EXPLANATORY STATEMENT
Issued by authority of the Assistant Minister for Competition, Charities and Treasury
Fuel Indexation (Road Funding) Special Account Act 2015
Fuel Indexation (Road Funding) Special Account Determination 2024
Subsection 8(1) of the Fuel Indexation (Road Funding) Special Account Act 2015 (the Act) provides that the Minister may, by writing, determine 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, by legislative instrument, 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.
The Determination provides for $1,773,000,000.00 to be credited to the Special Account on the day the Determination commenced. This amount is the fuel indexation amount for the 2022-23 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.
The 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 under section 42 of the Legislation Act, as the instrument is largely mechanical 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 its purpose.
Treating the Determination as non-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 section 50 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 2024, issued under the authority of the Assistant Minister for Competition, Charities and Treasury, was enacted to address the need for a dedicated funding mechanism for road infrastructure. The Fuel Indexation (Road Funding) Special Account Act 2015 established this account to ensure that the additional net revenue from the introduction of fuel indexation is allocated specifically for road infrastructure funding. The Act was enacted by the Parliament of Australia to create a clear and dedicated source of funding for road infrastructure by earmarking the revenue generated from the indexation of excise and excise equivalent customs duty on fuels, excluding aviation fuels. The policy objective of the Act is to facilitate efficient and targeted investment in road infrastructure across the states and territories by transferring the fuel indexation revenue to the COAG Reform Fund. The Special Account Determination of 2024 specifies that $1,773,000,000.00, representing the fuel indexation amount for the 2022-23 financial year, is to be credited to the Special Account, ensuring that only the revenue from fuel indexation is considered in the calculation.
Scope and Application
The Fuel Indexation (Road Funding) Special Account Determination 2024 applies to the Minister for Competition, Charities and Treasury, who is responsible for determining the amount to be credited to the Fuel Indexation (Road Funding) Special Account under the Fuel Indexation (Road Funding) Special Account Act 2015. The determination specifically relates to the transfer of funds from the Special Account to the COAG Reform Fund for the purpose of funding state and territory investment in Australian road infrastructure. This legislation operates within the Commonwealth jurisdiction, impacting the federal level of government in Australia. The Act does not specify exclusions, exemptions, or thresholds, but it does exclude any policy changes outside of the indexation process when determining the amount to be credited to the Special Account. The Determination is a legislative instrument that is not subject to disallowance under the Legislation Act, ensuring that the process of crediting the Special Account remains timely and effective. The instrument will sunset in accordance with the Legislation Act 2003, which means it will cease to have effect after a specified period.
Key Provisions
The main operative sections of the Fuel Indexation (Road Funding) Special Account Determination 2024, as per the Explanatory Statement, revolve around section 8(1) of the Fuel Indexation (Road Funding) Special Account Act 2015, which allows the Minister to determine a specific amount to be credited to the Special Account on a designated day. The determination of this amount is crucial for ensuring that the additional net revenue from fuel indexation is directed towards funding road infrastructure projects. The determination process must consider the purpose of the Special Account, which is articulated in section 9 of the Act, to facilitate the transfer of amounts to the COAG Reform Fund for state and territory road infrastructure investments. The Determination itself sets a specific amount of $1,773,000,000.00, representing the fuel indexation amount for the 2022-23 financial year, which is to be credited to the Special Account upon its commencement.
The obligations imposed by the Act on the parties involved, primarily the Minister, include ensuring that the amount credited to the Special Account accurately reflects the net increase in revenue from fuel indexation, excluding any unrelated tax credits, rebates, or grants. The Minister must derive this amount from data available to the Australian Government, ensuring that the determination is based on factual information rather than discretionary judgment. This procedural requirement is intended to maintain the integrity of the Special Account’s purpose by strictly adhering to the legislative rules set out in sections 8 and 9 of the Act.
Under the Act, any failure to comply with the requirements for determining and crediting the appropriate amount to the Special Account may lead to civil or administrative consequences. However, the Explanatory Statement does not explicitly detail specific offences, penalties, or consequences for non-compliance. Given that the Determination is largely mechanical and non-disallowable, any procedural errors could potentially be addressed through legislative or administrative means, though this is not specified in the Statement. The focus of the Determination is on minimizing uncertainty and ensuring timely funding for road infrastructure, rather than detailing punitive measures for breaches.