Tony Windsor (New England, Independent) Share this | Hansard source

Well, you said ‘around the edges’ twice. On the second occasion I think you said ‘around the fringes’. That, plus the Special Minister of State’s response in the chamber today to a letter from the member for Throsby, shows that the government has not thought through the processes that were announced yesterday. This is policy that is being made very much on the run. I think it is commendable that we do encourage the use of liquid petroleum gas in our vehicles. It was commendable some years ago when about one million Australians converted to LPG, because there was no tax imposed on LPG for use in motor vehicles.

Last year the government changed that and as of, I think, 2012 there will be an excise, based on energy equivalents of, I think, 12c a litre imposed on LPG.. I raise that issue for a number of reasons. The Prime Minister made some statements yesterday that he thought about 300,000 people would actually take on board LPG because of cheaper operating costs, even though they were going to have some capital outlay—a subsidised outlay, nonetheless, but some form of capital outlay.

The motorists that I talked to—and I had people in my office some months ago, before it was even proposed that there be a subsidy to encourage people to have vehicles fitted for LPG—were concerned about the changes in the tax regime coming along. They were concerned about the price rise in LPG, which was tied to the petroleum price rise. They were concerned about the profit taking of the fuel companies themselves and the lack of surveillance in profit gouging that was occurring. So there is concern out there that if they do invest in LPG it may be good at the moment and it may have all those environmental benefits—and I am sure it does—that the member for Macquarie spoke about but the government can change the rules. It has done that in the past. It has gone from no excise to 12c a litre excise. It can reverse that or it can double it. Are people going to trust the administration in terms of the government’s thirst for energy taxation? Are they going to trust the fuel companies, who are going to be in control of the outlets for LPG? The fuel companies have strangled—with the government’s assistance and the Labor Party’s assistance—the ethanol industry and the biodiesel industry in Australia because they have control of the outlets. There is more than enough money for potential investment in and bankrolling of ethanol plants and biodiesel plants if the fuel companies take on what is called offtake arrangements from those producers. Part of what happened yesterday is really window dressing or, as the member for Macquarie said, addressing the edges of the problem, to buy time for the fuel companies to move away from the call that is being made by many in this parliament—and I am pleased to see that there are members on both sides of this parliament now starting to make this call—for a mandate in the use of E10 ethanol in our vehicles.

As I mentioned the other day, I have just returned from a visit to the United States, where I visited 10 ethanol plants and some biodiesel plants. I saw the very positive attitude that there is in America. There is a positive attitude from the policymakers, who are recognising that they cannot depend any longer on the Middle East and on other parts of the world for their energy needs and that they have to look at alternatives. Some states—California, for instance—have had an environmental requirement for the carcinogenic discharges and the fine particle emissions from modern engines. Because of the impact on the health of their communities they have had to look at other ways of oxygenating fuel and keeping the octane rating up et cetera that is less dangerous to human health. So the Americans—at a policy level; at a state level, where they have mandated; and at a federal level, where they have put in place some restrictions for Brazilian imports—have encouraged an industry to develop to the stage where there are 106 ethanol plants in production in America at the moment, and 60 million tonnes of corn out of a total production of about 285 million tonnes of corn is now going into energy for their citizens rather than the corrupt food market which we here all know only too well from Australia’s involvement in the wheat market.

So the announcement yesterday, welcome as it is, still faces a degree of scepticism within the community. What price will the fuel companies set? There are no restrictions on the fuel companies. They will in fact have some degree of control over these people who are converting to LPG because they will have made a capital investment and they will feel obliged to use it. There could be price manipulation to take advantage of those people. The other issue is policy change to the taxation regime, and we have seen that in the past. The member for Lyons mentioned compressed natural gas, and I think that is something that really does need to be looked at. I understand that there are some problems. But it is cheap, it is combustible and it will burn in modern engines—although I know that there are some modifications that need to take place. If we are looking at the longer term and the comparative advantages that this nation has, we have to look at natural gas as a potential energy source for the future.

To avoid a mandate with the growing pressure on fuel prices, two of the fuel companies, BP and Caltex, announced last week a drop of 3c a litre in E10 fuel. Yesterday there was some encouragement from the government for an opening up of bowsers. I have been putting E10 fuel into my vehicle for about six years now. I obtain my fuel from a small community near Tamworth. I happened to call in there the other day, the day after that Caltex press release came out saying that they were dropping the price of E10 fuels by 3c. I spoke to my reseller, who is one of those people who has been promoting this in a small way for a long time. He has not been there only since it became fashionable; he has been selling Bogas E10 fuel for six or seven years, and I have been buying it from him for that period of time as well. He was a little annoyed because the day after Caltex dropped or discounted their price—and there are some semantics here about the price they are actually dropping—and put out a favourable press release about the government, saying, ‘This hasn’t happened because of the threat of mandating; it’s happened because of incentives by the government,’ which gave away the real thoughts in the fuel companies’ minds, who have gone into this gimmickry so that the government will not force them to use E10, the wholesale price of E10 fuel to my reseller went up 1.8c per litre. So, when everybody is lauding the fact that now ethanol is going to be available across the nation, that it will be coming out of every bowser that has ever existed, people who have been reselling that product for many years are being penalised—and there are some similarities between this bill we are talking about today, the Petroleum Retail Legislation Repeal Bill 2006, which will repeal the Petroleum Retail Marketing Franchise Act and the Petroleum Retail Marketing Sites Act, and the impact on the smaller independent operators, the fuel distributors and their relationships with the major companies.

I bring that point to the attention of the House because I think it does show that a number of things need addressing. If we are serious about fuel pricing and price gouging, we have to start looking at the terminal gate price. I know that Western Australia does, and I think one other state has a better way of administering or keeping a degree of surveillance on prices. My information is that the ACCC does not do much, if anything, in terms of terminal gate pricing and wholesale pricing, because there are a whole range of inconsistent messages coming from the fuel companies themselves. We heard the other day that there is going to be a discount. People assumed that that was a price drop. That discount could be removed next week or in a month’s time. When the heat is off this issue, that discount could be removed.

On the broader issue of taxation receipts and energy, I would like to suggest to the government that the addiction to fuel as a source of revenue is something that we should look at. I am very pleased that the member for Aston is at the table, because I have regard for some of his economic thoughts from time to time. I am sure he would agree that the taxing of a comparative advantage in terms of a nation’s capacity to trade internationally and be an effective economy—the taxing of energy—under the guise that it is to be used as a rationing instrument so that you can reduce consumption is something that we should start to review.

Some years ago, before I was in this parliament, when the GST was originally discussed—I was privately a supporter of the GST—I think a member of the cabinet, whom I will not name, suggested that the excise on fuel be removed totally and that the GST be increased slightly to take account of the revenue loss. In these times, when energy is so important—as the member for Macquarie said, not only in terms of transport for individuals but in terms of our comparative advantage as a trading nation—it is all very well to say we are the third lowest in the world, but 40 per cent of the petrol price is tax. To suggest that that is good economic policy or good taxation policy is a nonsense. In the next breath we will have people—I think the trade minister must be overseas today; he is not in the chamber—trying to deal with others overseas with respect to level playing fields and achieving access and advantage for our product. We are trying to keep the manufacturing industry in Australia alive under possible threat from the Chinese free trade agreement and the Indian free trade agreement. All these things are happening when we are tying our own people to the floor. Some people say, ‘For some businesses it is a cost; they can write it off their tax or they can get a rebate.’ Some of them do; some of them do not. For a modern economy to have energy as a revenue source is quite wrong. I think the Americans are starting to see that.

The other day in a matter of public importance the member for Page accused the Americans of entering into a subsidised existence for ethanol and renewable fuels. To suggest that the oil market is some sort of pure market is an obvious joke. When I was in America, many Americans, particularly those in the renewable fuel business, were saying that the Iraqi war was a subsidy of the fuel industry and that it was, in a sense, a protective arrangement for the energy assets of the capitalist world. People would argue about that, but those arguments have to be of some significance. The Americans have moved on. The Europeans have moved on. In Europe now the biodiesel market has exploded. It is having an impact on the world canola oil and vegetable oil prices, on the renewable oil price.

People ask, ‘Why are the Europeans subsidising these things?’ With the uncertainties in the world at the moment, you only have to look at what the Europeans went through in the Second World War. They thought they were self-sufficient in food. The reality was something quite different. We now argue that they subsidise their farm community and we put them down because, in our eyes, they will never run out of food again. They thought that before the Second World War. In that sense, they have protected themselves. The Europeans and the Americans have moved on. As the member for Lyons said earlier, in a matter of 12 or 15 years the Brazilians have moved from a situation of being 80 per cent dependent on imported oil product for their energy to being 100 per cent self-sufficient. They have done most of that through renewable energy, through the fermentation of sugar starches into ethanol.

So there is enormous capacity to play a role in this debate. I would encourage all members of this House not to give up on this. Do not just sell the peripheral and argue that you have cured the problem, because you have not. The other day, the member for Page said words to the effect—I do not want to verbal him—that it would be impossible to produce a mandated 10 per cent. When you do the numbers, you find that 10 per cent is equivalent to about six million tonnes of grain. We produce about 30 million tonnes of grain in Australia. Ten per cent of that would be six million tonnes or about two-thirds of the sugar production. It is quite possible, quite easy over a period of time—four or five or six years or whatever—to produce a mandated 10 per cent. The only member of a party that I hear who is really serious about this—I know the Independent members are serious about it—is the National Party’s Senator Barnaby Joyce, and I give him credit for that. I have no doubt that he is serious about his views on this issue and the impact it has on regional communities and the impact it could have on agriculture generally.

Another issue we do not look at seriously is Australia’s very high rate of nitrogen use—again, that is oil driven and the price has skyrocketed. We use it not only to achieve yield but also to achieve a protein level that gives a premium in the global wheat market. With ethanol production, in which you do not need high protein in the grain, we could see a reduction in the use of nitrogen fertilisers and a complete change in the breeds of wheat. We would be breeding wheat for starch production. Feed wheats, which are poorer in protein, have a higher starch content, and that is exactly what the fermentation of starch process is looking for.

I encourage the government to look at a number of these issues. Do not give up and trivialise this issue. It is too important not only for the individuals who drive cars and the businesses that rely on petrol, diesel et cetera as an energy source but also for our capacity to be independent of others for our energy needs into the future. I encourage all members of the House, whether they be in the government or the opposition, to get serious about renewable energy. Stop looking for the negatives. Look at what other countries are doing with their own energy resource security. Look at the problems we are having globally with oil in particular and start to put in place policies that are going to do something about it.

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