Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

The Petroleum Retail Legislation Repeal Bill 2006 repeals the Petroleum Marketing Franchise Act 1980 and the Petroleum Retail Marketing Sites Act 1980. These acts cover only part of the petroleum industry, with well over 50 per cent of the industry by volume of sales not covered by the current acts. The acts also discriminate between classes of business, large and small. In the small business sector, franchisees are advantaged over commission agents and independent operators. In the large business sector, Caltex and Shell are advantaged through their arrangements with supermarket chains over other larger companies such as Mobil and BP.

Immediately after these acts were repealed, the Minister for Industry, Tourism and Resources introduced a regulation under the Trade Practices Act 1974 to replace the retail protections provided under the repealed acts and to provide coverage of the whole petrol retail industry. The new regulation is an industry code to be known as the Trade Practices (Industry Codes-Oilcode) Regulations 2005. The Oilcode will provide better protections for and regulation of the petroleum retail sector than is the case currently. The Oilcode has been developed over a period of time. The current acts apply only to part of the industry. The acts have not prevented and indeed have encouraged the growth of retailing outside the acts’ ambit and the entry of supermarkets and independent import marketers into the industry. The acts have also restrained competition by limiting the ability of the majors to compete with retail operations.

It has been argued that the current legislation has advantaged small business franchisees over commission agents. The government sought to repeal this act back in 1998 but at that time it was unable to get support for a mandatory Oilcode and it would not proceed with the bill because the interested parties could not agree to an Oilcode. There has been a series of steps along the way to get to where we are today. In December 2004, the Minister for Industry, Tourism and Resources announced that the government intended to proceed with reform. The minister outlined components of the Oilcode, which will introduce a nationally consistent approach to terminal gate pricing. It is important to note that currently only Victoria and Western Australia regulate terminal gate pricing and set minimum standards for new fuel reselling arrangements, with greater coverage of different forms of agreement and dispute resolution.

In March 2005, following an industry roundtable, a number of changes were agreed to. The important issue was to ensure that the tenure of pre-Oilcode franchise agreements would continue to apply until they expired. Once this and a couple of other issues had been agreed to, the government was able to proceed. In April 2005, the department held an industry briefing on section 46 of the Trade Practices Act, and from there we have come to the legislation that is before us today. I may return to that a little later.

At the outset of my contribution to this debate, I want to make it very clear that I am supporting the amendment that moved by the member for Hunter. Australians are hurting as a result of high fuel prices, and the government’s inaction has done nothing to remedy the situation. It took the Prime Minister until yesterday to come into the parliament and make a very belated attempt to remedy the problem. There is no denial that high oil prices have contributed to the rise in petrol prices, but the government has been ignoring this looming disaster; it has not planned for a future where oil prices would increase, with a subsequent increase in the price of petrol at the bowser. It is nothing new. It did not happen yesterday. It was blatantly obvious for a long time that the price of petrol was going to increase.

It is interesting to note that government speakers—or should I say ‘government members’; I cannot see any government speakers in the chamber—are so uninterested in the price of fuel that only one government member has bothered to come into the chamber and speak on a piece of legislation that I think is of vital importance. If any evidence were needed to show that the government is arrogant and out of touch with the Australian people, this is it.

The people in the electorate that I represent in this parliament—the people who live in the Hunter and on the Central Coast of New South Wales—are very disturbed and worried about the increase in the price of petrol. When only one member from the government speaks on the legislation—and currently there are no government members in the House—it is evidence that the government is not that concerned about petrol prices. Government members say one thing to the media and their electorates but ignore the issue of high petrol prices when debating legislation on it in the parliament. I have to say that I am very disappointed.

The first thing that I believe the government needs to address is a long-term energy plan. The energy plan outlined by the Labor Party looks at the diversification of the Australian fuel industry so that, as a nation, we can become more self-sufficient.

I mentioned earlier that it was obvious for a long time that petrol prices were going to increase. One of the most obvious signals has been the conflict in Iraq, which the government involved us in. To a large extent, it has been responsible for the increase in the price of oil. We on this side of the House were very aware that the invasion of Iraq would impact on the price of petrol at the bowser. I am surprised that it took the Prime Minister until yesterday to seriously contemplate where we were going with fuel prices.

It is also very important to note that the supply of oil is finite. One day there will be no oil left. So, as a nation, we should be thinking about what we can put in its place to deal with the eventuality that our oil reserves will become depleted. To think that it has taken us until now to fiddle at the edges in dealing with an oil shortage is absolutely disgraceful. Our government needs to have a long-term perspective on energy. We need a viable, long-term energy plan. I implore the Prime Minister to go back to his statement of yesterday and take it further.

We on this side of the House were pleased that he embraced part of Labor’s blueprint. We were very pleased that he has taken up the issue of converting cars to LPG, but there are many people in Australia whom it will not help. I do not think the Prime Minister should stop there, because Australian families are struggling with the rising price of fuel. More than ever, our nation needs a federal government with a long-term strategy to reduce our dependency on overseas oil.

We need to be an independent country. We need to be independent in all things, and oil is one of those things that is a very pressing issue for us as a nation. Our independence there will remove us from the shackles of high overseas oil prices. It is very easy for the Prime Minister to come into this chamber and say that the price of petrol is high in Australia because of the price of oil overseas, that it is influenced by the global market. That is obvious to everyone.

We are saying that we need to remove ourselves and put in place a strategy to relieve the impact of that overseas oil market—to be independent, to stand on our own two feet. We must increase the use of Australian transport fuels and reduce our reliance on foreign oil. We also must develop and use fuels that will become cheaper in the future. Australians will not be able to afford to pay $5 or $10 at the bowser.

I know that the Prime Minister assured the Australian people that fuel prices will probably drop to $1.15 per litre, but I really cannot see how that will happen. I cannot see how any strategy that this government has put in place will lead to fuel prices falling to $1.15. I think it is much more likely that we will be paying $2 a litre by Christmas. I do not know how the Prime Minister is going to explain his rash promise to the Australian people.

We need some national leadership to develop existing alternatives like LPG, ethanol and biodiesel; emerging alternatives such as compressed natural gas, liquid fuel from gas and stored energy; and future fuels such as hydrogen. We need a government that looks to the future, embraces new technology and invests in research and development—invests in the future. We do not need a government that goes down the same track of supporting the tired old things of the past. We need a government of vision. We need a government that says, ‘No, Australia is not going to pay $5 a litre for petrol.’ We need a government that recognises our vulnerability and then puts in place strategies that are going to protect us from those external shocks. Australia needs to be much less reliant on foreign oil because not only is that affecting the price at the bowser; it is also affecting our trade deficit and foreign debt.

When we had the last interest rate rise, the Prime Minister was quite happy to blame our level of inflation on the price of petrol. He did throw in bananas as well—I cannot forget the bananas. When he blamed the price of petrol for the interest rate rise, why didn’t he decide to act immediately to make Australia independent and remove Australia from a situation where we are affected so greatly by external shocks? This is a Prime Minister who only acts when he is forced to act because he can see that it is going to have a detrimental effect at the ballot box. He is a reactionary Prime Minister, one who sits on his hands and does nothing until he is absolutely forced to do so.

I have brought with me today the statement that the Prime Minister made in this parliament yesterday. To say I was disappointed with it would be an understatement. He goes through and uses his—dare I say—weasel words to explain away the reason for the increasing petrol prices. Then he tacks in:

Since oil is a globally traded product, and Australia is a net importer of oil, there is no escaping the surge in oil prices.

Yes, there is, Mr Prime Minister. You can escape the surges in oil prices if you invest in Australian industries and try and make Australia a lot less dependent on imported oil. It would be good for Australia in a number of different ways. It would make us an independent nation. It would develop Australian industries. It would develop alternatives. It would be good for the environment. To be quite honest, I cannot see one argument against going down the track of standing on our own two feet and looking at alternatives.

We need to re-examine the depreciation regime for gas production infrastructure, and we need to allow selective use of flow-through share schemes for small operators. If they refer to the opposition’s blueprint No. 3 on Australian fuels, the government can get a number of good ideas about where they can go with their policy. They can look at making alternative fuel vehicles tariff free and at $2,000 off the price of hybrid cars. I really think we should be doing everything we can to encourage the research and development of hybrid cars, to see if we can make them not a rarity, not a curiosity, but rather something that is actually out there tackling the issues of high fuel prices and pollution. For hybrid cars to become a really viable alternative, the government need to work with state and local governments.

One of the failings of the Howard government is that they do not work with the states; they are more interested in blaming the states for everything that goes wrong. I think that the Prime Minister would be working in Australia’s interest if he actually sat down with the states and tried to look at some alternatives—giving city traffic and parking advantages to hybrid cars and examining the grants of tax rebates for converting. The government have done that. LPG is the part of our policy that they have embraced, and we congratulate them on doing that. We are happy to assist in any way we can with their policy development. A Beazley Labor government would conduct a feasibility study into a gas to liquid fuels plant in Australia—new technology, jobs for the future.

This government has failed the people of Australia in that it has led to increased fuel prices at the petrol pump. The bill before the House today is a bill that changes the Petroleum Retail Marketing Franchise Act 1980 and the Petroleum Retail Marketing Sites Act 1980. This government needs to embrace the amendment moved by the member for Batman and take on board the Labor Party’s ideas in this area. We do not mind. What we want is the best thing for Australia, and the best thing for Australia is for the government to adopt the Labor Party’s policy.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

It was a good speech that my colleague the member for Shortland has just made looking at alternatives. It is interesting that only one government speaker has spoken in this debate on the Petroleum Retail Legislation Repeal Bill 2006. That is a bit of an indictment of what that side of the House thinks about petrol prices. I see that two members from Tasmania, the member for Bass and the member for Braddon, are not in here endeavouring to defend the price of petrol or even to speak about their bosses’ policy of yesterday when they stole the Labor Party’s policy and brought it in. They are not even keen to be in here to defend that or even to put that before the people. So they are failing to give representation to the people of northern Tasmania about the price of petrol.

As my colleagues who spoke previously have mentioned, the Petroleum Retail Marketing Sites Act 1980 and the Petroleum Retail Marketing Franchise Act 1980 are outdated and serve no useful purpose in today’s petrol retail industry. Well over 50 per cent of the industry by volume of sales is not covered by these acts, including the supermarket chains Coles and Woolworths, which makes the rules for market participation inconsistent and unfair. That is bad for the industry and bad for consumers. Therefore, they need to be replaced, but replaced with something that actually deals with the problems facing consumers today.

The proposed Oilcode will finally bring the whole industry into a common regulatory regime with better protections for market participants and better protections for consumers. It will also, for the first time, bring some protection to commission agents and independent operators who currently do not have access to low-cost dispute resolution. But Labor is determined to go further and make amendments to section 46 of the Trade Practices Act, which are necessary to address outstanding concerns about the potential for abuse of market power. This is the substance of the amendment being proposed by this side of the House.

There is no doubt that the cost of fuel is concerning many people throughout the nation, and I am only too aware of the impact that is being felt across the electorate of Lyons. The regional nature of communities means that relatively long distances are travelled as part of daily life. The amendment moved by the member for Batman puts responsibility fairly and squarely back in the lap of the government—a government that has lost the ability to look beyond today, to take their own advice on the future fuel needs of this great country—to fix what they have clearly ignored. This amendment calls on the government to ensure that the Department of Industry, Tourism and Resources works towards increasing the market penetration of ethanol, biodiesel, LPG and CNG, giving a real choice to consumers and helping to reduce our reliance on the foreign oil market. Part of this process will require a study into the feasibility of a gas to liquid fuel plant, which includes the investigation of financial concessions and allowances to encourage investment in research and development and the infrastructure required.

It also calls on the government to embrace Labor’s first blueprint to cut tariffs on alternative fuel vehicles, including hybrid cars, and provide tax rebates for converting petrol cars to LPG, which is where the government stole Labor’s policy yesterday and badged it as their own. LPG is the only widely available alternative fuel capable of halving the average weekly family fuel bill at the moment, here and now. The challenge will be to provide a real incentive to encourage more outlets to install delivery infrastructure, especially in regional areas, and to increase usage outside the major centres, which would in turn create more consumer confidence in LPG as an alternative fuel. The government’s announcement yesterday acknowledges this fact with their rebate for converting vehicles to run on LPG.

Clearly, a bigger stumbling block to introducing a new fuel is funding delivery infrastructure and gaining enough public support to convert or purchase vehicles capable of running on the alternative fuel during the early stages of introduction. This too was addressed in yesterday’s announcement, and it is about time too. It only takes 10 years to get this implemented, and it is Labor Party policy when it is done. Affordability of new technology is always going to be a difficult issue unless a real financial incentive is given for consumers to change. The amendment moved by the Labor Party paves the way for a reactive approach, paves the way for a responsible approach and gives ways for it to be achieved.

I have been approached by many of my constituents from across the electorate of Lyons who are concerned about their future. Many of them are people who have worked productive lives building the communities that they call home. Many of these communities do not have the services or major hospitals, banks or department stores that many of us are able to take for granted, and they accept, to some degree, that they will be required to travel some considerable distances to access these services, but never in their wildest dreams did they think that the cost of fuel would reach $1.50 a litre and that they would be $40 to $50 worse off every single time they filled up their fuel tank.

The fact is that fuel is taking food off the tables of the people who can least afford it. It does not matter whether I am talking about an average single pensioner or a family with four children: the cost of fuel is biting because the average amount of fuel required does not change that much, but the cost does. In any week, in any town, families are still driving the kids to school or to the school bus. They still have to do the shopping; they still need to pay the bills, to get to work and to take little Peter to the doctor.

Spare a thought for the delivery drivers who, through no fault of their own, have been contracted to deliver goods, from newspapers to shipping containers, at a set rate negotiated before fuel costs rose the best part of 50 per cent. Add these astonishing figures to the steadily rising interest rates, which will have a significant impact on business loans and overdrafts in the coming months, and remember them when their backs are against the wall of their economic future.

But this is not the end of the matter, as the impact of additional fuel costs begins to affect community services in all regions and centres. Volunteers who deliver meals on wheels; Lyons, Apex, Rotary clubs; sporting clubs; advocacy groups and even volunteer emergency services are at risk of losing valuable members simply because the cost burden is too great for people to be volunteers. To get there to be a volunteer is costing people a lot of money. The very people who fill the gaps required to build better communities are finding the going pretty tough, to say the least. How much longer this has to be endured will directly determine what services will survive into the future. This must be addressed by finding ways of getting alternative fuel supplies to the general population now. We certainly cannot afford to let the issue lie for another 10 years.

The amendment being proposed is a simple solution to a complex problem. It is not the complete answer; it is a start in the right direction. It provides a foundation, with processes to follow and targets to meet. The answers that come from the required reporting system will drive research and development and the roll-out of fuel alternatives as well as provide support for progressive vehicle technology to reach the marketplace. After all, there is not much use spending millions of dollars on R&D if the outcomes never see the light of day—if we never get to see the results of that in practical terms. This amendment is a simple solution, but that is not to say it will be an easy task to overcome the problem. The problem will not go away. We need to work smarter, not necessarily harder; and to do that we need achievable goals and a process of making it happen.

We have heard a lot about ethanol in the last three weeks. I support the blending of ethanol with petrol, but it needs to be done in an economic and sustainable manner. My good friend the member for New England has been a champion of this for a long time, and a man who takes his work representing the people of Australia and the people of his electorate very seriously. I have listened to his words over a long time now on this matter. And my colleague Mr Fitzgibbon spoke in the House last week. He reinforced the difficulty of mandating ethanol up to a 10 per cent blend at this present time and that the country simply does not have enough opportunity to produce enough ethanol to get to 10 per cent at the moment. So there has to be a heck of lot of work done to get production up to any level like 10 per cent.

There is a clear need to support further development of the ethanol production industry, and Labor showed foresight by presenting our plan for the future fuel requirements of this country before yesterday’s announcement. I know some years ago we had a pilot study in Tasmania with the sugar beet industry, looking at ethanol in farm tractors and other vehicles. So the opportunities for the rural sector are quite real when we start talking about ethanol production.

Biological ethanol production is quite simple, I understand, compared with other fuel refining methods, and there are a number of very good reasons to begin producing it on a large scale. The first and foremost reason is that it is quite literally home-grown fuel—it gives us some independence. The largest single use of ethanol is as a motor fuel and as a fuel additive. The largest national fuel ethanol industries exist in Brazil. I remember speaking to the Brazilian agriculture minister last year. I think the member for New England was there with me. The Brazilian ethanol industry is based on sugar cane. As of 2004 Brazil produced 14 billion litres annually, enough to replace about 40 per cent of their petrol demand. Also, as a result, they announced their independence from Middle East oil in April 2006. It is a pretty important milestone, I would think, in one’s country’s history when you can say that you have your energy and fuel at an independent level and you are not relying on a very unstable part of the world. I will say it again: Brazil announced their independence from Middle East oil in April 2006.

We are floundering in this country. Most new cars sold in Brazil are flexible-fuel vehicles that can run on ethanol, petrol or any blend of the two. In addition, all fuel sold in Brazil contains at least 25 per cent ethanol. Flexible-fuel vehicles are nothing new. Henry Ford was the first person to mass produce them, with the Model T, which was designed to run on an ethanol and turpentine blend. So it goes back a long way. As it turned out, the petroleum industry saw an opportunity and took it, creating an industry that we have struggled to escape or have some independence from ever since.

Yesterday we heard the Prime Minister, John Howard, address this House with all sorts of facts and figures claiming that the fuel tax in Australia is low by international standards, but he failed to mention why it is that other countries have higher fuel taxes or what relevance that has in comparison to our overall economy. He was simply playing with the figures in an attempt to take attention away from his inaction on alternative fuels. They certainly do not reduce the pain of paying for a commodity which is fast becoming a luxury.

Europe has alternative fuels such as biodiesel available to the general public. It is made from a variety of waste or unwanted oils which would otherwise have been disposed of in some other way. The fact that there is a cottage industry of backyard biodiesel manufacturers speaks volumes for the efficiency and cost-effectiveness of this fuel.

I cannot remember where I read it but I did read somewhere that, if nylon strands could be made twice as strong and twice as thin, we would reduce world consumption of oil by one-third. I cannot tell you if there is any truth to that statement, but it certainly provides some food for thought if nothing else. It highlights the fact that oil is used by more industries than just fuel producers.

I have taken a broadbrush approach to this question because we need to have the debate about petrol and its possible replacements if we are to make the various forms of energy available to the consumer. Petrol will not last forever and will continue to rise in price. We have to find alternative strategies and fuels, and we have to have a way of implementing them and putting them into our system. Being independent of other parts of the world is the way to go—home-grown fuel, home-grown processes.

I understand that natural gas in cars is an option for the future, but it needs R&D. I understand it might take 1½ hours to fill your car up with natural gas but you would probably run it on 20c a litre. Those are incredible savings, but how do we get there? We get there by having R&D and governments willing to chase a positive approach.

We have enormous amounts of natural gas in Australia, but we do not have a pipeline from the North West Shelf to the eastern seaboard of this country. Maybe it is time we started to think in that way. Maybe we should start to think about building some infrastructure that can really set this country up for this century. Where is the population? Of course, it is on the eastern seaboard.

We accept that the world market of oil dictates to us and we say that if we have anything else we are kidding ourselves because, if we ever had to go on the world price of oil, that would affect our economy. Of course it would, but if you have home-grown energy you can do that a lot better. If towards Christmas this year petrol gets to $2 a litre, which some commentators are talking about, that will mean a great deal of sadness for many people in Australia.

The Labor amendment gives us some opportunities and this government ought to be picking them up, like they picked up our policy yesterday and ran with it. They ought to be picking up the other amendments that we have put up here to give this country an opportunity to go forward and not give us another 10 years of doing nothing, of not backing R&D or moving us forward. I will be supporting the amendment by the member for Batman, and I certainly hope the House does.

Kerry Bartlett (Macquarie, Liberal Party) Share this | Link to this | Hansard source

Until he made his last few comments, I was about to say I agreed with much of what the member for Lyons had to say, but he spoiled it there at the end. This particular piece of legislation, the Petroleum Retail Legislation Repeal Bill 2006, was on the Notice Paper before that range of measures was announced by the Prime Minister yesterday. Yet this bill still goes a small way in one small measure towards trying to take some of the upward pressure off the price of petrol. This bill aims to do that by increasing competition by reducing the restrictions on competition in the petrol market, thus trying to put some downward pressure on prices at the margin. There is no doubt about it: motorists are feeling the pain of high petrol prices—whether they are parents driving their children to and from school or sporting events or to do the shopping, whether they are commuters travelling by car to and from work, whether they are small businesses using their motor vehicles as part of their work, or whether they are larger transport companies and are passing on the high cost of fuel to consumers purchasing their products and thus adding to inflation in this country. Whichever they are, there is no doubt that the higher fuel prices are causing significant pain throughout this country.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

I didn’t see your name on the speakers list.

Graham Edwards (Cowan, Australian Labor Party, Shadow Parliamentary Secretary (Defence and Veterans' Affairs)) Share this | Link to this | Hansard source

You flushed him out.

Kerry Bartlett (Macquarie, Liberal Party) Share this | Link to this | Hansard source

Let us be honest about it. The predominant reason for high petrol prices is the high cost of world crude oil prices. Over the last seven years, world oil prices have risen by 400 per cent from roughly $15 a barrel to $75 a barrel. We hear interjections, hyperbole and rhetoric from the other side. If they think they can do anything at all to bring down world crude oil prices, let us hear it. What will they do to reduce world demand for oil? What will they do to stimulate world production of oil? What would Labor have done to stop world prices rising 400 per cent from $15 a barrel to $75 a barrel? What would they have done? Can they pretend they would have done anything about world oil prices? The reality is—and Labor knows it—that by far the predominant factor driving petroleum prices is rising world oil prices driven by the rapidly increasing demand from the industrialisation of China and India in particular, and driven by the simple fact that supplies are limited.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

Mr Adams interjecting

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

Order! The honourable member for Lyons has made his contribution.

Kerry Bartlett (Macquarie, Liberal Party) Share this | Link to this | Hansard source

Because of those limited supplies and the exponentially growing demand, world prices continue to rise. I might point out a couple of other things that are also important in this context. The dominant factor is crude oil prices—there is no doubt about that. The second significant factor driving petrol prices is the level of taxation. Let me point out the fact that, of the 30 OECD countries, Australia has the third lowest level of excise on fuel, the third lowest level of taxes on fuel. As a result, our prices are in fact the third lowest in the OECD. Yes, it is painful at $1.35, $1.40 or $1.45 a litre. But in most European countries it is in fact over $2 a litre. In some it is over $2.40 or $2.50 a litre.

I might point out that if it had not been for this government fuel prices would be higher, because in 2001 we removed the system of six-monthly indexation introduced by the Labor Party in 1983. If the Labor Party had their way—if we still had the tax regime that was introduced and operated by the Labor Party—fuel prices would be 8½c a litre dearer than they are now. It is because this government removed Labor’s system of automatic indexation that fuel prices in fact are not 8½c a litre dearer. So let us not hear any of this humbug and hypocrisy from the other side. The fact is Labor’s regime of taxes was a high-tax regime. This government has brought those taxes down. We have the third lowest level of taxation in the OECD.

If we want to talk about taxes—and it is not really my job to praise the Queensland government or indeed any state government—at least the Queensland government has an 8.4c a litre rebate on the GST that it gets on fuel. So Queensland motorists are paying less than motorists in every other state because the other state governments want to take every cent of GST that they can. At least the Queensland government is willing to hand some of that back.

This government has already introduced a number of measures in addition to the very significant one that I have just mentioned. In addition to abolishing Labor’s six-monthly system of indexation of fuel, we have introduced a number of other measures: expenditure on research and trials as to the suitability of biofuels, a $55 million concessional excise regime on biofuels and measures to assist us towards that target of 350 megalitres of biofuel by the year 2010. Interestingly in this context, the uproar from the other side, the strident opposition from the other side, when we tried to introduce ethanol—

Mr Tony Burke (Watson, Australian Labor Party, Shadow Minister for Immigration) Share this | Link to this | Hansard source

Mr Burke interjecting

Kerry Bartlett (Macquarie, Liberal Party) Share this | Link to this | Hansard source

Hang on a minute, Member for Kingsford.

Mr Tony Burke (Watson, Australian Labor Party, Shadow Minister for Immigration) Share this | Link to this | Hansard source

It’s Watson!

Kerry Bartlett (Macquarie, Liberal Party) Share this | Link to this | Hansard source

Yes, Member for Watson. I am talking about when we tried to introduce, a couple of years ago, ethanol. We had uproar from the other side about how unsafe it was, how outrageous this was, how it would ruin our engines and everything else. So do not give us your hypocrisy about being concerned!

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

Order! The honourable member knows that he should be addressing his remarks through the chair.

Kerry Bartlett (Macquarie, Liberal Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, let not the opposition give us any of their humbug and hypocrisy about their ‘real concern’ about introducing biofuels. Their opposition is clearly on the public record.

I come to the third thing that we have done. We hear this rhetoric from the opposition about giving the ACCC real powers to monitor petrol prices. They already do that—3,600 sites around this country. They have the power. We have already had fines of $20 million for price fixing around the Ballarat region and just last year in fact there were almost half a million dollars in fines for two Brisbane service stations for price fixing. They were prosecuted under section 45 of the Trade Practices Act. So do not give us this nonsense, as we have heard from the other side, that the government has not been doing anything. We have been, in spite of the policies of the opposition and in spite of the opposition to some of these measures that we have heard from those in the Labor Party.

But the very significant thing is the quality initiatives announced by the Prime Minister yesterday to do more where we can. We cannot do anything about international prices and everyone, even the Labor Party in their rare moments of honesty, will admit this. But we can do something around the edges to try to take the pressure off prices. And yesterday’s package of $1.57 billion to be spent over the next eight years—that is, $1,570 million over the next eight years—has a range of measures to help where we can. The first one of these—the one I am very pleased with—is the subsidy of $677 million to assist the conversion of cars to LPG. We had already planned for a subsidy of $1,000 for new cars starting in five years time. We have brought that $1,000 subsidy forward to start immediately. As well, there will be a $2,000 subsidy for motorists who want to retrofit—that is, convert—their existing vehicles to LPG.

This has the potential for very significant savings because, as anyone knows, LPG generally retails for less than half the price of petroleum. For a motorist with a six-cylinder car doing about 20,000 kilometres a year, this would mean a saving, if their car were running on LPG, of around $1,600 a year or more than $30 a week. People doing more mileage, such as those in my electorate of Macquarie—people living in the Blue Mountains and people living on the Hawkesbury who often travel significant distances to work—would save more than that because they would be doing more miles. So this is a very positive measure. The cost of retrofitting is around $2,500 to $3,500 and up to $4,000. This subsidy of $2,000 will help a lot. It will significantly reduce the break-even time, from what might have been 18 months to two years, to probably less than a year. So a motorist, with the help of this subsidy converting—retrofitting—his or her vehicle to LPG, should be able to make enough savings to pay that off in less than a year.

I think this is a very positive measure. Certainly, it does not suit everyone—it does not suit everyone’s motoring needs, it does not suit every vehicle; I am advised that roughly 30 to 40 per cent of vehicles would be suitable for retrofitting—but it will help enormously those whose vehicles it suits. It gives another option and it shows that this government is serious—and serious to the extent of $677 million—in trying to take the pain off motorists where we possibly can. There are also other, environmental benefits—an estimate of about 15 per cent fewer greenhouse gas emissions from the use of LPG.. That is significant. There will be fewer toxic pollutants that come with petroleum. The other very obvious benefit is that it will reduce, albeit at the margins, our dependence on oil and petroleum imports. We are a net exporter of LPG. We produce just over three million tonnes a year and we consume about two million tonnes. By going down this path we will also reduce our reliance on imports. So it is a win for motorists, it is a win for the environment and it is a win for our current account deficit.

What do we hear from the other side? Just carping and rhetoric, instead of getting behind this very positive measure. The Prime Minister announced a couple of other measures yesterday that are also very important—$17.2 million over the next three years to encourage service stations to take up the challenge of increasing the availability of E10 fuels. That is, $10,000 up front for those service stations which are willing to convert their service stations to provide E10—that is, ethanol blended fuel—and, if they then meet particular targets of sales of ethanol blended fuels, another $10,000 to assist them in that. That is a very real incentive to help rapidly spread the availability of ethanol blended E10 fuels. Again, that is a very positive measure.

The third measure announced yesterday was the extension of the Renewable Remote Power Generation Program—that is, to take the pressure off those remote communities that are dependent on diesel for their power generation. With diesel prices rising rapidly in recent years, there is much greater expense and pain for those remote communities trying to generate their own power. Again, this measure of $123.5 million, over the next four years, to take up alternative energy sources—wind power, solar et cetera—will help take the pressure off some of those remote communities.

The fourth measure announced yesterday increased support for exploration—an extra $76.4 million over the next five years to Geoscience Australia for their offshore seismic exploration program to try to find other sources of petroleum and indeed natural gas. In addition, there will be another $58.9 million over the next five years for onshore exploration. In all, there is a lot of extra money for exploration to try to increase Australia’s self-sufficiency and reduce our dependence on petroleum imports.

The fifth measure, and by no means least, is a much greater focus on examining alternative sources of fuel—exploring geothermal options; gas to liquid research, which offers enormous scope, given Australia’s abundance of natural gas; and coal to liquid research et cetera. This very substantial package of $1.57 billion over the next eight years goes a very long way towards addressing the pain that motorists are feeling as a result of high petrol prices. We cannot do anything about soaring world oil prices. As I have said, they have increased from $15 a barrel to $75 a barrel in just the last seven years. World oil prices have risen by almost 17 per cent just in the last 12 months. Those world market supply and demand forces will no doubt continue to put rising pressure on world oil prices. We cannot do anything about that, despite the rhetoric that we hear a little from the opposition.

We can help where it is possible and these measures announced yesterday are, admittedly, around the margins, but they are serious measures by the government to try to reduce the pain being felt by motorists. I commend these proposals put by the government. I am sure that they will help substantially by creating extra options for our motorists. It is disappointing to hear the other side criticising for criticism’s sake, with their typical negativity. They ought to be getting behind the government’s measures in supporting us in trying to reduce the pressure of rising fuel prices in this country.

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

I am pleased to see that another member of the government has spoken on this very important legislation, the Petroleum Retail Legislation Repeal Bill 2006, particularly given the announcement made yesterday by the Prime Minister. The member for Macquarie made some important points. I think a number of things in the announcement are positive, but he made the point that they are fiddling around the edges and we are not—

Kerry Bartlett (Macquarie, Liberal Party) Share this | Link to this | Hansard source

I did not say ‘fiddling’.

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

Well, you said ‘around the edges’ twice. On the second occasion I think you said ‘around the fringes’. That, plus the Special Minister of State’s response in the chamber today to a letter from the member for Throsby, shows that the government has not thought through the processes that were announced yesterday. This is policy that is being made very much on the run. I think it is commendable that we do encourage the use of liquid petroleum gas in our vehicles. It was commendable some years ago when about one million Australians converted to LPG, because there was no tax imposed on LPG for use in motor vehicles.

Last year the government changed that and as of, I think, 2012 there will be an excise, based on energy equivalents of, I think, 12c a litre imposed on LPG.. I raise that issue for a number of reasons. The Prime Minister made some statements yesterday that he thought about 300,000 people would actually take on board LPG because of cheaper operating costs, even though they were going to have some capital outlay—a subsidised outlay, nonetheless, but some form of capital outlay.

The motorists that I talked to—and I had people in my office some months ago, before it was even proposed that there be a subsidy to encourage people to have vehicles fitted for LPG—were concerned about the changes in the tax regime coming along. They were concerned about the price rise in LPG, which was tied to the petroleum price rise. They were concerned about the profit taking of the fuel companies themselves and the lack of surveillance in profit gouging that was occurring. So there is concern out there that if they do invest in LPG it may be good at the moment and it may have all those environmental benefits—and I am sure it does—that the member for Macquarie spoke about but the government can change the rules. It has done that in the past. It has gone from no excise to 12c a litre excise. It can reverse that or it can double it. Are people going to trust the administration in terms of the government’s thirst for energy taxation? Are they going to trust the fuel companies, who are going to be in control of the outlets for LPG? The fuel companies have strangled—with the government’s assistance and the Labor Party’s assistance—the ethanol industry and the biodiesel industry in Australia because they have control of the outlets. There is more than enough money for potential investment in and bankrolling of ethanol plants and biodiesel plants if the fuel companies take on what is called offtake arrangements from those producers. Part of what happened yesterday is really window dressing or, as the member for Macquarie said, addressing the edges of the problem, to buy time for the fuel companies to move away from the call that is being made by many in this parliament—and I am pleased to see that there are members on both sides of this parliament now starting to make this call—for a mandate in the use of E10 ethanol in our vehicles.

As I mentioned the other day, I have just returned from a visit to the United States, where I visited 10 ethanol plants and some biodiesel plants. I saw the very positive attitude that there is in America. There is a positive attitude from the policymakers, who are recognising that they cannot depend any longer on the Middle East and on other parts of the world for their energy needs and that they have to look at alternatives. Some states—California, for instance—have had an environmental requirement for the carcinogenic discharges and the fine particle emissions from modern engines. Because of the impact on the health of their communities they have had to look at other ways of oxygenating fuel and keeping the octane rating up et cetera that is less dangerous to human health. So the Americans—at a policy level; at a state level, where they have mandated; and at a federal level, where they have put in place some restrictions for Brazilian imports—have encouraged an industry to develop to the stage where there are 106 ethanol plants in production in America at the moment, and 60 million tonnes of corn out of a total production of about 285 million tonnes of corn is now going into energy for their citizens rather than the corrupt food market which we here all know only too well from Australia’s involvement in the wheat market.

So the announcement yesterday, welcome as it is, still faces a degree of scepticism within the community. What price will the fuel companies set? There are no restrictions on the fuel companies. They will in fact have some degree of control over these people who are converting to LPG because they will have made a capital investment and they will feel obliged to use it. There could be price manipulation to take advantage of those people. The other issue is policy change to the taxation regime, and we have seen that in the past. The member for Lyons mentioned compressed natural gas, and I think that is something that really does need to be looked at. I understand that there are some problems. But it is cheap, it is combustible and it will burn in modern engines—although I know that there are some modifications that need to take place. If we are looking at the longer term and the comparative advantages that this nation has, we have to look at natural gas as a potential energy source for the future.

To avoid a mandate with the growing pressure on fuel prices, two of the fuel companies, BP and Caltex, announced last week a drop of 3c a litre in E10 fuel. Yesterday there was some encouragement from the government for an opening up of bowsers. I have been putting E10 fuel into my vehicle for about six years now. I obtain my fuel from a small community near Tamworth. I happened to call in there the other day, the day after that Caltex press release came out saying that they were dropping the price of E10 fuels by 3c. I spoke to my reseller, who is one of those people who has been promoting this in a small way for a long time. He has not been there only since it became fashionable; he has been selling Bogas E10 fuel for six or seven years, and I have been buying it from him for that period of time as well. He was a little annoyed because the day after Caltex dropped or discounted their price—and there are some semantics here about the price they are actually dropping—and put out a favourable press release about the government, saying, ‘This hasn’t happened because of the threat of mandating; it’s happened because of incentives by the government,’ which gave away the real thoughts in the fuel companies’ minds, who have gone into this gimmickry so that the government will not force them to use E10, the wholesale price of E10 fuel to my reseller went up 1.8c per litre. So, when everybody is lauding the fact that now ethanol is going to be available across the nation, that it will be coming out of every bowser that has ever existed, people who have been reselling that product for many years are being penalised—and there are some similarities between this bill we are talking about today, the Petroleum Retail Legislation Repeal Bill 2006, which will repeal the Petroleum Retail Marketing Franchise Act and the Petroleum Retail Marketing Sites Act, and the impact on the smaller independent operators, the fuel distributors and their relationships with the major companies.

I bring that point to the attention of the House because I think it does show that a number of things need addressing. If we are serious about fuel pricing and price gouging, we have to start looking at the terminal gate price. I know that Western Australia does, and I think one other state has a better way of administering or keeping a degree of surveillance on prices. My information is that the ACCC does not do much, if anything, in terms of terminal gate pricing and wholesale pricing, because there are a whole range of inconsistent messages coming from the fuel companies themselves. We heard the other day that there is going to be a discount. People assumed that that was a price drop. That discount could be removed next week or in a month’s time. When the heat is off this issue, that discount could be removed.

On the broader issue of taxation receipts and energy, I would like to suggest to the government that the addiction to fuel as a source of revenue is something that we should look at. I am very pleased that the member for Aston is at the table, because I have regard for some of his economic thoughts from time to time. I am sure he would agree that the taxing of a comparative advantage in terms of a nation’s capacity to trade internationally and be an effective economy—the taxing of energy—under the guise that it is to be used as a rationing instrument so that you can reduce consumption is something that we should start to review.

Some years ago, before I was in this parliament, when the GST was originally discussed—I was privately a supporter of the GST—I think a member of the cabinet, whom I will not name, suggested that the excise on fuel be removed totally and that the GST be increased slightly to take account of the revenue loss. In these times, when energy is so important—as the member for Macquarie said, not only in terms of transport for individuals but in terms of our comparative advantage as a trading nation—it is all very well to say we are the third lowest in the world, but 40 per cent of the petrol price is tax. To suggest that that is good economic policy or good taxation policy is a nonsense. In the next breath we will have people—I think the trade minister must be overseas today; he is not in the chamber—trying to deal with others overseas with respect to level playing fields and achieving access and advantage for our product. We are trying to keep the manufacturing industry in Australia alive under possible threat from the Chinese free trade agreement and the Indian free trade agreement. All these things are happening when we are tying our own people to the floor. Some people say, ‘For some businesses it is a cost; they can write it off their tax or they can get a rebate.’ Some of them do; some of them do not. For a modern economy to have energy as a revenue source is quite wrong. I think the Americans are starting to see that.

The other day in a matter of public importance the member for Page accused the Americans of entering into a subsidised existence for ethanol and renewable fuels. To suggest that the oil market is some sort of pure market is an obvious joke. When I was in America, many Americans, particularly those in the renewable fuel business, were saying that the Iraqi war was a subsidy of the fuel industry and that it was, in a sense, a protective arrangement for the energy assets of the capitalist world. People would argue about that, but those arguments have to be of some significance. The Americans have moved on. The Europeans have moved on. In Europe now the biodiesel market has exploded. It is having an impact on the world canola oil and vegetable oil prices, on the renewable oil price.

People ask, ‘Why are the Europeans subsidising these things?’ With the uncertainties in the world at the moment, you only have to look at what the Europeans went through in the Second World War. They thought they were self-sufficient in food. The reality was something quite different. We now argue that they subsidise their farm community and we put them down because, in our eyes, they will never run out of food again. They thought that before the Second World War. In that sense, they have protected themselves. The Europeans and the Americans have moved on. As the member for Lyons said earlier, in a matter of 12 or 15 years the Brazilians have moved from a situation of being 80 per cent dependent on imported oil product for their energy to being 100 per cent self-sufficient. They have done most of that through renewable energy, through the fermentation of sugar starches into ethanol.

So there is enormous capacity to play a role in this debate. I would encourage all members of this House not to give up on this. Do not just sell the peripheral and argue that you have cured the problem, because you have not. The other day, the member for Page said words to the effect—I do not want to verbal him—that it would be impossible to produce a mandated 10 per cent. When you do the numbers, you find that 10 per cent is equivalent to about six million tonnes of grain. We produce about 30 million tonnes of grain in Australia. Ten per cent of that would be six million tonnes or about two-thirds of the sugar production. It is quite possible, quite easy over a period of time—four or five or six years or whatever—to produce a mandated 10 per cent. The only member of a party that I hear who is really serious about this—I know the Independent members are serious about it—is the National Party’s Senator Barnaby Joyce, and I give him credit for that. I have no doubt that he is serious about his views on this issue and the impact it has on regional communities and the impact it could have on agriculture generally.

Another issue we do not look at seriously is Australia’s very high rate of nitrogen use—again, that is oil driven and the price has skyrocketed. We use it not only to achieve yield but also to achieve a protein level that gives a premium in the global wheat market. With ethanol production, in which you do not need high protein in the grain, we could see a reduction in the use of nitrogen fertilisers and a complete change in the breeds of wheat. We would be breeding wheat for starch production. Feed wheats, which are poorer in protein, have a higher starch content, and that is exactly what the fermentation of starch process is looking for.

I encourage the government to look at a number of these issues. Do not give up and trivialise this issue. It is too important not only for the individuals who drive cars and the businesses that rely on petrol, diesel et cetera as an energy source but also for our capacity to be independent of others for our energy needs into the future. I encourage all members of the House, whether they be in the government or the opposition, to get serious about renewable energy. Stop looking for the negatives. Look at what other countries are doing with their own energy resource security. Look at the problems we are having globally with oil in particular and start to put in place policies that are going to do something about it.

Anthony Albanese (Grayndler, Australian Labor Party, Deputy Manager of Opposition Business in the House) Share this | Link to this | Hansard source

I am very pleased to follow the member for New England, and I indicate to him that the Australian Labor Party is certainly taking renewable energy and renewable fuels seriously. I want to speak on the Petroleum Retail Legislation Repeal Bill 2006 and the amendment moved by the member for Batman, which points out exactly what Labor’s plans have been. In the statement made by the Prime Minister yesterday it was as if, as he indicated to the parliament last Thursday, he had read Kim Beazley’s Aussie fuels blueprint. He decided to adopt bits of it, but he should have adopted the lot. We have had a half-baked response to the crisis being faced by Australian families who are battling to pay their petrol bills.

That blueprint outlined a number of programs. It outlined the fact that a Labor government will re-examine the depreciation regime for gas production infrastructure; allow the selective use of flow-through share schemes for smaller operators; allow the selective use of flow-through share schemes in the gas, oil and mineral exploration industry; make alternative fuel vehicles tariff free, cutting up to $2,000 from the price of current hybrid cars; work with state and local government to give city traffic and parking advantages for these vehicles; examine the granting of tax rebates for converting petrol cars to LPG; conduct a feasibility study into a gas to liquids fuels plant in Australia; offer petroleum resources rent tax incentives for developers of gas fields which provide resources for gas to liquid fuels projects; examine a new infrastructure investment allowance for investment in Australian gas to liquids infrastructure; develop a targeted funding scheme for research and development in this area; work with industry to improve engine design and fuel quality standards; ease regulation of biodiesel production on farms; and encourage a sustainable ethanol industry. It is a very comprehensive plan to address these issues.

But the Leader of the Opposition, Kim Beazley, went one step further. I was very pleased to be with him on 7 March 2006 when he launched Labor’s blueprint No. 6, ‘Protecting Australia from the threat of climate change’. That blueprint contained Labor’s green car challenge to industry. It started from the fact that 18 per cent of new cars in Australia are bought by federal, state or local government. It stated very clearly that, if the Australian car industry could build a competitive, value-for-money green car, a federal Labor government would put it in the Commonwealth fleet. As Kim Beazley put it: ‘You build it; we’ll drive it.’ It was a very simple proposition using industry policy and procurement policy that is available to the Commonwealth to make sure that we restructure the Australian car industry in a way that not only ensures good outcomes for the environment and lower fuel bills for Australian families but also ensures good outcomes for the Australian economy and Australian jobs.

It is a fact that Australia has, by and large, produced six-cylinder cars that are powered by petrol. The world has moved on. The world is very much diversifying its motor vehicle production and use. That is why Labor’s green car challenge is so important. It is a great example of Labor leading the way in innovation. It has the support of the Australian Manufacturing Workers Union, which covers the workforce in the motor vehicle industry. They know that, if you stand still while the rest of the world is moving forward, you get left behind. Yet here we have a failure by the Commonwealth government to do anything about this issue.

Having an Australian-made car that is cheaper to run and cheaper to buy simply makes sense. Have a look at the figures on the waiting lists to buy hybrid cars in this country, and at what has occurred in the United States car market. The biggest increase in sales there last year was for the Toyota Prius, a hybrid car. Even in the United States, known as the gas-guzzling capital of the world, they are turning towards these forms of vehicles.

We need to encourage that innovation, and Labor’s green car challenge would certainly do that. As Kim indicated in that speech, we also would work with the states and private fleets to guarantee that there was a market for those Australian cars that could meet cutting-edge environmental standards. So, on the one hand, you have Labor putting forward a comprehensive plan on fuels and a plan for a domestic green car. What do you have on the other hand?

My colleague, the member for Throsby, the shadow parliamentary secretary for the environment, wrote to the Special Minister of State about her own car: could her car, when it was renewed, be one which was converted to LPG fuel? And just one month ago the member for Throsby, Jennie George, got a very disappointing response indeed from the minister. The minister said in that letter dated 13 July 2006:

Further, cost benefits are only achieved in most cases where vehicle travel is in excess of 50,000km, and this is outside the standard usage pattern of the Commonwealth’s fleet.

In addition, mandating the use of LPG fuel for all Australian Government vehicles would be inconsistent with the Australian Government’s recent support of the use of ethanol-blended fuels and be contrary to existing industry development initiatives, due to the limited number of vehicle manufacturers offering LPG powered vehicles.

That was the response of the minister to the member for Throsby’s suggestion that the Commonwealth use its position in procuring vehicles—using industry policy, essentially—to make sure that the Commonwealth fleet was powered by LPG fuel. That was the practical suggestion put forward by the member for Throsby and rejected by the Special Minister of State.

That stands in stark contrast to the Prime Minister’s statement of yesterday. Yesterday, he spoke about LPG and how important LPG was for the future of the Australian economy and of Australian fuels. And that contradiction, I think, led to a very sorry performance in question time today, where the minister, inexplicably, continued to dig a hole further and further into the ground. He should have just said, ‘I made a mistake; we’ve changed our policy,’ and sat down. But we did not have that at all.

Mr Tony Burke (Watson, Australian Labor Party, Shadow Minister for Immigration) Share this | Link to this | Hansard source

He was digging for oil.

Peter Dutton (Dickson, Liberal Party, Minister for Revenue and Assistant Treasurer) Share this | Link to this | Hansard source

Mr Dutton interjecting

Anthony Albanese (Grayndler, Australian Labor Party, Deputy Manager of Opposition Business in the House) Share this | Link to this | Hansard source

The Assistant Treasurer has worked out a strategy; he just does not turn up for question time when we are going to ask him the first question—a very sensible strategy by the Assistant Treasurer indeed, and one he has stuck to since, because on these issues Labor is leading the way. We simply cannot allow a situation where we continue to have Australia being reliant upon Middle East oil. We have Labor leading the way because we need good industry policy, not just for the economy but for the environment. And when it comes to the use of biofuels, I want to indicate, as the shadow environment minister, that I am very supportive of an increase in biofuel use in Australia, in particular an increase in ethanol production.

There has been enormous loss of opportunity when it comes to the energy debate. We have a government that is obsessed with making small measures, taking some of Labor’s policy; a government that is obsessed with its nuclear fantasy for Australia. Yet, at the same time, it is ignoring the opportunities for Australia to be the Silicon Valley of the solar industry.

I conclude by calling on the government to revisit its decision to shut down the Photovoltaic Rebate Program which ends on 1 July next year, a program which has been well received. It allows a rebate of up to $4,000 for a solar energy system to be placed on a rooftop. Solar PV has grown by 40 per cent globally over the past five years but by only 16 per cent in Australia. When it comes to energy policy, we need support for the renewable energy industry. I commend the amendment to the House.

Brendan O'Connor (Gorton, Australian Labor Party) Share this | Link to this | Hansard source

When I put my name down to speak on the Petroleum Retail Legislation Repeal Bill 2006, there had not been statements by the Prime Minister or the Leader of the Opposition with regard to challenges for our energy industry. But it is good to see that the Prime Minister has, belatedly, responded to the petrol price crisis and—I guess precipitated by a backbench revolt—made some announcements, paltry though they are, on this matter. It seems important to every driver of every vehicle that goes through my electorate, so it is nice to see that, eventually, it became important enough for the Prime Minister to spend one half-hour considering the future of our industry in this nation. I welcome that effort. However, as the member for Grayndler and others have said, it certainly has fallen short in properly attending to the problems associated with our needs in this area.

Further, it was lifted from Labor Party announcements that were made last year and repeated throughout the course of this year. It certainly worries the opposition and, indeed, it should worry every person in this nation that this government takes so long to respond to matters of such urgency. It should concern the Australian nation that this government is so out of puff and out of touch that it has not considered these matters properly.

Mr Deputy Speaker Barresi, I congratulate you on being elevated to the important position of chairing the IR task force and I will be happy to talk with you about that at another date. It is good to see the government responding to the important issues and the adverse effects that Work Choices have already resulted and will result in. I look forward to our engagement on those matters—a bit of catch-up there also for the government.

Getting back to the particular bill before us, the Petroleum Retail Legislation Repeal Bill 2006 should have been introduced into the House some time ago. As the member for Batman rightly asserted, never has reform of the petrol retail industry been needed so urgently. The Petroleum Retail Marketing Sites Act 1980 and the Petroleum Retail Marketing Franchise Act 1980 are no longer appropriate in today’s environment. Well over half the industry by volume of sales is not covered by current legislation, and that includes the retail stores Coles and Woolworths. Clearly, the rules of market participants are not providing the necessary competition, which in the end hurts consumers. Although the mandatory Oilcode, pursuant to section 51AE of the Trade Practices Act 1974, will place industry under a common regulatory regime with some protections, reforms should also include—this was mentioned by the member for Batman—amendments to section 46 of the Trade Practices Act in order to attend to the potential for abuse of market power.

Unfortunately, this government has been stagnant in reforming this industry. This failure to reform has produced chickens—and they have come home to roost. I mention chickens, but I do not want to go any further than using it as a metaphor; I know that it has been used in recent days in this House to refer to the Treasurer. However, I think it is important to note the government’s long-time failure to respond to this industry. Let us not forget how long this government has been in power. Having entered its 11th year in power, this government cannot continue to blame its predecessors on matters of public policy. It seems to want to try to blame or to shift the blame to others, its predecessors, even though it is now into its fourth term.

Therefore, I would ask the government to start to take some responsibility. It should start to realise that it has been in power for more than a decade. It should accept that these matters have to be resolved by the government of the day—and, of course, as soon as possible. One of the problems we have is that the government has left it for so long to respond to these problems that we now have a crisis in petrol prices, which places unbearable burdens upon ordinary families.

I know that in my electorate many households are under enormous strain. Families are experiencing difficulties in using their vehicle to go to work and then using it to drop their kids off at school and at sporting events. In no way has the requirement to use the car diminished but, because of the price hike in petrol, people are facing real difficulties in meeting their ordinary day-to-day family obligations. I consider, first and foremost, that a government that is in touch with the electors, the people who voted it into power, should attend to the need of looking after the basic requirements of families—and that certainly is not happening with these price hikes.

That is not to say that these hikes were not foreseen. We have seen a gradual increase in petrol prices. We have seen a few occasions when very high spikes have occurred in the price of petrol. I accept that the government does not have full control over this situation and that there are external factors that help to determine the price of petrol. But certain things that are within the reach of government have not been implemented by the Howard government—and that is the failure.

Combined with the increase in petrol prices, which is causing an enormous burden on family budgets, there is the increase in interest rates. For a member of a family living in Caroline Springs in western Melbourne, a very fast-growing community—a very good community, I might add—wanting to get their kids off to school and then to get to work by either going back towards the city or heading towards Geelong or to other parts of west or north-west Melbourne, these concurrent increases both to mortgages and to petrol prices have caused enormous distress. By the way, these increases have already eaten up the tax cuts that were announced on last budget night, so effectively very little relief at all is now being felt. In fact, people at the very high end of the income scale may still be doing reasonably well or be doing okay because they received the much greater proportion of tax relief. However, 90 per cent of householders in my electorate received only a paltry sum, and the additional expense from the interest rate rises and petrol price hikes has certainly gone well beyond any amount they may have received in the form of tax relief as a result of that budget decision.

Clearly, there is a real failure of economic policy by the government in attending to these needs. Remember, that is coming off the back of an election campaign, when the Prime Minister looked the television camera straight in the eye—he looked at every Australian voter—and said, ‘I will keep interest rates down,’ and effectively implied that he would keep them down for as long as he was Prime Minister. We can see from the advertisements as well that he played loose with the truth by effectively saying he would keep them at record lows.

Let us remember that, firstly, there have been three interest rate increases since the Prime Minister’s government was returned. So there is already a failure to fulfil his promise. I am sure even the Prime Minister would not try to call interest rate promises noncore. I reckon he would have a hard time actually describing interest rate rises as non-core promises. He could give it a go because he has done it with other matters. We know that he quite happily disqualifies promises after the event when he fails to comply with those promises, but I do not think anyone will accept that three interest rate rises are anything other than a reneging of a commitment to the Australian people that he would not place pressure on the family home.

I do not want to distress people unduly and I do not want to create unnecessary alarm, but it will get to a point—and I see the Assistant Treasurer is at the table, and he knows this—where in certain parts of Brisbane, where the Assistant Treasurer resides, and Melbourne, where you reside, Mr Deputy Speaker Barresi, where the member for Watson resides in Sydney and indeed where I reside in Melbourne banks will foreclose and people may have to consider selling their homes. That is an awful thing. That is a dreadful thing to contemplate. If we look at the combination of petrol price increases cutting into the family budget combined with the increase in interest rates—we now know that a higher proportion of the household income is paying back the interest rates on the mortgage than was the case in 1991; we know there is now a higher proportion of household income being spent on just servicing the interest on the household home—we know that we have major problems. And the government has not attended to those problems.

The way the government has chosen to respond to the petrol prices is too little too late. But I guess you have to start somewhere. As the Leader of the Opposition said in his response, we welcome any relief. If it is stealing our ideas, we do not care. We think it is a sign of a good opposition when the government has no ideas of its own and it takes ours. We will happily accept that, because we do not care whether they are ours or the government’s, as long as they are being used to alleviate the problems associated with the burdens due to the petrol increases and the other associated increases to which I refer.

That is why there has to be a change to the way in which we use energy. We have to move away from a reliance on particular sources of energy, particularly Middle Eastern oil. It seems to be now that there should have been more done to look at the way in which we would remove ourselves from areas which are not stable and cannot provide stable sources of fuel. The member for Batman, the Leader of the Opposition and others have referred to the need to look at other sources and new technologies. Indeed, the Leader of the Opposition, in a blueprint speech last year—as long ago as last year—mentioned the need to move into new technologies. I think there should have been a much quicker response by government to do that.

When you are assessing the way in which a government is responding to these matters of national importance, it is important to see the way it is operating. You want to know whether it is sensitive enough to respond to the problem. As I said, the only reason there has been a statement this week is a backbench revolt. The only reason the migration bill—that pernicious piece of legislation, that weak-kneed legislation—was taken out of the chambers, not to be voted upon, was the backbench revolting and crossing the floor.

We have a situation where the government is in disarray and in a ditch in areas of public policy. Again today in question time the Special Minister of State, as mentioned earlier by the member for Grayndler, showed that there is a divide in the executive government about the extent to which LPG can be used to provide relief for consumers. As we know, the Prime Minister hung his little hat on the importance of bringing forward the rebate to subsidise new cars that have capacity for LPG use and also a $2,000 rebate to convert vehicles to the use of LPG. We support that. In fact, it is something we promoted. We actually suggested that a long time ago. We also suggested quite a while ago, too, that we should not have an excise apply—certainly not the excise that is coming on board to affect LPG costs in the very near future. If the Prime Minister were serious, he would have deferred the impending increases to LPG costs by not applying the excise duty to the LPG, as will be the case in a few years. So there are a number of failings.

In question time today the Special Minister of State fundamentally contradicted the Prime Minister’s statement on LPG. The Prime Minister, in his statement—and I draw your attention to it, Mr Deputy Speaker Barresi—said, effectively, that he would announce these changes and these changes would accelerate the relief for users of LPG and for people who require private vehicle use. He went on to boast:

LPG is readily available through 3,200 service stations in Australia, and nearly half of them are in regional or rural areas. It is usually much cheaper than regular unleaded petrol and diesel due to a range of factors, including concessional tax treatment.

Well, that is true. But the impression the Prime Minister left us with is that this magic wand that he was introducing, by way of a statement in the House yesterday, was going to somehow, in some way, alleviate in an across-the-board manner the problems experienced by every vehicle user in the country who wanted to take up LPG conversion—that is, those buying new vehicles or, indeed, seeking to convert their current vehicle.

The shadow parliamentary secretary for the environment, the member for Throsby, in a letter quite rightly asked about whether there was any capacity for the Commonwealth to save money and improve its environmental standing, and she also asked about LPG matters. The Special Minister of State in response to her letter said, ‘LPG fuel powered vehicles do not meet certain operational requirements of users, nor is supply of LPG readily available in all regional and rural areas.’ The Special Minister of State said—and get a load of this, Mr Deputy Speaker—‘Further cost benefits are only achieved in most cases where vehicles’ travel is in excess of 50,000 kilometres, and this is outside the standard usage pattern of the Commonwealth fleet.’ So he is effectively saying no. He is saying that, in many respects—in fact, in most respects—LPG is not going to provide the alternative source of fuel required for the Commonwealth fleet. Whether you lived in a regional or metropolitan area did not seem to qualify. If you have problems of access to LPG in regional areas, where you probably use the vehicle more often—and they suggest that you only make a benefit when you use up to 50,000 kilometres—how many people will choose to take that option?

That was contradicting the encouraging announcement by the Prime Minister that somehow the LPG plan would be the silver bullet that would solve the problems that beset the nation. Instead, we have to say that this has been a failure by the Prime Minister. This is a government out of touch and out of puff on major matters of public policy. It does not respond unless there is a backbench revolt or a backbench member crosses the floor. The fact is that this government only responds now when there is an internal crisis, internal dissent or public displays of dissent. That is the only way in which this Prime Minister seems to be operating. He is not thinking forward or concerning himself with these sorts of matters. He should have foreseen these matters many years ago, but he failed to do so. (Time expired)

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for Northern Australia and Indigenous Affairs) Share this | Link to this | Hansard source

I thank my colleague for his great contribution. It was a stimulating debate, and he has a sense of knowledge about the subject.

Peter Dutton (Dickson, Liberal Party, Minister for Revenue and Assistant Treasurer) Share this | Link to this | Hansard source

You weren’t listening, were you?

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for Northern Australia and Indigenous Affairs) Share this | Link to this | Hansard source

I listened very closely, and his acumen is to be commended. As we know, the shadow spokesperson on resources, Mr Martin Ferguson, has moved an amendment on the Petroleum Retail Legislation Repeal Bill 2006. This amendment has a number of parts, which I will go through in my contribution. In brief, it goes to six proposals. Firstly, it calls on the government to require the Department of Industry, Tourism and Resources to report to the parliament annually, commencing August 2007, on a number of measures to do with market penetration of ethanol and biodiesel, LPG and CNG; to invest in biofuels, LPG and CNG production and supply infrastructure; and to invest in new alternative transport fuel industries. Secondly, it calls on the government to review in 2009 the proposal to introduce excise on ethanol and biodiesel, and LPG and CNG in 2011, and consider whether or not there is a case for delaying the introduction of the excise, depending on the progress made in a number of areas.

It then criticises the government for its tardiness in moving on petrol retail reform and calls on the government to immediately conduct a feasibility study into gas to liquid fuels in Australia, and I will come to that later. It calls on the government to immediately embrace Labor’s fuel blueprint proposal to (1) make alternative fuel vehicles tariff free, cutting up to $2,000 off the price of current hybrid cars and (2) grant tax rebates for converting petrol cars to LPG. It calls on the government to immediately embrace Labor’s fuel blueprint to find more oil and gas by re-examining the depreciation regime for gas production infrastructure and to allow the selective use of flow-through share schemes for smaller operators.

During his contribution to this debate yesterday, my colleague the member for Hotham made mention of the fact:

The government continues to claim credit for freezing petrol excise.

Those of us who were in this parliament when the government first proposed the GST would remember that it was Labor that exposed the government’s folly that the GST would lead to cheaper prices. Of course, it never happened, not even before the impact of increasing world fuel prices. The freezing of the petrol excise was forced by public pressure on the government to act following a campaign spearheaded by Labor.

Recall again the back-stepping that occurred just prior to the introduction of the GST. The government’s proud boast at the time that fuel would be cheaper under GST was changed to the limp statement that fuel need not increase in price as a result of the GST. As I am sure you will recall, Mr Deputy Speaker Barresi, they said that they would reduce the excise by 7c a litre to compensate for the GST. If it was compensation, why is it that Australian motorists are now paying higher fuel taxes? As my colleague the member for Hotham said, the impact of the GST at the time of its introduction was only zero when petrol was priced at 69 cents per litre. When the GST was introduced, the price of fuel in my own electorate of Lingiari was already over the dollar mark. That was only in the larger populated areas of the electorate; in the more remote parts they were paying considerably more, as is the case today. Motorists in Lingiari and other parts of remote Australia—in the north-west of Western Australia, the far north of South Australia and western Queensland—know very well just how much extra fuel tax they are paying as a result of decisions taken by this government.

This government has never been able to deliver on its guarantee that petrol prices would not rise because of the GST. Not even the introduction of the Fuel Sales Grant Scheme, which was designed to provide savings of up to 3c a litre for consumers in regional areas, gave any relief. Now the Fuel Sales Grant Scheme is gone. To be quite frank, motorists in remoter parts of the electorate of Lingiari would not notice the difference. Indeed, I think that would be true of many parts of regional Australia, especially in some parts of my electorate where they could be paying $2.50 or even $3 a litre for fuel, or even in the main towns, where they are paying up to $1.70 a litre. As for the revenue saved by scrapping the Fuel Sales Grant Scheme, the government says it will go to roads. Motorists are not holding their breath waiting for the $810 million saved from the scheme going to roads in rural and regional Australia. Like the great many infrastructure needs in remote parts of Australia, they will believe it when they see it.

I have spoken on and on in this place about the failure of this government to address the road needs of rural and remote Australia. I have particularly raised my concerns about the failure of this government to provide adequate resources for roads for people who live in remote Aboriginal communities—on land which is not incorporated under any local government scheme—and for roads that link communities that might traverse through cattle properties and are major economic links for many people in the Northern Territory and other parts of Northern Australia. These roads need considerable work. In the case of the Northern Territory, there are between 8,000 and 9,000 kilometres of these roads, none of which are kept up to a standard that you would believe to be appropriate. There are many places in the Northern Territory, as I have said before, where the roads are out for six months of the year.

The promises of this government when they are made are not made or directed towards the people who live in these far-flung regional and remote areas. Generally speaking, the promises made in this place by the government in relation to relief for regional Australia are made to address relief to named National Party electorates and some Liberal Party electorates in regional parts of Queensland and New South Wales.

We know, despite what they say and despite what arguments might be put forward by the Prime Minister or the Treasurer, that the GST is nothing but a tax on a tax in relation to petrol. That is something that this government said—promised, indeed—would not happen. As we all know—a basic understanding of pricing would tell you—the GST gets larger the higher the price. This is true of petrol as it is of anything else. It is a new form of tax indexation. There is no point in seeking virtue by freezing the excise when the GST is a movable feast and moving ever upwards.

Since introduction of the GST in July 2001, the price of fuel in my own home town of Alice Springs has increased by 42 per cent. The total tax on fuel for the corresponding period in Alice Springs has seen a 17 per cent increase. This increase has been due to a reduction in excise but an increase in GST. The Prime Minister gave a summary of this increase in question time yesterday. He admitted that the GST take on fuel had increased over time, but he could not bring himself to say—he conveniently forgot, as members of the government continually forget—that, while the GST has increased for all Australian motorists, it has increased to a greater extent for motorists in regional and remote Australia, because they pay more for fuel. I spoke inside and outside this chamber time and time again prior to the introduction of the GST—and have many times since its introduction—on its impact on rural fuel prices. I will say it again: remote communities in this country pay the highest fuel prices and pay more tax than motorists anywhere else in the country.

During the winter recess I travelled to a number of communities in my electorate. A month ago in Borroloola the price of unleaded fuel was $1.63 a litre. That equates to extra GST of around 9c. Down the road at Cape Crawford the price was $1.72 a litre. That equates to extra tax due to GST of around 9½c. I also travelled to Urapuntja—better known to some as Utopia—and paid $1.75 a litre. That equates to nearly an extra 10c on GST. Even down the spine of the Northern Territory on the Stuart Highway things were not greatly different. In smaller communities like Tennant Creek and Elliott, the price of unleaded is similar to that at Borroloola at around $1.62 a litre.

We love the grey nomads. They spend a lot of money in the Territory and a lot of money in regional Australia, but travelling up north from down south as they do at this time of year they will no doubt know the impact of the GST as they go to fill up their vehicles to tow their caravans. They will understand, as the government clearly does not, the additional costs that are suffered by people living in remote Australia as opposed to those living in capital cities and will come to the conclusion very quickly that you pay more tax in the bush than you do in the city.

I could go on about this, but remember that all of these increases in total tax factor in that fuel excise has been reduced since 2001 by 7c and that its indexation was abolished early in 2002. So much for the government’s claim that the GST would reduce fuel prices. Now the government argues that the total fuel price increase has been primarily due to circumstances beyond its control. Granted, this may well be the case, but it is no excuse for the government to sidestep the increasing tax factor in current fuel prices. It remains to be seen if the regulation of industry conduct through the industry code and the Oilcode, and the repeal of the sites act and franchise act, will have any substantial benefit to consumers, particularly in remote parts of Australia. I will say, because I know, that in Alice Springs the number of outlets has been reduced over recent years. Three have closed down and one new station has been set up, operated by a major supermarket chain. I fear for the loss of competition and the impact on price competition in the long run.

Hopefully, the introduction of the Oilcode will ensure all participants, including independents, are subject to the same regulatory requirements, including a nationally consistent approach to terminal gate pricing. However, the reality for many in my electorate is that they have no choice at all. They are at the mercy of the one pump in their community, most often provided by the community store, not a one-stop service station for all your fuel and motoring needs. These community stores do not have the turnover to buy substantial quantities of fuel and to pay to have it delivered the long distances. Consumers then pay the highest taxes on a litre of fuel of any Australians, and in most circumstances these are the poorest of Australians. I am disappointed that the Prime Minister did not mention that yesterday when he acknowledged that the GST had led to higher fuel taxes than those that existed at the time his government introduced the GST.

On the issue of the government’s response to soaring oil prices—to provide tax-free grants to motorists to convert their vehicles to LPG—I would like to make a couple of comments. It is not often I agree with a radio commentator, particularly John Laws, because I make certain I do not listen to him, but I have listened to him in the last day or so. I think he was right when he pointed out today that subsidising conversions discriminated against people with older and cheaper cars, as they do not see the point in paying the difference of the conversion costs. Many people in my electorate, who are, as I say, the poorest of all Australians, buy the cheapest motor vehicles because they do not have the financial resources to buy new cars or even quality second-hand cars.

I did a quick search of the motor fuel outlets on major roads and found 3,200 LPG outlets in regional Australia. In my electorate I looked at 29 service stations; only 17 had LPG. If you happen to live in Borroloola, forget it—there is no LPG. At Nhulunbuy, a town of 4,000 people, there is no LPG. If you drive up and down the Stuart Highway you find that there are many roadhouses that do not have access to LPG. I am not quite sure what the Prime Minister was proposing in trying to promote these new service stations providing LPG, but I can say that currently in large areas of the Northern Territory you just cannot access that fuel.

Forty per cent or thereabouts of my electorate live in remote communities. If they are lucky they have a community store that operates a petrol bowser. We know that, by and large, they do not have any access to LPG. Of course, my point here is that the government policy to reduce reliance on diminishing petrol and diesel by encouraging conversion to LPG faces a snag—access for motorists who live in remote areas. As there are limited LPG suppliers there is no incentive to convert vehicles. The lure of a subsidy for a new or used car conversion means, by and large, absolutely nothing. In responding to Mr Laws, the Prime Minister claimed that, while grants were not the complete solution for people feeling pain at the pump, it was offering some relief. He said:

It is doing something at the margins to help, I suspect, a reasonably large number of people.

The Prime Minister must know—and his ministers and members must know—that, once again, it is rural and remote Australia that will wear the burden of ever-increasing fuel prices due to the lack of access to the cheaper LPG. Not satisfied with fuel taxes for regional and remote Australians increasing to levels higher than those that exist in the cities, the Prime Minister has now turned his back on the bush by offering assistance to a reasonably large number of people and forgetting those at the margin, where fuel prices are highest.

My colleague the member for Hotham said yesterday:

What can be done to ease the price differential between city and regional areas and ease the burden on regional motorists?

He pointed out that the Prime Minister says that the solution is through direct tax cuts. But the member for Hotham was right on the money when he said:

The trouble with this response is that the government has increased the price of petrol in regional Australia ... with no compensation in tax cuts for people living in those areas.

As I have said time and time again, and I repeat it here today, there needs to be an understanding in this place—and I do not think there is; in fact, I am sure there is no understanding—of the costs that people who live in remote and rural Australia are asked to bear. They are paying more in indirect tax on petrol, and they do not get any more than metropolitan areas in tax cuts. It is about time we had a targeted tax rebate for regional Australia. We could do that with a bit of creativity and inventiveness and if this government came down with proposals which address the needs and concerns of people who live in the bush, as it should do, and not just those people who live in the Prime Minister’s electorate.

Peter Andren (Calare, Independent) Share this | Link to this | Hansard source

I want to speak on a couple of matters pertaining to the Petroleum Retail Legislation Repeal Bill 2006 and to the Prime Minister’s announcement yesterday. Firstly on the matter of this bill, the long-heralded Oilcode is the issue of transparency. Prima facie, it seems to be the direction to which most people have been arguing for many years. But in looking back at the debate in 1998, when the repeal legislation was first introduced, I was concerned at that point, and I remain concerned, about the impact of the abolition of these pieces of legislation, irrespective of the introduction of the code, on the smaller service station operators, particularly in towns and villages outside the interests of the major operators, and particularly the supermarkets.

I took note of the member for Kennedy’s comments in this debate last night. Those wonderful words ‘competition’, ‘competition policy’, ‘transparency’ and so on have effectively brought about a concentration of market power. Supermarkets, perhaps here with the oil companies, are forcing out the smaller suppliers, the smaller garage, workshop and all of those job opportunities that the petroleum industry has traditionally offered in smaller country towns.

On the LPG conversions and the Prime Minister’s announcement yesterday, it remains to be seen whether these initiatives really will convert us to liquid petroleum gas. I note today concerns that the scheme will reward owners of large, gas-guzzling cars with a subsidy from taxpayers who do the right thing by buying small cars or, in the city, catching public transport. There has also been concern expressed to my office today from those who have already invested in the LPG conversions. It is a substantial expense, and they are wondering whether there is any retrospectivity in this process. I think not.

Buyers of new cars will receive a $1,000 grant while second-hand cars will be eligible for a $2,000 grant towards the cost of conversion to LPG, but the money has to be paid up-front. This is not possible for those people of limited income and means, who perhaps have the need to save whatever they can on their fuel bill. The member for Scullin talked last night of the metropolitan experience, where those from the outer suburbs of Melbourne, and no doubt in other major cities around Australia, are more often the ones living in the most affordable homes and the ones who need the biggest financial break they can obtain. They are the ones travelling the furthest, whereas those living in the inner cities with their big homes, and no doubt big cars, are able to take advantage of this without any financial pain.

It begs the question, among other things: where are the public transport initiatives for the cities? We cannot leave it all to the states. Sure, they should be spending far more, but we see now the states at least re-examining an old axiom of economics—that is, it is not a negative thing to borrow for infrastructure that will be paid off by future generations. But they should not be borrowing for tunnels and grand flyovers, inducing more and more cars onto the highways of our metropolises in particular.

And therein lies a very sound argument that the Prime Minister has well documented—that is, this easing of the cost of private transport in private cars should not be encouraged by reducing the excise on petrol. It should be used to encourage the introduction, through biofuels, ethanol and other means, of a cheaper additive to our petrol supplies that will give a win-win benefit to the environment and to those who purchase that product. But I do not see anything in yesterday’s package to suggest that, by not mandating the use of ethanol, we are going to go anywhere near satisfying an environmentally sound outcome.

The Prime Minister says the government may look at ways of mandating the availability of cheaper ethanol blended fuels—whatever that means. He does not say, ‘Because through some ideological position you do not mandate anything in this world.’ I think there is finally a recognition in this place of the situation with global warming. I had members around me in the last few years who severely questioned the veracity of the argument about global warming. I heard some members—I will not say exactly where they sit in this place, but they are still around—daring to say that the whole global warming plot was a figment of the scientific world’s imagination and that it was just one of those cyclical things that occur on this planet as time goes by. But they did not explain why it is that since the industrial revolution we have had a gradually increasing global warming that has accelerated to such a fantastic degree in recent years, and it is only going to get exponentially worse with the bringing on of the demand for motor vehicles in India and China, fuelled by their massive growth in GDP.

It is a huge crisis. This initiative by the government is a very hastily arranged package—as we saw today in question time, I would suggest—to try to head off flak about the increasing price of fuel. I do not think any government should offer any hope that there will be a reduction in fuel prices in the years ahead. The government should take the issue firmly on the chin. It should take the electorate into its confidence and say, ‘There will be some tough questions asked and there will be some tough policies here.’ Part of that toughness should be to mandate the inclusion of bio-friendly fuels, ethanol and others into our fuel chain, with the full price benefit passed on and not gouged back.

The member for New England detailed in his contribution to this debate how the oil majors get the headlines and say: ‘How good are we! We are offering this discount,’ yet they are quietly gouging it back at the retail outlet. More often than not, those independent operators have been prepared to carry the ethanol flag for so many years now, believing in it as a product in rural areas in particular that is part of an answer to our decline in rural economies. I hinted at this in a question today, where Cowra is looking down the tube at the closure of its abattoir and the loss of a couple of hundred jobs. This has been brought about by the extensive drought and the fact that stock numbers are down significantly. Maybe, just maybe, down the track there will be an abattoir industry of the proportions we have seen in the past but, unless there is a buyer for Cowra—and it is looking fairly bleak—those workers will be on the rack.

There are other industries in the town of Cowra. One is the Windsor Farm Food organisation, which is desperately hanging out for an answer from the Minister for Justice and Customs on an interim excise that has been applied to an imported Chinese mushroom product, which it claims is being dumped—and any fair judgement of it would suggest it is being dumped. It is being put on the shelves by whom? By the major supermarkets, as a generic brand and at far below the cost that Windsor Farm can turn out the product. The gouging of the market by the foreign supplier has led to the closure of the tin-plate manufacturing plant on the South Coast, which produced the cans for Windsor Farm to put its product in. Because Windsor Farm’s production has fallen through unfair competition from offshore—along with others in the market—we have lost another industry. This cannot go on forever.

There are two furniture manufacturers in Cowra, and the abattoir and Windsor Farm Foods, which are all in very tenuous circumstances. They would argue, quite fairly, that products are being dumped on the Australian market, and they are finding it very hard to get the government or trade ministers to argue at a world forum that they are faced with unfair competition. Surely the ethanol industry is but one that offers a strong alternative—one that we should encourage through a mandate. As the member for New England pointed out following his recent study trip, it is mandated in states throughout America. There is also the Brazilian example, where something like 30 per cent of ethanol goes into the fuel chain.

The fuel companies have strangled the ethanol process in this country because they control the outlets. Coming back to the bill, there is nothing to suggest that anything other than further control will occur. I am mindful of the arguments as to why this act may result in a more efficient industry, as many have said, but I am also mindful of the fact that the repeal of the franchise and sites acts is likely to result in some other concerning outcomes, such as franchisees being likely to lose from this restructuring. The number of small businesses will inevitably diminish.

I am constantly brought back to the words of the Motor Trades Association when they said to me and my Independent colleagues—and they told the Senate inquiry—that the outcome of these changes will result in the closure of more small, franchised and independent retail outlets in rural and regional areas. Motorists will have to drive long distances. There will be increased dominance by the retail petroleum market, increased dominance by the supermarket chains, a loss of competition in the retail and wholesale markets as independent importers struggle to find sufficient retail outlets. It will be detrimental to motorists in the long term as smaller competitors exit the market and so on. The consumer may finish up with a cheaper product, but it raises the question: are we heading towards one-stop shops, one-shop towns, newsagents and chemists as well?

I am mindful of the Blayney BP independent petrol station, where I often fill up my car. The owner points out that the retail price of their petrol cannot compete with that of stations further down the road in the big regional centres. It is not only the petrol that is an issue. Once petrol station owners decide that they cannot make enough from the petrol, they shut their doors, and that affects the garage, the mechanic and the apprentice—that whole unit which is so important to the social and economic fabric of many country towns.

Cheaper petrol, yes—but at what cost? There is a need to control market share of supermarkets not only in retailing, I would suggest, but in other areas too, including petroleum—as the member for Kennedy outlined in his contribution, when yet again he spoke of the US antitrust measures that have been in place for such a long time to control the influence and power of the major retailers in that country.

I could say a lot more about this, but I will just say this: the supermarket chains account for about half of Australia’s retail petrol sales, yet they do not fall under current legislation. It could be argued that it is important that we standardise the industry to that extent. It is no small irony that the two other majors that are not connected with the supermarkets are being squeezed by the very competition of the supermarkets. It is all right to say that we are going to even out the competition between the four majors, but we are lifting the whole competition debate to another plane, where we now talk about ‘the big four, plus the two’—the supermarkets—or ‘the big six’, if you like, in petroleum. It seems as though we are now forever to close the door on the smaller, independent operators, who I argue are very important to the economic fabric of smaller communities.

Finally, the question is no longer whether global warming will occur or whether its cause is largely due to the human activity of burning carbon in oil refining, power generation and car emissions. Even the world’s largest denier, the US government, now acknowledges it as fact and its causes—something the world’s scientific community has been shouting from the rooftops for decades. It seems that we now have consensus in this place that global warming is not a figment of Steven Spielberg’s imagination. However, the question now is: by how much is it warming, and what results will it bring?

I am not satisfied that the government’s hurried LPG fix or any of the other initiatives it outlined yesterday will go anywhere near curbing our petrol addiction. I am not convinced that they will go anywhere near providing a viable alternative energy process, whether it be for fuelling vehicles for transport or for power generation. While the extension of the solar subsidy to remote communities is welcome, it should be part of a process that is extended to the entire country. I am also not satisfied, as I have said, that in the long run this legislation will be in the best interests of smaller, independent operators or of rural motorists. I am not satisfied that the government’s energy package will benefit those most in need of a break either in price and access to fuel or in operating smaller rural outlets and workshops.

I support the second reading amendment for the substance contained therein, particularly around the Trade Practices Act. It should have been introduced as a cognate bill with this legislation, so important is it to implement the Dawson and Senate recommendations. So the amendment has my support. But I have grave reservations about the impact of this legislation on smaller rural operators. I will certainly look with interest at any amendments that might be moved in the other place that would further protect the interests of those operators.

Kim Wilkie (Swan, Australian Labor Party) Share this | Link to this | Hansard source

I am delighted to add my voice to those of my colleagues who have spoken on the Petroleum Retail Legislation Repeal Bill 2006, and I endorse in particular the approaches taken by the Leader of the Opposition and the members for Batman and Hunter in their speeches on the bill.

Unfortunately, the bill as put forward by the government highlights the government’s failed approach to petrol retailing in that it has taken so long for the government to act on these issues. Yesterday, we had the unedifying spectacle of a rattled Prime Minister cobbling together a hasty reaction to the fuel issue in an effort to shore up his support amongst his frustrated and angry backbench—and his backbenchers are justifiably angry. They have been telling the Prime Minister, the Deputy Prime Minister and the Treasurer for months that rising petrol prices are causing pain throughout the country. But the Prime Minister has been blithely telling them that it is not his fault, that the cause of rising prices is tied up with overseas oil and that there is nothing he can do—that is, until yesterday.

Yesterday the Prime Minister announced a range of measures to alleviate pressure coming from the issue of petrol prices, and he pinched a number of ideas from the Australian Labor Party. We do not mind that. We are big enough to take that and to congratulate the Prime Minister on taking our ideas on board. But, unfortunately, the government has not taken up all of our policy suggestions for fuel independence, which the Leader of the Opposition announced in his blueprint on fuels last October.

The government has at last adopted Labor’s policy to subsidise the conversion of cars from petrol to LPG and the guaranteed supply of LPG from a network of distributors. Unfortunately, this approach is likely to be compromised by yet another Howard government failure—our skills shortage. The subsidy will increase demand on an already overstretched industry in terms of conversions. As the Leader of the Opposition pointed out yesterday in the House, in Western Australia there are no conversion workshops in Karratha or Port Hedland, so vehicles must be sent to Perth for conversion, which alone costs $750.

Given the government’s track record on fuel taxation, there are also no guarantees that it will not be mean and tricky again and at some stage increase the tax on LPG. I know that members do not need to be reminded that, in the last parliament alone, the government changed its mind three times about the excise regime. In fact, it was not that long ago that I remember the Treasurer sneaking in an excise rise in the rate of LPG in a budget. There was such outrage from industry—and also taxidrivers, strangely enough—about what was being proposed that almost overnight the conversion industry went broke. Tank manufacturers were going out of business because people were not converting to LPG, and the government had to do an automatic backflip, so to speak, to try and reverse some of these trends. Here we are, and the government has come full circle and agreed with Labor’s philosophy that we need to subsidise people who take up the option of converting their cars to LPG.

There is a very important ingredient of any sensible response to the fuel crisis, which the Prime Minister has again squibbed. He keeps telling us that the ACCC has the powers to monitor retail fuel prices. That is true, and the ACCC does that on its website. But it should have the power to formally monitor petrol prices at the terminal gate and to obtain all information from refiners, wholesalers and major retailers and conduct other investigations into rising petrol prices.

One of the amendments we seek to the Petroleum Retail Legislation Repeal Bill is that section 46 of the Trade Practices Act be strengthened to provide greater scope for dealing with abuse of market power. The amendment we seek to this bill, as explained by the member for Batman last Thursday, would enable sharper and better monitoring of petrol prices; the evaluation of the market share and new investment potential for other fuels such as ethanol, biodiesel, LPG and CNG; the evaluation of the availability of those other fuels around Australia; the examination of excise arrangements for other fuels; the review of the trade practices framework for petrol marketing; the investigation of the feasibility of gas-to-liquids fuel plants in Australia; the examination of resource rent taxation arrangements for the gas field developments; the consideration of infrastructure investment allowances for investment in gas-to-liquids infrastructure; the development of a funding scheme for R&D into alternative fuels; alternative fuel vehicles to be tariff free; tax rebates for converting petrol cars to LPG; and the re-examination of the depreciation regime for gas production infrastructure. These are all important ingredients in the Labor Party’s approach to the fuel crisis facing Australia today.

Political reality decrees that it is difficult for governments to accept the policies put forward by oppositions. I would be naive if I thought that the situation could be any different for fuel policy, but I commend the amendment put forward by the member for Batman as a sensible and positive framework which would enable all realistic options to be examined and considered in a constructive way. It would be good for all Australians if the government could for once forget its pride and adopt the approach outlined by the member for Batman. But I know that this is pie in the sky for this government.

There are no simple fixes to the problems we are facing as a nation as we deal with the impact of higher fuel prices on family budgets and on businesses. The insidious aspect of fuel is that it is an input to just about every service or good produced in Australia. That is why increases in fuel prices underpin inflationary pressures throughout our economy and, indirectly, rising fuel prices ultimately impact on interest rates. So fuel prices hit families and businesses directly, but they also have pernicious impacts indirectly through their impact on interest rates. That is why so many Australians are hurting at the moment. The truth is that the pain that they are experiencing could have been avoided.

This bill repeals the Petroleum Retail Marketing Sites Act 1980 and the Petroleum Retail Marketing Franchise Act 1980. These acts are no longer effective, as they cover less than 50 per cent of the petrol retail industry by volume of sales. The Oilcode, which will be introduced as a mandatory industry code under section 51AE of the Trade Practices Act, will bring the whole industry under a common regulatory regime. This is sensible and appropriate. The Oilcode will improve the protections available to commissioned agents and independent operators, who currently do not have the protections afforded to franchisees. Both franchisees and commissioned agents will also have access to low-cost dispute resolution schemes for the first time.

As I said before, it is essential that section 46 amendments to the TPA are made to address outstanding concerns about the abuse of market power. I understand that the government has agreed to these changes, to be made in other legislation to be introduced into the parliament at a later date.

The introduction of the Oilcode is an important improvement to petrol retailing, and it is a reform which is long overdue. Since its election in 1996, the government has been talking about the need to reform petrol retailing—long on talk, short on action until now. Unlike the government, the Labor Party knows that national leadership is needed to develop an agenda for the use of those fuels which will become cheaper in the future. This agenda is neatly summarised in the amendment moved by the member for Batman. This agenda is necessary and, as I said, long overdue.

At community forums and morning teas throughout my electorate of Swan, one of the most often discussed topics is the fuel industry and the outlook for petrol prices. People know that the price of petrol is fundamentally determined in the international marketplace. They also know that we are too dependent on petrol and that it is sensible to explore the feasibility of adopting other fuels. They want to see action on this front as a matter of urgency. Families and businesses in my electorate are hurting because of higher fuel prices, just as they are in most electorates in the country. I say ‘most’ because, according to the member for Wentworth, these issues are not hitting so hard in his own electorate. But, in electorates in the rest of the country, as members of parliament we all know that people are feeling the pain of higher fuel prices on a daily basis. They know that the government collects almost 40c of the price of each litre of petrol. They want relief.

Many members will recall the early months of 2001, in the immediate aftermath of the introduction of the GST. The government lost a by-election in the seat of Ryan, up in Brisbane. The reason for that loss was the bad publicity the government was receiving for what was perceived as a swiftie it pulled when the GST was introduced. I know that you will recall, Mr Deputy Speaker, that when the government introduced the GST the excise on fuel was supposed to be adjusted in full so that the price of petrol did not rise, but in reality that did not happen. The government provided some part of the necessary adjustment but not the full amount. This swindle became very apparent to Australians, including the voters of Ryan, and so it was not surprising that they voted against the Liberal candidate in numbers sufficient to cause the government to lose the seat.

As the Liberal Party did the usual navel gazing after the by-election loss—and the previous drubbing which the coalition received in the Queensland state election—members may recall that a curious document came to light. It was the infamous ‘mean and tricky’ memo written by former federal Liberal Party president Shane Stone to the Prime Minister, which was leaked to the doyen of the press gallery, Laurie Oakes from Channel Nine. According to Mr Oakes, one of the major points of the memo was to do with the introduction of the GST. ‘We have just been too tricky on some issues’, said Mr Stone with regard to the GST on caravan park fees, beer and fuel. In terms of the impact of the GST on fuel, it was the government’s failure to honour its promise that the excise would be fully adjusted to ensure that the introduction of the GST did not lead to a rise in petrol prices that did the damage. Once again, the words of the then Liberal Party president are proving true in the way in which this government approaches fuel policy.

There is currently an inquiry being conducted in the other place into petrol prices and there is a submission to the inquiry by the Motor Trades Association of Australia, the MTAA. It makes interesting reading and I commend it to members. In its submission, the MTAA explains the very complex formula used to calculate the wholesale price of petrol in Australia, which then, of course, determines to a large degree the Australian price of petrol at the bowser. Import parity pricing means that the wholesale price of petrol in Australia is determined by making adjustments to an ‘international benchmark price of refined petrol’ set in Singapore for Australian fuel standards, wharfage, freight and insurance. This calculation is made in US dollars, which then have to be converted into Australian currency. This means that exchange rate changes can have a significant impact on the retail price of petrol.

One question which often comes up in discussions about petrol is: where is the advantage to Australia from having our own oil and gas fields? Obviously Western Australians are acutely aware of the huge expanse of oil and gas fields in the North West Shelf. The argument often put is that if we refined our own crude oil in Australia we would not be paying a price which is determined internationally. Obviously the oil companies have argued successfully that in order for them to invest in exploration they must be able to charge a higher price for petrol to make that investment worth while. Fair enough. But the international benchmark price is based on the cost of refining oil in Singapore, not Australia. The MTAA submission calls for the ACCC to undertake a complete review of the international benchmark price, including how the Singapore price is set. Such a review could also highlight the components of the wholesale price in Australia at the terminal gate. As I said, the MTAA submission is worth reading and it raises some very salient questions.

Just looking at what has gone on in my own electorate in terms of petrol prices, the increases are stark. According to FuelWatch in Western Australia, since January 2006 petrol prices in metropolitan Perth have increased by 40 per cent. That is a huge impact on family budgets by anyone’s reckoning. The government’s tax cuts do not compensate for the petrol price hikes, let alone the recent interest rate rises. The impact on businesses, especially small businesses with tight margins, is also severe. My message to the families and businesses in Swan is this: Labor will deliver a practical and comprehensive approach to fuel and we will leave no stone unturned in assessing the viability of alternative fuels. As outlined by the Leader of the Opposition in his blueprint last year, the Labor Party’s approach is to develop existing alternatives, such as liquid petroleum gas, ethanol and biodiesel; emerging alternatives such as compressed natural gas, liquid fuel from gas and stored electricity; and future fuels, such as hydrogen. These steps will stand us in good stead as we seek to protect Australia’s interests in the wake of rising fuel prices.

The Prime Minister knows that his government is suffering as a result of rising petrol prices, and now he is scrambling for initiatives to make it look as though the government is on top of this issue. Anyone watching the Prime Minister’s demeanour this week will at last know that he is rattled. It is not just because of the courageous stand taken against him by the members for Kooyong, Pearce and McMillan, as well as the abstentions of the members for Cook and Forrest and the strength of Senator Troeth. His rattled visage is also due to the fact that the government is clearly on the back foot with regard to petrol prices and interest rates. I call on the Prime Minister and his tired government to look at the petrol price issue objectively. If there was ever a time for the government to take a lead from Labor, it is on this issue. The government is demonstrating that it has run out of steam, and, thanks to the Leader of the Opposition and the members for Batman and Hunter, quite clearly Labor is setting the agenda.

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

Just before going to the next speaker I note that I think the member for Swan meant that the member for Mallee, Mr Forrest, abstained.

Steve Gibbons (Bendigo, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Petroleum Retail Legislation Repeal Bill 2006 and to indicate my support for the amendment moved by my colleague the member for Batman. Before I go any further I would like to correct some of the anomalies put forward by those opposite—or the very few speakers opposite who have actually spoken on this bill—about Labor’s attitude towards ethanol blended fuel. Labor, it is true to say, has had some major reservations about ethanol blended fuels and expressed those reservations a couple of years ago when the issue first became apparent in this parliament. It did so with good reason. At that time there were situations where a lot of unscrupulous distributors and retailers were artificially putting in ethanol and acetone or paint thinners into petrol or unleaded petrol to try to enhance their profits and increase their margins. It is quite illegal and potentially quite dangerous.

I have had some experience with the use of ethanol as a fuel. In my youth I was involved in competitive motorcycling and we used to use 100 per cent ethanol in those motorcycles because it enabled us to use engines with much tighter tolerances and clearances. The fuel burnt much cooler and enabled us to get more power from those particular engines. But there was a downside: the fuel had a very short shelf life. If it was not extracted from the machines, it used to form a gel-like substance, like wax. That could clog the carburettors and render the engines inoperable. It was very dangerous. If it was to be put into automobile engines in larger quantities—and, remember, the government was not advocating a 10 per cent ceiling on ethanol in those days—and do the same thing, it could render those engines inoperable at the worst possible time and perhaps cause an accident. It is potentially dangerous but certainly lethal. Unleaded petrol is also used in marine engines. If you are in a boat five kilometres off the shore of the coast of Australia and that situation happens, it is very dangerous.

It is more dangerous in aircraft engines. The Rotax engine, for example, is designed to run on unleaded petrol. If it had a fuel mix of higher than 10 per cent, the very same situation could occur. That is what I am advised by some of the experts, and I am certainly not one of those. So that was the reason for Labor’s opposition to ethanol in fuel at that particular time. I am told by the experts that a 10 per cent blend would be quite sufficient to enable most modern automobile engines to run quite successfully. So let us have no more of this nonsense from those opposite about Labor’s attitude to ethanol blended fuels.

Labor will never allow major oil companies to drive any competition out of the market. Australia needs an independent fuel retailing sector that will prevent the major oil companies, and their partners such as Coles and Woolworths, from dominating and controlling the market. That is precisely what this bill is all about.

Labor is supporting and amending this bill on the basis of the government’s so-called commitment to change the Trade Practices Act, something it failed to do in yesterday’s prime ministerial statement on the energy crisis. Competition in the fuel retailing sector cannot occur unless we have a stronger Trade Practices Act designed to encourage competition and discourage less than ethical behaviour by those who seek to dominate particular markets. There can be no clearer example of the need to beef up section 46 of the Trade Practices Act, which contains the main provisions for protecting against the misuse of market power and for protecting and enhancing competition. I use the term ‘so-called commitment’ because I believe—and there is plenty of evidence to suggest—that this government is still not fair dinkum about doing anything to enhance the powers of the Trade Practices Act, especially in monitoring petrol prices and profits.

In fact, while some aspects of Labor policies have been stolen and were incorporated in the PM’s policy statement yesterday, the government has predictably stopped short of providing the ACCC with the power it needs to effectively examine current and future petrol price rises. Petrol prices are one of the three areas where the policies and/or inaction of the Howard government are wreaking havoc on ordinary Australians, especially on the residents of my electorate of Bendigo, which is already one of the poorest, if not the poorest, regions of Victoria and one of the poorest regions in Australia in terms of weekly family income.

These policies and failings have created a new and unprecedented level of insecurity throughout the Bendigo region. Firstly, the government has destabilised the region’s employees with its draconian IR legislation and its potential impacts. Secondly, the government welshed on its election promise to keep interest rates at record lows. Thirdly, escalating petrol prices are a complete disaster for low-income earners in Bendigo. Craig James, chief economist with Commonwealth Securities, has estimated that the average Australian family spends $191 a month on petrol—and this includes an increase of $30 a month since the start of this year. That is an extra $7.50 a week sucked away from motorists at the bowser.

Not only has this government failed to act on rising petrol prices; it has backed the US invasion of Iraq. The US policies since then have created the Iraq chaos that has massively slashed the production of oil in Iraq. No other OPEC oil producer has made up for this lost oil production capacity. The policies of the Howard government in support of the Bush administration are a direct cause of the high petrol prices that Bendigo region motorists have been paying at the pump.

The RACV has warned motorists to purchase petrol early this week to avoid paying up to 15c extra per litre, as petrol prices in Melbourne are likely to rise to $1.50 per litre or more over the next few days. If fuel prices reach the $1.50 per litre mark in Melbourne then regional Victorian motorists will pay much more, as is always the case. Unleaded fuel hit $1.45 per litre for the first time in Bendigo leading up to the June Queen’s Birthday long weekend. Other states that observed the public holiday experienced similar petrol price rises. It is interesting to note that, in Western Australia, where there is no June Queen’s Birthday long weekend, petrol prices remained stable.

There is little doubt regarding the evidence that suggests that motorists are being ripped off by Prime Minister Howard and Treasurer Costello, while they continue to refuse to lift a finger to help. Petrol prices differed by as much as 13c to 14c per litre around regional Victoria over the previous Easter break, and Bendigo motorists paid the highest prices for petrol. Mildura, for example, is situated 600 kilometres from Melbourne and 400 kilometres from Adelaide, yet motorists were able to buy unleaded fuel for around 13c per litre less over the Easter break than motorists were paying in Bendigo. This should prove beyond all doubt the need for an effective monitoring and investigative body to ensure motorists are paying a fair price for fuel.

What makes central Victorian motorists very angry is the varying difference between metropolitan and country fuel prices, differences that in most cases are almost impossible to justify. What makes them even angrier is that, when the world crude oil price rises, it is often reflected at the bowsers in regional Australia in two or three days. When the world price for crude oil drops, as it sometimes does, it can take up to two weeks or more to be adjusted down at the bowsers—just another reason for the coalition to direct the ACCC to effectively monitor both fuel prices and profits.

Victoria’s peak motoring body, the RACV, has labelled recent petrol price hikes in Bendigo as simple profiteering. In recent weeks there have been occasions when petrol prices have jumped by as much as 7c a litre in less than an hour, usually between Wednesday night and Thursday morning. Often the price has fallen back to the original price within hours. The Royal Automobile Club of Victoria spokesman and head of government relations, Mr David Cumming, has described such action as unacceptable. He said:

All that is doing is saying to the market I want to make a bigger margin ...

They are also saying to the market to follow them. If the other stations don’t follow, they will then put their prices back down.

Another clear example of evidence that warrants a thorough investigation by the ACCC.

There is something sinister regarding the coalition’s do-nothing attitude to rising fuel costs. They constantly hide behind the mantra of ‘its out of our control’ or ‘it’s caused by the world pricing structures for crude oil.’ Of course the world price for crude oil is a significant factor in determining what Australians pay at the bowser—no-one disputes this fact. However, the rising world price of crude oil is being assisted by turmoil in the Middle East—and, as I said earlier, the Howard government is contributing to that by being an active partner in the coalition of the willing in Iraq.

The hypocrisy demonstrated by the coalition government is simply breathtaking. On the one hand they hide behind the chant that fuel prices are solely determined by world pricing for crude oil and that turmoil in the Middle East is keeping these oil price at record highs. On the other hand they are contributing to turmoil in the Middle East by participating in the invasion of Iraq.

Adding insult to injury, regional Victorian motorists have paid a staggering $198 million more in petrol taxes since the introduction of the GST, with central Victorian motorists contributing a massive additional $22 million to the Howard government’s fuel tax rip-off. The fuel fraud was revealed at a national trucking convention in Newcastle last year when the shadow roads and regional development minister, the member for Wills, who is at the table, proved that, if the government had stuck to pre-GST fuel taxes, it would have reaped $41 billion in the previous four years. Instead, it was estimated it had collected more than $44 billion. Spread evenly across the nation, this made regional Victoria’s share of the secret Howard government windfall around $198 million and rising. And I suspect our true share of that vile amount is even more than $198 million, given that country people pay more per litre for their fuel—and, according to transport economists, make more and longer vehicle trips than city motorists. Country people are even worse affected by the secret taxing, because of the transport costs component in absolutely everything they consume. The country transport industry has every right to feel very angry about this. In his address to the Australian Trucking Convention in 2005 the member for Wills said that in 2000-01 total petrol tax revenues were $8.38 billion. In 2004-05 it was estimated the tax take would be $9.32 billion, almost a billion dollars more than in 2001.

By the end of the financial year 2004-05, the Howard government would have collected an estimated $44 billion in petrol taxes since the GST came in—$36 billion in excise and $8 billion from the GST. If the government had stuck with the pre-GST petrol tax arrangements it would have collected $41 billion, or $3.31 billion less, during this period. Even allowing for the 1.5c per litre cut in March 2001, and for revenue forgone as a result of a nonindexation of petrol excise, the Howard government is still over $3 billion better off in petrol taxes since the introduction of the GST.

The Howard government does not seem to care that its bowser rip-off is becoming worse as time goes on. It so far shows no interest in stopping this scam. The coalition government prefers to walk away from its moral responsibility to use fuel tax revenues, including GST, to fund and maintain Australia’s national highway network on a fair and equitable basis as its AusLink strategic regional roads funding program was used as a $93 million slush fund in coalition held or targeted seats during the last election campaign. It is little wonder it refuses to take any action to provide motorists with any relief at the bowser.

The Howard government claimed the GST would lead to a drop in some indirect taxes but, when it comes to petrol taxes, the GST has been used to conceal a grotesque petrol tax rip-off. Of course, the coalition hides behind another mantra: that the states receive 100 per cent of all GST revenue. Perhaps they do, but the GST is a Howard government initiative. It and it alone was responsible for initiating the policy, deciding on what basis and what goods and services it would apply, and collecting the revenue. So let us have no more nonsense of blaming the states for the GST component in petrol taxes.

There is another example of the government’s sinister motives in doing nothing to assist motorists experiencing record high fuel prices. In 1996 the government abolished the Prices Surveillance Authority, which used to effectively monitor fuel prices and profits. Of course, the Howard government regarded this agency as unnecessary, so it abolished it at the first opportunity after gaining office. Abolishing the Prices Surveillance Authority and refusing to provide the ACCC with the direction and powers it needs shows that the Prime Minister seems hell-bent on seeing motorists continue to be ripped off by excessive fuel prices while he refuses to take any action to drive prices down.

Over the past 2½ years, the annual cost of the average Australian motorist’s fuel bill has skyrocketed by more than $400. The long-term price increase was worsened by a savage increase in the lead-up to Easter that pushed fuel up to and over $1.45 a litre in some instances. If the fuel price hike is sustained, and the 2006 annual average price ends up being $1.35 a litre, then typical Australian motorists will end up paying a massive $660 extra a year for fuel. Without formal direction the ACCC is powerless to use its compulsory information acquisition powers to vigorously investigate this year’s Easter fuel price hike and all of the others. Part 7A of the Trade Practices Act provides the competition watchdog with the power to subpoena documents and witnesses, but only after receiving a direct and precise set of instructions from the federal government.

Prime Minister Howard and Treasurer Costello have both assured motorists that the ACCC is ‘on the job’ investigating the current record fuel price hike. It is dishonest for the Prime Minister and Treasurer to make these claims when both have so far refused to formally direct the ACCC to begin effective monitoring of fuel prices and profits. The Chairman of the ACCC, Graeme Samuel, confirmed on ABC radio on 7 April that the ACCC had not been directed to begin formal monitoring of fuel prices, and he has not been given that instruction since then. The Prime Minister and Treasurer appear happy for the ACCC to adopt a ‘look but don’t touch’ approach to fuel prices and are still refusing to let the competition watchdog off its leash.

They are all talk with precious little action in addressing the petrol pricing rip-off. It is only when there is an ongoing and regular regime of petrol price monitoring with appropriate powers, similar to the task the former Prices Surveillance Authority used to provide, that any incidences of price fixing are able to be detected. The Howard government should reinstate the Prices Surveillance Authority or give the ACCC the appropriate direction and powers to monitor petrol prices and profits and prosecute offenders when they are charged with price fixing.

Labor is the only major political party that has a long-term commitment to enabling Australia to become self-sufficient in fuel, as stated in our amendment to this bill. We need to fast track a home-grown fuel industry for the 21st century. Yet, until yesterday, Australians had not heard one constructive suggestion or proposal from the government about fuel self-sufficiency. Today the government has stolen some of the very policies that it previously criticised Labor for advocating over the past 18 months. Labor in government will, as we have said since October last year, through the encouragement of innovation and tax initiatives, encourage the development of a gas to fuel industry using our massive natural gas reserves. Labor will also encourage the development of a biofuel industry using ethanol. But this is a medium- to long-term plan that a Beazley Labor government would initiate. What we need is relief at the pump right now. The Prime Minister continues to walk away from high petrol prices and wash his hands of the problem. All he has to do is have the Treasurer direct the ACCC to formally monitor petrol prices and profits, but he will not do it.

Recently, on Melbourne’s radio 3AW, the Prime Minister used spin and distortion when he promised Australian motorists that he would direct the ACCC to formally monitor fuel prices. When Neil Mitchell asked him:

Will you ask the ACCC formally to monitor prices?

the Prime Minister replied:

Naturally I will go back to them in the light of what’s been claimed and alleged in the recent past ...

Neil Mitchell said:

Let’s just get that clear. You will ask them now.

The Prime Minister said:

Yes I will. I will ask them again to have a look at it. They probably are anyway, but I certainly will.

There is a world of difference between asking the ACCC to simply ‘have a look at it’ and directing them to effectively monitor prices and profits. The ACCC is already recording or ‘looking at’ fuel prices in various locations across Australia but cannot effectively investigate allegations of artificially inflated fuel prices until the government directs it to do so.

Of course, there has been no follow-through on the promise of formal petrol price and profit monitoring. Mr Howard has constantly refused to formally direct the ACCC to begin what is called part VIIA monitoring of petrol prices. Until the ACCC uses its part VIIA powers to subpoena documents and witnesses, we will never know if current record fuel prices are just a function of rising world prices or if the oil companies, distributors and retailers are exploiting the situation to artificially inflate fuel prices.

The Prime Minister promised Australian motorists a full and frank investigation by the ACCC into record fuel prices—and he has not delivered on that promise. Unfortunately, the Prime Minister has decided to ignore that commitment completely. He is all spin and no solutions. The Howard government is a policy-free zone on fuel prices. Until yesterday, it had no short-, medium- or long-term solution to our reliance on imported oil and foreign prices. All the government has is an expensive offer to make to motorists who are lucky enough to be able to afford the up-front costs to convert their vehicles to run on LPG—and it will continue its regular multitax rip-off policy, which devastates the household budgets of most Australians.

In the short term, the Howard government should be forced to give the ACCC the powers it needs to investigate fuel prices and, over the middle to long term, it should develop fuel self-sufficiency strategies, as suggested in our amendment to this bill. The next Labor government will lead Australia’s way to fuel self-sufficiency so that average Australians can get relief from high petrol prices at the bowser. I urge all members to support the amendment as well as the bill.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

We need national leadership to develop:

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

…            …            …

We must make Australia less vulnerable to external shocks.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Nicola Roxon (Gellibrand, Australian Labor Party, Shadow Attorney-General) Share this | Link to this | Hansard source

Given that the debate on the Petroleum Retail Legislation Repeal Bill 2006 has been going on for some time, we know that it essentially deals with the retail aspects of petrol and changes that have occurred in the industry which go back even further than the last 10 years. It is a very important bill because it does, at last, recognise significant changes to the industry and the need for us to repeal legislation that has been in place and replace it with a proper Oilcode that will more comprehensively cover the industry.

I am particularly moved to speak on this bill because, like many other members in this House, I am aware that, behind all of the regulatory issues that are of concern, there are two even more pressing issues, and they are all interrelated. Australians in my electorate, as elsewhere, are suffering from the current high petrol prices. Hand in hand with that, people are increasingly fearful that, as a country, we cannot afford to remain dependent on foreign fuel, which predominately comes from the unstable Middle East. Many of the speakers on this side of the House have already canvassed some of these issues. As representatives in this place, we all feel very acutely the pressures that are on families in our electorates. Action needs to be taken because the current pressures on those families is, I think, coinciding with the need for us to take some national decisions and some strategic decisions to ensure that we secure our future fuel needs without such heavy reliance on other countries.

I want my contribution to touch on these three aspects: the change to the retail and regulatory regime, steps that might provide some relief from the current prices, and investments that need to be made now in alternative fuels and technologies, as set out by the Leader of the Opposition in October last year—well before the latest price hike really started to bite in our community.

As we all know in this place, constituents are having to tighten extensively their budgetary belts and many are drastically rearranging aspects of their day-to-day life to take account of the huge impact that high petrol prices are having on their family budgets. We have all read stories in the newspapers and many of us would have had representations from our constituents about these pressures. For example, young people who have not been driving for very long, who are in their first job or studying and who do not have a lot of extra money or disposable income suddenly find that the income they are earning in their part-time job is not sufficient to cover even their petrol needs. Perhaps they have to make a decision that they cannot be involved in a sporting activity because it costs the extra amount of money that they are now paying in petrol.

We can all see that, with the price of petrol at $1.40 and more per litre, the average tank of petrol now costs over $70. This is having a huge impact on people’s lives every single day. I can give one example—although there are thousands and thousands of them across the country—of a family of five who live in my electorate of Gellibrand, in Melbourne. This family, like many others, has two cars. They have had to rearrange their entire transport strategy as a result of the ever-increasing petrol prices. The mother, who drives further than the father to and from work each day, has had to swap cars. The family has three children and, because two other children often travel with them, they drive a large patrol car. But it guzzles petrol and cannot be used to drive to and from work anymore because it is far too expensive. However, even the smaller car goes through about $60 a week in petrol, which is up $20 from the $40 a week that it cost to fill it less than a year ago. For a family of five that is juggling to make ends meet as it is, an extra $20 a week is not an insignificant amount.

Public transport is not a real option for this mother and this family. She drops off kids to school on her way to work. She does the shopping and other errands on the way home. Like many mothers in our community and many parents generally, it is simply not possible for her to achieve any sort of work-life balance without using her car. Her partner drives a larger car to the local train station, as it is much more cost-effective for him to use public transport than to pay the high petrol prices to drive all the way to work. This takes an extra half-hour of travelling each way, each day. In addition, of course, the family are keeping a very close eye on their shopping trolley as they try and make up for the lost part of their budget each week.

I want to emphasise that we could pick almost any family across the country who could tell you the same story. There are very many people—whether they are students, people driving their first car or families who need the car to get the kids to and from sporting activities or to and from school and who often do a lot of running around in cars, as many in this place would know—for whom it is just impossible to adjust their lives in such a way that they do not use petrol at all.

Even if we can encourage consumers to moderate their use of petrol, is it really going to be possible for us to use that as the solution to high petrol prices? I do not think so. Increasingly, people are working further from their homes. The distance they are travelling to work is becoming an issue. The adequacy of public transport to get people to and from work as workplaces are becoming more dispersed is also a challenge. It is not realistic for us to consider that people will be able to do a lot of their day-to-day activities without cars. We would have to be thinking and planning a very long way ahead if we wanted to see that as a solution to the petrol problem.

But we also need to address the fact that this issue is not just for individual drivers and families. They may be able to soften the blow of these extra costs by changing their car use, which of course would be a good thing, but what alternatives are there for businesses, particularly those that rely heavily on transport? There is not just the transport industry as a whole but manufacturing, transporting products and parts between different sites. Obviously the distribution of many of our foodstuffs, let alone other, more manufactured goods, is a serious problem. We have to look at the way that we can sustain these industries with alternative fuels.

Although this bill might help in some small way to deal with price pressures, it is really just setting up a framework which is more realistic in terms of how the industry now operates. I must say that, without the changes that are being suggested by my colleague the member for Batman and that have been moved in his second reading amendment, this bill is not going to have as much impact as it could have.

One of the most obvious examples is Labor’s call for the ACCC to have the power to investigate price gouging without needing the Treasurer’s consent to do so. Many of the speakers in this debate have dealt with this issue. Even the member for Capricornia, who spoke before me, was talking about what I think everyone in the community is often curious and suspicious about: the way the prices change on the weekends and the way they seem to immediately change when there is an incident overseas. There is not a huge confidence in the community that petrol prices are set in a fair way, particularly the variations that happen week in, week out.

We in the Labor Party would like to give the ACCC powers in its own right to investigate potential cases of price gouging. This is an important proposal. It would be fantastic if the government could just see its way to accepting something that we have proposed. The ACCC might not find that there is extensive price gouging going on, but it might give the community much more confidence that the price increases that do occur are occurring for legitimate reasons rather than because distributors or retailers are making the most of world circumstances.

But first let us go through a bit of history on the legislation that we are repealing. The Petroleum Retail Legislation Repeal Bill 2006 that we are debating seeks to repeal the Petroleum Retail Marketing Franchise Act 1980 and the Petroleum Retail Marketing Sites Act 1980 and replace these two acts with an industry code known as the Trade Practices (Industry Codes—Oilcode) Regulations 2005.

When these two acts were originally made law, they were designed to counteract the market dominance of refiner-marketers, the oil majors such as BP, Caltex, Mobil and Shell, and the aim was also to encourage small franchisees into the retail industry. Since the 1980s, however, structural changes have rendered these acts outdated and ineffective. They cover only part of the industry—I was quite staggered to learn that they only cover about 50 per cent of the industry—and their regulatory coverage differentiates between different suppliers in the market, for example, the large franchisees and independent operators. Clearly this is not a workable position for this industry to stay in. The net effect of the current legislation is that different market participants are subject to widely varying regulation. It does not cover supermarket chains which have come into the market in such force in recent years.

So Labor is pleased that the new Oilcode will provide a more effective industry-wide regulation of the petrol retail sector, provide better protections and regulations than currently exist and bring the supermarket chains under a mandatory industry code of practice for the first time. All of this is welcome. The code will also establish standard contractual terms and conditions for petrol-reselling agreements between wholesale suppliers and retailers. These might sound like technical changes—if anyone is listening to the debate at this time of night—but I think that it is important, when we have this lack of confidence in the community that prices are set in a fair way, that we do everything we can to ensure that all of the players in the industry are competing on a level playing field where contractual terms are going to be dealt with in a regulated way. When these standards can build upon and strengthen relevant provisions of both the franchise act and the more general Trade Practices (Industry Codes—Franchising) Regulations 1998 and the relevant code of conduct, this does provide greater certainty and protection for all parties to fuel-reselling agreements. It includes the introduction of a nationally consistent approach to terminal gate pricing. These arrangements will improve transparency in wholesale pricing.

Importantly as well, the code is going to establish an independent downstream petroleum dispute resolution scheme to provide the industry with a cost-effective alternative to taking action in the courts. Again, this is important because, if we are able to find that there is some dubious activity going on in the industry, we need to have a way of being able to effectively take action. This will allow both industry players and consumers to have an effective way of being able to resolve these disputes. So although the code is not perfect it is a vast step forward. The bill has the support of the overwhelming majority of market participants, motorists and peak bodies. Labor support the bill but we do think it would be vastly improved by the amendment that has been moved by the member for Batman.

I will not read all of the amendment that is before the House, but I would like to emphasise a number of points that are raised in the amendment because I do think they are important. The first proposal is that we call on the government to require the relevant department, the Department of Industry, Tourism and Resources, to report annually to this parliament about the measures that have been taken and the progress that has been made to increase market penetration of alternative fuels such as ethanol, biodiesel, LPG and CNG, including the number and location of service stations and the names of companies offering these products on their retail sites. It is important that if we use the mechanism of reporting to the parliament then we can have the debate about whether or not it is going far enough, whether we can be doing more as this parliament or as a national government to encourage the increased reliance on these alternative options. We want to secure new investment in biofuel, LPG and CNG production and supply infrastructure in Australia. A report to the parliament about measures that have been taken and progress that has been made to achieve this would be a big step, and I think it would be a big motivator to the industry to make sure that they were actually actively participating and growing their industries.

We also ask the government to secure investment in new alternative transport fuel industries, including gas and coal to liquids. Just that one item moved in the amendment by the member for Batman summarises our view that there is much more that can be done to secure our long-term future in this area. While we must take all steps to relieve pressure now on families and drivers from the cost of petrol and the pain that they are feeling in their weekly budgets, we also have to think about those families 10, 20, 30 years into the future who will be in a far worse position if we do not make some decisions now to invest in these alternatives.

The amendment moved by the member for Batman covers a number of other alternatives that we would like the government to take but we are also concerned, as I have touched on already, that the Trade Practices Act be amended. There have been changes recommended repeatedly by both the Dawson report and a Senate committee in 2004 for the ACCC to have power, as I have already mentioned, to investigate petrol prices without the Treasurer’s consent but also to amend the abuse of market power provisions to make sure, again, that there is a mechanism that can be used effectively if those who are in a dominant position in the market abuse their position of strength.

Other members have talked about Labor’s proposal to conduct a feasibility study into a gas-to-liquid fuel plant in Australia and have also flagged in more detail some of the other options put forward in Labor’s fuels blueprint. We would like the government to embrace more of that blueprint. They have already, slowly, in this last week come to the table on a number of matters that were proposed in that, including looking at what can be paid and the assistance that can be given to consumers who might want to convert from petrol to LPG. We had proposed in the fuels blueprint that we look at making alternative fuel vehicles tariff free, cutting up to $2,000 off the price of the current hybrid cars and granting tax rebates for converting petrol cars to LPG. Further, we want to re-examine the depreciation regime for gas production infrastructure, and a number of different proposals have also been made for that.

So we call on the government to not close the door to these many other proposals. Labor has put a lot of time and thought into the way we can secure our future and make sure that future generations are not as dependent on Middle East oil. Of course, we all wish and hope that circumstances will become more peaceful in the future and we will not be considering the Middle East as an unstable region in the world, but I think it would be unrealistic not to at least plan for the risk that it might remain unstable for some time. In any case it is a good national strategy for us to be able to provide our own transport fuel to our own consumers and our own industry without the dependence on overseas fuel, if that is at all possible. In a country where we are blessed with so many resources, it seems crazy that we are not able to lead in terms of technology and conversion to these new types of industries.

The amendment that I have talked about covers our plans to: find more oil and use more gas in Australia, and I have gone through a number of things that we could do to assist with that; promote the use of alternative fuel vehicles; protect and promote the growth of ethanol, biodiesel, LPG and CNG; and strengthen the ACCC’s powers. I acknowledge that a number of these things are about the longer term solutions but we are anxious to urge the government not just to respond to the particular petrol price hikes now, although we call on them to do that, but also to set in place a clear strategy for how we are going to go forward into the future.

Labor has actually been out there leading the debate. It was last October—nearly 10 months ago—that Kim Beazley announced Labor’s Aussie fuels blueprint. It has that twin purpose of not just reducing Australia’s foreign fuel dependency but also developing existing and emerging alternatives. By contrast, the government has, for all this time, just been sitting on its hands. As we saw recently, the government has just belatedly come to the table and finally started offering some piecemeal solutions to this pressing problem.

But, unfortunately, as we often see with the coalition and their policy-on-the-run approach to these sorts of vital policy issues, what they have offered is too little and too late. The policy was hurriedly cobbled together as a political fix in face of political pressure that has been coming on them. Throwing money at Australians who can afford the up-front cost of converting their vehicles to LPG is a short-term quick fix which does nothing to put any downward pressure on petrol prices and does nothing to address Australia’s long-term energy needs. Quite apart from that, it does nothing for those many thousands of families in the community who may not be able to make that conversion and who in the meantime are going through—like the example of the juggling act of the family of five which I used at the start of my speech—the process of changing entirely the way they use their cars and their transport, how they drop their kids at school and what activities they do on the weekend simply on the basis that they cannot afford to be travelling any more than they absolutely must because of the costs that have increased so dramatically with the petrol prices.

In the absence of the initiatives that I have briefly outlined, and which are set out in the Leader of the Opposition’s fuels blueprint, John Howard’s fuel policy will do little for the overwhelming majority of motorists, who have no choice but to stay with petrol for the foreseeable future. And it will do nothing to reduce our reliance on fuel from overseas, particularly from the Middle East, at a time when it is in such unstable circumstances. I hope that the government will consider the amendment that has been moved by the Labor Party and that we will continue to have a proper debate about our long-term future, because that is the only way that we will be able to resolve this problem. (Time expired)

Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

The Petroleum Retail Legislation Repeal Bill 2006 repeals two pieces of legislation that were enacted more than 25 years ago: the Petroleum Retail Marketing Franchise Act 1980, otherwise known as the franchise act; and the Petroleum Retail Marketing Sites Act 1980, otherwise known as the sites act. The truth of the matter is that, over that 25-year period, there have been such profound changes in the petroleum marketing industry that the two pieces of legislation enacted all those years ago now cover less than 50 per cent of the industry by volume. So it is timely that the government review this legislation and remove it from the statute books, conditional upon the implementation of an Oilcode, which is an agreed set of arrangements between players in the industry, that has finally been brokered by the government.

Such repeal legislation has been contemplated by this government many times, but sadly it has not been able to get that Oilcode development—which would provide for greater transparency and a more even playing field for all participants in the industry—until this time. Labor supports the repeal of this very old legislation and the implementation of an Oilcode. Obviously, Labor also strongly supports the second reading amendment, which is a very wide-ranging amendment, that has been moved by the member for Hunter. That amendment covers alternative fuels, greater competition in the industry—greater competition is always welcome—and fiscal arrangements that the government might contemplate to implement an alternative fuels policy.

The sites act is so old that it restricts the number of retail sites that prescribed oil companies—namely, BP, Caltex, Mobil and Shell—can directly own and operate in Australia. The franchise act sets out minimum terms and conditions for franchise agreements between the oil majors and the franchisees. One of the profound changes that has occurred over that 25-year period is the market entry of large independent retail chains and, even more recently, the supermarket retailers. The Oilcode that has now been brokered introduces, among other things, a nationally consistent approach to terminal gate pricing, which provides for greater transparency in the wholesaling of petrol to independents and other players by the major oil companies. It also establishes a more efficient dispute resolution system, to provide the industry with a more cost-effective alternative to taking disputes to court.

The current arrangements, as provided for in this legislation, do not constrain importers and supermarkets, which gives them a competitive edge. That is why I say that the legislation does even up the playing field and provides for a slightly more competitive environment. To that extent, it is a good move. The explanatory memorandum to this bill argues that consumers will benefit from these arrangements. It says in the impact analysis that the change has the potential to affect the structure of the retail petroleum industry and may also directly have an impact on consumers. It goes on to say:

... the ongoing use of inefficient business models by some in the industry may be to the detriment of consumers to whom the higher overhead costs are passed on through the price of petrol.

The impact statement associated with the explanatory memorandum argues that one of the benefits of this legislation is to improve the prospects of consumers—that is, to help contain the upward pressure on petrol prices in Australia. There certainly has been intense upward pressure on petrol prices in this country, and indeed all around the world. It is well known that the major source of that upward pressure has been very large increases in world oil prices. I have had the opportunity to examine the IMF world economic outlook. It provides for a very sombre forecast in relation to world oil prices. It is worth quoting:

Will the shock in fact persist? From a historical perspective, about one-half of the 1973–74 oil price shock proved enduring, while the 1979–81 shock was eventually completely reversed. While any long-run oil price forecast is subject to enormous uncertainty, both market expectations and an assessment of medium-term oil market fundamentals suggest that a considerable proportion of the recent shock will be permanent in nature ...

So the International Monetary Fund is forecasting that a reasonable proportion of the oil price shock of the last few years is likely to be permanent. That is a very disturbing forecast. We know in economics that the basic laws of supply and demand are such that, when the demand is so strong, it will, through higher prices, elicit extra production. But the IMF is indicating that, in its view, that lift in production will not be sufficient to remove this big spike in oil prices; therefore, much of the lift in oil prices will persist.

This takes me to an outlook for particular countries in the same report—it is interesting reading—that says Saudi Arabia, unsurprisingly, has 22 per cent of known oil reserves, Iran has 11 per cent and Iraq has almost 10 per cent, possessing the third largest oil reserves in the world. I am not sure that that is widely understood. It is sometimes claimed that Iraq is floating on a sea of oil and yet, despite possessing around 10 per cent of the world’s oil reserves, it contributes only 2½ per cent of world oil production.

The reason I raise this is that, while I have said in the past, and I acknowledge it tonight, that the main reason for high petrol prices in Australia is high world oil prices, one of the key reasons for high world oil prices is the invasion of a country that possesses 10 per cent of the world’s oil reserves. When the Howard government says it cannot do anything about high world prices, it should at least take responsibility for the effect of the attack on Iraq, and the ongoing war in Iraq, on oil prices in this country and the rest of the world. The coalition of the willing attacked Iraq against the expressed wishes of the United Nations and, as a direct consequence of that attack, world oil prices started their upward march. Commentators at that time were arguing that one of the benefits of attacking Iraq would in fact be a reduction in world oil prices. Some were so bold as to predict that world oil prices would fall to $US20 a barrel. They are now more than $US70 a barrel. Such was the folly of creating enormous instability in Iraq, which has flowed into the rest of the Middle East.

In January 2003, Iraq was producing more than 2½ million barrels of oil per day—2.549 million barrels a day. The average for 2005 was 1.878 million barrels a day and the average for the first five months of this year is 1.823 million barrels a day. So there has been a substantial cut in oil production in Iraq, which was already low as a result of UN sanctions and the oil for food program. Far from releasing huge amounts of oil onto the world market and depressing the price of oil, the attack on Iraq has had precisely the opposite effect and the Australian government was right up there in the coalition of the willing.

A paper by Gal Luft called Reconstructing Iraq: bringing Iraq’s economy back online, points to some of the realities. The Energy Information Administration of the Department of Energy in the United States suggests that Iraq has more than 112 billion barrels of proven oil reserves—which is, as I have pointed out, one-tenth of the world’s total. Other petroleum analysts, however, believe the country’s reserves might be twice as high as that. Of all oil-producing countries, Iraq is perhaps the least explored. There are only 2,300 wells in Iraq. Compare that with one million oil wells in Texas alone. Only 10 per cent of Iraq has been explored. You can see that one of the reasons the coalition of the willing was so eager to attack Iraq was that it is a country that is floating on a sea of oil and these foolish people believed that, as a result of that attack, they could get their hands on the oil and drop the world oil price. Instead, a terror premium is now attached to the international price of oil such that, far from being $US20 a barrel, it is well over $US70 a barrel. This government has to take its share of responsibility for very high world oil prices that are affecting the household budgets of everyday Australians.

It is reported that since April 2003, which is when the major hostilities finished in Iraq, insurgents have hit oil targets more than 220 times. So the insurgents are absolutely determined to ensure that Iraq does not get oil into the international market. Iraq today is considered the riskiest destination for foreign investment of any of the world’s emerging oil markets. Iraq gives a new definition to the notion of sovereign risk. Who would invest in oil exploration and production in Iraq when every day it is heading closer and closer to civil war?

There are tragic human consequences of the attack on Iraq and the insurgency that has followed. At least 1,000 people are dying every month in Iraq and it was only the other day, at last, that the Prime Minister admitted that perhaps things were not going all that well in Iraq. So many people have lost their lives from this foolish attack on Iraq and it is getting no better but rather descending towards chaos and civil war. The government cannot get off the hook and say, ‘It’s just the world oil price and we have had no influence on that.’ They have. This government has contributed to a terror premium on the price of oil which has flowed into the household budgets of people all around the world, including those in Australia.

What can be done now about higher petrol prices? Certainly, the outlook in Iraq is not very good. As I have indicated, the International Monetary Fund is very concerned about the prospects for world oil prices, figuring that, by and large, higher oil prices will persist. The room for the Australian government to manoeuvre, in terms of providing genuine relief to Australian motorists, has now been limited by its ineptitude over the last five or six years. The Australian economy now is smashing up against capacity constraints, with domestic demand outstripping the economy’s capacity to supply that demand. As a result of these constraints on the capacity to supply Australian domestic demand, there is now pressure on prices and on interest rates.

In its most recent monetary policy statement, the Reserve Bank pointed out that, even after having had the third interest rate rise since the 2004 election, it expects the underlying inflation rate—not the headline inflation rate, which includes bananas—to be sitting right at the top of the Reserve Bank’s range of two per cent to three per cent per annum. That is, the Reserve Bank expects the underlying inflation rate for the next two years to be three per cent per annum. That leaves the Reserve Bank virtually no room to manoeuvre. Having no room to manoeuvre is not a good situation to be in, when Australia has already suffered three interest rate rises since the election of 2004, when the government promised to keep interest rates at record lows—which it has not done in a most blatant way. In fact, the last seven interest rate changes have been upwards. If the government were to keep interest rates at record lows, it would have to go back well before the 2004 election to come anywhere near to keeping that promise. Instead, it promised that it would keep interest rates at record lows—and, since then, there have been three interest rate rises.

That means that this government’s room to manoeuvre in providing relief for motorists through the budget is very limited. The Reserve Bank’s language in its statement on monetary policy issued on 4 August and its observation that inflation in any event will be at least at three per cent per annum, which is at the top of the acceptable range, mean that financial markets are now tipping—with a more than 90 per cent probability—a further interest rate rise before the end of this year. There is, in fact, the real prospect of a fifth interest rate rise since the election—since the day the Prime Minister issued his promise that interest rates would be kept at record lows.

Looking at the last budget, we can see that it was moderately expansionary. How do we know that? We know that because the OECD, so often cited by the government in support of its economic policies, says—this is in the country survey on page 37—‘The fiscal stance implied by the latest budget projections is moderately expansive.’ It then goes on to provide tables that prove that point.

In its statement on monetary policy, the Reserve Bank quite clearly shows that demand continues to be very strong. It is worried about the look for inflation. It is worried about the impact of high oil prices on inflation. It says that domestic demand is growing strongly again and that budget tax cuts and spending increases have fuelled consumption. Here, it is worth my pointing to a statement of the Reserve Bank that says:

... the recent tax cuts and other fiscal measures announced in the Australian Government Budget, are expected to support growth in household income and consumption in the second half of this year. Despite the expected growth in disposable income, the household debt-servicing ratio is likely to rise further in the period ahead, since household debt has been growing at an even faster pace than income.

Importantly, it goes on to say:

Together with the recent increases in interest rates, this is likely to boost households’ interest payments.

That is why there is so little room to manoeuvre in terms of budgetary policy. If the government provides offsetting income tax cuts, it runs the risk of further interest rate rises. Therefore, motorists are being stuck with the government’s incompetence, they are being stuck with the government’s failure to invest in the nation’s future by easing those capacity constraints and they are being stuck with a government that spends like a drunken sailor. Just in the last budget, the government spent an extra $20 billion on outlays and saved only $2 billion. That is why we have to do whatever we can to relieve the pressure on petrol prices and on inflation. But now the room to manoeuvre is quite limited.

The PRRT collects a lot of revenue, but, again, if some of that were rebated to people through lower income taxes, those risks that I have described would materialise. That is why at the very least we need to look at long-term solutions, as proposed by the member for Batman, including converting to gas to liquids. That is why I commend and fully support the second reading amendment moved by the member for Batman and condemn the government for its incompetence. (Time expired)

John Murphy (Lowe, Australian Labor Party, Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

I commend the member for Rankin for his passionate and withering contribution to the debate on the Petroleum Retail Legislation Repeal Bill 2006 this evening. The passage of this bill through the parliament is timely indeed. It comes at a time when rocketing petrol prices have inflicted pain at petrol station pumps for ordinary Australian households—a time when the price of living has climbed with inflation. The passage of this bill comes at a time when families are struggling with higher mortgage repayments following the latest interest rate rise under the Howard government’s stewardship. It comes at a time when Australians are burdened with record levels of debt and record proportions of household incomes are being swallowed up by home mortgage repayments. Clearly, this is not a time when ordinary Australians can continue to pay record high fuel prices. I am under no illusions about this, though I wonder whether a few members on the other side of this House still are, given the public statements they have made recently.

The debate about our energy future and the reform of the petrol retail industry, including the repeal of the two acts dealt with in this bill, have never been more important for my constituents in Lowe. The Petroleum Retail Marketing Sites Act 1980 and the Petroleum Retail Marketing Franchise Act 1980 are clearly past their use-by date—if ever they had one. These acts may once have had laudable public interest objects. In 1980 these acts compelled big oil companies to give up many of their retail sites or convert them into franchise operations. The ultimate intention of these acts was to minimise the control exercised by refineries over petrol prices in a market, apparently by increasing the breadth of the petrol industry structure and increasing small business participation.

Given the understandable cynicism many Australians hold towards the big oil companies, it may have made sense to maintain these tight regulations over the business structures they are able to adopt. Indeed, it seems that the economic orthodoxy still remains that government should limit the extent of vertical integration where there is a common ownership of the different stages of production of a product. Clearly, this is because of the potential for vertically integrated entities to engage in anticompetitive conduct, given their position in the supply chain, ultimately resulting in higher or unreasonable prices for consumers. Naturally, the accuracy of the premise underpinning restraints on vertical integration will depend on whether you are a supporter or an opponent.

Supporters of the Petroleum Retail Marketing Sites Act 1980 have sung its praises for placing restraints on the pricing power of the big oil groups. Opponents have spoken of reduced efficiencies in the petroleum industry. Despite prevailing attitudes seemingly supporting the former arguments about the potential misuse of vertical integration, a study in the US by John Gewecke titled Empirical evidence on the competitive effects of mergers in the gasoline industry from 2003 has stated that retail gasoline prices ‘tend to be lower if one company owns both refining and retailing operations than if they are owned separately’. Indeed, in a 2005 report titled Gasoline price changes: the dynamic of supply, demand and competition, the United States Federal Trade Commission stated:

The vast majority of the FTC’s investigations—

that is, into the petroleum industry—

have revealed market factors to be the primary drivers of both price increases and price spikes.

Contrary to expectations, the report also goes on to state that the price of petrol in those states that prevent refiners from operating retail outlets is generally higher than in states without those restrictions.

It would seem that, even at the best of times, legislation of the same ilk, such as that which this parliament proposes to repeal, has had little practical effect in alleviating the perceived problems they were introduced to address. Nonetheless, assuming that the Petroleum Retail Marketing Sites Act and the Petroleum Retail Marketing Franchise Act fulfilled their requirements in 1980 by maintaining the presence of small businesses and independent operators in the retail petrol sector, they seemingly have no role to play in the modern marketplace. This is a regulatory regime that is 26 years old, operating in an industry that bears absolutely no resemblance to the era for which it was designed. Of particular relevance is the fact that the Petroleum Retail Marketing Sites Act applies only to companies which have refining operations in this country. Thus, while supermarket chains including Woolworths and Coles now account for around 50 per cent of fuel sales, their activities do not fall under the scope of the act. The emerging class of retailers that are effectively regulation free have rendered this act useless for industry and for consumers.

The present rules surrounding the petroleum industry are unfair and inconsistent, in my view, leaving many in an invidious position of competing on an unequal footing with emerging competitors such as Woolworths and Coles. It is not in the public interest to continue to provide a free kick to retailers which are using low-margin discounted petrol sales to drive high-margin supermarket sales.

Refineries are giving the impression that a noose is tightening around their necks in light of their inability to absorb short-term losses through other means, such as grocery sales. I have no reason to disbelieve them. Despite the change in competitive dynamics in the petroleum industry and the need for refineries or marketers to compete vigorously with new market entrants, anachronistic legislation is unnecessarily restraining a freedom of choice in selecting appropriate business models.

It is at this point worth noting comments made by the President of BP, Mr Hueston, to the Senate Economics Legislation Committee about BP. He said:

... we do not have the freedom to operate the sites as efficiently as we can ... This has become increasingly important over the last few years, as the supermarkets have entered the game but not with the same rules that apply to us.

Such inefficiencies can only be imposing additional costs on refiners and marketers, which will undoubtedly be borne by consumers. Refiners are, for example, prevented from developing non-petrol offerings sufficiently so they can finance a cross-subsidy of petrol in a manner that would allow them to compete with Woolworths and Coles. The lack of flexibility with which to respond to market changes cannot, in my view, be helping the cause of competition in a market dominated by a few new players. It is a competitive advantage that is being sustained by the Commonwealth for the benefit of Woolworths, Coles and other groups who have exploited large, multisite franchising structures.

This protection, in the form of a distorted industry structure, naturally comes at someone else’s expense. Ultimately it is the consumer who has paid for a lack of competitive drive in the industry to get the cheapest possible prices at the pump. On this basis, I am happy to support the repeal of the Petroleum Retail Marketing Sites Act and the Petroleum Retail Marketing Franchise Act, which have served to perpetuate the problem. While these reforms do not provide an unequivocal answer to Australia’s petrol crisis, it has still taken far too long for the government to provide the four major players and the independent sector with the means to compete with supermarkets under a fair and realistic regime.

Debate interrupted.