Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Hansard source

I too rise to speak on the Petroleum Retail Legislation Repeal Bill 2006, particularly as I have received many calls in my electorate regarding petrol prices. Every day, Australians are suffering as petrol prices continue to climb and every day, for months, the government has been insisting there is nothing it can do about it. The government has now admitted that that is not true at all. The government has invested approximately $1.5 billion of the $100 billion that it will raise in association with the fuel excise over the next eight years to subsidise the uptake of LPG fuel. We welcome the announcements that were made on LPG yesterday.

Is the government expecting that the 40,000-plus vehicles within my electorate of Hindmarsh will be converted to LPG and ease the burden on families’ budgets? Is this the central idea of the Australian government’s would-be fuel based credibility and the policy rocket that was the Prime Minister’s half-hour statement to parliament yesterday? Investing $1.5 billion of $100 billion from fuel excise is not a substantial investment; it is a token effort to suggest that they care—that people’s views that the government could not care less about people’s financial pain is not correct—and that they are governing and actually doing something.

Petrol prices of $1.45 per litre in the electorate of Hindmarsh were never inevitable and neither is the forecast of $1.80 per litre. If the government acted with the national interest in mind, Australian motorists could look to a time when fuel prices would not rocket up along with the world price of oil. Indeed, if the government had acted earlier, we would probably right now not be paying anywhere near as much as we are. Urgent action needs to be taken with regard to petrol prices and, more generally, to our fuel supply. Australian families demand it, the economy demands it and the environment also demands it. These considerations must be at the forefront of legislative and policy reform.

Families are already struggling and under the pump from the new, extreme and unjust Work Choices laws and the recent seventh-consecutive interest rate hike that is causing their mortgage bills to bulge. Add to this skyrocketing petrol prices and it can be seen very quickly that things are not looking too good. Let me put the scenario another way: does the government think that it is fair for pensioners to refrain from driving to the doctor’s or to the shops because refilling their tanks is becoming prohibitively expensive? I hope not, but unfortunately anecdotes of exactly this situation continue to roll into the office as the price of petrol continues to soar through the roof. These consequences are bizarre, true and certainly not acceptable.

This government is severely out of touch with ordinary Australians—that is, those Australians who do not have a lazy $50 extra to continually put towards their skyrocketing petrol bill. An extra $50 per week for the petrol bill may not seem like much for some people, but I can tell the House that the people in Hindmarsh feel the pinch. It is not true that there is nothing the government can do about petrol prices. The proof of that can begin with this very bill currently before the House.

The government’s response to the current situation should be at least two pronged: (1) renewable energies and their continued research, development and promotion within the Australian community are essential for Australia’s long-term energy interests and (2) competition within the petrol retail sector must be encouraged through the continued involvement of independent small proprietors, even if not limiting the market share of the big oil companies. We need to protect the independent retailers from the multinational oil companies.

For many years the Australian government has had a choice about whether to be at the cutting edge of renewable energy and biofuels or whether to pretend everything is okay and that a potential increase in the price of fossil fuels would simply be a transitory thing that we could ride out over time. When the rest of the world wanted action from Australia in 1997 through the signing of the Kyoto protocol, Australia insisted it had to be allowed to increase greenhouse gas emissions, with the government refusing to accept the science of climate change. However, it could have invested in research to deliver alternative fuels and reduce our reliance on petrol. In other words, the situation Australians find themselves in today at the petrol bowser is the legacy of a refusal to make Australia the clever country on this issue almost 10 years ago.

Instead of leading the world by developing technologies which would boost the Australian economy and place us at an advantage compared with other nations, we are the international freeloader, contributing more greenhouse gases per capita than any other nation. What is more, we are paying through the nose to do so with high petrol prices. What a ridiculous position we find ourselves in: paying record prices at the bowser for the privilege of emitting greenhouse gases—all because of this government’s lack of direction and leadership to do something meaningful and sustainable for Australian families.

The government have had more than 10 years to get something done about this. It is not as if 10 years ago it was impossible to see that the cost of oil would one day be a choke on the Australian economy and family budgets if action were not taken. The writing has been on the wall for some time and the government have been dragging the chain, making excuses instead of taking responsibility. Unfortunately, we are paying the price now of government inaction.

Petrol prices are rising more quickly than oil prices. Lobby groups estimate that, given the cost of crude oil, we are being overcharged approximately 20c per litre for petrol. The Royal Australian Automobile Association identified this phenomenon after Hurricane Katrina. The cost of unleaded petrol, which was tracking at a reasonably consistent margin over crude oil, suddenly took on the appearance of the Glass House Mountains, towering over a comparatively mild fluctuation in the price of crude. That was over the period of August to November 2005. We can see a similar phenomenon occurring since approximately March this year. Crude oil is represented as being relatively static around the $60 mark, but the cost of unleaded around Hindmarsh has not represented this.

The profits being reaped by the oil companies are astonishing. It has been stated that Shell Australia’s petrol refining and marketing profit jumped from $43.5 million in 2004 to $300 million in 2005. It has also been suggested that Caltex’s forecast profit has been revised upwards to $420 million. These profits are coming out of the pockets of ordinary Australians battling to cover many increasing, everyday, necessary costs.

Australians are concerned by what appears to be collusion within the petrol retail sector. How is the sector viewed by the public when virtually all retail outlets are owned by a few big businesses? The public may well be more receptive to the sector by the demonstration of independent retail outlets on occasion undercutting the big chains. This is evident from time to time in Adelaide, although less and less so. It is sad, but the occasional petrol stations that were typically a number of cents under the big BP, Shell and Caltex chains are increasingly disappearing. Whereas in the past there may have been several scattered around Adelaide’s metropolitan and western suburbs, right now I can only visualise a couple.

I am informed that when FlyBuys were introduced approximately 15 years ago there were approximately 430 individual self-franchisees. Today there is only one across Australia, and that franchisee is Coles. Caltex is little different, with Woolworths being its sole franchisee. Oil barons and retail outlets, I would suggest, undermine the potential for competition and, to some extent, make our response to collusion more difficult. Who are they colluding with? Themselves—one hand with the other.

Only now is the government starting to show some interest in the pocket pain that motorists have been suffering over recent years as a result of its remarkable lack of vision. Even now, with yesterday’s statement on LPG conversion—and, as I said, we welcome that statement—and, more to the point, with the bill currently before the House, the government is only showing a very slight interest in being serious about the matter by repealing an outdated petrol retail regime. We need much more than this. We urgently need investment in a diverse range of energy sources, not just the band-aid solution of blending in a little ethanol to lower the price. We need long-term strategic thinking that will ensure our economic and energy security—something which has been lacking for the past 10 years.

Since petrol derived from foreign oil is a key input into so many other areas of our economy, there is a strong sense of urgency with which we must approach this matter, as well as a sense of importance. The good people of Hindmarsh—for example, pensioners—constantly let my office know that the price of everything is going up. Their income cannot keep pace. Superannuation indexing is not adequate when you take petrol into account. Some people can get by, but many are feeling the squeeze. Few have deep pockets like the member for Wentworth, but they are all intelligent enough to understand that petrol, being a key input, is the primary driver of the increasing cost of living. It does not take much more thought for them to see that, if we were not so dependent on petrol derived from foreign oil, we would not be in the situation we are in now.

This in turn requires that the alternative fuel industries have a sustainable base. The Petroleum Retail Legislation Repeal Bill 2006 is what one could loosely term an attempt at structural reform, but much more needs to be done in Australia if we are to be serious about petrol prices. We could cop out by saying that there is nothing we can do about it, like the government has been doing for the past 10 years, or we could tackle the issue head-on and ensure that all levels of the fuels industries—whether in the area of generation, extraction or retail—have a foundation with the interests of Australian motorists at its heart. Australians do not elect governments to tell them in return that everything is too hard.

I suppose one thing that this government has done on the petrol issue is tell Australians that a little ethanol can be added to their petrol tanks and that will somehow lower the price. This is probably true to some extent. Diluting petrol with ethanol achieves a little, but it can only get us so far. It still does not change the fact that, at least for the near foreseeable future, Australia will still be dependent on Middle Eastern oil and, indeed, foreign oil generally—that is, even if there is a little ethanol in our petrol tanks, it does not change the fact that a hike in world oil prices will still have an undesirable impact on the price at the bowser.

All in all, ethanol is just one tiny element in the more strategic and broader issues relating to petrol industry reform. The government must ensure that, in the long run, Australian motorists have a fuel supply with a sustainable price and product. The fact that some members of the government have this fixation on ethanol only typifies the shallow analysis and effort that has been put into solving this problem. It is better than the effort of most other members of the government, who say that nothing can be done, but it still falls well short of the mark of what Australia needs. We would not be in this place today debating the issue like this if the federal government had exhibited some form of leadership and long-term strategic planning by investing in research and development for alternatives. Natural gas, ethanol and biodiesel are not concepts that have been around for only the past short while. Labor has been talking about these alternatives for years, and the work done by the Hawke-Keating government is but one example of the work that was done to encourage these industries.

The incentives to invest in these industries, whether that investment is made by the petrol manufacturer or the retailer to encourage take-up of alternatives, need to be accelerated. Labor’s alternative fuels blueprint brings this to the fore. The fuels blueprint shows that, in fact, it is possible to do something meaningful about the high price of petrol. These measures can have a long-lasting effect. The blueprint targets investment in several alternative fuels rather than putting all of our eggs in the ethanol basket. It also recognises that there are measures that can be put in place by the parliament to strengthen competition laws so that petrol is sold at a price that consumers—Australian families—can afford. It simultaneously pursues environmental and economic objectives.

The Petroleum Retail Legislation Repeal Bill 2006 perhaps represents one of the basic steps required to set up the conditions for a sustainable alternative fuels industry that would help Australian families and pensioners breathe a little easier. But it would be foolish to think that all we need to do is repeal the old Petroleum Retail Marketing Franchise Act and Petroleum Retail Marketing Sites Act. Much more work needs to be done and the government cannot stop here. I will elaborate on this in a moment.

I want to return to the point I made earlier regarding how this government has taken so long to start the ball rolling on petrol prices. The present Petroleum Retail Marketing Franchise Act and Petroleum Retail Marketing Sites Act constitute a system that is 26 years old. Times have changed significantly since then—in particular, energy markets do not look anything like they used to. Parliament must ensure that the laws on the statute books are appropriate to the time. That is where leadership comes into play. While it is true that the government made an attempt at reforming petrol retail in 1999, it never eventuated. Some seven years have passed since then, and one could be forgiven for thinking that the government has simply shoved it all in the too-hard basket. Indeed, this seems to be exactly what happened.

When attempts were made around 1998 and 1999 to reform the petrol retail industry, nothing ever became of it because the government failed to facilitate the establishment of a new Oilcode. The result has been that, for at least the past seven years, consumers—Australian families and pensioners—have been suffering because of the government’s incompetence and lack of leadership in developing a new Oilcode. History credits governments that have the courage to do things for the good of the nation, not governments that weasel out of matters because they are too hard. Even now, the government keep telling Australians that there is nothing they can do to ease the impact of high petrol prices. It seems they tried to do something in the late 1990s, except that they gave up halfway through the process. Now they are finally coming around to acting, and Labor welcomes that.

The government is conceding that, in fact, something can be done about the high cost of petrol, as the bill before the House shows. For some time now Labor has been calling upon the government to bring about industry reform to help put downward pressure on the price of petrol. The establishment of the new Oilcode is a good start, but it is important to point out that it is only a first step.

Indeed, it is not sufficient to simply establish a new code and leave the rest for the oil companies to sort out. That is like saying that this new code will deliver lower prices because of the inherent benevolence of the huge oil companies themselves. But we all know that is not how it works. Oil companies are not in the industry because they want to help consumers by supplying them with cheap petrol; they are in it to make money. So there is a clear tension. Society needs to draw a line somewhere beyond which we say supranormal profits and anticompetitive activity, at the expense of ordinary Australian families, is unacceptable.

Competition is probably the one most critical thing that can help push petrol prices down. As part of its fuels blueprint, Labor has been calling upon the government to see that competition laws are strengthened. In particular, the Trade Practices Act provision concerning the misuse of market power urgently needs revisiting. Labor notes that the government has given a promise in this House that it will, in this regard, move to strengthen the Trade Practices Act. One hopes this promise, unlike the Prime Minister’s promise on interest rates, will be fulfilled, and we look forward to seeing what the government has to present in that regard.

Petrol is not just like any other commodity. It has a peculiar place in our economy, being a key input into so many sectors. This is a legacy of the government’s failure to invest in alternative energy sources, as I have already mentioned. But also, quite importantly, exactly because of this position, competition laws too must adapt to reflect this. Anticompetitive conduct in any market is bad, but the impact is particularly compounded when it occurs in the petrol industry. So, far from being an optional extra, meaningful reform of the petrol industry must also beef up the misuse of market power provisions in the Trade Practices Act as well as enhance the powers and terms of reference of the competition watchdog, the ACCC. Our economy is in such a precarious position in relation to energy that these changes to competition laws are far too important to be omitted.

Australian families and pensioners are desperately looking for a solution that will lessen their dependence on Middle Eastern oil, and foreign oil more generally. The repeal of the Petroleum Retail Marketing Franchise Act and the Petroleum Retail Marketing Sites Act and the introduction of the Oilcode are a start, but by no stretch of the imagination is that sufficient. Trade Practices Act amendments to beef up prohibitions on anticompetitive conduct are also required. More generally, a strategic approach to diversify our energy sources is required, and that is good for the environment as well as for the pockets of our people.

Labor has this holistic vision, but unfortunately this government do not appear to have a similar approach. Their dragging of the chain, taking seven years to revisit the petroleum retail framework, and even then only to come up with a partial response, says much about how keen they are to do something that can deliver sustainable outcomes. What else will be forthcoming? Their record here too is probably their guarantee. As I said, we need a two-pronged approach. One is to ensure that we develop renewable energy through research and development. The other is that good competition within the petrol retail sector and the continuation of petrol independence are very important. Unfortunately, under this government, I see neither of those two things happening.

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