On 13 May 2003 the Government announced that a grant would be provided to producers and importers of premium unleaded petrol with 50 parts per million or less of sulphur to encourage the introduction of this standard from 1 January 2006 in advance of it becoming the mandatory standard from 1 January 2008.
At the time of the announcement it was indicated that an indicative excise of 0.06 cents – less than 1/16th of one cent – would fund the subsidy.
The Government also announced that any changes to excise would be reviewed prior to implementation in the light of market conditions.
Given current market conditions the Government has decided there will be no increase in excise to fund this incentive. The incentive for low sulphur premium unleaded petrol will be funded from the Budget. Excise will remain at 38.143 cents the same rate as was fixed when indexation was abolished in 2001.
This measure delivers on the Government's commitment in the Measures for a Better Environment package announced on 31 May 1999 to provide encouragement for the conversion to cleaner fuels. It is also consistent with the Government agreement with the Australian Democrats.
New, lower sulphur, mandatory standards will apply to diesel from 1 January 2009. Incentives to take up these standards from 1 January 2007 will be reviewed in the period prior to implementation to ensure it aligns with new fuel standards and market conditions.