Cameron Thompson (Blair, Liberal Party) Share this | Hansard source

After all that hot air from the member opposite, it is great to be able to stand up and create some of my own. Fuel is causing a lot of drama for Australians. We have got a situation of continually rising prices causing real pain, and that is even in the state of Queensland, where, as you would probably know, Mr Deputy Speaker, there is not a petrol franchise fee. That fee does not apply in Queensland; it never has. All the other states of Australia had a petrol franchise fee, which was rolled into the GST. So we in Queensland are privileged because the price of our fuel is still, on average, about nine cents a litre cheaper than in all the other states. So while we in Queensland feel the pain, it is hard to imagine how people are putting up with the incredible prices that they are paying in the southern states and elsewhere in Australia.

It is a pleasure to speak on the Petroleum Retail Legislation Repeal Bill 2006 because there is no doubt that we have come a long way down the road since 1980, when the previous bills were created. We have come a long way to where we are today. So much has gone on and there have been so many changes, particularly in the automotive industry and fuel retailing, that it is hard to see how those bills could possibly still be regarded as effective in today’s environment. The world has moved on and Australia has changed dramatically, and that is reflected in the government’s treatment within this bill of this area, with the introduction of the new Oilcode and the removal of quotas on the oil majors as to the number of sites that they can own. You would have to be Rip Van Winkle not to notice that today in Australia shopper dockets are playing a really big part in our process of buying fuel. People are religiously collecting shopper dockets to get what they regard as bargains as they try to minimise their fuel costs.

The shadow minister said that we needed to look very strongly at alternative fuels and he was roasting the government, saying the government needed to act. That was an amazing set of words to be coming from the member of an opposition that killed off ethanol quite some time ago with a whole lot of spurious nonsense about the dangers that it supposedly posed to motor vehicles. They concocted a bodgie case on that. I remember that a couple of their members were fingered in the process of doing it. They put about false claims about ethanol and its dangers and, as a consequence of that, across my electorate I still come across fuel pumps that have these hideous little stickers on them saying, ‘Does not contain any ethanol,’ as if that is a bad thing.

Ethanol actually boosts the octane content of petrol. It is a welcome addition to any fuel. I feel very strongly about this, because we could produce it so readily in Australia. Shame on the Labor Party for killing it off, given that it could have been introduced so much more effectively several years ago. Shame on them for going about Australia and telling a whole lot of untruths about the impact of ethanol on people’s motor vehicles and for continuing to maintain that for such a ridiculous period of time. They fallaciously linked it to the Manildra group and to all kinds of claims that they regarded as being politically advantageous to them to make. The result of their pursuing political ends is that the national interest has been badly set aside. We have not made progress down the road to ethanol—there has not been an uptake of ethanol—because Labor Party members have been telling everyone that they meet in the street that ethanol is no good. They have been doing that again and again, but today the shadow spokesman is trying to perform a backflip and trying to get those words out of his mouth about ethanol being good. It must be hard for him to do that, but at last Labor are starting to get with the strength and the reality of what is going on all over the world.

Ethanol is a great alternative, particularly for a country like ours which produces heaps of sugar cane. A lot of people simplistically say, ‘Oh, sugar cane is what you get your ethanol from,’ but there are plenty of other ways to get ethanol. We have lots of low-grade sorghum produced in this country that could go into ethanol. There are all kinds of other grain crops and opportunities. We have got so much land and the capacity to generate sources of ethanol; it is there all over the country.

What we need to do is to look at mandating that ethanol and saying, ‘Let’s have 10 per cent of it in our fuel.’ It certainly will not harm anything at 10 per cent. I think we could even have 20 per cent. That is certainly being done in the US. I think in the US now they are running something like 85 per cent ethanol in some cars. That brings me to the situation in Brazil. In that country they are using flex-fuel cars and they are making big savings because of the use of ethanol in their fuel. That use of ethanol is something that I think needs to be carefully examined by Australians, and I think we need to pursue it.

I would like to quote a couple of articles about the way things are going in Brazil. The first one comes from the Guardian from 23 November 2005. It traces the history of what has happened with ethanol in Brazil. The article was entitled ‘Sugar powers a revolution on Brazil’s roads’. It says:

In the 80s the then military government reacted to the oil price shocks of 1973 and 1981 by offering tax advantages to run cars on ethanol - so much so that between 1983 and 1988 up to 90% of vehicles were powered by the fuel.

It goes on to make an interesting point. It says:

The bottom fell out of the market when oil prices collapsed - and sugar cane producers jacked up ethanol prices more than 40%.

The difference now is that drivers have a much greater choice, being able to mix ethanol and petrol at will in “flex fuel” engines that Volkswagen introduced in 2003 and are being built by rivals such as Peugeot, which launches a 1.4-litre version next month ...

And it goes on to mention other producers. So fluctuations in the price of sugar and oil have meant in the past that, for example, overnight, sugar producers suddenly do not want to sell you their ethanol. When flex-fuel is the way to go, when that provides the motive power, there is no reason why those kinds of market forces will impede in any way the growth of an ethanol industry in Brazil—and there is certainly no way that it will impede the growth of an ethanol industry in Australia.

The article quotes Serge Habib, Citroen’s managing director in Brazil, as saying that in Brazil as many as 80 per cent of new Brazilian built cars are powered by flex-fuel engines. I heard a member of this parliament saying the other day that Holden is producing flex-fuel engines in Australia—or certainly one of the Australian producers is producing them here and exporting them to Brazil. So we have a ready-made source of flex-fuel cars already here in our country. We can buy locally in terms of the fuel and we can buy locally in terms of the vehicles. According to this article, Mr Habib, from Citroen, said that producing ethanol from sugar is profitable as long as oil costs more than $37 a barrel. It sounds to me like we will be producing ethanol profitably till hell freezes over, the way things are currently. That price of $37 a barrel is a price that we are probably not likely to revisit in the near future. I think we can look at this opportunity to switch to ethanol.

The article makes another point about what has happened in Brazil—and I am looking at the way this impacts on our fuel industry in Australia. It quotes Luiz Custodio Martins, president of a sugar and alcohol union in Brazil, who said:

The Brazilian economy has saved $400bn in imports since the creation of the National Alcohol Program, and that’s without mentioning interest ...

So Brazil has made $400 billion in savings in terms of imports. We are a country that has a lot of imported fuel. The opportunity for import replacement with ethanol is a very good thing.

We did not hear an awful lot on ethanol from the opposition. They still find it a dirty word. They still cannot bring themselves to recognise it as the most important option that faces us. I heard them talking about gasification—that is, turning gas to liquids—using coal to generate energy. Honestly, the member opposite quoted Paul Keating as having said that many years ago. I reckon they must have had that discussion in a telephone booth somewhere out the back of Winton, because it is not something that they have paraded down the street on. It is not something that they have brought on the cabaret for—they have not lit the lights; they have not put on their tights. They have not been out there saying anything about what to do with this gas to liquids option. It has hardly rated a mention anywhere within the Labor Party, and now we are in a position where, suddenly, it is apparently, according to them, an even greater option than the logical conclusion of a transition to ethanol.

One of the major issues that we are all discussing at the moment is the price of fuel. It is affecting people’s livelihoods and it is something that we have to address directly. This bill will modernise the legislation, remove irrelevant restrictions on the structure of the petroleum market and create a more transparent, competitive market that will be the best way to deliver cheaper fuel prices to consumers. As I said earlier, there have been significant changes in the retailing of petrol in Australia since the acts repealed by this bill were introduced in 1980. The legislation has not been able to keep pace with these market structure changes. In Australia, the retail petroleum industry provides approximately 38,100 jobs and had a turnover of about $21.7 billion in 2004-05. There are about 6,500 service stations throughout our country. It is a major part of our economy. It is also inseparable from the international economy.

This bill repeals the Petroleum Retail Marketing Sites Act and the Petroleum Retail Marketing Franchise Act 1980. The Petroleum Retail Marketing Sites Act sets quotas on the oil majors—BP, Caltex, Mobil and Shell—restricting the number of sites that they can own, lease and operate either directly or on a commission agency basis. In fact, going back to 1980, there were nine majors regulated in this way. It just shows you that we have now slipped down to where there are basically four and, honestly, those are divesting themselves, in these arrangements with Woollies, Coles and Quix, of their sites. The whole thing becomes an irrelevance to the way fuel is actually being retailed in our country. The only major company now hindered by quotas as a result of those retailing activities is BP. It is at its limit, with no room to compete with the other industry operators in terms of creating additional sites, because it is now the only one being limited by the sites act.

Quotas are based on the volume of fuel each company has the capacity to produce in its own domestic refineries. The act was introduced at a time when there was a lot of fuel available. Independents would be able to acquire internationally sourced fuel while the refiners could sell on their own. The abundant supply meant a potential threat to the independent operators’ viability. Because the acts have not progressed alongside the petrol retailing sector changes in the last 26 years, an effect of the acts themselves has been to encourage trading in the industry outside the coverage of the act. The obvious example of that is major companies divesting their retail operations to the supermarket chains. They have taken a large chunk of operations. This has radically altered the structure and thus the competitiveness of the market. Because of the trend, the competition that was meant to be fostered by the act has been split into those industry traders operating under the act’s coverage and those operating outside.

BP has not divested its operations and is therefore prevented by the act from increasing its number of sites. It cannot increase its competition with the supermarket traders, who are not limited by the acts. As a result, we have a two-tiered system that is, by its nature, discriminatory: applying one set of rules to one party while allowing the remainder to operate without those rules. The ability of the majors to compete with newer market entrants, such as the supermarkets, is limited. It has also resulted in advantage for small business franchisees over small business commission agents.

Since 1980, fuel quality standards have also tightened in line with global environmental best practice. Global supply capacity is stretched, with massively increased demand internationally, resulting from economic growth throughout Asia. The situation of 26 years ago, with abundant supply and lower demand, has been dramatically reversed. The acts no longer serve the industry or the public. This bill will create a fair and open competition between the oil majors, healthy independents and supermarkets. It also allows for what is sure to be major change in the industry in coming years as it finds alternative supply.

As I said before, the obvious source to consider is ethanol. There are also the biodiesel opportunities. I do not mind the opposition talking about coal to liquids or gas to liquids. These are courses that, of course, we must pursue, but I think the one that is staring us right in the face is ethanol. We should be looking at a mandate for ethanol to drive it forward. If we look at that example from Brazil, we see quite clearly that in that country it was necessary for the government to go so far as to provide special tax advantages to promote people running cars on ethanol. That is the kind of step we need to be looking at in this country. We have reached a point that, perhaps, Brazil did way back then. We have reached this point now, and we need to be looking to those positive measures to drive it forward.

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