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

I move:

That the House:

(1)

notes:

(a)

the Government’s failure to direct the Australian Competition and Consumer Commission (ACCC) to formally monitor the prices, costs or profits in the petroleum industry;

(b)

the comments made by Mr Brian Cassidy, Chief Executive Officer of the ACCC, to Senate Estimates that the ACCC would need formal price monitoring powers to gain access to information from the oil companies to adequately monitor profits, margins and costs; and

(c)

that Labor’s announcement to appoint a national Petroleum Commissioner, with the sole responsibility to formally monitor and investigate within the ACCC would ensure Australian motorists are getting a fair go at the bowser; and

(2)

calls on the Government to provide the ACCC with a reference under section 95ZE of the Trade Practices Act 1974 to formally monitor fuel process in Australia.

There must be an election coming on. On Friday the government finally acted—finally gave the ACCC a direction to hold an inquiry into petrol prices in this country. After a mountain of calls from every peak motoring body in this country, after almost daily calls from the opposition and after anger from motorists across this country, the government finally acted. The government say they have acted because Graeme Samuel told them it was appropriate to hold an inquiry into petrol pricing. The Australian people are entitled to think that it has more to do with Mark Textor saying it is appropriate to hold an inquiry into petrol pricing. Let’s have a look at the history of this matter.

In 2005, the chairman of the ACCC, Graeme Samuel, said there was ‘something funny going on’ with petrol pricing. Mr Samuel was reported on 9 September 2005 as saying:

… the commission did not have a formal role regarding fuel prices, only advisory but there were strange occurrences regarding price margins.

In January this year, the chairman of the ACCC was reduced—again because of his lack of powers from this government—to pleading with petrol companies; as the front page of the Daily Telegraph in Sydney said, ‘Stop petrol rip-off now’. In the last fortnight, the ACCC issued a press release saying that reductions in the Singapore price of oil are not being passed on to Australian motorists. On each of these occasions, the government took no action—not in 2005, not in January, but only in June. Why? Because we are a couple of months from an election. At least this time they took some action. The only thing that is different is that an election is coming up. This government, which has had a tin ear to the concerns of Australian motorists for the past 11 years, suddenly feels their pain.

Now, is it the first time these concerns have been raised? Of course it is not. Australian motorists and consumers, the Labor Party and peak bodies have been raising these concerns. The Labor Party have been listening. We recognise that the biggest impact on petrol prices in this country is world oil prices. We have always said that. But we also say that, when petrol is so expensive, the government has an important obligation to make sure that Australian motorists are not paying one cent more than they need to at the petrol pump—and the ACCC is the best and, in many ways, the only mechanism for achieving that.

We recognise that petrol has a huge impact on people’s bottom lines—a huge impact at the bowser and a huge flow-through impact at the grocery store and the supermarket. We recognise that the oil and petrol industry in this country is concentrated, and concerns have been raised by no less a person than the chairman of the ACCC, somebody for whom I have a high regard, someone who has been saying since 2005 that there is ‘something funny going on’ with petrol prices. Yet the government only act in 2007. How did they act? There will be a temporary inquiry, an inquiry that will finish in October, an inquiry referred to the ACCC under section 95H of the Trade Practices Act. Is this good enough? No, it is not. Why don’t we actually adopt Labor’s plan and have formal monitoring on an indefinite and rolling basis under section 95ZE of the act? Let’s give the ACCC the power to formally monitor petrol prices on an ongoing basis. Just because we know now that there is ‘something funny going on’ with petrol prices, why limit the inquiry to this year just because it is an election year? Why not give the ACCC these powers on an ongoing basis?

Another interesting thing about the government’s decision to refer the powers under section 95H of the Trade Practices Act is that it is a return to petrol price regulation to some degree. This is something the government were keen to explore at Senate estimates. They were keen to explore it; they got it wrong. They thought that, under our policy, petrol prices could not increase while the inquiry was going on. Wrong. But, under their policy, oil companies have to apply to the government to increase petrol prices if they rise higher than they have over the last 12 months. It is a return to regulation, a path the Labor Party have avoided the temptation of going down. But, in their political desperation, at the last minute—after 11 years of saying, ‘We’re not going to return to regulation,’ after 11 years of saying, ‘There’s no problem,’ after 11 years of saying, ‘We’re not going to give the ACCC any more power’—they have had a conversion on the road to Damascus. (Time expired)

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

Is the motion seconded?

Anthony Byrne (Holt, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

I second the motion and reserve my right to speak.

David Fawcett (Wakefield, Liberal Party) Share this | Link to this | Hansard source

I rise to address this motion today concerning the important issue of petrol pricing, because it has such a large impact on the families, businesses and individuals in the electorate of Wakefield whom I have the privilege of representing in this place. It has a large impact on families because public transport is so poor in parts of South Australia. Families in One Tree Hill, from the Clare and Gilbert Valleys and out in Kapunda, as well as in some of the outer metropolitan areas, need to operate vehicles for just about everything they do, whether it be the shopping, taking children to sport or getting to work. This has a large impact on their weekly budget as petrol prices vary.

What is the industry’s position on this? The Australian Institute of Petroleum quite rightly point out that 95 per cent of the wholesale price is governed by the Singapore benchmark for 95 octane unleaded. Their figures—and they use a range of statistical measures, including a rolling seven-day average—show that the trend of the wholesale price follows the Singapore benchmark pretty closely, with about a two-week lag, and for both rising and falling prices, they claim. But I have to say that, from the feedback I get in the street and from what I see in the petrol stations, people are rightly sceptical about the fact that that lag is balanced on either side. People are also sceptical because the peaks and troughs within that seven-day rolling period seem to rise close to long weekends, public holidays and other times when they will have that greater demand for petrol.

What have the government done to date? Unlike the ALP, who supported indexation for petrol, which meant that the take of excise continued to increase, this government reduced excise by 6.7c a litre in 2000 and, in 2001, reduced excise again and in fact abolished indexation. The result of these measures is that petrol is now some 17.2c cheaper than it would have been if we had not abolished the indexation supported by the previous Labor government. So families who use, on average, say, 50 litres of petrol a week are now saving nearly $450 per year.

The result of these measures is that Australia is now the fourth lowest country with respect to petrol prices in the OECD; only the United States, Canada and Mexico offer lower prices to the public than Australia. Other countries in the OECD can pay anything up to $2 a litre or more for petrol. State governments also play a part. It is terrific to see Queensland continuing with its subsidy of 8.4c per litre. It is sad to see that both Victoria and Tasmania, which have had a subsidy—albeit a very small one—are getting rid of that subsidy. I am sorry to report that South Australia does not have a subsidy even though, as Queensland demonstrates, because of the large amounts of GST flowing into those states, they have every capacity to provide that subsidy to motorists.

One of the other avenues that the government has to act is through the ACCC. The Australian Competition and Consumer Commission monitors petrol, diesel and auto LPG at 4,600 of the 6½ thousand sites around Australia. This monitoring is not a toothless tiger. In 2005 it identified price fixing in Brisbane and firms were fined some $470,000. In the Ballarat area, where a price-fixing cartel was identified, some $20.1 million of fines were allocated to, and costs were awarded against, the people who were guilty of that price fixing.

But it does not stop there. The Chair of the ACCC, Mr Graeme Samuels, noted in January this year and again in June that there is a noticeable margin emerging between the Singapore benchmark and the Australian retail price. He subsequently wrote to the Treasurer to ask that an inquiry be authorised under part VIIA of the act. The Treasurer has since authorised this and a report is due on 15 October 2007. One of the things the Australian public has been calling for is an inquiry that can go inside the gate to look at the books and the accounts of the petrol companies so that, unlike the many other inquiries that have been done, we can actually get to the depths of this and find out what is happening. It is hypocritical of the ALP to be criticising this power when they voted against the government’s amendments to the Trade Practices Act, which actually grant search-and-seizure powers to the ACCC to get exactly this kind of information. I welcome this inquiry and I trust the outcome will see further relief to the families of Wakefield.

Anthony Byrne (Holt, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

We can discuss and finesse the finer points as to why people have had to wait 11 years for this inquiry, the inquiry that we actually had to have, by the ACCC. But when you look at the evidence from the families in my electorate and the constant high prices that they have to pay for petrol you would hear them saying—these are not just my words but the words of many people whom I speak to in my electorate—‘It’s about time.’ It is about time that the government got serious about looking at what petrol companies have been doing, about the price gouging that has been occurring, and at the consequences for constituents’ lives as a result of the price of petrol.

For example, today, in my electorate of Holt, families will be filling up their petrol tanks at a price between 122.9c per litre and about 123.9c per litre. If you contrast that with June 1998, when the average price of unleaded petrol in metropolitan Melbourne was 68.7c per litre, you find that in nine years families are paying 55.2c per litre more for petrol. In nine years the cost of petrol has risen by 80 per cent, which is a substantial increase out of a person’s income every year. The interesting thing is what you see when you take snapshots through the last few years. For example, after Hurricane Katrina, in September 2005, the average Melbourne metropolitan price was 128.4c per litre. The lowest price recorded for the month was 115.1c; the highest price was 149.9c. That is a difference of 34.8c in that month. If you look at July 2006, which saw the highest prices in the last couple of years, for example in Melbourne, you see that the metropolitan price averaged 136.6c. The lowest price recorded for the month was 126c; the highest price was 149c. That is a difference of 23c. In May 2007 the average price per litre was 130c. The lowest price was 115c; the highest was 143c. That is a difference of 28c. People in my electorate are justifiably asking why this inquiry has taken so long when there is such flagrant evidence of petrol price gouging by petrol companies being passed on to people. If you think that that does not affect normal working people in my electorate, think again.

We see the petrol price impact through community support organisations such as the Casey North Information and Support Service, whose director is Susan Magee. In April 2007, 275 people were assisted with the cost of travel through petrol vouchers or by assistance with the cost of public transport. In Cranbourne, which is a large working-class area with families with mortgages, the vast majority of clients are receiving Safeway vouchers, which can be used for food and petrol, but $30 is the maximum amount that they can give in order to work within the budget. Anecdotally, Leanne Petrides understands that many of her clients are using some if not all of their voucher allocation on petrol and often have to toss up between purchasing food, purchasing petrol, paying bills and buying clothes. There is enormous financial pressure on families. The high petrol costs have added to the financial pressures on families who are already coping with four successive interest rate rises since the 2004 election and eight successive interest rate rises since 2002.

How does this also manifest itself? If you look at the data from the Insolvency and Trustee Service Australia, which is the federal government agency responsible for the administration of personal insolvencies, it shows that in the period from 1999-2000 to 2005-06 personal insolvencies in south-eastern Melbourne have increased from 349 to 596 or by 70.8 per cent. South-eastern Melbourne includes the City of Casey and the Cardinia shire. Given that the City of Casey is the municipality area which the federal electorate of Holt is predominantly based in and has the highest rate of mortgages, we suspect that a majority of these personal insolvencies come from that particular area. This directly relates to the cost of petrol. When we did a survey last year we had an overwhelming response—a 22 per cent response rate—and a large percentage said that the cost of living, fuelled by the cost of petrol, was of concern. As I said in speaking to this motion, what people in my constituency would say, having borne the high price of petrol and the consequent effect on their families, is, ‘It’s about time.’

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

I am particularly pleased that last Friday, 15 June, the Treasurer announced that an inquiry will be held into petrol prices. I must say that I have often been concerned that the petrol price in Queensland, which does have a subsidy on fuel, is not very much less than that in New South Wales. I have wondered for a long time whether the taxpayers and the road users of Queensland are subsidising those in other states. It is interesting when one gets close to the Queensland-New South Wales border that the price in New South Wales appears to be almost at the Queensland price.

Petrol prices have for a long time been an issue of debate and controversy. Of course it was the coalition government that reduced Labor’s fuel excise. We took away indexation and we actually reduced the price of fuel a number of years ago. If that had not happened then the price of fuel at the bowser would be substantially more than it currently is. But there is no doubt that right around the country, in workplaces, bars, hotels, sporting clubs and even at petrol bowsers themselves, there is ongoing discussion as to whether the price being paid by the Australian motorists at the bowser is indeed fair and reasonable.

The ever-fluctuating price of fuel provides a constant source of bewilderment for a great number of Australians. I know people say that it is because of the law of supply and demand, but I have to say that I have had many complaints from constituents who say that just before pensions are paid or just before the end of the week or just as a public holiday approaches the price of fuel seems to go up, yet it seems to go down for no apparent reason when there is not a high demand for fuel. That might be the law of supply and demand, but the price going up and down—a bit like someone having a heart attack, as disclosed by a cardiograph—may indicate there is some action by fuel companies that is not in the interests of the road user.

The ACCC say that the simple answer is that the price of fuel, like the price of other commodities in a consumer-driven society, is demand driven. They point out that prices are subjected to a competitive market in which prices will drop when the demand is down and prices will rise when the demand is high. It is not rocket science for us to realise that these demands seem to rise around pay day and on the weekends and, as I said before, drop early in the week. The fact that prices might be consumer driven, even though it might be correct that this is the case, does not really justify the kinds of price hikes and spikes that we seem to see from time to time.

In April last year the chairman of the ACCC, Graeme Samuel, made it clear that if the ACCC ever find any evidence of this sort of collusion amongst fuel retailers to keep fuel prices high then they would use their substantial investigatory powers to uncover any illegal activity. Despite this explanation, it is likely that fluctuations in the price of petrol will continue to be a hot topic in the future because petrol is a must-have commodity, given the fact that we are a country with a large road system that is spread over a huge area and public transport is not quite what one would desire.

It does remain an ongoing challenge to the family budget when one looks at what the average family pays each week in fuel. The honourable member for Prospect appropriately raises this matter of private members’ business for debate in the people’s chamber. Having said that, I think, regrettably, the member has sought to politicise an issue when the government has already announced that action will be taken.

It is obvious also that, when in power, the Labor Party seemed to have a policy of hiking petrol prices. It is also a fact that, if state Labor governments were of a mind to introduce price controls on petrol, they could indeed do so. But Labor have not done so. I am not suggesting that this should be done, but I believe very strongly that we ought to look closely at the price being charged at the bowser because I share the concern of many other honourable members that all is not well in the area of petrol marketing.

However, the ALP has been desperately trawling for issues as the next election approaches. This government, though, continues to provide sound, effective government, as it has done since 1996, and the Treasurer’s recent announcement indicates that the government is on top of this issue. (Time expired)

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

In its first term of government, the Howard government abolished the Prices Surveillance Authority, whose role was to monitor excessive price increases and prosecute people who indulged in price-fixing activities. Now, after ignoring the results of this disastrous decision, the federal government, in commissioning yet another investigation into petrol prices, has adopted a strategy directly from the Yes, Minister manual on how to deal with difficult problems. When a government is confronted with a problem that requires a difficult solution and the government is aware of the solution but does not have the courage to implement it, it sets up an inquiry and arranges for that inquiry to discredit all other inquiries on the same issue. Sir Humphrey Appleby himself could not have arranged it any better.

Motorists throughout Australia, and particularly in regional Australia, do not need another inquiry to tell them that they are being comprehensively fleeced in the prices they pay for fuel—that is, petrol, LPG and diesel. As I outlined in a submission to the inquiry by the Senate Standing Committee on Economics into petrol pricing in Australia in August 2006, the average retail price for petrol in my electorate of Bendigo rose from 89c per litre in September 2003 to $1.45 per litre in June 2006. That is a massive rise of 62.9 per cent. On the June 2007 Queens Birthday long weekend the price was around $1.39 per litre.

Finally, after 11 years as Treasurer, Peter Costello has for the first time apparently told the Australian Competition and Consumer Commission, the ACCC, to look at anomalies between the price of benchmark Singapore oil and the price motorists are paying to fill their vehicles. So why, after 11 years of ignoring what is a major cost of living problem for most Australians, has the Treasurer finally acted—or at least appeared to have acted—on this vital issue? Because Labor announced a major policy on combating artificially inflated fuel prices and because we are almost on the eve of a federal election. The Treasurer has been stung into action because Labor, as always, has set the agenda on the important policy areas that affect most Australians.

I hope this is a genuine inquiry, designed to identify anomalies in the pricing structure of our fuel and to recommend real solutions, not just the usual arrogant spin and obscure statements designed to hoodwink the Australian public into believing the Howard government is actually doing something worthwhile on this vital commodity upon which so many Australians depend in their everyday lives. I have every confidence that the ACCC, if left to its own devices, will come up with a comprehensive report and recommendations to appropriately deal with the problem. The question is: will the Howard government have the courage to implement any recommendations? After 11 years of inaction, it does not look promising.

In my submission to last year’s Senate inquiry into petrol pricing, I urged the Howard government to immediately exercise its power under the Trade Practices Act and direct the ACCC to fully investigate petrol pricing in Australia and ensure transparency, competition and fair fuel prices for all consumers. I also urged the Howard government to develop a comprehensive, strategic framework, including tax incentives, promotion of research and new technologies, and the necessary infrastructure to ensure that Australia rapidly repositions itself to be less dependent on imported petroleum and a hostage to wild fluctuations in the world price of oil. Nobody believes the Howard government’s spin and distortion in ducking and weaving on the likelihood of artificially inflated fuel prices, including its favourite piece of dishonesty that (1) the ACCC has the powers to protect consumers from unlawful anticompetitive conduct and unlawful market practices through the provisions of the Trade Practices Act and (2) the ACCC monitors the daily average retail price of unleaded petrol, diesel and automotive LPG. What absolute rubbish!

There is a world of difference between observing the retail price of petrol in newspaper ads and over the internet, and vigorously investigating, using powers to subpoena documents and witnesses, in order to fully understand the pricing process and profit margins within the automotive fuel industry. The proof of this inquiry being fair dinkum will be a recommendation to dramatically expand the powers of the ACCC. If this is not included in the recommendations, then this will be nothing less than just another Sir Humphrey Appleby piece of deception solution—the same as all the others over the past 11 years.

Luke Hartsuyker (Cowper, National Party) Share this | Link to this | Hansard source

The price of petrol is an issue that affects everyone whether it is reflected in the cost of filling our cars or in the cost of our food and other goods in shops which depend on fuel as an input. It is particularly serious for those living in rural communities where public transport is not an option. A rise in the price of petrol bites particularly hard on rural businesses where the use of transport, often over long distances, is a fixed and unavoidable part of carrying on trade in a large part of Australia. I therefore welcome the decision to have the ACCC hold an inquiry into the recent differences between international and domestic prices.

The ACCC has always had the option of advising the government that an inquiry was advisable but, clearly, until now, it has not felt the need. I should note that the ACCC currently monitors petrol, diesel and LPG prices at around 4,600 of the approximately 6,500 retail sites around Australia. Petrol prices are closely linked to the international price because petrol is an internationally traded commodity, and if we are not prepared to pay that price we simply will not get the product.

Despite their rhetoric, Labor has yet to produce real solutions to the issue of petrol price fluctuation and I welcome the fact that we will have an inquiry that will confirm or allay suspicions with regard to this matter. This motion by the member for Prospect will do nothing to bring down the price of petrol, not even by one cent. It is just another piece of grandstanding by the opposition latching onto a populist cause. The opposition leader woke up one day and his focus groups told him it was not Monday or Tuesday but Petrol Day and he should say something about petrol. If they were ever to come to power they would find that they would have to deliver some real outcomes, and that is far different from just making empty and ineffective promises.

They say the government has not been doing its job on petrol prices, but let me remind them that one of the key conclusions of the Senate Standing Committee on Economics inquiry into this topic last year was:

... the petrol market shows the characteristics of a strongly competitive market, with sufficient competitive forces to place downward pressure on retail petrol prices.

Do we really need Labor to remind us that we buy and sell petrol in an international market? Do we really need Labor to remind us that in a competitive market prices can go up as well as down? Do we really need Labor to remind us that Australia has the fourth lowest petrol prices in the OECD? Although Labor is in opposition in this House, it could do something about petrol prices. It could get its cronies in the states and territories to do something about petrol prices. But have they been doing that? They have been quite silent on that.

All credit to Queensland; it subsidises the cost of fuel by just over 8c a litre. But that is just Queensland. No other state comes close to that. If they were really concerned about the price of petrol, they would get on the phone to their Labor mates in the other states and say: ‘Match Queensland. Subsidise the petrol as they do in Queensland.’ But they are silent. All states except Queensland have the powers to put some control in the pricing of petrol. They do in New South Wales, Victoria, Western Australia, South Australia and the ACT. They can impose price controls on declared fuels. But we have silence from the Leader of the Opposition, even on Petrol Day, with regard to that matter.

In the face of what Labor seem to call a crisis that apparently demands action, what have they done? They have created a nebulous figure, the petrol commissioner. I am not sure what the petrol commissioner would ever do in reality. I presume he will make a lot of noise, emit a lot of hot air and probably do nothing. He will no doubt be a Labor hack or some union crony. The moral we can draw from this is: Labor in opposition is good at talking but they are not much good at acting; Labor in power will not deliver.

We hear a lot about the tax on petrol, so let us look at the coalition government’s record in this regard. Petrol prices would be 17.2c a litre higher than they currently are if it were not for the decision of this government to eliminate the indexing of the fuel excise. That is an annual saving of some $448 for a family using 50 litres a week.

While Labor wring their hands and talk about petrol pricing, they come up with the rather nebulous concept of a petrol commissioner, who would do nothing to reduce the price of petrol. They are all hot air and talk on the issue of petrol prices. They care very little about the Australian people in this matter except when their focus groups tell them it is Petrol Day. They are unable to act. They are unable to deliver real solutions; just look at the states.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The time allotted for this debate has expired. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.