No subsidy arrangement was required for tobacco products because no concessions were provided in relation to these products under the old business franchise fees scheme.
Mr Speaker, the Financial Management Act 1996 was amended in 1997 to validate the payment of such subsidies out of Consolidated Revenue. The administrative arrangements under which such payments are made are not currently supported by legislation, and rely on the integrity and goodwill of the various participants. To date, this has been working reasonably well. However, it does not provide adequate compliance and investigation powers for the Government adequately to police the schemes and to ensure that its revenue is protected.
The rate of subsidies is not uniform throughout the States. This could lead to opportunistic producers taking unfair advantage of differing subsidy rates. Producers could maximise their subsidy claims by applying for a subsidy in a jurisdiction with the most generous subsidy rate and selling these products in another jurisdiction. This applies particularly to the ACT, which is one of the few jurisdictions to impose no fees on low-alcohol products. It would also be possible, without adequate audit, for producers to seek subsidies from more than one jurisdiction in respect of a single sale of the same product. These issues are specifically addressed in the legislation, which closely follows that of other jurisdictions.
Mr Speaker, the provisions of subsidies in respect of low-alcohol and diesel products are set out separately in the Bill, but there are a number of identical features. The Bill requires persons seeking a subsidy to be registered with the Commissioner for ACT Revenue and for the commissioner to be able to seek relevant information about the applicant prior to processing such registration. Once registered, a producer or supplier can make regular applications for the payment of subsidies based on relevant sales in the ACT.