EXPLANATORY STATEMENT
Issued by authority of the Treasurer
Fuel Indexation (Road Funding) Special Account Act 2015
Fuel Indexation (Road Funding) Special Account Determination 2023
Subsection 8(1) of the Fuel Indexation (Road Funding) Special Account Act 2015 (the Act) provides that the Minister may determine, by writing, that a specified amount is to be credited to the Fuel Indexation (Road Funding) special account (the special account) on a specified day.
The Act establishes and provides rules for the operation of the special account to ensure that the additional net revenue from the introduction of fuel indexation (that is, the indexation of excise and excise equivalent customs duty applying to fuels, other than aviation fuels) is used for road infrastructure funding.
Under the rules set out in section 8 of the Act, the Minister may, in writing, determine that an amount is to be credited to the special account. In determining this amount, the Minister must have regard to the purpose of the special account. Section 9 of the Act specifies that the purpose of the special account is to ensure that amounts equal to the fuel indexation amount for a financial year are transferred into the COAG Reform Fund, to fund State and Territory expenditure in relation to investment in Australian road infrastructure.
The fuel indexation amount for a financial year is defined by subsection 9(2) of the Act as, broadly, the net increase in revenue in that financial year resulting from the re‑introduction of fuel indexation in 2014, after deducting any offsetting increases in tax credits, rebates and grants that also resulted from the indexation.
This determination provides for $1,072,000,000.00 to be credited to the Fuel Indexation (Road Funding) special account on the day the determination commenced. This amount is the fuel indexation amount for the 2021-22 financial year. Any policy changes that occur outside of indexation are effectively excluded from calculating the amount to be determined, ensuring that indexation on fuel is the only factor in determining the value credited to the special account.
This determination commenced on the day after it was registered on the Federal Register of Legislation.
Under subsection 8(3) of the Act, the determination is a legislative instrument but is not subject to disallowance, as the instrument is largely machinery in nature where the amount being determined is simply a statement of fact to be derived from data held by the Australian Government. The Minister does not have a broad discretion to determine the amount to credit to the special account as the Minister must have regard to the purpose of the account.
Treating the determination as not disallowable minimises uncertainty. The risk of disallowance would delay decisions to apply the amounts in the special account for road infrastructure funding until after the disallowance period had expired. Delays would also occur if the instrument was disallowed and arrangements needed to be put in place for remaking a revised instrument or legislation needed to be passed to give effect to the intended operation of the determination.
The instrument will sunset in accordance with Part 4 of the Legislation Act 2003.
No consultation was undertaken on this determination as it is minor and mechanical in nature, only involving the determination of an amount from available data, consistent with the rules set out in sections 8 and 9 of the Act.
Overview
The Fuel Indexation (Road Funding) Special Account Determination 2023 was enacted to provide for a specified amount to be credited to the Fuel Indexation (Road Funding) special account, as required by the Fuel Indexation (Road Funding) Special Account Act 2015. This Act was introduced to address the need for a dedicated funding mechanism to channel the additional net revenue generated from the indexation of excise and excise equivalent customs duty on fuels, excluding aviation fuels, into road infrastructure projects across the states and territories. The Fuel Indexation (Road Funding) Special Account Determination 2023, made by the Minister for Finance under the authority granted by the Act, specifies that $1,072,000,000.00 is to be credited to the special account, representing the net increase in revenue from fuel indexation for the 2021-22 financial year. The policy objective of the Act is to ensure that the additional revenue from fuel indexation is used to fund state and territory road infrastructure projects, as stipulated in the COAG Reform Fund. This determination is a legislative instrument but is not subject to disallowance, ensuring that the process of crediting the special account proceeds without delay.
Scope and Application
The Fuel Indexation (Road Funding) Special Account Determination 2023 applies to the Fuel Indexation (Road Funding) Special Account established under the Fuel Indexation (Road Funding) Special Account Act 2015, with the Minister responsible for determining amounts to be credited to the account based on the fuel indexation amount for a financial year. The Act ensures that the additional net revenue from fuel indexation is directed towards road infrastructure funding. The determination is applicable nationally as it pertains to the Commonwealth's special account for road funding. The Act's scope is limited to the indexation of excise and excise equivalent customs duty on fuels, excluding aviation fuels, and does not extend to other policy changes or increases in tax credits, rebates, and grants unrelated to indexation. The determination itself is not subject to disallowance as it is largely mechanical, involving the straightforward calculation of the fuel indexation amount based on available data, and is considered to be a statement of fact. The amount determined is credited to the special account for the purpose of funding State and Territory road infrastructure investments through the COAG Reform Fund.
Key Provisions
The main operative sections of the Fuel Indexation (Road Funding) Special Account Determination 2023 (the Determination) under the Fuel Indexation (Road Funding) Special Account Act 2015 (the Act) are sections 8 and 9. Section 8(1) of the Act allows the Minister to determine, in writing, the amount to be credited to the Fuel Indexation (Road Funding) Special Account (the Special Account). This determination is made on a specified day, which in this case is the day after the determination was registered on the Federal Register of Legislation. Section 9 of the Act specifies the purpose of the Special Account, which is to ensure that amounts equal to the fuel indexation amount for a financial year are transferred into the COAG Reform Fund to fund State and Territory expenditure in relation to investment in Australian road infrastructure. The fuel indexation amount is defined in section 9(2) of the Act as the net increase in revenue in a financial year resulting from the re-introduction of fuel indexation in 2014, after deducting any offsetting increases in tax credits, rebates and grants that also resulted from the indexation.
The Determination imposes several obligations and requirements on the parties it governs. The Minister must have regard to the purpose of the Special Account when determining the amount to be credited. This purpose is to ensure that the additional net revenue from the introduction of fuel indexation is used for road infrastructure funding. The Minister must also ensure that the amount determined is based solely on the fuel indexation amount for the relevant financial year, excluding any policy changes that occur outside of indexation. The Minister must credit the determined amount to the Special Account on the specified day. The determination is not subject to disallowance under subsection 8(3) of the Act because it is largely machinery in nature and involves a statement of fact derived from data held by the Australian Government. This ensures that decisions to apply the amounts in the Special Account for road infrastructure funding can proceed without delay.
The Determination does not specify any offences, penalties, or civil/criminal consequences for breach. However, the Act itself may contain provisions that impose such consequences for breaches related to the operation of the Special Account. The Determination is minor and mechanical in nature, only involving the determination of an amount from available data. Therefore, no consultation was undertaken on the Determination. The instrument will sunset in accordance with Part 4 of the Legislation Act 2003. This means that the instrument will cease to have effect after a specified period, unless it is renewed or replaced by new legislation.