Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Hansard source

It is my pleasure to follow the member for Bendigo in this debate and to endorse what was a very well researched speech into many aspects of petrol pricing. He was kind enough to quote some remarks about the impact of GST on petrol prices and petrol taxes that I made at a trucking industry conference at the end of 2004. It is my melancholy duty to inform him that, since that time, the government’s GST take has increased. The estimate I have seen for the financial year 2005-06 is that the GST petrol tax take will exceed $2 billion, bringing the total GST petrol tax take since the government introduced the GST to over $10 billion.

The Prime Minister says, ‘Oh yes, but you have to look at what would have happened to the excise had we not frozen it,’ as the government did at the time. I think it is incorrect to simply assume that the public would have accepted an increase in petrol taxes via the excise at the same time as other petrol prices and components of petrol prices were increasing. The government’s claim that ‘it is too expensive to reduce petrol taxes’ masks the fact that petrol taxes continue to increase as the price of petrol rises, because the GST is a 10 per cent tax on the top.

The government also claims that GST revenue goes to the states and people ought to look to the states in this regard. Mr Deputy Speaker Hatton, you may recall that, when the GST was introduced, the government claimed it would lead to new breakthroughs in federal-state financial relations and it would mean the end of disputes between the states and the Commonwealth over financial matters. In fact, it has done nothing of the kind. The Commonwealth has endeavoured to reduce other outlays to the states, which puts additional financial burdens on them, and the federal-state fiscal argument continues unabated, GST notwithstanding.

It is my pleasure to support the amendment to the Petroleum Retail Legislation Repeal Bill 2006 moved by the member for Batman. In particular, I draw the attention of the House to the aspects of his amendment that call on the government to review, in 2009, the proposal to introduce excise on ethanol and biodiesel, and on LPG and CNG in 2011, and to consider whether there is a case for delaying the introduction of excise, depending on the progress made in increasing market penetration of biofuels, LPG and CNG; in securing new investment in biofuel, LPG and CNG production and supply infrastructure in Australia; and towards achieving the 350 million litre biofuels target in 2010.

The amendment goes on to criticise the government for failing to introduce amendments to the Trade Practices Act to implement the 2003 Dawson and 2004 Senate recommendations for reform. It also calls on the government to immediately conduct a feasibility study into a gas to liquids fuels plant in Australia, including consideration of petroleum resources rent tax incentives for developers of gas fields which provide resources for gas to liquid fuels projects; examining a new infrastructure investment allowance for investment in Australian gas to liquids infrastructure; and developing a targeted funding scheme for research and development in this area. Further, the amendment calls on the government to embrace Labor’s fuels blueprint proposal to make alternative-fuel vehicles tariff free, cutting up to $2,000 off the price of current hybrid cars, and to grant tax rebates for converting petrol cars to LPG. It also calls on the government to embrace Labor’s fuels blueprint to find more oil and use more gas by re-examining the depreciation regime for gas production infrastructure and allowing the selective use of flow-through share schemes for smaller operators.

Regrettably, today’s debate on petrol prices has followed the effective doubling of petrol prices in Australia for motorists in the space of a mere two years. I was entertained today to hear the industry minister at the dispatch box suggesting that Labor’s proposals in relation to greenhouse gas emissions and our targets for 2050 would lead to a doubling of petrol prices by that time—by 2050—when the government has managed it in two years.

But, while this has been happening, those opposite have been sitting on their hands, saying, ‘We’re terribly sorry, but there’s nothing we can do.’ In fact, all along they could have done many things. For example, they could have moved to strengthen the power of the ACCC to ensure that things were being done properly and fairly in the market. They could have restored and they still can restore the Trade Practices Act to its former glory—in particular, section 46—so that the ACCC has some prospect of securing prosecutions for misuse of market power.

Indeed, during question time last week, the member for Hunter urged the Treasurer to sign a letter which the member had drafted—he had done the hard yards; he had drafted the letter—that would have given the ACCC the power to formally monitor and investigate petrol prices. That letter authorised the ACCC Chairman, Graeme Samuel, to monitor prices, costs and profits relating to the supply of goods and services by refiners, wholesalers and major retailers of transport fuel pursuant to section 95ZE(1) of the Trade Practices Act. The Treasurer refused to do it. But, if he is concerned and if the government is genuinely, sincerely concerned about the impact of high petrol prices on Australian families and on business, he would be strengthening the Trade Practices Act to rein in market power abuse and strengthen the ACCC’s powers to intervene in petrol pricing.

Indeed, it is this government which took away the power to formally monitor petrol prices. The Treasurer says, ‘The ACCC monitor petrol prices.’ What they actually do is go and look at the noticeboards and see what the price is, write it down and collect all these statistics from around Australia which are absolutely useless. Families struggling with higher petrol prices want more than a quarterly report on what the retail price is. What they want the ACCC to do is not to look at the retail price but to look behind the prices to guard against excessive profiteering. If the Treasurer were to reinstate formal price monitoring and investigative powers under the Trade Practices Act, that is what we would get. That is what Australian families want and are entitled to. So the first thing this government could do about petrol prices is to strengthen the Trade Practices Act to rein in market power abuse and to strengthen the capacity of the consumer watchdog to intervene in petrol pricing issues.

Then there is LPG. I welcome the government’s announcements concerning LPG. But it is ironic. We need to recall that, first, the LPG industry took the full brunt of the GST. Back then it had no excise at all. LPG attracted no excise; there was no excise to reduce. It took the full 10 per cent hit—the 10 per cent brunt—of the GST. Then the Prime Minister decided to put an excise on LPG for the first time. So this Prime Minister has been working against LPG in the market these past five years rather than assisting a greater take-up of LPG. It is entirely hypocritical of him to now pose that as the solution to the significant issues we face. LPG is a great opportunity for Australia, no doubt about it. It is an indigenous Australian fuel. We have plenty of it. But the government these past five years has been undermining the take-up of LPG in this country.

We also ought to talk about natural gas. I believe we ought to think of hydrogen as an ultimate solution but, in the short term and in the medium term, natural gas has a great deal to offer. For a start, we have enormous reserves of it: 150 trillion cubic feet. Our natural gas is easily convertible into liquid diesel which can go straight into the diesel engines of motor cars as they stand, without modification. So there are plenty of opportunities for gas to liquids conversion. In fact, around five years ago, the then minister for resources, Senator Minchin, appointed a gas to liquids task force to investigate the feasibility and benefits of establishing a gas to liquids industry in Australia. But, five years later, no action has been taken. The government has been sitting on its hands. The fact that it has been speaking with a forked tongue in relation to LPG was exposed in the parliament today when questions to the Special Minister of State revealed that he as minister thought that LPG was not really a suitable fuel for the Commonwealth vehicles driven by politicians, public servants and so on. So the government stood exposed through the revelation of that correspondence.

We have a situation where the price of petrol has effectively doubled in the last two years. Given these circumstances, I believe it is quite inexcusable that the Howard government has failed to act on Australia’s growing import dependence and its impact on energy security and fuel prices. We are in the process of moving to import 60 per cent of our oil. For the past seven years, we have been using oil three times faster than we have been finding it. Given this, a do-nothing strategy is not an acceptable option. It sells Australia short and, if it continues, it will seriously damage regional Australia. Amongst the things that we can do about it, the member for Bendigo referred to the fact that it would be useful if we gave up some of the foreign policy adventurism which we have seen in Iraq, which has been so catastrophic on so many levels and which has been one of the factors in increasing international oil prices. But, with international oil prices so high, as I have outlined previously we need to increase competition in the Australian petrol retailing industry.

Going back some time, Labor produced a plan which would put downward pressure on petrol prices, seeking to break down the power of the big oil companies and help consumers. That plan included amending the Trade Practices Act to guarantee independent wholesalers and retailers access, on fair terms, to fuel supplies from the terminals of the major oil companies; allowing independent wholesalers and retailers to bargain collectively when seeking fuel supplies from the terminals of the major oil companies; and outlawing predatory pricing under the Trade Practices Act and strengthening section 46 to stop the abuse of market power, thereby protecting independents against the market power of the big companies. That is the kind of thing we believe could have put downward pressure on petrol prices.

In my view, we need to use these huge gas reserves to produce liquid based transport fuels. Using current technology, we could transform some of those offshore gas reserves into what amounts to a limitless supply of transport fuel, which is commercially viable. If we take advantage of the riches we have, we can insure Australia against physical supply shocks and give this nation some genuine energy independence. The government ought to be making Australia a place of gas to liquids production. We should not be sitting on our reserves while the price of our transport fuels continues to skyrocket, nor should we be exporting everything we can find and letting other countries do the value adding, guaranteeing that our current account and trade deficits will continue to rise.

We need to do more to promote biofuels, LPG, compressed natural gas and synthetic fuels produced from gas to liquids technologies. Back in June I commended to the House a paper produced by the Australian Petroleum Production and Exploration Association. The particular parts of that paper which I think are interesting and significant are those which go to the use of gas, in the paper’s own words, ‘as a platform for prosperity’. The paper points out that gas is becoming increasingly important in the global energy mix, that Australia has abundant natural gas resources and that these provide great opportunities for us, as gas is a cleaner and less greenhouse intensive fuel than coal. The paper notes that, even though significant gas reserves have been discovered, many remain undeveloped. It goes on to say that there is great potential in the development of an Australian gas to liquids industry.

This can provide us with a viable additional source of hydrocarbon liquids generated from our large gas reserves. The opportunity exists to develop new Australian LNG projects of between 30 million tonnes per annum and 50 million tonnes per annum by the year 2015. The commercialising of gas technologies would enable us to move into the area of electricity generation and also to increase the conversion of gas to various forms of liquids. There are, of course, forecast capacity additions to Australia’s alumina refining capacity, and growth in gas fired electricity generation would be very useful given that context.

In the remaining few minutes available to me, I want to turn to the other elements of the amendments moved by Labor to this bill. These amendments are in support of Labor’s blueprint for the Australian fuel industry released by the Leader of the Opposition back in October of last year. At the time, the opposition leader indicated that it was Labor’s aim to develop a diversified Australian fuel industry—one which would make Australia a more self-sufficient country. The Leader of the Opposition said:

We must increase the use of Australian transport fuels and reduce our reliance on foreign oil. We must develop and use those fuels that will become cheaper in the future ...

We need national leadership to develop:

• existing alternatives like liquid petroleum gas, ethanol and biodiesel;
• emerging alternatives such as compressed natural gas, liquid fuel from gas and stored electricity; and
• future fuels, such as hydrogen.

…            …            …

We must make Australia less vulnerable to external shocks.

We must make Australia less reliant on the foreign oil affecting our trade deficit and foreign debt.

We must play a leading role in emerging energy sectors to boost our export performance and take advantage of opportunities in world markets. We must invest in preserving our environment by diversifying our fuel base beyond petrol to biofuels and gas and hydrogen.

Labor believe that, if we look ahead 10, 20 or 30 years, it is highly unlikely that we will be able to source a consistent supply of petroleum at a sensible price when we have ever increasing global demand and something like 57 per cent of the world’s proven oil reserves in the Middle East, which is clearly in an unstable situation. If we have major disruptions to oil supplies occurring in the decades ahead, it is not reasonable to expect that foreign countries will be giving priority to supplying Australia’s needs. We are in a situation of falling production and higher demand, given that clearly prices will continue to go up. We need a government which can see the writing on the wall, can foresee the soaring demand and can foresee the threats to supply, and a government which is prepared to put the national interest first and prepare Australia for these changes.

In the past three years we have seen global oil prices triple. The era of cheap oil is over. Given that, the government needs to do some hard thinking. The Prime Minister earlier this year said, ‘I can understand the anger of motorists but prices are out of our control.’ Back in June last year the Minister for Industry, Tourism and Resources was asked by my colleague the member for Melbourne, who has joined us in a timely fashion, if the government had done any modelling of the impact of future peaks in oil prices on the Australian economy. The minister provided a five-word answer—at least we can give him credit for a brief answer—and it was, ‘No, no, no and no.’ This is simply not good enough.

This is a national and urgent priority. We need to do the hard work to enable Australia to develop an indigenous fuel industry to get rid of our dependence on imported oil. We need to do the right thing by the environment, to do the right thing by regional Australia and to do the right thing by securing Australia’s national sovereignty and energy independence. (Time expired)

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