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 2026
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 $3,215,000,000 to be credited to the Special Account on the day the Determination commences. This amount is the fuel indexation amount for the 2024-25 financial year. Where policy changes outside of indexation affect total excise paid per litre, the special account amount changes approximately in proportion with the total change in net fuel excise.
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 Act 2015 was enacted by the Australian Parliament to establish a special account for the purpose of ensuring that additional net revenue from the introduction of fuel indexation is allocated towards road infrastructure funding. This legislation was introduced to address the gap in funding for road infrastructure arising from the indexation of excise and excise equivalent customs duty on fuels, excluding aviation fuels. The policy objective of the Act is to channel the revenue generated by fuel indexation into the Federation Reform Fund, thereby facilitating state and territory investment in road infrastructure. The Act authorises the Minister to determine, through a legislative instrument, the amount to be credited to the special account, ensuring that the amounts credited reflect the net increase in revenue from fuel indexation for a given financial year. This approach ensures that the additional revenue is systematically directed towards its intended purpose, mitigating any potential delays or uncertainties that could arise from disallowance procedures.
Scope and Application
The Fuel Indexation (Road Funding) Special Account Determination 2026 applies to the Minister for Financial Services, who is empowered by the Fuel Indexation (Road Funding) Special Account Act 2015 to credit a specified amount to the Fuel Indexation (Road Funding) special account. This Act ensures that additional net revenue from the introduction of fuel indexation, specifically the indexation of excise and excise equivalent customs duty on fuels excluding aviation fuels, is directed towards road infrastructure funding. The Minister's determination is guided by the purpose of the Special Account, which is to transfer amounts equivalent to the fuel indexation amount into the Federation Reform Fund for state and territory road infrastructure investment. The fuel indexation amount is defined as the net increase in revenue from fuel indexation for a financial year, adjusted for any tax credits, rebates, or grants resulting from the indexation. This Determination, which specifies $3,215,000,000 as the amount to be credited for the 2024-25 financial year, commenced on the day after it was registered and is a legislative instrument that is not subject to disallowance, minimising uncertainty and ensuring timely application of funds. The Determination will sunset in accordance with the Legislation Act 2003, and no consultation was undertaken due to its minor and mechanical nature.
Key Provisions
The main operative sections of the Fuel Indexation (Road Funding) Special Account Determination 2026 are subsection 8(1) and subsection 8(3). Under subsection 8(1), the Minister has the authority to determine, by written notice, the amount that should be credited to the Fuel Indexation (Road Funding) Special Account on a specified date. This authority is exercised in accordance with the rules laid out in section 8 of the Act. Subsection 8(3) clarifies that the Determination, while it is a legislative instrument, is not subject to disallowance under section 42 of the Legislation Act 2003. This is because the Determination is largely mechanical in nature, involving the calculation of an amount based on data held by the Australian Government. This avoids the need for broad discretionary powers, ensuring the Minister's determination is aligned with the purpose of the Special Account.
The Act imposes specific obligations on the Minister, requiring them to determine the amount to be credited to the Special Account by considering the purpose of the account as specified in section 9. The purpose is to ensure that amounts equivalent to the fuel indexation amount for a financial year are transferred into the Federation Reform Fund to support state and territory expenditure on road infrastructure. The fuel indexation amount is defined in the Act as the net increase in revenue resulting from the re-introduction of fuel indexation, after accounting for any offsetting increases in tax credits, rebates, and grants. The Minister must have regard to this purpose when determining the amount to be credited.
There are no specific offences, penalties, or consequences mentioned for breaches of the Determination. However, the nature of the Determination being largely mechanical and based on factual data held by the Australian Government reduces the likelihood of non-compliance. The disallowance of the Determination is not applicable, and its operation is designed to minimise uncertainty and delays in funding for road infrastructure. The instrument will automatically sunset in accordance with section 50 of the Legislation Act 2003, ensuring its continued relevance and alignment with legislative requirements.