Kirsten Livermore (Capricornia, Australian Labor Party, Shadow Parliamentary Secretary for Education) Share this | Hansard source

I want to speak on the Petroleum Retail Legislation Repeal Bill 2006 for a couple of reasons. The first reason—and it is one I will come back to later in my speech—is that the high cost of fuel is the No. 1 issue for people in my electorate right now. That is the case right across Australia, but it is particularly a problem for people in regional electorates like Capricornia, where long-distance travel between rural communities and major centres is a fact of life. The second reason I want to speak on this bill is that the need for reform of the petroleum retail industry has been around as an issue since I entered this place in 1998. I have been referring to it in speeches on petrol prices ever since that time, so I thought that I should participate in this debate now that the government is finally making some progress towards that outcome.

Consumer confidence in the operation of the fuel industry is a real concern for my electorate. The record high petrol prices we have today might be a relatively recent problem for most Australians, but the question of petrol prices and how they are set by fuel companies and retailers has been a burning one in Rockhampton for as long as I can remember. For some reason that no-one has ever been able to get to the bottom of, the price of a litre of petrol in Rockhampton is always higher than almost all of the other comparable provincial centres in Queensland. As a result of those discrepancies apparent in Rockhampton, I can remember speaking about the need for more competition and greater transparency in the fuel industry in my first term in the late 1990s.

At that time, Labor was calling on the government to implement the kind of reform that these bills represent—or at least these bills represent part of the package of reforms that we identified as necessary to establish a new and more effective system for regulating the behaviour of players in the fuel industry. So after five or more years, here we are finally debating the first part of the government’s plan for the retail fuel industry—a long overdue plan that we hope can promote competition in the industry by protecting independent operators and small operators and reduce the ability of the major oil companies to force other players out of the marketplace. For Labor, these reforms have always been about increasing competition and the flow-on of that to consumers—that is, lower petrol prices.

This bill seeks to repeal the Petroleum Retail Marketing Franchise Act and the Petroleum Retail Marketing Sites Act. Both of these acts date back to 1980, when the structure of the petroleum retail sector was very different to what it is today. The changing structure of the industry means that those acts now apply to only a small proportion of petrol retailers, and over 50 per cent of the industry by volume is now beyond the reach of the legislation. Those laws were introduced to address an imbalance in market power between the major oil companies—those engaged in both refining and marketing fuel—and their commission agents.

In an effort to prevent the majors abusing their market power, the sites act provided for a limit on the number of service stations the major oil companies could run directly, instead requiring them to set up franchise arrangements. The franchise act complemented that act by providing for safeguards to secure the positions of franchisees in their negotiations with the refiners and marketers. It was expected that the combination of those measures would encourage the entry of small businesses into the retail petroleum market. Twenty-six years on, the changes in the industry have made those acts largely redundant. First, it was the major oil companies that got around the regulations by using multisite franchise arrangements. And now, with over 50 per cent of petrol sold through partnership arrangements with supermarket chains, there is effectively a two-tier system of regulation because the two acts do not apply to them. As a result, different market participants are subject to different protections and regulatory requirements, and some are discriminated against relative to others.

Labor supports the repeal of the Petroleum Retail Marketing Sites Act and the Petroleum Retail Marketing Franchise Act, which this bill seeks to effect. But the repeal of these outdated acts is only the start of putting in place the regulatory regime that is needed to protect operators in the fuel retail sector, to prevent the abuse of market power by the refiners and to promote competition in the industry. The next step is for the government to introduce the Oilcode as a mandatory industry code under section 51AE of the Trade Practices Act.

The Oilcode represents a significant improvement in the regulatory regime applying to the retail fuel sector. It will create a more equal playing field, with all market participants subject to the same regulatory requirements and able to access the same protections. It is what Labor have been calling on the government to achieve for the last five years or so. We have said all along that we would support the government in its efforts to repeal these acts and to reform the fuel industry as long as it implemented the Oilcode to address the gaps in the existing regulatory regime to protect smaller operators and consumers. It has taken the government all this time to finally bring before the parliament the reform package it identified as necessary, and Labor agreed was necessary, eight if not 10 years ago.

I have spent this time going through the technicalities and the history of this bill because it is quite instructive as to the government’s approach and its failings when it comes to putting in place important reforms that can make a difference to people’s lives. The fact that it has taken 10 years to get this set of reforms in place—and there is still some way to go in truly addressing deficiencies in the Trade Practices Act in this area—shows that this government is just coasting along. The government is happy to spend the dividends of the economic prosperity brought about by the resources boom but it is too lazy to do the things that it needs to do to make life easier for Australians now and to secure our prosperity into the future.

Madam Deputy Speaker, you could not get a more obvious example than petrol of how the government’s neglect and complacency has impacted on people’s cost of living. Fuel is an essential commodity and, because of that, all Australians are held to ransom by high fuel prices. We need the fuel, so we pay the price, whatever it might be and however hard it hits the family budget. In those circumstances, you would think that a government would be doing everything in its power to avoid excessively high prices. I say ‘excessively high prices’ because I acknowledge, like all members here, that there is a component of the price of fuel that is beyond the power of this government or any government to control, and that is the world oil price.

Australia is part of the world market for oil and is subject to the variations in the price of oil just like all other countries. But there are other factors that feed into the cost of fuel at the bowser that cannot be explained by the cost of oil on the world market. It is now almost a year since Hurricane Katrina tore through the south of the United States, destroying New Orleans and shutting down oil production in the Gulf of Mexico. We can all remember the impact of that here in Australia and how immediate it was. Service stations in Rockhampton put up their prices within a day of the hurricane’s hitting. While I do not deny that the disruption to oil supplies out of the USA had an effect on the world oil price, like all motorists I get suspicious when the effect at local service stations in Queensland seems to be almost instantaneous.

At that time, there were widespread accusations of profiteering and price gouging by the oil companies, based on the gap between the world crude oil price and the price for refined petrol in Australia. It was Labor that identified the gap back in September last year while the government, and particularly the Treasurer, sought to shift the blame and refused to act. There is a similar reaction from motorists when they see the price of petrol go up on Thursday and fall again on Tuesday, after the weekend has passed. Of course, this opportunistic variation in prices is even more pronounced over long weekends. But again the Prime Minister and the Treasurer take Australian motorists for mugs. They pretend it is not happening and refuse to do anything about this blatant rip-off of struggling motorists.

Their mantra at the time of Hurricane Katrina—and still today—is that we are at the mercy of the world oil price and the government cannot do anything about the cost of petrol. There is a difference between ‘cannot do anything’ and ‘will not do anything’. We think that, for this lazy government, it has been more a case of ‘will not do anything’. It is not true to say that the government is entirely powerless when it comes to putting downward pressure on fuel prices. The government can regulate the industry so that competition is genuine and pricing is transparent. They can strengthen section 46 of the Trade Practices Act to address the misuse of market power in the industry. The government can do as Labor has been asking for weeks and give the ACCC the power it needs to properly investigate petrol prices in this country. It can also take steps to encourage the investment and innovation that can lead in the medium to long term, to the establishment of an Australian fuels industry.

The government can start down that track by supporting the excellent second reading amendment to this bill moved by Labor’s shadow minister for resources. If the government is really serious about taking a strategic view of Australia’s need to establish its independence from imported oil, and the opportunities that exist for that to be achieved, then I suggest it adopt the proposals set out in Labor’s blueprint for developing the Australian fuel industry. You need look no further than Labor’s blueprint on fuels to see the difference between Labor and the government on the issue of fuel prices and fuel security. The Prime Minister came into parliament yesterday with his package of measures to offer motorists some relief from record fuel prices. ‘Fuel prices are high,’ we were told, ‘and increasing demand means that things will only get worse. Australia needs to reduce its reliance on imported oil and develop its own fuel industry based on our natural gas reserves and renewables.’ Funny, but I was sure I had heard that before. Of course, these were the points that Kim Beazley was making back in October 2005 when he outlined Labor’s blueprint.

In the lead-up to that, the shadow minister for resources and I spoke on the MPI debate on 14 September 2005 and raised similar points to those expanded upon in the blueprint. The difference we see here is that Labor is proactive, not reactive, when it comes to addressing the problems that are making life difficult for Australians. We look to find solutions, not to shift blame like the Prime Minister and his Treasurer. Labor look to address what is in the national interest and not just the narrow political interests of the coalition parties. So Labor have been out there for a year putting forward our proposals to try to ease the pain of high fuel prices for Australian motorists now and into the future.

In the short term, we repeat our call on the Treasurer to reinstate formal price monitoring and investigative powers under the Trade Practices Act. It is not good enough for the Treasurer to say that the ACCC is monitoring prices when what he means by that is the ACCC simply writes down the retail prices of petrol around the country. Motorists want the ACCC to do more than just note down the prices of petrol; they can do that for themselves from any website. They want the ACCC to be able to look behind the prices, including the refiner margins, to give consumers confidence that they are not victims of excessive profiteering by the oil companies. The Prime Minister’s statement yesterday made no commitment to give the ACCC those powers to stop the rip-offs.

The other thing to say about the Prime Minster’s statement yesterday is how cobbled together it is starting to look. We heard in question time today that it was only a month ago that the Special Minister of State, Gary Nairn, was telling another MP that LPG could not be used in the government fleet for a number of reasons, including its unavailability in many parts of the country. A month later and a panicking Prime Minister is telling the Australian public that conversion to LPG is the answer to their problems with high petrol prices.

While John Howard was cherry-picking that initiative from Labor’s fuels blueprint, he should have had a good look at our other proposals. They are not about grabbing headlines but about building Australia’s self-reliance in this area so that we can face an uncertain future secure in the knowledge that we have our own supply of transport fuels. Our reliance on overseas oil, particularly from an increasingly volatile Middle East, poses a real challenge to our national security and prosperity. While the government has been fighting over who gets to be Prime Minister for the last year, we have been putting our minds to that challenge.

Labor’s proposal includes: a re-examination of the depreciation regime for gas production infrastructure; allowing the selective use of flow-through share schemes in the gas, oil and mineral exploration industry; conducting a feasibility study into a gas to liquids fuels plant in Australia; making alternative-fuel vehicles tariff free by cutting up to $2,000 from the price of current hybrid cars; and encouraging a sustainable ethanol industry. These are just some of the initiatives that Labor has identified in the blueprint to help Australia become more self-sufficient in the area of transport fuels and to help ease the burden of high petrol prices on motorists.

There are enormous challenges ahead for Australia as the supplies of fossil fuels come under increasing pressure from the rapid pace of development in countries like India and China, but there are also opportunities for us as we develop our own resources. With vision and leadership, there is the real prospect of major new industries opening up in areas such as the conversion of natural gas and coal to diesel. As a representative of a regional and rural electorate, I am always interested in the potential for a large-scale ethanol and biofuels industry in Australia.

What I do not want to see for the people in my electorate are ever-rising fuel prices and an increasing reliance on overseas oil, with our future prosperity and security held to ransom as a result of this government’s lack of initiative.

See this speech in context