Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Primary Industries, Resources, Forestry and Tourism) Share this | Link to this | Hansard source

As I rise today to speak on the Petroleum Retail Legislation Repeal Bill 2000, I think we all appreciate that Australians are more concerned than ever about record high petrol prices. Reform of the petrol retail industry, including the repeal of the two acts dealt with in this bill, has never been more important.

The Petroleum Retail Marketing Sites Act 1980 and the Petroleum Retail Marketing Franchise Act 1980 are outdated. They serve no useful purpose in today’s petrol retail industry, and I will tell the House why. Well over 50 per cent of the industry by volume of sales is not covered by these acts, including the supermarket chains Coles and Woolworths, and the rules for market participants are inconsistent and unfair. That is bad for industry and, perhaps far more importantly, that is bad for the Australian consumers, who are doing it tough at this point.

The Oilcode, which will be introduced as a mandatory industry code under section 51AE of the Trade Practices Act 1974, will finally and appropriately bring the whole industry into a common regulatory regime, with better protections for market participants and better protections for consumers. The Oilcode will improve the protections available to commissioned agents and independent operators, who currently do not have the protections available to franchisees. Both franchisees and commissioned agents will also appropriately have access to a low-cost dispute resolution scheme for the first time.

The Labor Party’s view is that section 46 amendments to the Trade Practices Act are necessary to address outstanding concerns about the potential for abuse of market power. I call on the government to bring these forward as a matter of urgency. In that context, I also indicate to the House that we are taking the government on trust with respect to these very central and important amendments. I expect the minister to confirm in his reply undertakings given to the opposition that the government is keen to introduce legislation, the Trade Practices Legislation Amendment Bill (No. 2) 2006, to implement its response as soon as the Trade Practices Legislation Amendment Bill (No. 1) 2005, the Dawson bill, has passed through the parliament. In essence, we have shaken hands on the importance of this amendment. It is therefore very important that the minister, in replying to the debate, confirms on the public record his undertaking given to the opposition with respect to the importance of those amendments and their urgency.

Nevertheless, the introduction of the Oilcode to cover the entire petrol retail sector is an improvement over the existing situation, where more than 50 per cent of the industry by volume is not regulated at all. Petrol retail reform is a good step forward to give consumers more confidence that the petrol prices they are paying are as fair and as competitive as we can make them. But reform, we also accept, has been a long time coming.

Interestingly, petrol reform has been on the Howard government’s policy agenda since 1996. In 1998, the opposition appropriately said that it would support petrol reform as long as the Oilcode was agreed to. But it has taken this government another eight years to get to that point. As in many other policy areas, reform under the Howard-Costello government has stagnated over 10 long years. The Australian government, led by the Prime Minister, John Howard, simply cannot keep up with the changes that are necessary to encourage investment and maintain competitive markets and affordable prices in petrol, electricity, transport and telecommunications. Look at the debacle, for example, that confronts the Australian community on the issue of broadband this very day.

The Howard-Costello government has also failed completely to keep the reform momentum of the Hawke and Keating governments going. That was when tough decisions about reform in the Australian economy and opening it up to competitive pressures were actually put in place—the foundations of economic growth that we now experience. But we are starting to pay the price. We are paying the price for neglect—if anything, absolute negligence by the Howard government—on the need for ongoing reforms so as to keep Australia competitive. I refer to labour shortages, erosion of our skills base, choked infrastructure which is holding back exports, inflation pressures, productivity stagnation and higher interest rates.

It is most worrying of all that the Howard-Costello government’s answer to everything as we appreciate it—as is reflected in the recent budget—is simply ‘spend, spend, spend’. Unfortunately, all the indicators now show that that short-term approach to economic management has hit a brick wall. The budget is no longer sustainable. If anything, the chickens are coming home to roost. What are the indicators? Let us deal with a couple of those indicators. Interest rates are rising and the government seeks to deny that they have an impact not only on business in Australia but also on ordinary households trying to make ends meet from week to week and day to day and pay their mortgage payments. The high level of debt held by Australians continues to rise disproportionately to the increase in their incomes and cost of living in Australia.

Then we go to the issue of prices, which is central to this debate. Prices are going through the roof. Wages—that is an interesting debate. The government are in so much trouble handling the industrial relations debate today that they now have a junior minister, the member for North Sydney, Mr Hockey, to try to assist the Minister for Employment and Workplace Relations to sell their message. That is interesting because the truth is that they know it is very hard to sell. I will tell you why it is very hard to sell. Wages for those already struggling are under pressure because of the government’s extreme industrial relations changes, which not only open these wages and conditions to attack but also create a major sense of uncertainty in their minds, in their household’s minds, in their families and in Australia at large.

Then we go to the issue of tax cuts. We heard the Prime Minister and the Treasurer waxing lyrical about the impact that the tax cuts were going to have, only a matter of months ago on the second Tuesday of May. The facts show that they have been swallowed up because of mismanagement by the Howard government on a broad range of other fronts. We have the issue of competitiveness and our capacity to survive in a tough global market. Foreign debt is through the roof.

All these indicators suggest that unfortunately the Howard government approach of buying or spending their way out of trouble is no longer appropriate. Tough decisions and leadership are required. Let us go to the issue of the petrol debate. Back in 2001, when they were having difficulties, they decided to cut petrol excise. They have used tax cuts, family payments, baby bonuses and any number of handouts to buy off the electorate, but eventually, as we all appreciate, the patience of the Australian community runs out just as the government coffers are starting to run dry. They have no options left on petrol prices. One of the reasons is that petrol reform has taken 10 long years.

Excise cuts are no longer an option because we simply cannot afford them. This government has still done nothing to address the real issue. The real issue is Australia’s security. This is the guts of the debate that Australia has to have in the lead-up to the next election, because if we do not get this debate right we not only worsen the potential situation confronting Australian consumers but also put at risk Australia’s economic future. The principal reason is that the Prime Minister has sat in the oval office and accepted that basically we should place our future, in terms of where we go on resource security and the energy debate on transport fuels, on foreign oil from—guess where—unstable parts of the world like the Middle East. What a gamble. It is not a gamble that the Labor Party is prepared to take.

I say that because it is obvious to everyone except the government that, if you do not have home-grown fuel industries, Australia is at risk. We will always be hostage to foreign oil. We will always be hostage to unstable areas such as the Middle East. These are very serious issues that Australian consumers understand and appreciate. They are very serious issues that Australian industries speak to me about regularly in terms of my portfolio responsibility as the shadow minister for resources—a portfolio that includes energy, forestry and tourism. This is about what is going to rule the future and our capacity to have energy to drive the Australian economy.

I think we have to accept that there is no longer a capacity for short-term fixes. We need a national transport fuel policy that guarantees supplies for the long term and gives Australia options to deal with global fuel supply and price emergencies. That is the debate in Europe; that is the debate in North America; that is the debate in Asia; but unfortunately it is not the debate that the Prime Minister wants in Australia, because it requires tough decisions and leadership. I believe that we can no longer ignore that debate because, if other countries accept that this is the new Cold War and that the new cause of tension in the international community is who supplies the energy, then it is also part of what we have to face up to in guaranteeing our future as a nation. I will tell you why. It is pretty simple. It is about supply and demand. Who supplies the energy and who has influence over the energy supply of the world has economic power in the world. We want the Australian economy to go at full bore. We want to guarantee the creation of further training and apprenticeship opportunities for the Australian community. That requires a few tough decisions.

We have to lift our productivity and we have to try to make it easier for Australian workers to survive from week to week and day to day with all the added cost pressures that are imposed on them because of neglect and negligence by the Howard government. That simple debate goes like this: when supplies are short or demand is high—or both, as is the case right now—guess what? Prices go up. Prices are going up at the moment. As you as a former teacher know, Mr Deputy Speaker Hatton, it is simply economics 101. Unfortunately the Treasurer does not understand it and nor does the Prime Minister. They are not really interested in economic reform in Australia; they are merely interested in political survival: who occupies Kirribilli House or who might occupy Kirribilli House in the future. That is what occupies the minds of the Prime Minister and the Treasurer from sun-up to sundown each day—not where Australia goes but who occupies the Lodge and Kirribilli House and who might occupy the Lodge and Kirribilli House in the future.

We can no longer accept the contempt shown by the Australian government for these hard issues that have to be fronted up to now. The solution has to be embraced by the Australian community, with leadership from government in partnership with the private sector. The solution is home-grown fuel industries in Australia. That requires that we accept that there are policy options available to ensure that the wheels continue to turn for Australian consumers and Australian industries, to ensure that Australians can afford fuel and to ensure that Australian industry can afford energy. That drives job growth, apprenticeships and higher education opportunities. In doing so, it creates the social dividend which enables us to have a decent healthcare system and to look after the elderly in their aged years, and it also gives us the capacity to create opportunities for families experiencing stress at the moment, to manage the family difficulties of child care. So I would have thought the debate is pretty simple. It goes from A to B and C: make the hard decisions, embrace the policy options and get on with implementation. But unfortunately this is where the Howard government is remiss.

Federal Labor, alternatively, has always supported the oil and gas and alternative fuel industries. Let us deal with a few facts of modern history in Australia, because these industries are strategically important to Australia, strategically important to the region in which we live and strategically important to the world. I remind the House that Labor supported the proposal to extend the effective excise-free period for biofuels and LPG by three years to 2011. It supported legislation to introduce mandatory cleaner fuel standards that should benefit environmentally friendly fuels. So it is not about having economic growth without paying attention to environmental considerations; it is about doing both.

However, while Labor supported this approach, the House should be reminded that the overwhelming reason was—and this has always been the key to running a business in Australia—to provide some level of certainty for the alternative fuels industry and for the refining industry. It was the Keating government which introduced an 18c a litre production bounty for ethanol in the 1993-94 budget and, in addition, the zero excise rating for the product.

Perhaps the member for Blair ought to pay a little bit of attention to the history of why ethanol has gone backwards while the Howard government has been on watch. The record shows that the Howard government abolished the bounty scheme one year early, in the 1996-97 budget. It has consistently undermined the industry by changing the playing field on a regular basis over the last nine years. In the last parliament alone, the Howard government changed its mind not once, not twice but on three occasions with respect to the excise regime, not only for ethanol but also for the LPG industry. Despite his May 2002 view that applying an excise to ethanol and LPG was a bad idea, the Treasurer announced in the 2003 budget that he would do just that. He announced that biofuels and LPG would be subject to an excise from July 2008. In December 2003, guess what? He changed his mind again, announcing a new excise regime to apply from July 2011.

For those reasons, we will be moving today a detailed second reading amendment which stands in my name, to be seconded by the member for Hunter, Mr Fitzgibbon. This goes to the future of the ethanol industry. I challenge the member for Blair, who likes to interject, to have the guts to cross the floor like other members of the government if he wants to stand up for his local community and to vote for this second reading amendment, because it is about guaranteeing the future of ethanol and biofuels in Australia. I will tell you, Mr Deputy Speaker: I have no doubt that he will dog it. He will go missing in action when it comes to putting up his hand. He has form on that front.

These are important issues, because, between May and December 2003, the LPG industry was in turmoil. Many of the small business operators involved in LPG conversion and maintenance suffered from serious business downturns due to the uncertainty about the excise regime. Similarly, the biofuels industry suffered during this period because there was simply no certainty for investors in the industry. It has taken time for the industry to recover. That is mainly because record high prices have meant that consumers are more willing to set aside their concerns about fuel uncertainty than they would otherwise have been and that biofuels are now more price sensitive and attractive to refiners and marketers. In fact, let me say at this point that Caltex is to be commended for its announcement today that it will discount E10 petrol by 3c per litre. We await the other refiners.

The history of the Howard government’s double backflips on alternative fuels is in stark contrast to the stability Labor provided through its 13 years in office when it maintained the LPG excise exemption introduced in 1979 for fuel security reasons. The other stark contrast—

Cameron Thompson (Blair, Liberal Party) Share this | Link to this | Hansard source

You’re a comedian!

Michael Hatton (Blaxland, Australian Labor Party) Share this | Link to this | Hansard source

The member for Blair will get his go.

Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Primary Industries, Resources, Forestry and Tourism) Share this | Link to this | Hansard source

is just how interested in fuel security the Prime Minister was, back then in 1979, compared with his complete lack of interest today as Prime Minister, when fuel security has never been so important and petrol prices have never been so high. As I have said before, this government treats tax cuts as go-away money for motorists worried about petrol prices.

I therefore remind the House of some facts I have raised many times in this place. The fact is that, without developing large-scale alternative fuels industries in Australia, we will increasingly be hostage to supplies from the Middle East, West Africa and Russia. This is the debate about security. I do not need to spell out the implications of that fact for energy security and for the security of Australia’s economic future. Australians around the kitchen table each night want to know that their governments and the companies with stewardship of their resources have a plan to secure their energy supplies for the future at prices affordable to Australians.

I raise this because it is important. At the moment there is no plan. Unlike Uncle Arthur would have them believe, they should be relaxed and comfortable. Have we heard the Prime Minister talking about being relaxed and comfortable? They are not relaxed and comfortable about our energy future. Creating the right fiscal and regulatory regime to convert our natural gas and coal to clean diesel as a new industry option and a new fuel supply source for Australia is unfortunately not on the Howard government’s radar. Mr Howard was thinking about it, interestingly, in 1979, but it is not on his radar in 2006 when he is the Prime Minister and it is more important. Unlike with other alternative fuels, the Prime Minister has done nothing to provide any industry framework to encourage the establishment of industries in Australia to convert our vast local coal and gas resources to clean diesel. This is the future debate. This is the key to transport security in terms of energy in the future.

Alternatively, the Labor Party has always been a great supporter of both gas to liquids and coal to liquids, which is integral to the commercialisation of clean coal technology for power generation in Australia and which is part of the environmental debate. We actually achieve on both fronts—energy security and environmental progress. I recall that a former Prime Minister, Paul Keating, as resources minister, was a great advocate of gas- and coal-to-liquids technologies. That was more than 20 years ago. This is a debate that has been ongoing. It is about time the Howard government actually got serious about it.

My colleague the member for Hunter was also a great advocate when he was shadow minister for resources in the last parliament—and we continue this tradition because we believe that establishing new nation-building industries is not easy and requires, more than anything, sustained leadership and focus at a national level. For that reason, over the last couple of weeks I have had the pleasure of dealing with two innovative proposals in the private sector, both looking at coal gasification and conversion to diesel, one in Queensland and the other in the Latrobe Valley in Victoria. Unfortunately, the Howard government has waxed and waned on both coal to liquids and gas to liquids. It should pick up the challenge and run with it.

Once again, let me remind the House that it is now almost five years since Senator Minchin, then minister for resources, appointed a GTL task force to investigate the feasibility and benefits of establishing a GTL industry in Australia. Five years later, no action has been taken. I suppose that is why the member for Hunter once said that in John Howard’s mind it is easier to get gas to Shanghai than to Sydney. That says it all: export it; do not worry about our own local economy. John Howard is happy to dig it up, ship it out and look after Japan, China and the United States. He guarantees their resource and energy security, but when it comes to Australia he has no plan for our energy security and our economic future.

I simply say to the Prime Minister that he needs an industry policy, a resources policy and an energy policy. We can no longer wait. Those policies will have to give us large-scale options to reduce our reliance on foreign oil. This is pretty interesting. I think it is what Australians actually believe. We cannot rely on foreign oil if the Strait of Hormuz is closed, if the Alaskan pipeline has to be fully shut down, if war escalates in the Middle East or if civil unrest shuts down West African production. GTL is the best option. It is about time the Prime Minister took up the challenge laid down by the Leader of the Opposition in October last year about the importance and urgency of this debate.

The Prime Minister’s own GTL task force noted that, while Australia could simply wait for the market to provide an incentive for a GTL industry, once gas supply infrastructure is in place and investment is sunk in other countries—not in Australia—where taxation and infrastructure incentives are on offer today, those countries will serve as investment hubs for expansion for years to come. Unfortunately, that is what is happening in Qatar at the moment while the Prime Minister is asleep on his watch.

The implication from the task force’s review was that Australia’s remote gas fields could be left stranded from markets for even longer because, by and large, it will be cheaper to expand existing projects than to build new ones here. It is about economies of scale. I am sure this is a concept Australia’s LNG industry fully understands.

The task force also highlighted the potential significance of a GTL industry to Australia’s economy, saying that it could underwrite offshore gas supply infrastructure to bring forward the possibility of further major new domestic gas pipelines to connect the national market, increase domestic gas competition and energise gas exploration. That is an interesting challenge, one the Labor Party would love to have the opportunity to implement. That is why it is going to be an ongoing debate between now and the next election. This debate can no longer be put off. The task force also said, and this is the crux of the debate:

These benefits would be of national strategic significance to Australia.

It went on to say this, and perhaps the Prime Minister should revisit the report:

The cost of any government intervention must be considered against the potential benefits.

That is simply saying that if you invest now you get the return in the future in terms of competitive energy supply in Australia, which is the key to our future. That is what attracts investment to Australia—a stable economy, stable government and energy at a reasonable price and with security of supply. The potential benefits go beyond unlocking new resources. They go beyond wealth and creating new industry, more jobs and more exports. They include the opportunity for Australia to address our most pressing problem, our future transport fuel security challenge.

It is also three years since CSIRO’s report Energy and Transport Sector Outlook to 2020 laid out its proposed strategy for Australia’s transport future—a strategy that identified gas to liquids and coal to liquids as the keys to our future transport fuel security. The tragedy is that we all appreciate the potential but the reality remains just beyond the Howard government’s grasp. It requires sustained and committed national leadership. It requires that we review the PRRT regime and consider special treatment of capital investment in gas to liquids fuel projects and associated gas production infrastructure. It requires that we have some responsibility for resource related infrastructure instead of simply saying that it is a state responsibility. Above all, it requires that the Howard government should send a clear signal to Australians that it is interested in their future fuel supply security. We should send that clear signal.

So on that basis, in order to bring this debate to a head, I will have pleasure in moving the second reading amendment circulated in my name calling on the government to immediately conduct a feasibility study into a gas-to-liquids plant in Australia. The Prime Minister needs to dust off his 2001 report, bring it up to date, move on the implementation and make it a reality. I also call on the government to review, in 2009, the proposal to introduce excise on ethanol and biodiesel, LPG and CNG in 2011 and to consider whether or not there is a case for deferring the introduction of excise depending on industry progress. I think this is a matter of such public importance that the department should report to parliament, in the period commencing next year, on the measures taken and the progress made to wean Australia off foreign oil dependence. Such a review would keep the pressure on parliament and decision makers. It would be on the uptake of alternative fuels. We have got to be serious about the implementation, given the issues raised in the opposition’s blueprint.

I simply say in conclusion, before moving the second reading amendment, that the government ought to be criticised for its tardiness in moving on petrol retail reform, for bypassing the parliamentary process in taking companies out of the sites act, for failing to announce amendments to the Trade Practices Act to implement the 2003 Dawson and 2004 Senate committee reports and, above all—and this is the crux of the debate—for failing abjectly to take action to reduce Australia’s dependence on foreign oil. I now move the second reading amendment standing in my name:

That all words after “That” be omitted with a view to substituting the following words: “whilst not declining to give the bill a second reading, the House:

(1)

calls on the Government to require the Department of Industry, Tourism and Resources to report to the Parliament annually, commencing in August 2007, on the measures taken and the progress made to:

(a)

increase market penetration of ethanol and biodiesel, LPG and CNG, including the number and location of service stations and the names of the companies offering these products on their retail sites;

(b)

secure new investment in biofuel, LPG and CNG production and supply infrastructure in Australia; and

(c)

secure investment in new alternative transport fuel industries in Australia, including gas and coal to liquids;

(2)

calls on the Government to review, in 2009, the proposal to introduce excise on ethanol and biodiesel, LPG and CNG in 2011, and consider whether or not there is a case for delaying the introduction of excise, depending on the progress made:

(a)

in increasing market penetration of biofuels, LPG and CNG;

(b)

in securing new investment in biofuel, LPG and CNG production and supply infrastructure in Australia; and

(c)

towards achieving the 350 million litre biofuels target in 2010.

(3)

criticises the Government for:

(a)

its tardiness in moving on petrol retail reform;

(b)

bypassing due parliamentary process in introducing a regulation to “undeclare” companies under the Sites Act;

(c)

failing to introduce amendments to the TPA to implement the 2003 Dawson and 2004 Senate recommendations for reform; and

(d)

failing to act to reduce Australia’s dependence on foreign oil and improve its transport fuel security;

(4)

calls on the Government to immediately conduct a feasibility study into a gas to liquids fuels plant in Australia, including:

(a)

consideration of Petroleum Resources Rent tax incentives for developers of gas fields which provide resources for gas to liquid fuels projects;

(b)

examining a new infrastructure investment allowance for investment in Australian gas to liquids infrastructure; and

(c)

developing a targeted funding scheme for research and development in this area;

(5)

calls on the Government to immediately embrace Labor’s Fuels Blueprint proposal to:

(a)

make alternative fuel vehicles tariff free, cutting up to $2000 off the price of current hybrid cars; and

(b)

grant tax rebates for converting petrol cars to LPG; and

(6)

calls on the Government to immediately embrace Labor’s Fuels Blueprint to find more oil and use more gas by;

(a)

re-examining the depreciation regime for gas production infrastructure;

(b)

allowing the selective use of flow-through share schemes for smaller operators”.

(Time expired)

Michael Hatton (Blaxland, Australian Labor Party) Share this | Link to this | Hansard source

Is the motion seconded?

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

I second the motion.

Cameron Thompson (Blair, Liberal Party) Share this | Link to this | Hansard source

After all that hot air from the member opposite, it is great to be able to stand up and create some of my own. Fuel is causing a lot of drama for Australians. We have got a situation of continually rising prices causing real pain, and that is even in the state of Queensland, where, as you would probably know, Mr Deputy Speaker, there is not a petrol franchise fee. That fee does not apply in Queensland; it never has. All the other states of Australia had a petrol franchise fee, which was rolled into the GST. So we in Queensland are privileged because the price of our fuel is still, on average, about nine cents a litre cheaper than in all the other states. So while we in Queensland feel the pain, it is hard to imagine how people are putting up with the incredible prices that they are paying in the southern states and elsewhere in Australia.

It is a pleasure to speak on the Petroleum Retail Legislation Repeal Bill 2006 because there is no doubt that we have come a long way down the road since 1980, when the previous bills were created. We have come a long way to where we are today. So much has gone on and there have been so many changes, particularly in the automotive industry and fuel retailing, that it is hard to see how those bills could possibly still be regarded as effective in today’s environment. The world has moved on and Australia has changed dramatically, and that is reflected in the government’s treatment within this bill of this area, with the introduction of the new Oilcode and the removal of quotas on the oil majors as to the number of sites that they can own. You would have to be Rip Van Winkle not to notice that today in Australia shopper dockets are playing a really big part in our process of buying fuel. People are religiously collecting shopper dockets to get what they regard as bargains as they try to minimise their fuel costs.

The shadow minister said that we needed to look very strongly at alternative fuels and he was roasting the government, saying the government needed to act. That was an amazing set of words to be coming from the member of an opposition that killed off ethanol quite some time ago with a whole lot of spurious nonsense about the dangers that it supposedly posed to motor vehicles. They concocted a bodgie case on that. I remember that a couple of their members were fingered in the process of doing it. They put about false claims about ethanol and its dangers and, as a consequence of that, across my electorate I still come across fuel pumps that have these hideous little stickers on them saying, ‘Does not contain any ethanol,’ as if that is a bad thing.

Ethanol actually boosts the octane content of petrol. It is a welcome addition to any fuel. I feel very strongly about this, because we could produce it so readily in Australia. Shame on the Labor Party for killing it off, given that it could have been introduced so much more effectively several years ago. Shame on them for going about Australia and telling a whole lot of untruths about the impact of ethanol on people’s motor vehicles and for continuing to maintain that for such a ridiculous period of time. They fallaciously linked it to the Manildra group and to all kinds of claims that they regarded as being politically advantageous to them to make. The result of their pursuing political ends is that the national interest has been badly set aside. We have not made progress down the road to ethanol—there has not been an uptake of ethanol—because Labor Party members have been telling everyone that they meet in the street that ethanol is no good. They have been doing that again and again, but today the shadow spokesman is trying to perform a backflip and trying to get those words out of his mouth about ethanol being good. It must be hard for him to do that, but at last Labor are starting to get with the strength and the reality of what is going on all over the world.

Ethanol is a great alternative, particularly for a country like ours which produces heaps of sugar cane. A lot of people simplistically say, ‘Oh, sugar cane is what you get your ethanol from,’ but there are plenty of other ways to get ethanol. We have lots of low-grade sorghum produced in this country that could go into ethanol. There are all kinds of other grain crops and opportunities. We have got so much land and the capacity to generate sources of ethanol; it is there all over the country.

What we need to do is to look at mandating that ethanol and saying, ‘Let’s have 10 per cent of it in our fuel.’ It certainly will not harm anything at 10 per cent. I think we could even have 20 per cent. That is certainly being done in the US. I think in the US now they are running something like 85 per cent ethanol in some cars. That brings me to the situation in Brazil. In that country they are using flex-fuel cars and they are making big savings because of the use of ethanol in their fuel. That use of ethanol is something that I think needs to be carefully examined by Australians, and I think we need to pursue it.

I would like to quote a couple of articles about the way things are going in Brazil. The first one comes from the Guardian from 23 November 2005. It traces the history of what has happened with ethanol in Brazil. The article was entitled ‘Sugar powers a revolution on Brazil’s roads’. It says:

In the 80s the then military government reacted to the oil price shocks of 1973 and 1981 by offering tax advantages to run cars on ethanol - so much so that between 1983 and 1988 up to 90% of vehicles were powered by the fuel.

It goes on to make an interesting point. It says:

The bottom fell out of the market when oil prices collapsed - and sugar cane producers jacked up ethanol prices more than 40%.

The difference now is that drivers have a much greater choice, being able to mix ethanol and petrol at will in “flex fuel” engines that Volkswagen introduced in 2003 and are being built by rivals such as Peugeot, which launches a 1.4-litre version next month ...

And it goes on to mention other producers. So fluctuations in the price of sugar and oil have meant in the past that, for example, overnight, sugar producers suddenly do not want to sell you their ethanol. When flex-fuel is the way to go, when that provides the motive power, there is no reason why those kinds of market forces will impede in any way the growth of an ethanol industry in Brazil—and there is certainly no way that it will impede the growth of an ethanol industry in Australia.

The article quotes Serge Habib, Citroen’s managing director in Brazil, as saying that in Brazil as many as 80 per cent of new Brazilian built cars are powered by flex-fuel engines. I heard a member of this parliament saying the other day that Holden is producing flex-fuel engines in Australia—or certainly one of the Australian producers is producing them here and exporting them to Brazil. So we have a ready-made source of flex-fuel cars already here in our country. We can buy locally in terms of the fuel and we can buy locally in terms of the vehicles. According to this article, Mr Habib, from Citroen, said that producing ethanol from sugar is profitable as long as oil costs more than $37 a barrel. It sounds to me like we will be producing ethanol profitably till hell freezes over, the way things are currently. That price of $37 a barrel is a price that we are probably not likely to revisit in the near future. I think we can look at this opportunity to switch to ethanol.

The article makes another point about what has happened in Brazil—and I am looking at the way this impacts on our fuel industry in Australia. It quotes Luiz Custodio Martins, president of a sugar and alcohol union in Brazil, who said:

The Brazilian economy has saved $400bn in imports since the creation of the National Alcohol Program, and that’s without mentioning interest ...

So Brazil has made $400 billion in savings in terms of imports. We are a country that has a lot of imported fuel. The opportunity for import replacement with ethanol is a very good thing.

We did not hear an awful lot on ethanol from the opposition. They still find it a dirty word. They still cannot bring themselves to recognise it as the most important option that faces us. I heard them talking about gasification—that is, turning gas to liquids—using coal to generate energy. Honestly, the member opposite quoted Paul Keating as having said that many years ago. I reckon they must have had that discussion in a telephone booth somewhere out the back of Winton, because it is not something that they have paraded down the street on. It is not something that they have brought on the cabaret for—they have not lit the lights; they have not put on their tights. They have not been out there saying anything about what to do with this gas to liquids option. It has hardly rated a mention anywhere within the Labor Party, and now we are in a position where, suddenly, it is apparently, according to them, an even greater option than the logical conclusion of a transition to ethanol.

One of the major issues that we are all discussing at the moment is the price of fuel. It is affecting people’s livelihoods and it is something that we have to address directly. This bill will modernise the legislation, remove irrelevant restrictions on the structure of the petroleum market and create a more transparent, competitive market that will be the best way to deliver cheaper fuel prices to consumers. As I said earlier, there have been significant changes in the retailing of petrol in Australia since the acts repealed by this bill were introduced in 1980. The legislation has not been able to keep pace with these market structure changes. In Australia, the retail petroleum industry provides approximately 38,100 jobs and had a turnover of about $21.7 billion in 2004-05. There are about 6,500 service stations throughout our country. It is a major part of our economy. It is also inseparable from the international economy.

This bill repeals the Petroleum Retail Marketing Sites Act and the Petroleum Retail Marketing Franchise Act 1980. The Petroleum Retail Marketing Sites Act sets quotas on the oil majors—BP, Caltex, Mobil and Shell—restricting the number of sites that they can own, lease and operate either directly or on a commission agency basis. In fact, going back to 1980, there were nine majors regulated in this way. It just shows you that we have now slipped down to where there are basically four and, honestly, those are divesting themselves, in these arrangements with Woollies, Coles and Quix, of their sites. The whole thing becomes an irrelevance to the way fuel is actually being retailed in our country. The only major company now hindered by quotas as a result of those retailing activities is BP. It is at its limit, with no room to compete with the other industry operators in terms of creating additional sites, because it is now the only one being limited by the sites act.

Quotas are based on the volume of fuel each company has the capacity to produce in its own domestic refineries. The act was introduced at a time when there was a lot of fuel available. Independents would be able to acquire internationally sourced fuel while the refiners could sell on their own. The abundant supply meant a potential threat to the independent operators’ viability. Because the acts have not progressed alongside the petrol retailing sector changes in the last 26 years, an effect of the acts themselves has been to encourage trading in the industry outside the coverage of the act. The obvious example of that is major companies divesting their retail operations to the supermarket chains. They have taken a large chunk of operations. This has radically altered the structure and thus the competitiveness of the market. Because of the trend, the competition that was meant to be fostered by the act has been split into those industry traders operating under the act’s coverage and those operating outside.

BP has not divested its operations and is therefore prevented by the act from increasing its number of sites. It cannot increase its competition with the supermarket traders, who are not limited by the acts. As a result, we have a two-tiered system that is, by its nature, discriminatory: applying one set of rules to one party while allowing the remainder to operate without those rules. The ability of the majors to compete with newer market entrants, such as the supermarkets, is limited. It has also resulted in advantage for small business franchisees over small business commission agents.

Since 1980, fuel quality standards have also tightened in line with global environmental best practice. Global supply capacity is stretched, with massively increased demand internationally, resulting from economic growth throughout Asia. The situation of 26 years ago, with abundant supply and lower demand, has been dramatically reversed. The acts no longer serve the industry or the public. This bill will create a fair and open competition between the oil majors, healthy independents and supermarkets. It also allows for what is sure to be major change in the industry in coming years as it finds alternative supply.

As I said before, the obvious source to consider is ethanol. There are also the biodiesel opportunities. I do not mind the opposition talking about coal to liquids or gas to liquids. These are courses that, of course, we must pursue, but I think the one that is staring us right in the face is ethanol. We should be looking at a mandate for ethanol to drive it forward. If we look at that example from Brazil, we see quite clearly that in that country it was necessary for the government to go so far as to provide special tax advantages to promote people running cars on ethanol. That is the kind of step we need to be looking at in this country. We have reached a point that, perhaps, Brazil did way back then. We have reached this point now, and we need to be looking to those positive measures to drive it forward.

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

Hear, hear! Take the initiative.

Cameron Thompson (Blair, Liberal Party) Share this | Link to this | Hansard source

I see the member for New England over there. He was the one I saw talking about E85 in the United States. That is an example of the flex-fuel opportunities we certainly need to be taking up in this country.

The bill is part of a government reform package: the downstream petroleum reform package. The aim of the package is to provide a more competitive retail fuel market. It has the potential to have a positive impact for consumers at the pump, and we can all hope for that but we must continue. We must find other ways to drive that forward, as I have mentioned. As a part of the package, the government will introduce a mandatory industry code for the oil industry called the Oilcode. The aim is to provide industry certainty and to make that regulatory environment uniform. This will encourage investment and employment in what is a major industry in this country, as well as achieve transparency and competition in petroleum pricing.

The Oilcode will cover the relationships between suppliers and retailers. The terminal gate prices provisions in the code will improve the transparency in the industry and create an even and fair opportunity for operators. All customers, small businesses or supermarkets, franchises or commission, will have access to fuel at the published terminal gate price. Dispute resolution is also covered in the Oilcode to ensure the industry participants have access to ongoing cost-effective resolution without the need for involving the courts—and I say ‘Hear, hear!’ to that.

If we look at the quotas that are allowed, the quota allowed to BP is 87 and it has 87 current sites. Caltex’s quota is 136, and it has 87 sites. Of course, it has also got its arrangements with Woolworths. Mobil’s quota is 87; current sites, one. Quite obviously, that has been divested as well. Shell’s quota is 114 and its number of current sites is 16. Quite obviously, the minister and the government have responded effectively to what is an emerging change in the industry. We have taken a major step in the way we control the operation of these retail sites, but we have got to go right down to the base of the industry and we have got to provide it with alternative solutions. The idea of import replacement using ethanol will be a bonus not only to our farming industries and not only to our motorists but to our current account as well. If we can reduce the amount of our reliance on imports of oil and replace it with ethanol, I think we will be moving in the right direction. Despite the shameful activities of the Labor Party in trying to kill off ethanol, it will survive. (Time expired)

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

I will not even do justice to the member for Blair’s weak and poorly researched speech, but I will congratulate him on speaking on a bill relating to petrol prices in this very week when petrol prices are such an important issue and are so much at the forefront of the minds of all Australians. I do note, from having a look at the speakers list, that he was the only member on that side game enough to do so, but I may return to that point.

It is a pleasure to speak to the Petroleum Retail Legislation Repeal Bill 2006 and to provide support to the amendments moved by the member for Batman and seconded by me. This is a very important piece of legislation and a piece of legislation that is long overdue. The regulatory regime which controls the petroleum retailing sector in Australia is now 26 years old. It was forged in an era when we had nine major oil companies, and of course now we have four. It was forged at that time because the then government was concerned about market concentration in the petroleum market. I repeat, then we had nine majors, now we have four.

Some people might think we would be looking at actually strengthening the act rather than repealing it but, unfortunately, it is not that simple. This act is now antiquated. It really does not mean anything much because, over the years, the major oil companies have effectively been able to circumvent the act, particularly by way of creative multisite franchise arrangements. But, just as importantly, we now have operating in the market the partnership arrangements between Coles and Shell, and Caltex and Woolworths. Of course, the Petroleum Retail Marketing Sites Act, which is designed to limit the number of service stations the oil companies can run directly, does not cover Coles or Woolworths. So we have a big problem.

Labor supports the idea that we repeal the two acts—that is, the sites act and the franchise act, which supports it—to put in place a more modern and more effective regulatory regime. This should have happened at least five years ago. Why did it not happen five years ago? Because of government incompetence and the government’s failure to show leadership and to secure amongst industry and consumer representatives a new regulatory structure that was acceptable to all involved. Those involved include those at the industry, refinery, wholesale, distribution and retail levels and those who represent consumers and who are naturally concerned about the impact and the efficiency of the regulatory regime and its ability to hold petrol prices as low as possible and to protect independent service stations as best as can be achieved. Competition is everything in keeping petrol prices down. We cannot sit back and allow a few major oil companies to drive any competition out of the market. In this country we need an independent sector, as we see in many American and European markets, which keeps the major oil companies and their partners, such as Coles and Woolworths, honest. It took a lot of work to get a regulatory regime, which of course keeps all those players happy.

I am not suggesting the government is there yet, and I know there remains a lot of concern, particularly amongst organisations like the MTAA, representing independent service station operators, but I suspect the government has secured as close an agreement as it can achieve. But it should have happened five years ago. Certainly, it should have happened a long time before now. This bill is about consumers, it is about small business and it even goes to Australia’s competitiveness, because fuel in Australia is an input to production in both the manufacturing sector and the services sector. It is also about international competitiveness and it is something we should have dealt with long before now.

There is a caveat contained within the member for Batman’s second reading amendment. The opposition has indicated its support for this bill on the basis of the government’s belated promise that it will finally do something about the Trade Practices Act. I have talked about the importance of competition in keeping petrol prices down. We cannot have competition unless we have a strong Trade Practices Act. It is well known to all watchers of this industry that we have not had a strong Trade Practices Act for some time now. We have not had, in particular, a sufficiently strong section 46 of the Trade Practices Act, which of course contains the main provisions for protecting against misuse of market power, therefore protecting and enhancing competition.

We say to the government: we intend to support the bill this time around, but we want to see the whites of their eyes, we want to see the detail of the amendments they intend to finally and belatedly move to the Trade Practices Act so we can be sure that this new regulatory regime, in partnership with those changes to the Trade Practices Act, is sufficient to protect consumers and Australian small business. Make no mistake about it: Australian families, Australian small business and indeed Australian business generally are hurting as a result of high fuel prices. Australian families are hurting to the tune of between $40 and $50 a week. Australian business are hurting to the extent that they are starting to question their viability. Yet, despite that, the Prime Minister and his Treasurer say there is absolutely nothing they can do about petrol prices.

We on this side acknowledge that high petrol prices are driven largely by the high price of crude oil. We accept that. But, when crude oil is high, it is all the more urgent for governments to act in the short term, the medium term and the long term. The Prime Minister and his Treasurer can act today in a couple of ways. They can bring forward those amendments to the Trade Practices Act and the Treasurer can sign this letter, which I have with me today, which would refer to the ACCC the power it needs to properly investigate petrol prices in this country. So, Mr Prime Minister, while you and your Treasurer are present, I appeal to you on behalf of Australian families and Australian business to take that short-term action. But there is more, Mr Prime Minister, that you can do. I also appeal to you and your Treasurer to embrace the Leader of the Opposition’s fuels blueprint and start doing something about energy independence in this country, weaning ourselves off our dependence on Middle Eastern oil—

David Hawker (Speaker) Share this | Link to this | Hansard source

Order! It being 2 pm, the debate is interrupted in accordance with standing order 97. The debate may be resumed at a later hour and the member will have leave to continue speaking when the debate is resumed.