Chris Hayes (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

Prior to the interruption of the debate on the Petroleum Retail Legislation Repeal Bill 2006 I was speaking about the restructuring of the petrol retail industry. This process is set to continue, regardless of the structures governed by the operations within this industry. However, it is appropriate that the ongoing framework is appropriate in the future as the restructuring is resulting in a greater concentration of market power, particularly with respect to the falling number of service stations. The entrance of the major supermarket chains into the petroleum retail sector has permanently and fundamentally changed the industry. They have brought with them obviously discounted petrol, which is levied against their retailing outlets, but they have also been able to set about snapping up a great number of outlets.

To enter with this level of market strength, outside the existing regulatory structure, during a time of significant industry restructuring can only favour the supermarket chains, and there needs to be a restoration of the competitive relativities between all operators in this sector. The Oilcode will bring about some uniformity in applying a mandatory industry code of practice that will for the first time, as I understand it, cover all sectors of this industry. That has to be a welcome position for all operators—from those at the service station end of the retailing sector through to the peak bodies and motoring advocates within the industry.

I am sure the implications of the actions of the government when it comes to levelling the playing field in the petrol retailing sector will not be lost on small business operators. This government continues to talk big but does very little when it comes to amendments of the Trade Practices Act that will do something to relieve some of the pressures on small business. It continues to resist all calls to introduce the amendments to the Trade Practices Act that will deliver the recommendations of the 2003 Dawson report and the 2004 Senate inquiry. Small businesses are generally suffering as the march of the major supermarket chains continues. Not only are small businesses facing the loss of market share but they also regularly face predatory behaviour.

As I mentioned prior to the interruption to this debate, the net effect of the repeal of this bill in conjunction with the introduction of the Oilcode will be that market participants will no longer be subject to different protections and regulatory requirements. All market participants, no matter their ownership structure or market strength, will be treated relatively equally. Sure the Oilcode could be improved by the strengthening of section 46 of the Trade Practices Act, but if we all waited around for that to occur then many other businesses would go to the wall.

Small business operators throughout the country are suffering at the hands of major retail chains. We have many examples of that. I certainly see that from day to day within my own electorate. They simply are not able to compete on fair grounds. They are strangled by unfair business practices and predatory behaviour by some of the market giants.

Major supermarkets such as Coles and Woolworths currently have between them approximately 80 per cent of the dry grocery market. They are dominant players, and they are now becoming significant players in the petrol retailing industry. Recent estimates indicate that, between them, Coles and Woolworths already have 50 per cent of the petrol retailing market. This is probably unsurprising to most, given the fact that both supermarkets offer fuel discount schemes and that they have rapidly expanded the number of petrol stations they operate either themselves or in conjunction with the existing retailers.

At a time of a rapid increase in the price of petrol, petrol discounting schemes offered through more than 1,200 locations throughout the country give you a pretty good head start when it comes to establishing your position in the petrol retailing market. Add to that the fact that, between them, Coles and Woolworths currently operate petrol retailing networks of more than 1,000 outlets themselves, and that gives you a fair indication of the degree of dominance which is being shown by the retailing sector in this area. When you can set up retail sites and networks like this as rapidly as the supermarkets have been able to do, that certainly delivers you great clout within the petrol retailing market.

Of course, the major supermarket chains are not stopping just with petrol. Progressively, supermarket chains are using their market dominance, sometimes in conjunction with quite predatory behaviour, in other sectors. Demands on small business—and often what we see as the destruction of small business—in many sectors have led to the reduction of competition. I have to say that everything I see indicates that this will continue. Many small business operators, not just petrol retailers, are the focus of efforts to reduce the amount of competition generally, but this bill will at least, for the first time, try to level the playing field to ensure that there is no difference between businesses of different ownership structures as they apply their trades throughout the petrol retailing sector of the market. It does seem that, under the Oilcode, the playing field from hereon in will be somewhat more balanced and that small operators in the petrol retailing sector will be protected from the misuse of market power.

The government might claim that it has attempted to improve the lot of small business by trying to introduce industrial relations reforms. I have to say, after talking to a number of small businesses in my electorate of Werriwa, that plenty of them do not want what is on offer, and they certainly do not like what they are being asked to do by this government. No matter how much the government might not want to hear it, quite frankly, reform in industry is not a one-way street.

This government has rammed through changes to industrial relations that have impacted on the labour side of production, yet it sits on its hands when it comes to reform involving business. It does not see itself as responsible for amending the Trade Practices Act, particularly to strengthen the sections on the misuse of market power, to assist small business. Yet, when it wants to talk about industrial relations, you would be forgiven for thinking that all of this has taken place simply to accommodate the wish of small business. It is a pity that the minister has not been out there—as I have been—listening to small business, because this is not what they are after. Small businesses want some protections from predatory behaviour, loss-leading behaviour, behaviour that is designed to effectively destroy the ability of small business to compete within a marketplace. That is what they want from this government, and that is what they have been denied. As a consequence—and it is not just in the petrol retailing sector—we are seeing a greater tendency now towards the emergence of duopolies or even worse in many industries. As I said, it is not just in this sector or throughout the retailing sector generally.

Productivity reform should be driven by competition. Competition produces better outcomes for all market participants. However, this government continues to condone bully-boy tactics, loss-leading behaviour and the use of sheer market strength to stamp out competition. If this trend continues, innovation will be stifled, no doubt competition will be decreased and choice for consumers will disappear—and obviously that will have an effect in industrial relations by slashing wages as well. Competition is a great regulator. Small business operators in every sector deserve the opportunity to compete on a fair basis, and this government continues to resist implementing any changes that will facilitate competition in many of our Australian markets.

In the time I have left, I would like to say a little about petrol prices. Ultimately this bill is designed to address the regulatory aspects of the industry but, at the back of people’s minds—and certainly the minds of people in my electorate—is: ‘What effect does it have on my family? What effect is it going to have on petrol prices?’ I have said on many occasions here that, having regard to the significant reliance on imported crude product, I accept that there are issues beyond our control when it comes to setting petrol prices. However, that does not mean that the government is excused from doing anything to try to protect the public.

It was only last week that I seconded a motion by the member for Hunter that called upon the Treasurer to refer the necessary powers to the ACCC, to not simply monitor petrol pricing but enable it to examine all relevant elements that come into play as companies set petrol prices. That is what people want. They do not want to see the ACCC just use a database and simply go through an exercise of working out changes in petrol prices. They want to be assured that there is some transparency in petrol pricing when they are paying for petrol at the pump. Further, if we are going to be serious about it, we should have the ACCC at our disposal. It should not be left with the Treasurer. He has shown that he was not prepared to sign a letter giving back the powers that this government has stripped away from the ACCC to examine petrol pricing. (Time expired)

Chris Bowen (Prospect, Australian Labor Party) Share this | Link to this | Hansard source

The Petroleum Retail Legislation Repeal Bill 2006 repeals two outdated and anachronistic pieces of legislation which have outlived their usefulness. Indeed, the government has already acted by administrative fiat to neuter the legislation in the acts that are being repealed under this bill. However, the new system to be put in place by the government will not do enough to support small business operators in the petrol industry, and the government should be strengthening the Trade Practices Act to provide for better protection.

The bill will repeal the Petroleum Retail Marketing Franchises Act 1980 and the Petroleum Retail Marketing Sites Act 1980, which were originally designed to control oil company ownership and operation of service stations. Under the existing laws, oil companies can directly own and operate about five per cent of service stations. However, supermarket chains such as Coles and Woolworths, which operate outside the existing regulatory system, now control over 50 per cent of the petrol retail market. So the acts’ effectiveness has been substantially reduced. They are pieces from another time.

Generally speaking, I am not a supporter of blunt economic instruments like ownership restrictions. They are quite Brezhnevian in their character and they are, as I said, a leftover from another era. They do not, in my view, usually achieve the noble reasons for putting them in place. And that is the case with these two pieces of legislation that are being revoked in this bill.

Since the laws came into place, 30 per cent of Australia’s petrol stations have closed. Of course, when the laws were introduced, petrol stations were owned by either oil companies or independent operators. As I said, that is no longer the case. There are other players, primarily large supermarket chains that control over 50 per cent of the petrol market. So the Petroleum Retail Marketing Franchises Act 1980 and the Petroleum Marketing Sites Act 1980 are now more ineffective than ever in protecting small business from predatory behaviour.

There is a much better way of protecting small business, and that is to strengthen the Trade Practices Act. This was recommended by the 2003 Dawson review and by a Senate committee in 2004. My attention has also been drawn to support for a strengthening of section 46 of the Trade Practices Act by Professor Frank Zumbo, Associate Professor in Business Law at the University of Technology, Sydney. Associate Professor Zumbo has argued for an ‘effective’ section 46 of the TPA to deal with anticompetitive, below-cost pricing; anticompetitive cross-subsidisation; claims of unconscionable conduct; and unfair contractual terms. The professor said:

Without appropriate safeguards, in the areas outlined above, any small business operating after the repeal of the Franchise and Sites Act would struggle to survive as a distinct competitive force in petrol retailing, which would be to the detriment of Australian consumers.

I endorse those remarks. Labor has been calling on the government to beef up section 46 of the Trade Practices Act for years. I acknowledge the efforts of honourable member for Hunter, who is in the chamber tonight. He has been talking about this for years and pushing the government to beef up section 46 of the Trade Practices Act.

Of course, protecting small business is a worthy end in itself. But in the case of petrol, in particular, it is vital for the consumer. There is a fair argument to make that independent petrol retailers play an important role in keeping petrol prices lower than they otherwise would be. It is basic economics. A fully competitive market is better for prices than an oligopoly. The government’s failure to beef up the Trade Practices Act to protect independent petrol retailers from anticompetitive behaviour is entirely consistent with the government’s failure to do anything about petrol prices.

We have always said on this side of the House that petrol prices are a worldwide phenomenon. We have always said that the main driver of petrol prices is world oil prices, but where we differ from the government is that we have said that that does not mean the government can sit on their hands and do nothing. It does not mean that the government cannot make changes to improve the situation for consumers.

This government has, up until today, done absolutely nothing to re-examine the depreciation regime for gas production infrastructure; nothing to allow the selective use of flow-through share schemes for smaller operators; nothing to allow the selective use of flow-through share schemes in the gas, oil and mineral exploration industry; nothing to make alternative fuel vehicles tariff free, cutting up to $2,000 off the cost of hybrid cars; nothing to work with state and local government to give city traffic and parking advantages to these types of vehicles; nothing to conduct a feasibility study into a gas-to-liquids fuels plant in Australia; nothing to offer petroleum resources rent tax incentives for developers of gas fields which provide resources for gas-to-liquid fuels projects; nothing to examine a new infrastructure investment allowance for investment in Australian gas-to-liquids infrastructure; nothing to develop a targeted funding scheme for research and development in this area; nothing to work with industry to improve engine design and fuel quality standards; nothing to ease the regulation of biodiesel production on farms and encourage a sustainable ethanol industry; and nothing, up until today, to encourage the granting of tax rebates for the conversion of petrol cars to LPG.

Today, we saw the Prime Minister come into this House and press the cut and paste buttons. He went to Kim Beazley’s speech of October 2005 on fuel alternatives, and he cut and pasted. He pressed the ‘cut’ button and cut bits out of Kim Beazley’s speech—not all of it, but some of it—and then he pressed the ‘paste’ button and pasted bits into his own speech. But he left out bits of Kim Beazley’s speech.

Finally, after a tense party room meeting last Monday—where backbenchers said: ‘Prime Minister, wake up. This is an issue. People are hurting. We’re losing votes’—we saw the Prime Minister come into this House and do something about petrol prices. Even today, there was nothing about monitoring petrol prices or giving the ACCC real power. There was nothing to direct the ACCC to deal with the situation that the Chairman of the ACCC has described as ‘fishy’.

The honourable member for Hunter and the honourable member for Werriwa gave the government the chance last week. A letter was even written. Again, it would have been an easy cut-and-paste job. The government are prepared to do the cut-and-paste job on petrol prices today but they are not prepared to do the cut-and-paste job on the letter that the honourable member for Hunter prepared last week, directing the ACCC to deal with this.

There is nothing in this legislation to investigate the system which has been criticised by the government’s own backbenchers. Again, I am drawn to the comments by Senator Humphries—comments I endorse. He said:

The relatively opaque nature of petrol prices means there is an opportunity for parties in the supply chain [to make] discretionary decisions about how much to charge to exploit motorists.

He is dead right. We all agree with him. This side is in the white heat of agreement with Senator Humphries. His own side is doing nothing about backing up those comments with real action.

We are not pretending that by punishing price gouging there would be a miraculous reduction in petrol prices overnight—of course there would not be; of course it would not happen—but, if we can reduce petrol prices by even a small amount by taking out anticompetitive practices and by taking out price gouging, we will have made a contribution. I am sure people who are paying $1.40 and $1.50 at the petrol pump would appreciate even a bit of relief that this government could offer through getting the ACCC to do a bit of fair dinkum monitoring and enforcement of proper pricing practices and competition.

I also agree with the NRMA, which last week issued a press release. It is a lengthy press release but a worthy one, and I am going to share it with the House in some detail. In this press release, the President of the NRMA is reported as saying:

BP announces that in the coming weeks it will be shutting down its Alaskan oil fields for repairs and the price of oil jumps to a record $77 per barrel—surely that’s all the proof we need that we must develop an alternative fuel industry now.

This is not the member for Hunter or the member for Prospect; it is the President of the NRMA. The press release continues:

The future of Australia’s energy supply is being held to ransom by the highly volatile nature of international oil prices. It is motorists that bear the brunt of this and we must accept that something can be done about it now.

Mr Evans said that as a first step the Federal Government must give the ACCC the powers it needed to ensure that oil companies aren’t using leaky pipelines in Alaska as an excuse to gorge on record profits.

“At the time of Hurricane Katrina last year oil companies were helping themselves to record profit margins—this must never be allowed to happen again,” Mr Evans said.

He continues:

“However, the long-term security of energy in Australia can not be assured by keeping a lid on prices today.

“Australia needs to act now to develop an economically sustainable alternative fuel industry. This needs to include but not be limited to the production of ethanol in this country.”

“Apart from ethanol, we must also consider a range of options such as other bio-fuels, liquid petroleum gas, natural gas and renewable options.”

              …              …              …

“It will strengthen our economy by creating a new export industry and could generate much-needed job growth in regional areas.

“Australia is falling behind much of the rest of the world in securing alternative fuels for the future—it’s time to catch up.”

That is the view of the NRMA. That could have been a cut-and-paste job. Those could have been the comments of the member for Hunter. He has been saying it for 12 months. The Leader of the Opposition has also been saying exactly that for 12 months. The government has been deathly silent. I endorse the comments of Mr Evans. It was a very good press release. As I said, it states things that the Labor Party has been talking about for 12 months.

The government’s failure to introduce proper protection for small businesses and independent petrol operators in this bill will make the situation described by the President of the NRMA worse. The government says that it is the friend of small business, yet we see very little in this legislation to protect small, independent petrol operators continuing in business.

Today the Prime Minister reminded us of his heritage in a small, independent petrol operation. He reminded us that his family had been involved in the industry. It should be more of a reminder to him to take a more proactive role in protecting small business by strengthening the Trade Practices Act. The Senate has called for it, an independent review has called for it and Labor has called for it. It is time for the Prime Minister and the government to do it. If they do not act now, small business will suffer, and Australian consumers will also suffer through ever-increasing petrol prices.

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

I am happy to follow my colleagues in this debate in endorsing the fundamental approach taken in the Petroleum Retail Legislation Repeal Bill 2006. The stance that Labor has taken in 2006 is not the same as that taken in 1999, when a bill that was almost exactly the same as this one was under consideration. Indeed, it was under consideration in 1998, and it has taken eight full years for a virtually identical bill to it to reach this place.

In those eight years, much has changed within the petroleum industry—not so much in the refining but certainly in the marketing and ownership and the effects of those on franchisees and people on commission. But the dramatic change has been the entry of the two major supermarket chains, Coles and Woolworths, into this market.

This legislation has been a long time coming. The reason it was not introduced in 1998 was that the participants could not agree on an outcome, so the government pulled back. As Labor indicated in our report to the Senate, the fundamental and critical thing missing in the legislation in 1998-99 was the establishment of an oil code. If the two regulatory mechanisms were to be taken away—the sites act and the franchisee act—then an oil code needed to be put in place to provide some protection for those franchisees, for people on commission and for the independents.

The fundamental problems faced by the operation of these acts over the last number of years go to the question of the dramatic changes we have seen right across the industry. If you go back to that period in time when the acts were put in place, in 1980, I think Australia had in the order of 25,000 service stations. I stand to be corrected on that. We are now down to about 7,000 service stations, and that number is declining. There has been a massive concentration of the numbers of service stations Australia wide. That concentration and diminution in numbers has continued apace and the expectation is that there will be fewer service stations available in Australia and fewer opportunities for people who are franchisees, independent operators or commission agents to get the best sites. Take the situation in 1980, when the oil majors dominated the market and when franchisees argued that there had been an abuse of market power. This proposed act does in fact return us to a pre-1980 situation where the oil majors are freed from a restriction on the number of sites they can have and freed from a number of other restrictions.

The reason that has happened is the entry of the other great factor: the two supermarket chains and the fact that, in the case of Woolworths, they have undertaken to do a deal with some Caltex service stations that are close, geographically, to Woolworths outlets to include them in their shopper docket scheme to give 4c off per litre of petrol. We have also seen Coles do a deal with the whole of the Shell chain. That of course leaves out Mobil and BP. Most of BP’s operations have involved major contracts and understandings with government agencies and other large companies, and they are looking to that market, so they are not looking so much to the normal retail and domestic retail as they are to that broader fleet market, and their discounting is directly to them.

The changes here are in fact the greatest. As the member for Prospect indicated, and as the member for Hunter previously informed me, the situation here is different from what it was then because the government has already moved to vitiate the sites act. By regulation the government has said, ‘The sites act that operated from 1980 on does not really apply anymore, because we will just take those designated sites and pull them away and recognise the fact that the whole industry has dramatically changed.’ So we are faced with a return to the pre-1980 situation, a return to the potential dominance of the oil majors.

But the major factor that we have on the other side is the dominance of the retail chains Coles and Woolworths as a potential counterbalance to the power that the oil majors have exercised. What we are offered under this legislation, known in shorthand as the Oilcode, are three key things. The second reading speech and the explanatory memorandum run out the three policy initiatives in this way: (1) to establish minimum industry standards for fuel re-selling agreements between wholesale fuel suppliers and fuel retailers; (2) to introduce a nationally consistent approach to terminal gate pricing arrangements to improve transparency and wholesale pricing and allow access for all consumers; and (3) an independent downstream petroleum dispute resolution scheme to provide the industry with an ongoing cost-effective dispute resolution mechanism as an alternative to taking action in the courts.

These things one hopes and trusts may be of some help or assistance and they may lead to a more efficient operation of the industry. After more than eight years the oil companies have come forward and said that they will accept what is being proposed here and they in fact welcome the government’s legislation.

Mr Deputy Speaker Scott, you will not be surprised to hear that a number of independent operators, people working on commission and those who are franchisees do not welcome this legislation because of the impact they fear it will have on them. They see the potential for the situation they complained about in 1980, when they saw an abuse of power by the oil majors, to happen here. Labor, in demanding that there be an oil code before this legislation can properly come before the House, has argued quite sensibly that, if you do not have a beefing up of section 46 of the Trade Practices Act and if you do not protect other people in the industry from a potential abuse of power by the oil majors, you have not gone far enough and you do not have a balanced enough system to deal with.

Indeed, given that we have the situation where there is an inequality between franchisees and those people operating on commission—and that is why there is a distinction in the franchisees act that a person who has a direct franchise with an oil major is offered some protection—it is argued quite properly in the brief from the library that there is always a cost to those sorts of arrangements. In doing away with it there will be the potential for greater efficiency within the industry. The oil majors think this is a good thing and they say the introduction of this act is ‘essential to ensure that costly and overly prescriptive regulations are removed and that all participants can compete effectively in the evolving petroleum market.’

As I indicated previously, if you go to those most affected by this change—to the Motor Trades Association of Australia, which represents service station operators—they have a different point of view. The reason they have a different point of view is that, in being released from the constraints of the sites act—officially here when this legislation goes through both chambers but unofficially because it has already been done away with by regulation—the oil majors will be able to pick and choose which sites they operate. So franchisees can expect that they will be on the receiving end of a notification. But, having had the franchise, they will not be continuing that because it is going to be taken back by those oil majors. Indeed, I understand from the member for Hunter that in this regard a number of BP service stations—in fact, the majority—have had their franchise agreements terminated. They were not renewed. So the expectation is that BP and others, as oil majors, will make the choice of the best sites for themselves. Those franchisees will lose out. They will be run directly by those oil companies. What is left will be the sites that are not so good, the sites that are second-rung, third-rung or lower. It will be harder for people to make a living. So the people on the receiving end of this say that they are ‘extremely disappointed that the government has introduced legislation.’ They say:

Service station operators believe that the proposed code is defective because it will not ensure a level playing field that will allow small service station operators to be able to compete fairly in the market with the large supermarkets and oil companies.

I will quote this in full because I think it is the most substantial argument that has been put forward. They further argue:

The outcome of the Government’s proposed changes will be:

• the closure of more small franchised and independent retail outlets—meaning in rural and regional areas, in particular, motorists will have to drive longer distances to obtain fuel;
• increased dominance of the retail petroleum market by the two supermarket chains;
• loss of competition in the retail and in the wholesale market as independent importers will struggle to find sufficient retail outlets necessary to sustain a viable import business; and
• detrimental to motorists in the longer term as smaller competitors exit the market and the large chains gain a greater share of the retail petrol market leading to less price competition.

Finally, they say:

Service station operators wonder where the benefits to motorists and the Government are in these proposed reforms. The only winners here would seem to be the oil majors and the two supermarket chains.

You could argue that, for those who face the brunt of this change, where it is perceived that there has been so much change since 1980, particularly in the last decade, this legislation simply endorses the fact that there has been that change and that the efficiencies sought will be at the expense of those people who have tried long and hard.

In my electorate of Blaxland, a large number of people operate independent retail outlets. Some people work on a commission basis, some as franchisees. Given the difficulties previously with regard to ethanol, one of the operators in my electorate who had an independent oil operation was forced to go to BP and take up a concession with BP. They will now be in a position where they will not know where they will stand—whether BP will stand by their current arrangement or whether they will be forced again to face a great deal of loss as a result of changes made. Bankstown is a very important part of the distribution service because the Hume Highway, Canterbury Road and Milperra Road run right through it. Particularly up the Hume Highway, there is some of the cheapest discounted petrol in Sydney. If you compare it to a range of other areas in Sydney, the people who operate those service stations will come under a great deal of pressure as a result of this.

Likewise, the Chief Executive Officer of the Service Station Association Ltd, Mr Ron Bowden, said that he expects 1,000 to 1,500 service stations will close, another 200 franchisees will probably leave the industry in the next two years and the market power will be left in the hands of a few large companies, which could lead to higher prices. There could be other deleterious effects. Looking at the broad scheme, something that was mooted in 1998 has now come to pass, not because of the franchisees or the independent contractors or those on a commission arrangement—they are not the ones who have driven this—but because of the oil majors and the fact that the supermarket chains have moved into it. Given the government’s determination to carry forward with this, Labor in this situation, as announced by the member for Hunter in April 2006, said:

Labor supports the repeal of the antiquated Petroleum Sites and Franchise Acts but wants both the proposed Oilcode and section 46 of the Trade Practices Act strengthened as part of the package.

You cannot have one without the other. Currently the government is giving us one without the other. They are giving us the change without any of the protection needed for those smaller operators. It may be more efficient and maybe the distortions are taken out of it but the end result will be fewer people independently owning those petrol stations and fewer people able to make a viable living out of it. It may well be, as has been indicated, that you end up with higher prices in the end because competition will be dramatically reduced as the oil majors and the major supermarket chains constrain what happens. Having driven so many independent operators out over many decades—down to 7,000 or so now and being driven down to another 1,000 to 1,500 or possibly more—that leaves one to think that it could be a lot worse.

I just want to speak briefly at the end of this speech about the amendments that Labor has put forward. The series of amendments are very far reaching, and I wish to congratulate the shadow minister and the team that has worked on them. What this demonstrates is that the government have taken eight years to get to this point to say that they recognise there has been a great deal of change in the industry, that they will simply move to put the oil majors back in the position they were in prior to 1980, that they recognise that there are two new entrants—Coles and Woolworths—and that there will be a consolidation of the industry but they will not move to put in any protection under section 46. Labor’s amendments are extremely far reaching. They are far reaching because Labor understands that the whole question of fuel availability in Australia goes to whether or not you understand Australia’s industrial needs, whether or not you understand our needs in terms of resource exploitation and whether or not you have a commitment to take the enormous riches that Australia has and actually direct them towards the benefit of the country in a proper way. So we call on the government to report to parliament annually on 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;

We saw today the Prime Minister, under immense pressure, come up with a statement in relation to energy and fuels. He gave a nod to what we have been pushing for with regard to LPG conversion and said that the government is now willing to undertake that. He said that he would have a look at Labor’s proposals for gas to liquids, but I could not really see much enthusiasm with regard to that. We argue very strongly—and there is a fundamental nationalistic approach at the very basis of this—that we have great resources that could make us more independent of the vagaries of world pricing in relation to petroleum products. We could develop our own resources and therefore not be on the end of the string of supply coming from overseas, which, as we know, can be interrupted in part, not only because of the problems in Iraq with the ongoing war and what we face in terms of the dissolution of that country into three separate entities and because of the problems we face in relation to the situation with Iran—one of the major oil producers in the world—but also because of the uncertainties throughout the whole of the Middle East because of the problems that not only are evident there now but also will continue to bedevil relations in those areas and put a giant question mark over the availability of petroleum worldwide.

We think it is in our national interest to develop our own capacities, to really go hard in terms of alternative fuels, to go hard in terms of gas to liquids and to go hard in taking an Australian approach to secure ourselves against the vagaries of world supply and to secure ourselves from being in a position where we cannot be sure that we can sustain ourselves properly in a world that is changing greatly. So, while the government has taken eight years to get to this point, there is an enormous amount of work to be done. The complexity of the amendments we have put indicate how much thought has gone into Labor’s approach to this. We see clearly what needs to be done and what has not been done by a government that really does not understand that you need to grapple with these things and put a proper plan in place. (Time expired)

Simon Crean (Hotham, Australian Labor Party, Shadow Minister for Regional Development) Share this | Link to this | Hansard source

I rise to support the member for Blaxland and others on this side who are in support of the amendments to the Petroleum Retail Legislation Repeal Bill 2006 moved by the member for Batman. This is important and timely legislation because the soaring price of petrol is putting enormous financial pressure on Australian families. The families that are feeling the biggest burden are those in rural and remote Australia, as you would be aware, Mr Deputy Speaker Scott. It is a financial pressure that is compounded by the third interest rate hike since this government was elected—an interest rate hike the government promised would not happen.

The Reserve Bank’s measure of debt servicing shows that mortgage interest repayments now consume a higher proportion of household disposable income than ever before. They now consume 11 per cent of household disposable income, compared with 9.3 per cent when interest rates peaked in 1989. Reserve Bank figures also show households now have more debt as a proportion of their income. Household debt is now equivalent to 150 per cent of household disposable income, compared to 60 per cent in 1989. This comes to complete the triple whammy as the government’s unfair industrial relations laws put further pressure on families by forcing a race to the bottom on wages.

The bill itself is a belated response to the problem of spiralling petrol prices—but it is not enough. The Prime Minister says that there is nothing he can do when the family budget is being stretched by this triple whammy of higher petrol prices, even higher interest rates and uncertain job security. Many people wonder how they will be able to visit their family, get the kids to school and make ends meet. Of course, the government simply washes its hands and says there is nothing it can do. The government is wrong.

We on our side of the parliament do acknowledge that price hikes are a reflection of global prices, but there are some things—important things—that the government can do. Repeal of these acts is only part of that response. Labor support the repeal of these two acts—in fact, we proposed it seven years ago, but then subject to two conditions: that an oil code be drafted and agreed between the parties in the sector to address important market issues and that the Trade Practices Act be strengthened to increase competition and support independents. The repeal of the acts only meets one of those conditions. It does introduce an oil code which ensures all participants, including independents, are subject to the same regulatory requirements, including a nationally consistent approach to terminal gate pricing, but it does nothing to strengthen the Trade Practices Act. I will come to this later.

So here we are, seven years after Labor proposed this course of action. The government is acting, but only in a half-hearted way. It could have been different. Seven years ago the price of petrol was 69c a litre. Hard as it might be to believe in this current environment, that is where it was seven years ago. Firming up the regulatory regime and giving the ACCC stronger powers to deal with predatory pricing could have been an important factor. It would have led to lower prices at the bowser now had the government acted.

As minister assisting the Treasurer and with responsibility for the Prices Surveillance Authority, I remember that during the first Gulf War when world oil prices were rising sharply we used the role of the ACCC to restrain the timing and extent of their impact on Australian motorists. So the government can make a difference if they have the will. They have the power to influence, but today the Prime Minister argued that that power is limited. I say that it has been made more limited by the failure of this government to act. We gave the ACCC the opportunity; this government will not. The member for Hunter even drafted a letter to the ACCC to give it the power to investigate petrol prices without the Treasurer’s consent. All they have to do is to sign that letter. Interestingly, the Prime Minister does not deny that he has the power; it is just that he said he will not sign the letter. It is also interesting that in his response in the parliament he added the proviso ‘not at this stage’. So, if the Prime Minister has the power, why won’t he act now? Why wait? Why give motorists more pain? The government can act; the problem is that they will not act.

I support the amendments moved by the member for Batman. They are necessary amendments and will strengthen section 46 of the Trade Practices Act to develop a comprehensive approach to petrol retail pricing and provide greater scope for dealing with market power abuse. Amendments to section 46 of the Trade Practices Act will clarify the sort of behaviour that constitutes an abuse of market power, and it will provide a line in the sand to defend small business. The amendments proposed by the member for Batman will also lower the threshold for the ACCC to provide that abuse of market power has occurred and will ensure that recoupment of losses is not seen as an essential for market abuses to occur.

These amendments were recommended by the 2003 Dawson inquiry and by the 2004 Senate recommendations for reform, yet the government fails to act. It is another example of a wasted opportunity. Australian motorists are slugged, the Prime Minister cries crocodile tears and says he cannot act, but these amendments demonstrate that he can. In our view, they will have an impact. So the question is: how long will it take this government to address the problem of potential abuse of market failure?

This is an abuse that has been reinforced in recent court decisions. If Labor is elected, we will legislate, but the truth is that we could get progress now if the government were prepared to accept the amendments or the thrust of them. Labor has succeeded, importantly, in getting the issue of petrol pricing referred to a Senate inquiry. Again, the Prime Minister posed the question: why is another petrol inquiry necessary? We say it is necessary because it will examine the relationship between the wholesale price and the retail price and the regional differences. What is clear from the inquiry hearings to date is that the ACCC cannot formally investigate anticompetitive behaviour in the petrol market. They can look at prices; what they cannot do is look behind them. So, when the Prime Minister says, ‘What can the government do?’ there are three important areas in which they could act.

The first area is that of the powers of the ACCC. The ACCC must have greater powers to formally monitor petrol prices and demand information from oil companies and retailers. It is well within the powers of the Treasurer and he must take responsibility. The second thing the government can do is to reduce our dependency on foreign oil—and it is interesting that we had a statement from the Prime Minister attempting to go down this route today. The truth is, though, that it has no real plan to do it. Its proposal to subsidise car conversions to LPG is plain theft of Labor policy. Any measure to encourage the use of alternative fuels is well overdue. But the government has failed to address what it says is the root cause of rising petrol prices and improved transport fuel security. The government has had 10 years to do something about the problem, and it has failed at every point.

Labor, on the other hand, has a plan to reduce our dependence on imported oil and to put in place new policies that can encourage alternative energy use. Labor has proposed important measures, including, firstly, finding more gas and oil in Australia by re-examining the depreciation regime for gas production infrastructure; secondly, allowing the selective use of flow-through share schemes for smaller operators; thirdly, conducting a feasibility study now to convert gas into clean diesel in Australia; fourthly, promoting the use of alternative fuel vehicles and making alternative fuel vehicles tariff free, cutting up to $2,000 off the price of current hybrid cars; fifthly, granting tax rebates for converting petrol cars to LPG; and, sixthly, implementing what we have termed Labor’s ‘green car challenge’ to get competitive value-for-money green cars on the road. Labor has also called for the protection and promotion of ethanol, biodiesel, LPG and CNG through a 2009 review of the government’s plan to levy excise on these fuels. This will determine whether a deferral of the excise is required. Ethanol and biofuels have the potential to develop regional industry and jobs and to start addressing the problem.

The Prime Minister today had a go at me and the member for Batman. No doubt in the course of time they will also have a go at you, Deputy Speaker McMullan, because we were very critical of the government’s approach to the ethanol industry at the time. Bear in mind that this was a government that got elected in 1996 promising to keep Labor’s ethanol bounty and in their first budget scrapped it. So do not give us this hypocrisy about Labor not supporting the ethanol industry. It was the government that attacked the ethanol industry and then rearranged the support so that effectively only one person, Mr Dick Honan, got the benefits of the ethanol scheme. The Prime Minister’s statement today quoted me, as the then leader of the Australian Labor Party, as talking about:

... having their engines wrecked by ethanol fuel.

The Prime Minister often says that you have got to read the statements quoted by the opposition in context. Let us have a look at his quote of mine in context. That statement came from a question I asked him in this parliament. I was criticising the government for failing to put a cap on the amount of ethanol going into petrol—a 10 per cent cap; what is now called E10. We were saying that you had to put a cap on ethanol because the automotive manufacturers and the motoring authorities were saying that if you did not and it exceeded 10 per cent it ran the risk of wrecking those vehicles. That is where the words came from.

But, as we now know, there was that infamous secret meeting that the Prime Minister’s office had with the proponents of ethanol. My question to the Prime Minister was why he would not agree to a 10 per cent limit. He had said there was no way he was going to agree to the limit if it affected the operations of Manildra. That was the cause of our complaint against the Prime Minister—that he was protecting a mate and protecting him in the worst of possible ways. So I reject the Prime Minister’s assertion that we in the Labor Party have not been serious in supporting ethanol as an alternative.

The third area we have to address in the question of the impact on motorists is the taxation regime on petrol. The government continues to claim credit for freezing petrol excise. That was never its intention when the GST was introduced. It was forced by public pressure to act following a campaign spearheaded by Labor. The government promised that petrol prices would not rise with the introduction of the GST. It said that it would reduce the excise by 6.3c a litre to compensate for the GST. That was when petrol was 69c a litre. It would have offset any impact of the GST, but the arithmetic shows that it only worked if petrol was priced at 77c a litre or less. This is certainly not the case nationally today. It was not the case then and never would have been in the bush. We argued that the government could never deliver on its guarantee that petrol prices would not rise because of the GST, particularly in the regions. That was when the government came up with the solution called the Fuel Sales Grant Scheme. We said at the time that it would not work. It did not. But the problem has got worse because the government has run up the white flag. It scrapped the scheme, but it put nothing in its place. As a consequence, people in the regions now have to pay up to 3c a litre more for their fuel.

The other guarantee that the government made was that there would not be a tax on a tax when the GST came in. Of course, there is. Yes, the excise is frozen as a result of a campaign that Labor spearheaded, but it continues to attract the GST. It is a tax on a tax and something the government said would never happen. The GST take gets bigger the higher the petrol price. It is the new indexation. So there is no point coming in here seeking virtue in freezing excise when the GST is a movable feast.

The Senate inquiry which I have referred to also gives the opportunity for this issue to be looked at in detail. What can be done to ease the price differential between city and regional areas and ease the burden on regional motorists? The Prime Minister’s argument is that the solution is not through cutting indirect taxes but through direct tax cuts. The trouble with this response is that the government has increased the price of petrol in regional Australia by up to 3c a litre with no compensation in tax cuts for people living in those areas. The regions are paying more in indirect tax on petrol, but they do not get any more than metropolitan areas in tax cuts. So why not provide a targeted tax rebate to regional Australia? The low-income tax offset contained in this year’s budget shows that the government is prepared to embrace the notion of targeted relief—in this case, to low-income earners—but there is no targeted tax rebate for regional and remote Australians who have been slugged with even more fuel tax.

The government could also review the tax zone rebate and see what opportunities exist for targeted relief. These are all options open to the government. It is nonsense to suggest that there is nothing the government can do. It puts the lie to the claim that another inquiry into petrol pricing would not achieve anything. Let us make the inquiry work and come up with some solutions to alleviate the city-regional price differential.

As for the revenue saved by scrapping the Fuel Sales Grant Scheme, the government says it will all go to roads. But there is no guarantee that the $810 million saved from the scheme will actually go to roads in regional and rural Australia. Think of it: it is only the motorists in regional and remote areas who have to pay the extra 3c, but motorists in regional and remote areas are footing a huge proportion of the bill with no guarantee that it will go to their roads.

Repealing these acts is an important start. The government should have acted seven years ago. It is long overdue, but it is a half-hearted response. The government does not go far enough. Let us strengthen the Trade Practices Act, let us use the Senate inquiry to look at solutions to alleviate the differential, let us revise the unfair tax on petrol, and let us implement a comprehensive plan to reduce Australia’s reliance on foreign oil. Labor stands by its long-standing policies for national mandatory terminal gate pricing. I say to the government: adopt our amendments, do something in a constructive way to help struggling motorists. (Time expired)

Bernie Ripoll (Oxley, Australian Labor Party, Shadow Parliamentary Secretary for Industry, Infrastructure and Industrial Relations) Share this | Link to this | Hansard source

It is always a pleasure to speak on bills in this place. Although I think they are all important, some are more important than others. The Petroleum Retail Legislation Repeal Bill 2006 is particularly important because it goes to the heart of many of the problems that are facing ordinary Australians today and to the heart of the financial problems that they are facing in meeting their day-to-day living expenses. Before I begin speaking on the bill, I note that the Prime Minister made some sweeping statements and policy announcements today—all of which are pretty much an adoption of Labor’s policies, although not all of them, which we have had on the table for a number of years and which we have been working very studiously on. It is always good to see the government adopt some of the opposition’s policies, even if only a little bit and very, very late.

The point I wanted to make in particular is that so excited was the government’s backbench, the Liberal and National party members, that none of them are going to speak on it. None of them are prepared to front up. None of them are in the House at the moment to speak on this bill and I believe none have put their name down to speak on this bill. So excited, so enthused, so well connected and in touch with the community, they just do not bother to speak. Maybe they have nothing to say on fuel retailing. Maybe they do not understand just how much pressure fuel prices put on ordinary families. I do not want to say too many words about it, but maybe they are like the member for Wentworth, who unfortunately made a gaffe by not understanding the real pressures that ordinary people face, whether it be their mortgages, their health-care costs, the education costs for their kids or simply the price of petrol.

It is a bit disappointing we are not going to see anyone from the government stand up and defend their position or explain why it has taken them 10 long, long years to come into this place and do something. You would not have to be too cynical to make the judgement that the only reason the Prime Minister came to the dispatch box today to announce a very welcome but very belated move to do something about petrol prices, fuel and the fuel industry in this country is that he is feeling the blowtorch of political heat, the community heat that is out there. People are angry; people are saying, ‘Do something about it.’ The government have refused to do anything for so long, they really must not have thought it was an issue at all, but they finally came into this place and did something.

Before coming down to speak on this bill, I was looking through my many hundreds of emails, as I am assuming everybody else does from time to time. I got a very interesting email from a member of the public in Tasmania. I will paraphrase a few of the comments he made as I think they are particularly relevant today. He said that back in 1996, during the TV leaders debate—the famous debate where we had John Howard and Paul Keating debating issues of the state of the nation—John Howard made some interesting remarks at that time. In his concluding remarks, he said that the Keating government had been in office for 13 years, that it was arrogant and remote and that there was a widening gap between rich and poor. He said that we had the worst current account deficit in the world—and I will forgive you if you start to laugh as I go through these, Mr Deputy Speaker McMullan—and that there was a growing social division. He said that you could not separate leadership from what happens and that on that basis Keating had failed.

Isn’t it funny that the words he said all those years ago are coming back to bite? Those famous words John Howard said back then, and which I am sure helped him to win the election, are now coming back to haunt him in a really horrible way. That is not only the situation that people face today, but it is even worse. After only 10 years, this government is more arrogant; it is more remote; it is more out of touch. It does not understand about interest rates. It does not understand the kitchen table issues. It does not understand the pressure of fuel prices. It does not understand how bad the current account deficit is and just how big that gap is between the haves and the have-nots. The government talks about a low number for interest rates but, when you compare it to the rest of the world, it is quite high. It talks about a low number for interest rates but, when you compare it to the actual amount that people pay in interest payments, it is higher than it was at its peak in 1989 at 17 per cent.

How does that add up? It adds up because this government has not been doing its job. It has not been doing its job on interest rates, and it has not been doing its job on petrol prices. It is oh too easy to blame the states; it is oh too easy to blame what is happening globally; it is oh too easy to blame everybody else and do nothing. This is a do-nothing government and it has consistently refused to do anything at all about high petrol prices or the pain that ordinary Australians are feeling. The government thinks it can get away with it by saying to people, ‘You’re richer.’ But, if people are asset rich, why are they so financially poor? Why are they struggling today? Why is it that, in every newspaper I pick up, there are reports of credit card debt blowing out? It is now $36 billion. That is private debt. It is not debt from people buying new cars or new furniture—it used to be, once upon a time; you could borrow the money, service the debt, pay it off over a period of time. It is debt from people being forced into borrowing to live.

Because of high petrol prices, because of this government’s inaction on fuel retailing and its refusal to reform the fuel industry, people are actually borrowing to live. They are borrowing to buy food; they are borrowing to pay the electricity bills; they are borrowing to pay for their kids’ education; they are borrowing to pay for their healthcare costs. That is the danger we face today. It is a very real danger. Today on average, in real terms, individual Australians—there are 13 million cards in Australia, by the way—are $2,000 more in debt than they were a decade ago.

That message just does not seem to be getting through to the government. The government just keeps waxing lyrical about how asset-rich people are even if they are struggling to buy bananas. They are struggling to buy bananas because they cannot afford them; they are struggling to buy fresh fruit and vegetables because they cannot afford them. A whole range of issues tie into the Petroleum Retail Legislation Repeal Bill 2006. Labor has been consistently and insistently arguing for these changes for quite some time. This is important change. What we are seeing with this bill is the government finally having some spark of awakening. After years of the opposition beating the drum and making all the necessary noises about these very vital issues, the government has finally sat up and listened.

I give my support to the second reading amendment proposed by the member for Batman, Martin Ferguson, and I want to discuss some important parts of the bill, particularly in reference to the explanatory memorandum. This bill seeks to address a number of regulatory failures, particularly some inequitable application of the current petroleum legislation. The bill repeals both the Petroleum Retail Marketing Sites Act 1980 and the Petroleum Retail Marketing Franchise Act 1980. The repeal of this legislation is necessary because the current system has failed—a point which Labor has made very well. Under the current legislation, additional costs are imposed on the oil majors which prevent them from achieving increased efficiency. That is not something we would want to prevent. I think the oil majors should be increasing their efficiency; they should also be responding effectively to changing market forces and providing consumers with fair, equitable and competitive prices. I am concerned that the oil companies are not doing everything they can to reduce the cost of fuel at the bowser.

The reform package, which includes the repeal of both these acts, will bring the introduction of a new industry code which will be called the Trade Practices (Industry Codes—Oilcode) Regulations 2006. That will be mandated under section 51A of the Trade Practices Act 1974. Most importantly, this will establish standard contractual terms and conditions for wholesale supplier and fuel retailer reselling agreements for both franchise and commission agency arrangements. These standards will build upon and strengthen relevant provisions in both the franchise act and the more general Trade Practices (Industry Codes—Franchising) Regulations 1998. This will provide a greater level of certainty and protection for all parties to fuel reselling agreements.

I want to make a couple of points about that because I think it is important that we understand and acknowledge that, for consumers to have confidence at the bowser and believe they are getting the best possible value and not being gouged on prices, we need to have fair, open, competitive, transparent competition in the industry. The independent fuel retailers and the small players must have the same access and be protected from predatory pricing practices and the practices of major oil companies that would drive them out of business through economy of scale or sheer market size and presence in the industry. I think that is important. We have already seen too great a loss of the independent fuel retailers and the small franchisees and service stations—the mum and dad service stations that have literally disappeared from sight. We now only see the really big players such as BP, Caltex, Shell and so forth in the market. In fact, in the last decade or so we have lost something like 10,000 to 20,000 small and independent retail fuel outlets, which is a real travesty.

Through the introduction of this nationally consistent approach to terminal gate pricing, known as TGP, these arrangements will improve transparency in wholesale pricing and will allow access for all customers, including small businesses, to petroleum products—something I think is very important—whilst not negating the ability of the entities to negotiate individual supply agreements nor preventing them offering discounts or other schemes. The application of this new legislation should provide more competition in the market and, hopefully, a better outcome for consumers.

Also—and I think this is very important for the industry—it will establish an independent dispute resolution scheme to provide the industry with a cost-effective alternative to taking action in the courts. If you think about it for a minute, that is a very important move because the small retailers literally cannot afford the time or the expense to go to the courts to take on the major companies. The majors have an unlimited source of revenue. In the past they have litigated or remained in the courts in dispute for years on end, driving small independent retailers out of business, and they would be prepared to do so in future. There needs to be a better system and it is good to see that these changes will bring that about.

These regulations will facilitate a more effective regulatory environment for the industry. They will also mean that consumers get some better protection. As we have heard from other speakers on the Labor side, who seem to be the only people prepared to speak on this very important issue, there needs to be a balance. We must protect individual consumers and make sure that they get the best possible value through open competition, create a transparent process where wholesale and retail prices are reflected in what consumers actually pay, and ensure that independent fuel retailers are not driven out of business by large companies.

This is a very important change. Labor has been consistently saying that the government ought to be doing a number of things to make the fuels industry more competitive. We need long-term energy security in this country beyond the small amount of resources that we have and our reliance on other countries for our energy needs. For a number of years every other country in the world—I refer to China in particular but also to India, Russia, the United States of America, Brazil and a whole host of countries—has been strategically working on energy security and fuel independence. They have tried their best to develop policies and budgets which reflect a growing independence.

That has not been the case in Australia, and I think that is a great shame. As yet, we have not seen from government a real move in that direction. There were some small movements in that direction today with the government announcement’s of a liquid to gas policy, but as yet we have to see how that would work. We have been calling on the government to require the Department of Industry, Tourism and Resources to report to the parliament on an annual basis, commencing next year, on measures taken to progress, in particular, the increased penetration of ethanol and biodiesel—two very important fuels—in our energy market and the increased market penetration of LPG and CNG, including the number and location of service stations and the names of companies offering these products on their retail sites. We are also calling on the government to secure new investment in biofuel, LPG and CNG production and supply infrastructure in Australia—and there is that ‘infrastructure’ word again, something that this government continually refuses to acknowledge.

We also need to see the government secure investment in the alternative transport fuels industries, including gas, coal and liquids. We are also calling on the government to review the proposal to introduce excise on ethanol and biodiesel in 2009 and LPG and CNG in 2011 and to consider whether or not there is a case for delaying the introduction of the excise, depending on the progress made, in particular, in increasing market penetration of those mentioned fuels. We also need to see the government secure new investment in biofuel, LPG and CNG production and supply infrastructure in Australia and work towards achieving the 350 million litre biofuel target by 2010.

We are also critical of the government—and you cannot walk away from this—for its tardiness in moving on petrol retail reform. What has to happen in this country before the government moves? You have to drag it kicking and screaming to the table. It takes record fuel prices—incredibly high fuel prices—and people suffering before the government moves even an inch. We are also critical of the government for bypassing due parliamentary process in introducing a regulation to undeclare companies under the sites act and for failing to introduce amendments to the TPA to implement the 2003 Dawson and 2004 Senate recommendations for reform. This government has steadfastly sat on its hands while Australians have continued to pay more and more for their fuel. This is something that could have been done years ago. It should have been acted upon but was not. We are also critical of the government for failing to act to reduce Australia’s dependence on foreign oil and improve its transport fuel security—something that we keep raising with this government. Hopefully, if today is any indication, it will start to take up more of Labor’s policies in these areas.

Labor is also calling on the government to immediately conduct a feasibility study into gas to liquid fuels plants in Australia. That would include the consideration of petroleum resources rent tax incentives for developers of gas fields, which provide resources for gas to liquid fuels projects. Labor is also calling on the government to examine a new infrastructure investment allowance for investment in Australian gas to liquids infrastructure and to develop targeted funding schemes for research and development. Labor is also calling on the government to immediately embrace Labor’s fuels blueprint policy, and not just some of it but all of it—all of it because it is good, sensible and will work. As I said, the government has at least come part way in that direction, which is good.

We need to re-examine the depreciation regime for gas production infrastructure and allow the selective use of flow-through share schemes for small operators. The amendments seek to give effect to Labor’s plan to, in particular, find more oil and use more gas in Australia. We will do that by re-examining the depreciation regime, allow selective use of flow-through share schemes, as I have said, and conduct some feasibility studies in converting gas into clean diesel.

In the few minutes I have remaining, I want to make a couple more comments on promoting the use of alternative fuel vehicles, which is an important thing the government should be doing. It should make using alternative fuel vehicles tariff free, cutting up to $2,000 off the price of current hybrid cars. If you are going to encourage consumers to buy these vehicles, give them an incentive more than just the fuzzy, warm feeling they get inside for having done something good for the environment and mankind. We also need to look at granting tax rebates for converting petrol cars to LPG—again, one of our policies which the government today announced. I am always happy to see the government announce Labor policy. It is a great thing and we saw that today.

We need to protect and promote the growth of ethanol, biodiesel, LPG and CNG properly. We need to adopt the proper processes to do that. It needs to be transparent. We also need to strengthen the ACCC’s powers to investigate petrol prices. We need to remove the requirement that they cannot do so without the Treasurer’s consent. The Treasurer has been flapping his wings on a whole range of issues, but right now we need to see the government give them—

Teresa Gambaro (Petrie, Liberal Party, Parliamentary Secretary Foreign Affairs) Share this | Link to this | Hansard source

Ms Gambaro interjecting

Bernie Ripoll (Oxley, Australian Labor Party, Shadow Parliamentary Secretary for Industry, Infrastructure and Industrial Relations) Share this | Link to this | Hansard source

You are right: I could not help myself; it will be in this place for a long time. As I have said to many people: one small fluffy toy but a huge reaction from government. Why is it so? We also need to strengthen the Trade Practices Act to give greater scope for dealing with abuse of market power. I will end on this point: about six years ago I was a customer of LPG and I went to great expense to convert my car. But, like so many other people, I got disillusioned that the government would not assist and that LPG kept getting more expensive and, proportionately, became uneconomical as a fuel to use. It was cheaper to buy fuel, which is what I started doing. I was driven out of LPG, and I know many others were. Not only was I driven out but the people who installed my gas conversion were also driven out. The government needs to do more about this. (Time expired)

Harry Jenkins (Scullin, Australian Labor Party) Share this | Link to this | Hansard source

The technical issues of the Petroleum Retail Legislation Repeal Bill 2006 have been well canvassed in debate so far. Suffice to say, these are important amendments that are being made that will repeal the Petroleum Retail Marketing Franchise Act and the Petroleum Retail Marketing Sites Act and put in place a regime about petroleum retail issues that is much more contemporary. For instance, if you look at the nature of the way that retail sales of petrol have changed so rapidly over the last few years with the two major supermarket chains entering into the sale in this sector, you can see that it is a very important measure that is being taken by this legislation. As members on this side have indicated, it is a measure that really should have been taken much earlier because a lot of what has been spoken about, in terms of the reasons for these amendments, has been known. It is only that we have got to the point where we have something like 50 per cent of the industry by volume of sales in the control of supermarket chains Coles and Woolworths that we see some action. I do not think that this would be heartening news for those very many franchisees and independent operators that have already hit the wall and perhaps could have been saved by earlier action such as that intended by these pieces of legislation.

One of the extraordinary aspects of the debate is that there has been only one backbench contribution from the government. One backbench member has decided that they would step forward and come up to the plate to support the minister on this piece of legislation. That leads us to ask whether, at a time when the retail price of petrol to consumers in Australia is at a record high, those that sit opposite actually understand that this is a problem. This is a problem with a capital P and, as the song says, ‘P rhymes with T, and that is trouble.’ Trouble! This is trouble for the thousands of Australian families that are trying to come to grips with the hardship that is placed on their budgets by the increase in fuel prices at the same time as increasing interest rates. In conjunction with the amount of money that they are paying off their mortgages, this has sent the family budgets into record levels.

For those whom I represent on the northern urban fringe of Melbourne—basically people who are dependent upon an employer-employee relationship—the devastating effects of Work Choices and the way in which workplaces operate are also of concern, because there is a bottom line. Since the new industrial relations legislation, the families that are being most impacted on by the increases in interest rates and petrol prices are lacking in certainty about the continuation of their jobs. This is not addressed by the way in which those opposite have taken this debate so lightly.

Last Thursday, when the debate started, they were scurrying around, there seemed to be nothing on the horizon and they were not sure whether the boss was going to do anything or if the Prime Minister would actually understand the problem. Straight after question time, the Prime Minister gave his second prime ministerial statement in two days—his second this year, I might add. They were the only two prime ministerial statements for the whole of 2006. He spent half an hour on issues related to petrol price increases. These issues are germane to the intentions of this bill because this bill and the second reading introduction by the Minister for Industry, Tourism and Resources talked about the gains to consumers of a more efficient petroleum retail sector.

In his statement today the Prime Minister indicated that part of the reason for his statement was to announce a number of measures to assist hard-pressed motorists to better cope with the very high petrol prices—cope! I would have thought, given this grand display—$1½ billion of new money to be spent on this issue—that someone would scurry out of the rabbit holes that the members of the coalition have gone into. Surely they think that this small piece of legislation is a step forward, plus that the Prime Minister’s statement would give them a bit of courage to come forward—or perhaps they have decided that, again, what the Prime Minister announced today was lacking in substance and was smoke and mirrors.

I might be a little charitable about the Prime Minister’s statement in that perhaps it indicates that he has started to define the questions and problems that his government needs to address. I do not know whether he bothered to have different people throughout the departments or his department come up and list those problems, but I would suggest to him that—if he just bothered to read the second reading amendment that has been moved by the member for Batman and seconded by the member for Hunter, who have carriage of issues to do with not only resources but also the petrol market—he would not have needed further investigation, because many of the issues that he raised in his prime ministerial statement are included in the second reading amendment, where we say that they need to be addressed.

Regrettably, whilst there may be some acknowledgement of the questions and problems, the solutions offered fall far short of the mark. One has to ask whether this grand statement made today is really just something of a gesture: the running of a small flag up the flagpole, saying: ‘Oh, yeah. We know there is a problem. But, look! We’re doing something.’ I believe that while some of the people who are still struggling out there in the real world will be appreciative of some of the measures and will use some of the measures, in the main they will really ask, ‘What is this all about?’

Some work done at Griffith University by a couple of researchers, Jago Dodson and Neil Sipe, has been of interest to me. Late last year, under the Urban Research Program, they put out research paper No. 8, July 2006, entitled Shocking the Suburbs: Urban Location, Housing Debt and Oil Vulnerability in the Australian City. This shows clearly that the regions in major Australian cities that are crying out as a result of increased petrol prices are on the outer urban fringes of the major Australian cities. These areas are characterised by a lesser coverage of efficient mass public transport. They are characterised by great distances between services, which a family has to contend with.

The popular press seems to understand these things. For example, under a headline today in the Melbourne Herald Sun, ‘Luxuries gone as fuel hits’, it says, ‘Petrol soars, pay stays the same’. These are the types of things that are being talked about around the kitchen tables in many family homes throughout Australia. But, on the outer urban fringe, they absolutely know the hardships that these double whammies are causing them. For instance, on Saturday in the Melbourne Age, there is the story of a teacher who lives in an outer urban area in Gisborne, who travels 60 kilometres each day via the suburb of Bundoora, which I represent, to drop her son at school and then on to work in Thornbury. The real problem for this person is that filling the tank costs about $70 a week. This is not discretionary spending; this is necessary spending. I would think that, in this family’s case, living in an area beyond the fringe like Gisborne or on the outer urban fringe is partly for lifestyle but in many cases it is because of economics. It is where the housing that is affordable is located.

You have that contrast where people make decisions to go to areas where the public transport is not as great, on the basis of being able to afford the price of housing. But, when the pressures of increasing interest rates plus increasing fuel prices come to bear, these are difficulties. They are then locked into a cycle where they cannot change jobs because they are uncertain whether, if they change jobs and go to another equivalent job, they can be guaranteed to come to a similar agreement with a prospective employer under the new IR regime of this government. These are real examples. These are not scenarios that we raise just as things that we are conjuring up. They are real, practical things that people have to confront in their day-to-day lives.

That is why for years we have said that there need to be reforms to the petrol retail sector. If you are going to talk about competition, you have to make sure that those who are competing are playing the same sport, under the same rules, and that it is all level pegging. This has been a sector where, for too long, that has not been the case. Why is that so? It is of course because the oil companies—the people who are involved in the refineries—are also involved in retail. They are involved in retail directly. They are involved in retail through some of the franchisee arrangements that happen—but, as I said, many of the pressures that have been placed on franchisees have meant that many people who thought that they could see a working life as a petrol-retailing franchisee have not had the opportunity. That was made a lot different when, as I have said from the outset, the decision was made by Coles and Woolworths to enter petrol retailing.

Hopefully, the principles in this piece of legislation and the Oilcode that flows and the other regulations that will flow from it will in fact produce the level playing field which will not only lead to greater competition—

Bob Katter (Kennedy, Independent) Share this | Link to this | Hansard source

Mr Katter interjecting

Harry Jenkins (Scullin, Australian Labor Party) Share this | Link to this | Hansard source

for those who are the retailers but hopefully will give some real competition in the pricing levels of the product. I know that the member for Kennedy will be indicating to us plenty of other examples where competition was going to be the be-all and end-all of bringing relief but where it did not happen. I understand that, and he understands that that is my starting position. But, regrettably, the only game in town from governments not only of the persuasion opposite but sometimes from the persuasion of Labor has relied on competition.

I have acknowledged that, under the legislation that is to be replaced by this bill, the competition was not level. Hopefully the detail in this bill will lead to a greater competitive market, a fairer market, a market where especially the independent operators do not have the same hurdles that they had to confront in the past to get access to the product, because that is one of the great problems: the way in which the gate to the refinery can so easily be shut.

The other aspect was mentioned by the Prime Minister today in defending his decision not to touch petrol excise in any way. What he does not contemplate is that the income tax cuts that were so championed—it was not a case of, ‘If we have these income tax cuts, we won’t be able to spend on education, health and defence,’ or whatever the Prime Minister was talking about—were skewed to areas where the vulnerability to the price of petrol is the least. This study by Dodson and Sipe goes to that. The people who can most afford—the people on high incomes who got the greatest rate of personal income tax cut—tend to live in suburbs of the major cities that are under the least stress as a result of increasing petrol prices. And the reverse is absolutely true, because those at the lower income levels are the people who live in the outer urban fringes of our major cities. They get less relief in comparison but confront greater costs in the prices of commodities such as petrol.

What the government could do is get their departments to look at whether in fact a return to the excise is a fairer form of tax. I am only contemplating this, but that is what we have to look at. On the basis that our income tax system remains a progressive form of income tax and the excise on petrol is a flat tax based on usage—and most flat taxes are recognised as being regressive—I have a feeling that there would be some worth in looking at that type of relief as against other forms of tax relief.

I am disappointed that members of the coalition have scurried away and have gone missing in action on this debate, especially those from the western suburbs of Sydney, the great champions, the ones who are supposed to have brought across the Howard battlers—those from the electorates of Macarthur, Greenway and Lindsay. Where are they? Where are they to champion those people who, because they live in the outer suburbs of Sydney, travel great distances to their employment, to their places of training and to take their kids to child care so that they can go to work—that is, if they can find the child care? Even if they want to crawl to the Prime Minister, like they usually do, why aren’t they in here defending those people and saying, ‘Mr Prime Minister, it’s wonderful—$1½ billion—but you should do more.’ Somebody has to get into his ear and tell him that there is a lot more that needs to be done. He should not be churlish and dismiss the ideas that have been put forward by Labor over a number of years.

We see today that the Prime Minister has finally found an area that Labor has talked about as being one of the ways that we could take some of our competitive advantage because of the resources we have—to invest in new technologies such as gas to liquids and coal to liquids, something that might add to our ability to be independent of overseas and global interests in our fuel dependency. Suddenly the light switched on and the Prime Minister said, ‘We’re in it.’ But as our spokesperson, the member for Batman, said on Thursday, he simply recalls that when Paul Keating was the resources minister, not the Treasurer, he was a great advocate of that type of technology—gas and coal to liquids—over 20 years ago.

This government wants to give the impression that it does something. It is a great government about the spin. Mr Deputy Speaker McMullan, you have suffered because of the spin over ethanol when, in fact, at the end of the day anybody who is a fair observer of our position on ethanol can see that what is happening now is proving our point. When you go to the petrol station now, they tell you that it is E10; they tell you that it is up to 10 per cent. The car manufacturers are advising consumers that, in the operation of their car, as long as it is E10 it is all right. But we were criticised because we raised this. We simply said that the consumer should make informed decisions. This government has to make decisions that make sure that Australia’s renewable energies are sustainable and that Australia has an energy system that is sustainable into the long term. (Time expired)

Roger Price (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

I am pleased to speak on this extraordinary day when we are debating the Petroleum Retail Legislation Repeal Bill 2006 and when we have had a ministerial statement about fuel. I just want to pick up on comments made by the honourable member for Scullin, because he has pointed out that, clearly, the Prime Minister believes that his ministerial statement has gone some way to relieving the angst amongst members of the public about high petrol prices. I am staggered to find today that only Labor members and, of course, Independents are rising in this debate to talk about the issue that I think is hurting Australians so much, certainly those in my own electorate.

It is very interesting that people are suffering not only from high petrol prices but also from a rise in interest rates. In fact, the proportion of household income going to service interest payments on home mortgages has reached a record high of 28.2 per cent. That contrasts with the situation in 1989, when they were 25.8 per cent under Mr Keating. A greater proportion of household income is now going to service home mortgages. At a time when the Prime Minister promised the people of Australia that he would keep interest rates low, lo and behold, what has happened? We have had two interest rate rises since the budget, and many commentators are speculating that the market has already factored in a third interest rate rise. This is hurting the hip pockets of Australians, particularly those who are paying off a mortgage and those who have recently moved into houses, particularly young families.

In addition to interest rate rises and their effect on the hip-pocket nerve, we have seen record amounts of household debt. Again, in 1989, household debt as a proportion of income was 60 per cent. In 2006, it not only has doubled but stands at 150 per cent. No wonder people are very sensitive about increases in the price of petrol. I want to make the point that, when the Prime Minister was asked in question time about interest rates—that is, the interest rates that mums and dads are paying on their home—and that in Australia they are higher than in any other comparable country apart from New Zealand, he did not want to answer it. However, in his ministerial statement, he was at pains to point out that petrol prices in Australia are the fourth lowest in the OECD. The member for Kennedy would never have tried to explain to his constituents that petrol prices, notwithstanding their high price today, are by world standards very low. It means not one jot to people when they pull up in the family car and spend $60, $70 or $80 to fill up the petrol tank.

The Prime Minister also said in his ministerial statement that there are many factors beyond the control of the government. I would like to quote from a 1986 matter of public importance debate on fuel prices, in which a member states:

When he—

that is, the Prime Minister of the day—

talks about complexity, difficulty and problems and asks the Australian public to understand the difficulty of the Government, I say to him and to the Treasurer on behalf the Opposition and the Australian public that if there is any complexity, difficulty, pain or problem, it is all the Government’s own making.

I have given the person away by mentioning the date, 1986. The honourable member for Bennelong said that. It is a quote from him. I suspect that we ought to keep him at his word. Again, on 11 February 1986, he said:

When one looks across the whole gamut of policies being followed by this Government, one finds again the again actions taken by the Government that are damaging the living standards of average Australians and their families. We find it with interest rates, taxation and petrol prices ...

I agree with him on that about this government—his own government.

Today the government announced an important initiative on LPG. They are going to offer two subsidies—$1,000 towards a new car fitted with LPG and $2,000 towards the cost of converting a vehicle to LPG. It sounds like a very sensible measure, and I am happy to support it. It will be good for the community. But the Prime Minister’s statement included no estimate of the number of people who will be able to take advantage of these subsidies. Why is he running for cover? Why won’t he say to the Australian people that, over four years, he expects so many people will be able to take advantage of them. There is a figure of 230,000 people taking advantage of this new initiative on LPG—one, I might say, that was advocated in a blueprint by Mr Beazley, the honourable member for Brand and Leader of the Opposition.

I am pleased for those people who can take advantage of this. I say to the honourable member for New England and the honourable member for Kennedy that, when you work the figures out, it means that in 12 months 383 of the constituents in your electorate will take advantage of it. But, as always, there is a catch. They need to have money in the hand in the first place to pay for the conversion, to get the rebate.

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

Mr Windsor interjecting

Roger Price (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

And the honourable member for New England, as he always does in these debates, makes a very sensible observation—that is, the availability of LPG. In my electorate, I will be pleased if 383 people take advantage of the government’s initiative. There is no harmonisation and no extra assistance to get the quota up in my electorate, the electorate of Chifley—or in the electorate of New England or in the electorate of Kennedy—if only 200 or 300 people take advantage of it. Those who can afford it can take advantage of it.

But if you are an apprentice and you own a car, because you need it to travel to and from work, but you do not have $2,500—and some say it could be more than that—you will not be able to afford to make the conversion. If you are a single mum who has a car and you want to get back into the workforce and you want to reduce your costs, how will you apply for it with the punitive operation of the taxation and social welfare system that applies to those people who want to re-enter the workforce? You are not going to have a lazy $2,500 or $3,000 lying on the kitchen table that you would be able to grab and take advantage of this initiative. I do not want to quibble about it. We have advocated it—it is in the blueprint—and it is being introduced, but I do not think it goes far enough.

One of the most important things in the amendment moved by the honourable member for Batman relates to the Australian Competition and Consumer Commission. In his ministerial statement, the Prime Minister said:

The Australian Competition and Consumer Commission has powers to protect consumers from unlawful, anticompetitive conduct and unlawful market practices through the provisions of the Trade Practices Act. The ACCC monitors the daily average retail prices of unleaded petrol, diesel and automotive LPG at roughly 3,600 sites across Australia.

That is true, but in his statement the Prime Minister does not refer to the question that the shadow Treasurer, the honourable member for Lilley, asked the Treasurer:

My question is to the Treasurer. I refer to the Treasurer’s numerous assurances that the ACCC is constantly monitoring petrol prices to ensure that consumers are not being gouged by oil companies. Treasurer, is it the case that according to a letter from the ACCC Chairman, Graeme Samuel, this price monitoring is limited to collecting incomplete data from oil company websites and filling in the gaps with six-month-old data? Treasurer, do googling and six-month-old data constitute effective monitoring? Will the Treasurer now instruct the ACCC to engage in formal price monitoring to enable them to demand and collect relevant data?

What the member for Lilley was referring to was wholesale prices. We have seen time and time again that the Treasurer answers the question on the basis of retail prices. So no Australian listening to this debate can be reassured that the ACCC is bringing to bear a full amount of authority and undertaking comprehensive price monitoring at a time when petrol prices are hurting Australians. It is something the government has refused to do and slip slides around in implementing. It is also the subject of the amendment moved by the honourable member for Batman. Last week in question time the honourable member for Hunter had a prepared a letter, and all it required was a signature from the Treasurer to implement this wholesale price monitoring. That is all it required.

Opposition Member:

Is that all?

Roger Price (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

That is all it required; you are quite right. I want to refer to two problems. When prices peak on a Thursday and trough on a Tuesday, people are suspicious. They do not understand and nor do they believe that this is demand driven. They believe that the petrol companies are taking advantage of consumers.

Bob Katter (Kennedy, Independent) Share this | Link to this | Hansard source

How cynical of you!

Roger Price (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

I think they might be on the mark, and I think you might agree with me that they are on the mark. There is a problem that I want to refer to, and I must say that I have only recently been made aware of it—that is, petrol companies actually own the petrol that is in the storage tanks of the retailers. Now I am not saying that I want to put an extra burden on the retailers, far from it, but I do say that while the petrol companies own the petrol in those petrol station storage tanks they will have ultimate control of the price. You will not get a free and fair market. I am very keen for the NRMA in their petrol summit in October to have a look at that and to get some advice and see what can be done about overcoming this anomaly.

The other issue I want to raise is ethanol. Mr Deputy Speaker, you know that when it comes to rural industries the National Party will always offer them a ‘funeral option’. What do I mean by that? I mean that when they are in trouble they will always get people out of the industry or they will pay them to get out of the industry. I know the honourable member for Kennedy is very close to the sugar industry, and I say to him: when prices were so low just a few years ago, what a pity we did not have an ethanol initiative then rather than the $600 million to buy people out of industries they had been in for generations. They did it in dairy; they do it in all the industries. They can never get it up over the Liberals in here so all they do is offer the funeral option: ‘Goodbye, you’re finished. We don’t want to know you anymore. Get out of the industry.’

I am keen about ethanol and I always have been. One thing I will say about giving Australian consumers more choice by spending some $17.2 million to allow service stations to have or convert storage tanks into ethanol storage: it is a good thing. I know that in my electorate there is not one petrol station that sells ethanol. Surprise, surprise! Why would that be so? It is that, although the Labor Party many years ago supported the establishment of this industry, we have kept that very minute. I would like to see it a lot stronger. I sincerely hope this measure works, but I do note that there is no monitoring in this, there is no control and there are no targets. There is a total absence of targets.

When there is talk about mandating ethanol, people run up a lot of arguments. I think we ought to look at mandating. I hope the NRMA conference in October gives mandating a good look, if for no other reason than this press release from BP in which they talk about rolling out E10 and which says:

This initiative is due in no small way to the policies of the Federal and Queensland Governments. By incentivising ethanol instead of mandating it, they are ensuring that the benefits will be passed on to consumers.

In my electorate we would just like to have the opportunity to buy ethanol! Notwithstanding the measures in this prime ministerial statement, there is no guarantee that we will see ethanol being offered at one of the service stations in the electorate of Chifley. I say to petrol companies: when you say that you do not like mandating it makes me a bit suspicious. I have never in this House been an advocate for petrol companies. I realise they are necessary bodies and they provide a most important ingredient for my constituents and for the economy but I am inherently instantly suspicious, as any good person from Western Sydney is, of petrol companies.

I read with interest an article about the Holden car company in Australia. They are now manufacturing engines that are capable of taking up to 25 per cent of ethanol. Isn’t that marvellous? Isn’t that wonderful? But the problem is that they are not selling them in Australia. They are exporting them. How ridiculous is that? The honourable member for Batman and the member for Hunter talk about the new technologies, and I totally support their views on that. But what I do say is this: ethanol we have already. There are many people who want to get into producing ethanol and we have to make sure that we have the policy framework right. Last but not least, if the Prime Minister’s target of 350 megalitres of biofuels is achieved by 2010 it will constitute just one lousy per cent of our production. How is this helping our current account deficit? How is this helping sustainability? It is a lousy target. I am sure that we as a country are able to do a lot better than that.

Bob Katter (Kennedy, Independent) Share this | Link to this | Hansard source

The Independents—the three of us—went to Michael Delaney’s group, the Motor Trades Association of Australia, and we found out that they had formed a fair trade council. I think it is only proper to put before the House the solutions that have been proposed by this particular group. They are:

a. That a positive right to supply be included in legislation—that is, that supply cannot be refused unless on occupational health and safety grounds. Petrol being an essential energy good, a minimum quantity of a tanker load could be applied;

b. That the ACCC be required to receive a commercial-in-confidence base information from the four refiners of all wholesalers data on their actual wholesale price—so on a monthly basis the high and low price, and a medium price—thus enabling the ACCC to gain a greater knowledge of price margins in the market. This would also provide some transparency in the event that pricing about concerns were referred to the commission;

c. The introduction of terminal gate price so the only movement from posted terminal gate price was for volume discounts;

d. A renegotiation of the Oilcode;

e. The passage of the Dawson bill, in particular collective bargaining notification arrangements;

f. The passage of the majority report of the Senate Economics Committee inquiring into the TPA and small business. Also a right for victims of breaches of the TPA to take action for compensation for successful ACCC action.

It is quite a remarkable event today. It is truly remarkable. I once belonged, as did my colleague the member for New England, to a once great party that was responsible for aggressively introducing, and pushed for the introduction of, the sites act. We stood up to the big corporations. We had courage, we had gumption and we had tenacity. The history books glow with pride for what we achieved for this nation. The followers that followed after us introduced national competition policy. It was going to give us competition. The one thing that we absolutely all know competition policy never gave this nation is competition.

The most important product to us all, of course, is food. In 1990 Woolworths and Coles, according to the AC Nielsen annual report and the ABS report, owned 50.5 per cent of the retail food market. Now, according to AC Nielsen and the ABS, and Coles’ and Woolworths’ own figures, they hold 82 per cent of the market. So if there is one thing that national competition policy has not delivered it is competition.

I virtually live on aeroplanes. My official report to the parliamentary committee was 37½ hours. I nearly died of shock when I found out that I had spent that much time travelling. In the last three years I think I have travelled non-Qantas twice. All I do is say, ‘I want to leave at this time.’ Whatever plane is leaving at that time, I get on it, whether it is Alliance, Virgin or Qantas. You only have to go to an airport to see that 90 per cent of the traffic is carried by Qantas. So it did not deliver competition in transportation. In the media, I think almost all the radio stations in the northern half of Australia are now owned by one single broadcaster, and I understand that is pretty much the same for the rest of Australia. As far as newspapers and television go, I do not have to tell anyone in this place about the concentration of ownership, which is unprecedented in the Western world.

I and the honourable member for New England got a briefing, and we were appalled to find out that one of the reasons that we would not be able to sell ethanol in this country now or in the future is that 62 per cent of the petrol throughput is now controlled by Woolworths and Coles and their partners Caltex and Shell. At the present rate of progress, within three years they will be up to 75 per cent. The 25 per cent that is left—and if you go out and put $30 million into an ethanol plant you would want to be pretty confident you have some customers there—are the little tiny blokes. What are you going to do? Run around and draw up a contract with a thousand of these small retailers? It is not likely. Interestingly, the only single plant that was being built in Australia was being built by a person that already owned the retail outlets. I think it was Caltex that made them an offer for the plant. They would not sell the plant. But what they did then was buy out the retail outlets so that the oil company had control of the ethanol.

Why do the oil companies not go for ethanol? Clearly it is a lot cheaper now. Everybody knows that it is cheaper than oil, so why don’t they buy it? If they are out there screaming, ‘We have to pay this terrible, high, spot market price, which is now $70-odd a barrel; we have to charge you this,’ why don’t they buy ethanol? It is cheaper. I will tell you why they do not. Roll the clock back to when we had a price at the wellhead in Australia, when there was an agreed upon price which gave, I think, BHP a very generous return on their investment and their risks—and it was $3 a barrel. So the price of producing and making a profit then was $3 a barrel. The world spot price was $7 a barrel. I will bet London to a brick that those relativities are the same today as they were then. So, whilst it might be $70 a barrel out there, the Shells, Caltexes and Mobils own the oil wells, or they have contractual arrangements which amount to them owning the oil wells, and they made those contractual arrangements long before the price shot through the roof.

I doubt whether any of us in here are going to be able to settle the question of whether supply and demand is dictating the world price of oil or whether the price is being manipulated, but one thing we do know is that the spot price is a hell of a lot different to the cost of production which is being borne by these companies. And that is the reason why they are not buying ethanol—because the oil companies are buying oil at one hell of a lot cheaper price than we can produce ethanol for. But they will not sell it to us at that price.

The trouble in this place is that, when all the members of the frontbenches of both sides of the House were little boys, they never played Monopoly. I played Monopoly, and I remember well that if you got all the utilities then you could charge four times as much money than if you only owned one of the utilities. So I learned very quickly, at a very tender age, that what you did was try and buy up the opposition as fast as you could gobble them up, and then you made an awful lot of money.

I can remember well when we implemented the sites act. I was in parliament at the time. Because I was the chairman of the Queensland branch’s small business committee or whatever we called it then, we went around and interviewed people about it. We interviewed a service station owner, and he said: ‘Here’s my bill from the oil company. It is 52c a litre. But down the road the company is selling retail at 50c a litre. How can I compete against him? He is my supplier.’

That is what is called vertical integration. When that very great American—probably one of the few really outstanding American politicians—Theodore Roosevelt mobilised his antitrust legislation against John D Rockefeller to break up his huge cartel, the US Supreme Court interpreted the antitrust legislation as actually banning vertical integration in industry. They saw, and see, vertical integration in industry as a breach of the antitrust legislation in the United States. I believe the US Supreme Court most certainly has it right in justice if not in law.

There has to be a political point made here. In my state the party that I belonged to were champions of the owner-operator, and we actually banned the selling of groceries through service stations. We put up some spurious argument because we wanted to protect the little bloke against the giant oil companies. That was the reason we banned it—and because we also wanted to keep competition in the food purchasing marketplace. There was no after-hours shopping in Queensland for corporate supermarkets then. That was only for owner-operator supermarkets. I have to say, in all fairness, that the current government has preserved that to some degree. But the party that actually drove all of this legislation to help the owner-operator is now the party that are abolishing the sites act. It is really extraordinary that a party going in one direction could, within the short space of 15 years, be heading 180 degrees in the opposite direction.

I want to hone in on two other figures. I did not have time to check, but I think that it was in the 1980s—it might have been little earlier than that—that oil went over $50 a barrel. It was $40 or $50 a barrel for a protracted period of time, and at that time, when the tax was taken off, petrol cost 22c a litre. Oil has now gone to $70 a barrel—an increase of about 50 per cent. So the price of petrol should have increased 50 per cent to about 35c. But it has not—it has gone to 105c.

Why has there been this sudden huge increase in the price of oil? The cost of producing oil has not changed: you dig a hole the ground and the pressure brings it up or you pump it up. We are producing oil exactly the same way now as we were then, and we must have this question answered. If we cannot force the oil companies and if we are not prepared to implement price controls, then we must intervene in the marketplace to see that there is competition—and to do that we need mandating. I have been heavily involved in efforts to get ethanol plants off the ground, but we have to find someone to buy the product.

Quite frankly, the only big operators in Australia are Mr Honan at Manilda, who has his own plant so he is most certainly not going to buy off us—and I do not want a commercial-in-confidence situation here—and a big operator that has already entered into contracts, Sarina’s CSR. There are only three other big independents, and one of them is locked in contractually for a few years yet with one of the oil companies. One of them, as I have just remarked, has been bought out by, I think, Caltex, because they were involved in an ethanol plant and it was getting a bit scary for the oil companies.

Let me go through the figures again just quickly, because it is not very difficult; it is not rocket science. You can buy, and we can produce, sugar for $360 a tonne. There are 600 litres per tonne, so that is 60c a litre. If we take 50 per cent of our sugar production and turn it into ethanol, about one-third of our tonnage would come from molasses, which is only 22c, so we would have an average price of around 47c. It is about 9c for processing, so it would be 56c. There is storage and transport of 10c and 5c for retail, so that would be 71c a litre. We would have to add one-quarter, because ethanol has a lot of oxygen in it and your motor car does not go as far since you get a better burn and you get more power. It might be fairer to say that you would add 18c to that, so that would bring it to 89c a litre.

We absolutely know that we are talking about a comparable price in the range of under 90c a litre. Why is it not happening? It is not happening because the marketplace will simply not provide room for us to go into the marketplace. There has to be mandating. After seven years of this, surely this House realises that there is no ethanol without mandating. If you want verification of this, let me tell you that four years ago the demand for ethanol was around 70 million litres. The demand for ethanol is now 23 million litres, so the government has done a wonderful job! The proof of the pudding is in the eating. Four years ago in Australia we had 70 million litres of production; now we have 23 million litres of production or consumption—they are both the same thing.

I will make one other remark concerning petrol. We have spoken about LPG, and it would appear from the Prime Minister’s statement today that we can deliver LPG at 78c a litre. But as the member for Chifley, in a very excellent speech to the House this evening, very adequately asked, ‘Where are you going to fill up?’ We have enough big operators in livestock haulage and banana haulage and in the mines in North Queensland and in the sugar industry itself to produce biodiesel ourselves. But the trouble is that whilst I would be confident of us having biodiesel outlets in North Queensland, when the livestock haulier is carting cattle south, where would he fill up at a bowser? He would not know where he would be taking the cattle and he could not afford to take the risk of going to some area where there is no biodiesel.

So, as outlined by the member for Chifley, once again we have the problem of having to have outlets all over Australia. The only way that can be done is by mandating it. There is not a country on earth producing ethanol that is not mandating it first. I have held things up in the House on numerous occasions—and I will do it again this evening. This shows the price at the bowser in Brazil. ‘Preco por litro’ is Portuguese for ‘price per litre’. It is 1.359 real, which in Australia is 68c a litre. I do not have to do the figures, as I did earlier in my speech this evening; I can simply hold up a picture of a bowser in Brazil. We absolutely know that if this government moved on mandating they could deliver to the people of Australia petrol at the bowser at under 90c a litre, but we are buying it at $1.30 a litre.

I went up to see the rugby league finals on the weekend. The Cloncurry team of my own home town travelled a 1,000 kilometre round trip to Normanton to play in the semi finals. What does petrol mean to us at $1.30? Thanks to the incompetence of the state government in Queensland, for the last 12 months we have gone without any dentists in the midwest—we have had none. In my lifetime we have always had three. On average, the people from that area would have had to travel 800 kilometres every time they got a toothache! Whilst it must be nice and academic to sit here and argue these things, it sure would be nice if the government gave us mandating and delivered to us petrol at the price at which we should be getting it—that is, the ethanol price, which is under 90c a litre. If the government think all this running around and tiptoeing in the tulips has achieved anything, let me tell you what it has achieved: we have gone from 70 million litres down to about 20 million or 30 million litres over the last four or five years, so the policies have been an abject failure. We ought to expect that the policies that were implemented today will go in exactly the same direction. (Time expired)

Debate (on motion by Mr Hunt) adjourned.