Chris Bowen (Prospect, Australian Labor Party) Share this | Hansard source

The Petroleum Retail Legislation Repeal Bill 2006 repeals two outdated and anachronistic pieces of legislation which have outlived their usefulness. Indeed, the government has already acted by administrative fiat to neuter the legislation in the acts that are being repealed under this bill. However, the new system to be put in place by the government will not do enough to support small business operators in the petrol industry, and the government should be strengthening the Trade Practices Act to provide for better protection.

The bill will repeal the Petroleum Retail Marketing Franchises Act 1980 and the Petroleum Retail Marketing Sites Act 1980, which were originally designed to control oil company ownership and operation of service stations. Under the existing laws, oil companies can directly own and operate about five per cent of service stations. However, supermarket chains such as Coles and Woolworths, which operate outside the existing regulatory system, now control over 50 per cent of the petrol retail market. So the acts’ effectiveness has been substantially reduced. They are pieces from another time.

Generally speaking, I am not a supporter of blunt economic instruments like ownership restrictions. They are quite Brezhnevian in their character and they are, as I said, a leftover from another era. They do not, in my view, usually achieve the noble reasons for putting them in place. And that is the case with these two pieces of legislation that are being revoked in this bill.

Since the laws came into place, 30 per cent of Australia’s petrol stations have closed. Of course, when the laws were introduced, petrol stations were owned by either oil companies or independent operators. As I said, that is no longer the case. There are other players, primarily large supermarket chains that control over 50 per cent of the petrol market. So the Petroleum Retail Marketing Franchises Act 1980 and the Petroleum Marketing Sites Act 1980 are now more ineffective than ever in protecting small business from predatory behaviour.

There is a much better way of protecting small business, and that is to strengthen the Trade Practices Act. This was recommended by the 2003 Dawson review and by a Senate committee in 2004. My attention has also been drawn to support for a strengthening of section 46 of the Trade Practices Act by Professor Frank Zumbo, Associate Professor in Business Law at the University of Technology, Sydney. Associate Professor Zumbo has argued for an ‘effective’ section 46 of the TPA to deal with anticompetitive, below-cost pricing; anticompetitive cross-subsidisation; claims of unconscionable conduct; and unfair contractual terms. The professor said:

Without appropriate safeguards, in the areas outlined above, any small business operating after the repeal of the Franchise and Sites Act would struggle to survive as a distinct competitive force in petrol retailing, which would be to the detriment of Australian consumers.

I endorse those remarks. Labor has been calling on the government to beef up section 46 of the Trade Practices Act for years. I acknowledge the efforts of honourable member for Hunter, who is in the chamber tonight. He has been talking about this for years and pushing the government to beef up section 46 of the Trade Practices Act.

Of course, protecting small business is a worthy end in itself. But in the case of petrol, in particular, it is vital for the consumer. There is a fair argument to make that independent petrol retailers play an important role in keeping petrol prices lower than they otherwise would be. It is basic economics. A fully competitive market is better for prices than an oligopoly. The government’s failure to beef up the Trade Practices Act to protect independent petrol retailers from anticompetitive behaviour is entirely consistent with the government’s failure to do anything about petrol prices.

We have always said on this side of the House that petrol prices are a worldwide phenomenon. We have always said that the main driver of petrol prices is world oil prices, but where we differ from the government is that we have said that that does not mean the government can sit on their hands and do nothing. It does not mean that the government cannot make changes to improve the situation for consumers.

This government has, up until today, done absolutely nothing to re-examine the depreciation regime for gas production infrastructure; nothing to allow the selective use of flow-through share schemes for smaller operators; nothing to allow the selective use of flow-through share schemes in the gas, oil and mineral exploration industry; nothing to make alternative fuel vehicles tariff free, cutting up to $2,000 off the cost of hybrid cars; nothing to work with state and local government to give city traffic and parking advantages to these types of vehicles; nothing to conduct a feasibility study into a gas-to-liquids fuels plant in Australia; nothing to offer petroleum resources rent tax incentives for developers of gas fields which provide resources for gas-to-liquid fuels projects; nothing to examine a new infrastructure investment allowance for investment in Australian gas-to-liquids infrastructure; nothing to develop a targeted funding scheme for research and development in this area; nothing to work with industry to improve engine design and fuel quality standards; nothing to ease the regulation of biodiesel production on farms and encourage a sustainable ethanol industry; and nothing, up until today, to encourage the granting of tax rebates for the conversion of petrol cars to LPG.

Today, we saw the Prime Minister come into this House and press the cut and paste buttons. He went to Kim Beazley’s speech of October 2005 on fuel alternatives, and he cut and pasted. He pressed the ‘cut’ button and cut bits out of Kim Beazley’s speech—not all of it, but some of it—and then he pressed the ‘paste’ button and pasted bits into his own speech. But he left out bits of Kim Beazley’s speech.

Finally, after a tense party room meeting last Monday—where backbenchers said: ‘Prime Minister, wake up. This is an issue. People are hurting. We’re losing votes’—we saw the Prime Minister come into this House and do something about petrol prices. Even today, there was nothing about monitoring petrol prices or giving the ACCC real power. There was nothing to direct the ACCC to deal with the situation that the Chairman of the ACCC has described as ‘fishy’.

The honourable member for Hunter and the honourable member for Werriwa gave the government the chance last week. A letter was even written. Again, it would have been an easy cut-and-paste job. The government are prepared to do the cut-and-paste job on petrol prices today but they are not prepared to do the cut-and-paste job on the letter that the honourable member for Hunter prepared last week, directing the ACCC to deal with this.

There is nothing in this legislation to investigate the system which has been criticised by the government’s own backbenchers. Again, I am drawn to the comments by Senator Humphries—comments I endorse. He said:

The relatively opaque nature of petrol prices means there is an opportunity for parties in the supply chain [to make] discretionary decisions about how much to charge to exploit motorists.

He is dead right. We all agree with him. This side is in the white heat of agreement with Senator Humphries. His own side is doing nothing about backing up those comments with real action.

We are not pretending that by punishing price gouging there would be a miraculous reduction in petrol prices overnight—of course there would not be; of course it would not happen—but, if we can reduce petrol prices by even a small amount by taking out anticompetitive practices and by taking out price gouging, we will have made a contribution. I am sure people who are paying $1.40 and $1.50 at the petrol pump would appreciate even a bit of relief that this government could offer through getting the ACCC to do a bit of fair dinkum monitoring and enforcement of proper pricing practices and competition.

I also agree with the NRMA, which last week issued a press release. It is a lengthy press release but a worthy one, and I am going to share it with the House in some detail. In this press release, the President of the NRMA is reported as saying:

BP announces that in the coming weeks it will be shutting down its Alaskan oil fields for repairs and the price of oil jumps to a record $77 per barrel—surely that’s all the proof we need that we must develop an alternative fuel industry now.

This is not the member for Hunter or the member for Prospect; it is the President of the NRMA. The press release continues:

The future of Australia’s energy supply is being held to ransom by the highly volatile nature of international oil prices. It is motorists that bear the brunt of this and we must accept that something can be done about it now.

Mr Evans said that as a first step the Federal Government must give the ACCC the powers it needed to ensure that oil companies aren’t using leaky pipelines in Alaska as an excuse to gorge on record profits.

“At the time of Hurricane Katrina last year oil companies were helping themselves to record profit margins—this must never be allowed to happen again,” Mr Evans said.

He continues:

“However, the long-term security of energy in Australia can not be assured by keeping a lid on prices today.

“Australia needs to act now to develop an economically sustainable alternative fuel industry. This needs to include but not be limited to the production of ethanol in this country.”

“Apart from ethanol, we must also consider a range of options such as other bio-fuels, liquid petroleum gas, natural gas and renewable options.”

              …              …              …

“It will strengthen our economy by creating a new export industry and could generate much-needed job growth in regional areas.

“Australia is falling behind much of the rest of the world in securing alternative fuels for the future—it’s time to catch up.”

That is the view of the NRMA. That could have been a cut-and-paste job. Those could have been the comments of the member for Hunter. He has been saying it for 12 months. The Leader of the Opposition has also been saying exactly that for 12 months. The government has been deathly silent. I endorse the comments of Mr Evans. It was a very good press release. As I said, it states things that the Labor Party has been talking about for 12 months.

The government’s failure to introduce proper protection for small businesses and independent petrol operators in this bill will make the situation described by the President of the NRMA worse. The government says that it is the friend of small business, yet we see very little in this legislation to protect small, independent petrol operators continuing in business.

Today the Prime Minister reminded us of his heritage in a small, independent petrol operation. He reminded us that his family had been involved in the industry. It should be more of a reminder to him to take a more proactive role in protecting small business by strengthening the Trade Practices Act. The Senate has called for it, an independent review has called for it and Labor has called for it. It is time for the Prime Minister and the government to do it. If they do not act now, small business will suffer, and Australian consumers will also suffer through ever-increasing petrol prices.

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