Terms of reference

  • The inquiry is requested to examine the total existing structure of Commonwealth and state taxation of petroleum products, and petroleum substitute products, particularly for transport and off road use (but not for commercial electricity generation) and related rebates, subsidies and grants, including the proposed Energy Grants (Credits) Scheme and other fuel related measures proposed as part of Measures for a Better Environment.
  • The inquiry will not impact upon the government’s commitment that the Energy Credits Scheme will maintain benefits equivalent to those available under the Diesel and Alternative Fuels Grants Scheme and the Diesel Fuel Rebate Scheme.
  • Further, given the government’s concern about the impact of high world oil prices, the inquiry will not consider options that involve long-term real increases in the effective level of diesel or petrol taxes paid by business or private consumers.
  • The inquiry will report on:
    • The effects on the efficient allocation of resources, taking into account the pivotal role that petroleum products play in economic activity; environmental outcomes, including in relation to transport; and as an input to production more generally;
    • The interplay between fuel taxation and related issues such as petroleum pricing, cost structures and marketing arrangements with particular attention to the effects on competition (in particular, access to supply) and the efficiency and international competitiveness of Australian industries.
    • The options available to the government to reduce or eliminate any adverse effects reported under (a) and (b) above, including any anomalies or inequities arising from the existing arrangements for industry and consumers;
    • The options available to the government to reduce the cost or improve the effectiveness of the administration of the existing and proposed arrangements; and
    • Implementation strategies for options identified under (c) and (d) above.
  • The inquiry should have regard to the impact of existing arrangements and proposed changes on:
    • The overall economic performance of the Australian economy, including promoting domestic competition and international competitiveness;
    • Fuel suppliers, downstream industries and consumers;
    • The welfare of regional, rural and remote communities;
    • Externalities associated with transport;
    • The use of fuels that would deliver better air quality and contribute to greenhouse objectives; and
    • The flexibility and sustainability of government revenue.
  • The inquiry should take into account the government’s wish to achieve overall budget neutrality in relation to petroleum products in its recommendations.
  • The existing income tax arrangements affecting petroleum producers and distributors and excise on the production of crude oil are excluded from the scope of the review.