Steve Gibbons (Bendigo, Australian Labor Party) Share this | Hansard source

I rise to speak on the Petroleum Retail Legislation Repeal Bill 2006 and to indicate my support for the amendment moved by my colleague the member for Batman. Before I go any further I would like to correct some of the anomalies put forward by those opposite—or the very few speakers opposite who have actually spoken on this bill—about Labor’s attitude towards ethanol blended fuel. Labor, it is true to say, has had some major reservations about ethanol blended fuels and expressed those reservations a couple of years ago when the issue first became apparent in this parliament. It did so with good reason. At that time there were situations where a lot of unscrupulous distributors and retailers were artificially putting in ethanol and acetone or paint thinners into petrol or unleaded petrol to try to enhance their profits and increase their margins. It is quite illegal and potentially quite dangerous.

I have had some experience with the use of ethanol as a fuel. In my youth I was involved in competitive motorcycling and we used to use 100 per cent ethanol in those motorcycles because it enabled us to use engines with much tighter tolerances and clearances. The fuel burnt much cooler and enabled us to get more power from those particular engines. But there was a downside: the fuel had a very short shelf life. If it was not extracted from the machines, it used to form a gel-like substance, like wax. That could clog the carburettors and render the engines inoperable. It was very dangerous. If it was to be put into automobile engines in larger quantities—and, remember, the government was not advocating a 10 per cent ceiling on ethanol in those days—and do the same thing, it could render those engines inoperable at the worst possible time and perhaps cause an accident. It is potentially dangerous but certainly lethal. Unleaded petrol is also used in marine engines. If you are in a boat five kilometres off the shore of the coast of Australia and that situation happens, it is very dangerous.

It is more dangerous in aircraft engines. The Rotax engine, for example, is designed to run on unleaded petrol. If it had a fuel mix of higher than 10 per cent, the very same situation could occur. That is what I am advised by some of the experts, and I am certainly not one of those. So that was the reason for Labor’s opposition to ethanol in fuel at that particular time. I am told by the experts that a 10 per cent blend would be quite sufficient to enable most modern automobile engines to run quite successfully. So let us have no more of this nonsense from those opposite about Labor’s attitude to ethanol blended fuels.

Labor will never allow major oil companies to drive any competition out of the market. Australia needs an independent fuel retailing sector that will prevent the major oil companies, and their partners such as Coles and Woolworths, from dominating and controlling the market. That is precisely what this bill is all about.

Labor is supporting and amending this bill on the basis of the government’s so-called commitment to change the Trade Practices Act, something it failed to do in yesterday’s prime ministerial statement on the energy crisis. Competition in the fuel retailing sector cannot occur unless we have a stronger Trade Practices Act designed to encourage competition and discourage less than ethical behaviour by those who seek to dominate particular markets. There can be no clearer example of the need to beef up section 46 of the Trade Practices Act, which contains the main provisions for protecting against the misuse of market power and for protecting and enhancing competition. I use the term ‘so-called commitment’ because I believe—and there is plenty of evidence to suggest—that this government is still not fair dinkum about doing anything to enhance the powers of the Trade Practices Act, especially in monitoring petrol prices and profits.

In fact, while some aspects of Labor policies have been stolen and were incorporated in the PM’s policy statement yesterday, the government has predictably stopped short of providing the ACCC with the power it needs to effectively examine current and future petrol price rises. Petrol prices are one of the three areas where the policies and/or inaction of the Howard government are wreaking havoc on ordinary Australians, especially on the residents of my electorate of Bendigo, which is already one of the poorest, if not the poorest, regions of Victoria and one of the poorest regions in Australia in terms of weekly family income.

These policies and failings have created a new and unprecedented level of insecurity throughout the Bendigo region. Firstly, the government has destabilised the region’s employees with its draconian IR legislation and its potential impacts. Secondly, the government welshed on its election promise to keep interest rates at record lows. Thirdly, escalating petrol prices are a complete disaster for low-income earners in Bendigo. Craig James, chief economist with Commonwealth Securities, has estimated that the average Australian family spends $191 a month on petrol—and this includes an increase of $30 a month since the start of this year. That is an extra $7.50 a week sucked away from motorists at the bowser.

Not only has this government failed to act on rising petrol prices; it has backed the US invasion of Iraq. The US policies since then have created the Iraq chaos that has massively slashed the production of oil in Iraq. No other OPEC oil producer has made up for this lost oil production capacity. The policies of the Howard government in support of the Bush administration are a direct cause of the high petrol prices that Bendigo region motorists have been paying at the pump.

The RACV has warned motorists to purchase petrol early this week to avoid paying up to 15c extra per litre, as petrol prices in Melbourne are likely to rise to $1.50 per litre or more over the next few days. If fuel prices reach the $1.50 per litre mark in Melbourne then regional Victorian motorists will pay much more, as is always the case. Unleaded fuel hit $1.45 per litre for the first time in Bendigo leading up to the June Queen’s Birthday long weekend. Other states that observed the public holiday experienced similar petrol price rises. It is interesting to note that, in Western Australia, where there is no June Queen’s Birthday long weekend, petrol prices remained stable.

There is little doubt regarding the evidence that suggests that motorists are being ripped off by Prime Minister Howard and Treasurer Costello, while they continue to refuse to lift a finger to help. Petrol prices differed by as much as 13c to 14c per litre around regional Victoria over the previous Easter break, and Bendigo motorists paid the highest prices for petrol. Mildura, for example, is situated 600 kilometres from Melbourne and 400 kilometres from Adelaide, yet motorists were able to buy unleaded fuel for around 13c per litre less over the Easter break than motorists were paying in Bendigo. This should prove beyond all doubt the need for an effective monitoring and investigative body to ensure motorists are paying a fair price for fuel.

What makes central Victorian motorists very angry is the varying difference between metropolitan and country fuel prices, differences that in most cases are almost impossible to justify. What makes them even angrier is that, when the world crude oil price rises, it is often reflected at the bowsers in regional Australia in two or three days. When the world price for crude oil drops, as it sometimes does, it can take up to two weeks or more to be adjusted down at the bowsers—just another reason for the coalition to direct the ACCC to effectively monitor both fuel prices and profits.

Victoria’s peak motoring body, the RACV, has labelled recent petrol price hikes in Bendigo as simple profiteering. In recent weeks there have been occasions when petrol prices have jumped by as much as 7c a litre in less than an hour, usually between Wednesday night and Thursday morning. Often the price has fallen back to the original price within hours. The Royal Automobile Club of Victoria spokesman and head of government relations, Mr David Cumming, has described such action as unacceptable. He said:

All that is doing is saying to the market I want to make a bigger margin ...

They are also saying to the market to follow them. If the other stations don’t follow, they will then put their prices back down.

Another clear example of evidence that warrants a thorough investigation by the ACCC.

There is something sinister regarding the coalition’s do-nothing attitude to rising fuel costs. They constantly hide behind the mantra of ‘its out of our control’ or ‘it’s caused by the world pricing structures for crude oil.’ Of course the world price for crude oil is a significant factor in determining what Australians pay at the bowser—no-one disputes this fact. However, the rising world price of crude oil is being assisted by turmoil in the Middle East—and, as I said earlier, the Howard government is contributing to that by being an active partner in the coalition of the willing in Iraq.

The hypocrisy demonstrated by the coalition government is simply breathtaking. On the one hand they hide behind the chant that fuel prices are solely determined by world pricing for crude oil and that turmoil in the Middle East is keeping these oil price at record highs. On the other hand they are contributing to turmoil in the Middle East by participating in the invasion of Iraq.

Adding insult to injury, regional Victorian motorists have paid a staggering $198 million more in petrol taxes since the introduction of the GST, with central Victorian motorists contributing a massive additional $22 million to the Howard government’s fuel tax rip-off. The fuel fraud was revealed at a national trucking convention in Newcastle last year when the shadow roads and regional development minister, the member for Wills, who is at the table, proved that, if the government had stuck to pre-GST fuel taxes, it would have reaped $41 billion in the previous four years. Instead, it was estimated it had collected more than $44 billion. Spread evenly across the nation, this made regional Victoria’s share of the secret Howard government windfall around $198 million and rising. And I suspect our true share of that vile amount is even more than $198 million, given that country people pay more per litre for their fuel—and, according to transport economists, make more and longer vehicle trips than city motorists. Country people are even worse affected by the secret taxing, because of the transport costs component in absolutely everything they consume. The country transport industry has every right to feel very angry about this. In his address to the Australian Trucking Convention in 2005 the member for Wills said that in 2000-01 total petrol tax revenues were $8.38 billion. In 2004-05 it was estimated the tax take would be $9.32 billion, almost a billion dollars more than in 2001.

By the end of the financial year 2004-05, the Howard government would have collected an estimated $44 billion in petrol taxes since the GST came in—$36 billion in excise and $8 billion from the GST. If the government had stuck with the pre-GST petrol tax arrangements it would have collected $41 billion, or $3.31 billion less, during this period. Even allowing for the 1.5c per litre cut in March 2001, and for revenue forgone as a result of a nonindexation of petrol excise, the Howard government is still over $3 billion better off in petrol taxes since the introduction of the GST.

The Howard government does not seem to care that its bowser rip-off is becoming worse as time goes on. It so far shows no interest in stopping this scam. The coalition government prefers to walk away from its moral responsibility to use fuel tax revenues, including GST, to fund and maintain Australia’s national highway network on a fair and equitable basis as its AusLink strategic regional roads funding program was used as a $93 million slush fund in coalition held or targeted seats during the last election campaign. It is little wonder it refuses to take any action to provide motorists with any relief at the bowser.

The Howard government claimed the GST would lead to a drop in some indirect taxes but, when it comes to petrol taxes, the GST has been used to conceal a grotesque petrol tax rip-off. Of course, the coalition hides behind another mantra: that the states receive 100 per cent of all GST revenue. Perhaps they do, but the GST is a Howard government initiative. It and it alone was responsible for initiating the policy, deciding on what basis and what goods and services it would apply, and collecting the revenue. So let us have no more nonsense of blaming the states for the GST component in petrol taxes.

There is another example of the government’s sinister motives in doing nothing to assist motorists experiencing record high fuel prices. In 1996 the government abolished the Prices Surveillance Authority, which used to effectively monitor fuel prices and profits. Of course, the Howard government regarded this agency as unnecessary, so it abolished it at the first opportunity after gaining office. Abolishing the Prices Surveillance Authority and refusing to provide the ACCC with the direction and powers it needs shows that the Prime Minister seems hell-bent on seeing motorists continue to be ripped off by excessive fuel prices while he refuses to take any action to drive prices down.

Over the past 2½ years, the annual cost of the average Australian motorist’s fuel bill has skyrocketed by more than $400. The long-term price increase was worsened by a savage increase in the lead-up to Easter that pushed fuel up to and over $1.45 a litre in some instances. If the fuel price hike is sustained, and the 2006 annual average price ends up being $1.35 a litre, then typical Australian motorists will end up paying a massive $660 extra a year for fuel. Without formal direction the ACCC is powerless to use its compulsory information acquisition powers to vigorously investigate this year’s Easter fuel price hike and all of the others. Part 7A of the Trade Practices Act provides the competition watchdog with the power to subpoena documents and witnesses, but only after receiving a direct and precise set of instructions from the federal government.

Prime Minister Howard and Treasurer Costello have both assured motorists that the ACCC is ‘on the job’ investigating the current record fuel price hike. It is dishonest for the Prime Minister and Treasurer to make these claims when both have so far refused to formally direct the ACCC to begin effective monitoring of fuel prices and profits. The Chairman of the ACCC, Graeme Samuel, confirmed on ABC radio on 7 April that the ACCC had not been directed to begin formal monitoring of fuel prices, and he has not been given that instruction since then. The Prime Minister and Treasurer appear happy for the ACCC to adopt a ‘look but don’t touch’ approach to fuel prices and are still refusing to let the competition watchdog off its leash.

They are all talk with precious little action in addressing the petrol pricing rip-off. It is only when there is an ongoing and regular regime of petrol price monitoring with appropriate powers, similar to the task the former Prices Surveillance Authority used to provide, that any incidences of price fixing are able to be detected. The Howard government should reinstate the Prices Surveillance Authority or give the ACCC the appropriate direction and powers to monitor petrol prices and profits and prosecute offenders when they are charged with price fixing.

Labor is the only major political party that has a long-term commitment to enabling Australia to become self-sufficient in fuel, as stated in our amendment to this bill. We need to fast track a home-grown fuel industry for the 21st century. Yet, until yesterday, Australians had not heard one constructive suggestion or proposal from the government about fuel self-sufficiency. Today the government has stolen some of the very policies that it previously criticised Labor for advocating over the past 18 months. Labor in government will, as we have said since October last year, through the encouragement of innovation and tax initiatives, encourage the development of a gas to fuel industry using our massive natural gas reserves. Labor will also encourage the development of a biofuel industry using ethanol. But this is a medium- to long-term plan that a Beazley Labor government would initiate. What we need is relief at the pump right now. The Prime Minister continues to walk away from high petrol prices and wash his hands of the problem. All he has to do is have the Treasurer direct the ACCC to formally monitor petrol prices and profits, but he will not do it.

Recently, on Melbourne’s radio 3AW, the Prime Minister used spin and distortion when he promised Australian motorists that he would direct the ACCC to formally monitor fuel prices. When Neil Mitchell asked him:

Will you ask the ACCC formally to monitor prices?

the Prime Minister replied:

Naturally I will go back to them in the light of what’s been claimed and alleged in the recent past ...

Neil Mitchell said:

Let’s just get that clear. You will ask them now.

The Prime Minister said:

Yes I will. I will ask them again to have a look at it. They probably are anyway, but I certainly will.

There is a world of difference between asking the ACCC to simply ‘have a look at it’ and directing them to effectively monitor prices and profits. The ACCC is already recording or ‘looking at’ fuel prices in various locations across Australia but cannot effectively investigate allegations of artificially inflated fuel prices until the government directs it to do so.

Of course, there has been no follow-through on the promise of formal petrol price and profit monitoring. Mr Howard has constantly refused to formally direct the ACCC to begin what is called part VIIA monitoring of petrol prices. Until the ACCC uses its part VIIA powers to subpoena documents and witnesses, we will never know if current record fuel prices are just a function of rising world prices or if the oil companies, distributors and retailers are exploiting the situation to artificially inflate fuel prices.

The Prime Minister promised Australian motorists a full and frank investigation by the ACCC into record fuel prices—and he has not delivered on that promise. Unfortunately, the Prime Minister has decided to ignore that commitment completely. He is all spin and no solutions. The Howard government is a policy-free zone on fuel prices. Until yesterday, it had no short-, medium- or long-term solution to our reliance on imported oil and foreign prices. All the government has is an expensive offer to make to motorists who are lucky enough to be able to afford the up-front costs to convert their vehicles to run on LPG—and it will continue its regular multitax rip-off policy, which devastates the household budgets of most Australians.

In the short term, the Howard government should be forced to give the ACCC the powers it needs to investigate fuel prices and, over the middle to long term, it should develop fuel self-sufficiency strategies, as suggested in our amendment to this bill. The next Labor government will lead Australia’s way to fuel self-sufficiency so that average Australians can get relief from high petrol prices at the bowser. I urge all members to support the amendment as well as the bill.

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