EXPLANATORY STATEMENT
Issued by authority of the Assistant Treasurer and Minister for Financial Services
Fuel Indexation (Road Funding) Special Account Act 2015
Fuel Indexation (Road Funding) Special Account Determination 2025
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 Federation 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 $2,688,000,000.00 to be credited to the Special Account on the day the Determination commences. This amount is the fuel indexation amount for the 2023-24 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.
Subsection 8(3) of the Act provides that the Determination is a legislative instrument but that the Determination is not subject to disallowance under section 42 of the Legislation Act 2003, 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 2025 is a legislative instrument introduced under the Fuel Indexation (Road Funding) Special Account Act 2015, enacted by the Australian Parliament. This Act was designed to address the problem of ensuring that the additional revenue generated from the re-introduction of fuel indexation is specifically allocated for road infrastructure funding. The policy objective is to channel the proceeds from fuel excise indexation into the Special Account to fund state and territory expenditure on road infrastructure, thereby promoting uniformity and efficiency in the allocation of fuel tax revenue. The Determination, which was not subject to disallowance, specifies an amount of $2,688,000,000.00 to be credited to the Special Account, reflecting the net increase in revenue from fuel indexation for the 2023-24 financial year. The Determination aims to ensure a timely and accurate transfer of these funds for their intended purpose, thereby supporting the government's broader infrastructure investment strategy.
Scope and Application
The Fuel Indexation (Road Funding) Special Account Determination 2025 applies to the Minister for Financial Services who, under the Fuel Indexation (Road Funding) Special Account Act 2015, determines an amount to be credited to the Special Account. The Special Account is a statutory mechanism designed to ensure that the net revenue from the introduction of fuel indexation is used for road infrastructure funding. The Act applies to entities involved in the collection and transfer of fuel excise revenue, specifically targeting the revenue increase from fuel indexation, excluding any other tax, credit, rebate, or grant changes. The Act has a Commonwealth reach, as it is an Australian federal legislation. The Determination itself, which provides for the crediting of $2,688,000,000.00 to the Special Account for the 2023-24 financial year, is a legislative instrument that is not subject to disallowance and will sunset in accordance with the Legislation Act 2003. This ensures that the process of crediting the Special Account is timely and not subject to the delays that might arise from the disallowance process.
Key Provisions
The main operative sections of the Fuel Indexation (Road Funding) Special Account Determination 2025 (the Determination) are sections 8 and 9 of the Fuel Indexation (Road Funding) Special Account Act 2015 (the Act). Section 8(1) of the Act allows the Minister to determine by writing the amount to be credited to the Special Account on a specified day. This determination is required to be made with regard to the purpose of the Special Account, which is specified in section 9 of the Act. The purpose is to ensure that the net increase in revenue resulting from the re‑introduction of fuel indexation is transferred into the Federation Reform Fund for road infrastructure funding. Section 8(3) of the Act also provides that the Determination is a legislative instrument but is not subject to disallowance under the Legislation Act 2003, given its largely mechanical nature.
The Act imposes several obligations and requirements on the Minister and other parties. The Minister must determine the amount to be credited to the Special Account based on the fuel indexation amount for a financial year, ensuring that this amount accurately reflects the net increase in revenue resulting from fuel indexation, as defined in section 9(2) of the Act. The Minister must also ensure that this amount is credited to the Special Account on the specified day. Additionally, the Act requires that the Minister has regard to the purpose of the Special Account when making this determination, ensuring alignment with the intended use of the funds for road infrastructure. The Determination itself is a legislative instrument that must be registered on the Federal Register of Legislation before it can commence.
The Determination does not create specific offences, penalties, or consequences for breach, as it is largely mechanical in nature. However, the importance of accurately determining and crediting the amount to the Special Account cannot be understated, given its critical role in funding road infrastructure. Any misapplication or miscalculation of the fuel indexation amount could potentially lead to a shortfall in funding for road projects, impacting the intended purpose of the Special Account. The Determination's non-disallowable nature is intended to minimise uncertainty and ensure that the funds are available for their intended use without delay.
In conclusion, the Fuel Indexation (Road Funding) Special Account Determination 2025 plays a crucial role in ensuring that the additional revenue from fuel indexation is appropriately allocated to fund road infrastructure across Australia. By crediting a specific amount to the Special Account, the Determination supports the objectives of the Act and ensures that the Federation Reform Fund receives the necessary funds for state and territory road projects. The obligations placed on the Minister to determine and credit the amount accurately are essential to maintain the integrity and effectiveness of this funding mechanism.