Simon Crean (Hotham, Australian Labor Party, Shadow Minister for Regional Development) Share this | Hansard source

I rise to support the member for Blaxland and others on this side who are in support of the amendments to the Petroleum Retail Legislation Repeal Bill 2006 moved by the member for Batman. This is important and timely legislation because the soaring price of petrol is putting enormous financial pressure on Australian families. The families that are feeling the biggest burden are those in rural and remote Australia, as you would be aware, Mr Deputy Speaker Scott. It is a financial pressure that is compounded by the third interest rate hike since this government was elected—an interest rate hike the government promised would not happen.

The Reserve Bank’s measure of debt servicing shows that mortgage interest repayments now consume a higher proportion of household disposable income than ever before. They now consume 11 per cent of household disposable income, compared with 9.3 per cent when interest rates peaked in 1989. Reserve Bank figures also show households now have more debt as a proportion of their income. Household debt is now equivalent to 150 per cent of household disposable income, compared to 60 per cent in 1989. This comes to complete the triple whammy as the government’s unfair industrial relations laws put further pressure on families by forcing a race to the bottom on wages.

The bill itself is a belated response to the problem of spiralling petrol prices—but it is not enough. The Prime Minister says that there is nothing he can do when the family budget is being stretched by this triple whammy of higher petrol prices, even higher interest rates and uncertain job security. Many people wonder how they will be able to visit their family, get the kids to school and make ends meet. Of course, the government simply washes its hands and says there is nothing it can do. The government is wrong.

We on our side of the parliament do acknowledge that price hikes are a reflection of global prices, but there are some things—important things—that the government can do. Repeal of these acts is only part of that response. Labor support the repeal of these two acts—in fact, we proposed it seven years ago, but then subject to two conditions: that an oil code be drafted and agreed between the parties in the sector to address important market issues and that the Trade Practices Act be strengthened to increase competition and support independents. The repeal of the acts only meets one of those conditions. It does introduce an oil code which ensures all participants, including independents, are subject to the same regulatory requirements, including a nationally consistent approach to terminal gate pricing, but it does nothing to strengthen the Trade Practices Act. I will come to this later.

So here we are, seven years after Labor proposed this course of action. The government is acting, but only in a half-hearted way. It could have been different. Seven years ago the price of petrol was 69c a litre. Hard as it might be to believe in this current environment, that is where it was seven years ago. Firming up the regulatory regime and giving the ACCC stronger powers to deal with predatory pricing could have been an important factor. It would have led to lower prices at the bowser now had the government acted.

As minister assisting the Treasurer and with responsibility for the Prices Surveillance Authority, I remember that during the first Gulf War when world oil prices were rising sharply we used the role of the ACCC to restrain the timing and extent of their impact on Australian motorists. So the government can make a difference if they have the will. They have the power to influence, but today the Prime Minister argued that that power is limited. I say that it has been made more limited by the failure of this government to act. We gave the ACCC the opportunity; this government will not. The member for Hunter even drafted a letter to the ACCC to give it the power to investigate petrol prices without the Treasurer’s consent. All they have to do is to sign that letter. Interestingly, the Prime Minister does not deny that he has the power; it is just that he said he will not sign the letter. It is also interesting that in his response in the parliament he added the proviso ‘not at this stage’. So, if the Prime Minister has the power, why won’t he act now? Why wait? Why give motorists more pain? The government can act; the problem is that they will not act.

I support the amendments moved by the member for Batman. They are necessary amendments and will strengthen section 46 of the Trade Practices Act to develop a comprehensive approach to petrol retail pricing and provide greater scope for dealing with market power abuse. Amendments to section 46 of the Trade Practices Act will clarify the sort of behaviour that constitutes an abuse of market power, and it will provide a line in the sand to defend small business. The amendments proposed by the member for Batman will also lower the threshold for the ACCC to provide that abuse of market power has occurred and will ensure that recoupment of losses is not seen as an essential for market abuses to occur.

These amendments were recommended by the 2003 Dawson inquiry and by the 2004 Senate recommendations for reform, yet the government fails to act. It is another example of a wasted opportunity. Australian motorists are slugged, the Prime Minister cries crocodile tears and says he cannot act, but these amendments demonstrate that he can. In our view, they will have an impact. So the question is: how long will it take this government to address the problem of potential abuse of market failure?

This is an abuse that has been reinforced in recent court decisions. If Labor is elected, we will legislate, but the truth is that we could get progress now if the government were prepared to accept the amendments or the thrust of them. Labor has succeeded, importantly, in getting the issue of petrol pricing referred to a Senate inquiry. Again, the Prime Minister posed the question: why is another petrol inquiry necessary? We say it is necessary because it will examine the relationship between the wholesale price and the retail price and the regional differences. What is clear from the inquiry hearings to date is that the ACCC cannot formally investigate anticompetitive behaviour in the petrol market. They can look at prices; what they cannot do is look behind them. So, when the Prime Minister says, ‘What can the government do?’ there are three important areas in which they could act.

The first area is that of the powers of the ACCC. The ACCC must have greater powers to formally monitor petrol prices and demand information from oil companies and retailers. It is well within the powers of the Treasurer and he must take responsibility. The second thing the government can do is to reduce our dependency on foreign oil—and it is interesting that we had a statement from the Prime Minister attempting to go down this route today. The truth is, though, that it has no real plan to do it. Its proposal to subsidise car conversions to LPG is plain theft of Labor policy. Any measure to encourage the use of alternative fuels is well overdue. But the government has failed to address what it says is the root cause of rising petrol prices and improved transport fuel security. The government has had 10 years to do something about the problem, and it has failed at every point.

Labor, on the other hand, has a plan to reduce our dependence on imported oil and to put in place new policies that can encourage alternative energy use. Labor has proposed important measures, including, firstly, finding more gas and oil in Australia by re-examining the depreciation regime for gas production infrastructure; secondly, allowing the selective use of flow-through share schemes for smaller operators; thirdly, conducting a feasibility study now to convert gas into clean diesel in Australia; fourthly, promoting the use of alternative fuel vehicles and making alternative fuel vehicles tariff free, cutting up to $2,000 off the price of current hybrid cars; fifthly, granting tax rebates for converting petrol cars to LPG; and, sixthly, implementing what we have termed Labor’s ‘green car challenge’ to get competitive value-for-money green cars on the road. Labor has also called for the protection and promotion of ethanol, biodiesel, LPG and CNG through a 2009 review of the government’s plan to levy excise on these fuels. This will determine whether a deferral of the excise is required. Ethanol and biofuels have the potential to develop regional industry and jobs and to start addressing the problem.

The Prime Minister today had a go at me and the member for Batman. No doubt in the course of time they will also have a go at you, Deputy Speaker McMullan, because we were very critical of the government’s approach to the ethanol industry at the time. Bear in mind that this was a government that got elected in 1996 promising to keep Labor’s ethanol bounty and in their first budget scrapped it. So do not give us this hypocrisy about Labor not supporting the ethanol industry. It was the government that attacked the ethanol industry and then rearranged the support so that effectively only one person, Mr Dick Honan, got the benefits of the ethanol scheme. The Prime Minister’s statement today quoted me, as the then leader of the Australian Labor Party, as talking about:

... having their engines wrecked by ethanol fuel.

The Prime Minister often says that you have got to read the statements quoted by the opposition in context. Let us have a look at his quote of mine in context. That statement came from a question I asked him in this parliament. I was criticising the government for failing to put a cap on the amount of ethanol going into petrol—a 10 per cent cap; what is now called E10. We were saying that you had to put a cap on ethanol because the automotive manufacturers and the motoring authorities were saying that if you did not and it exceeded 10 per cent it ran the risk of wrecking those vehicles. That is where the words came from.

But, as we now know, there was that infamous secret meeting that the Prime Minister’s office had with the proponents of ethanol. My question to the Prime Minister was why he would not agree to a 10 per cent limit. He had said there was no way he was going to agree to the limit if it affected the operations of Manildra. That was the cause of our complaint against the Prime Minister—that he was protecting a mate and protecting him in the worst of possible ways. So I reject the Prime Minister’s assertion that we in the Labor Party have not been serious in supporting ethanol as an alternative.

The third area we have to address in the question of the impact on motorists is the taxation regime on petrol. The government continues to claim credit for freezing petrol excise. That was never its intention when the GST was introduced. It was forced by public pressure to act following a campaign spearheaded by Labor. The government promised that petrol prices would not rise with the introduction of the GST. It said that it would reduce the excise by 6.3c a litre to compensate for the GST. That was when petrol was 69c a litre. It would have offset any impact of the GST, but the arithmetic shows that it only worked if petrol was priced at 77c a litre or less. This is certainly not the case nationally today. It was not the case then and never would have been in the bush. We argued that the government could never deliver on its guarantee that petrol prices would not rise because of the GST, particularly in the regions. That was when the government came up with the solution called the Fuel Sales Grant Scheme. We said at the time that it would not work. It did not. But the problem has got worse because the government has run up the white flag. It scrapped the scheme, but it put nothing in its place. As a consequence, people in the regions now have to pay up to 3c a litre more for their fuel.

The other guarantee that the government made was that there would not be a tax on a tax when the GST came in. Of course, there is. Yes, the excise is frozen as a result of a campaign that Labor spearheaded, but it continues to attract the GST. It is a tax on a tax and something the government said would never happen. The GST take gets bigger the higher the petrol price. It is the new indexation. So there is no point coming in here seeking virtue in freezing excise when the GST is a movable feast.

The Senate inquiry which I have referred to also gives the opportunity for this issue to be looked at in detail. What can be done to ease the price differential between city and regional areas and ease the burden on regional motorists? The Prime Minister’s argument is that the solution is not through cutting indirect taxes but through direct tax cuts. The trouble with this response is that the government has increased the price of petrol in regional Australia by up to 3c a litre with no compensation in tax cuts for people living in those areas. The regions are paying more in indirect tax on petrol, but they do not get any more than metropolitan areas in tax cuts. So why not provide a targeted tax rebate to regional Australia? The low-income tax offset contained in this year’s budget shows that the government is prepared to embrace the notion of targeted relief—in this case, to low-income earners—but there is no targeted tax rebate for regional and remote Australians who have been slugged with even more fuel tax.

The government could also review the tax zone rebate and see what opportunities exist for targeted relief. These are all options open to the government. It is nonsense to suggest that there is nothing the government can do. It puts the lie to the claim that another inquiry into petrol pricing would not achieve anything. Let us make the inquiry work and come up with some solutions to alleviate the city-regional price differential.

As for the revenue saved by scrapping the Fuel Sales Grant Scheme, the government says it will all go to roads. But there is no guarantee that the $810 million saved from the scheme will actually go to roads in regional and rural Australia. Think of it: it is only the motorists in regional and remote areas who have to pay the extra 3c, but motorists in regional and remote areas are footing a huge proportion of the bill with no guarantee that it will go to their roads.

Repealing these acts is an important start. The government should have acted seven years ago. It is long overdue, but it is a half-hearted response. The government does not go far enough. Let us strengthen the Trade Practices Act, let us use the Senate inquiry to look at solutions to alleviate the differential, let us revise the unfair tax on petrol, and let us implement a comprehensive plan to reduce Australia’s reliance on foreign oil. Labor stands by its long-standing policies for national mandatory terminal gate pricing. I say to the government: adopt our amendments, do something in a constructive way to help struggling motorists. (Time expired)

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