Barnaby Joyce (Queensland, National Party) Share this | Hansard source

We have heard today the debate with respect to regulations that get rid of the Petroleum Retail Marketing Sites Act 1980 and the Petroleum Retail Marketing Franchise Act 1980. A couple of clear issues have been illustrated throughout the debate. What has happened with these regulations is that the intent of a piece of legislation that has not yet been debated is about to be put into place. This Senate has not had the chance to debate the issue that there has been a regulatory change that has brought about the intent of a piece of legislation that we have not yet had a chance to see.

Going back to the issue, everyone acknowledges that the current oil code is flawed. There is no argument that the current oil code is flawed. The problem with the current oil code has been brought about by Coles and Woolworths circumventing the intent of the 1980 act. However, there is nothing in this regulation or the proposed legislation that deals with the fact that Coles and Woolworths have circumvented the intent of the act. We have basically found the people who have broken the intent of the act and let them off the hook. We have done nothing to actually address the problem. Instead, in some obscure piece of logic, rather than addressing the problem we are going to affect an innocent third party in this: the independent branded and franchisees, the mum-and-dad operators. They are going to have to suffer the slings and arrows of the fact that Coles and Woolworths have circumvented the intent of the act.

The intent of 1980, when the coalition government initially brought in this piece of legislation, is still as good now as it was then. The world has not changed that much in 26 years. The government’s intent then was to keep wider participation in the retail market to prevent vertical integration. And now we are about to bring in a piece of legislation that is going to bring a narrower participation in the retail market and create vertical integration. I do not see the logic of how we have managed to do that complete 180-degree turn on what has always been a strong small business intent.

A lot of people have had to deal with the bluff of the major oil companies. We have had the major oil companies saying, ‘If this doesn’t go through, we’re going to pull out of Australia; the world will collapse.’ I think that is a load of rubbish. They have been doing very well for themselves and they will continue to do very well for themselves—and we want them to do very well for themselves. But it is a sign of the sorts of tactics they use, the standover tactics: ‘You’—that is, the parliament of Australia—‘will do this or else.’ I take with a grain of salt the predictions by one oil company in particular, which said to my office that they had an intention, if this did not go through, to leave Australia. How ridiculous is that?

I also acknowledge that in the National Party we have a clear intention to try to get ethanol out into the market. Everyone clearly states that, if this goes through in its current form, it is going to be an inhibitor to getting ethanol out into the market. Getting a biorenewable fuel alternative out into the market that basically makes Australia a benefactor of the biorenewable fuel industry rather than a casualty of it will be affected by the fact that the independents are not in the market. They will be under undue pressure because of this, because all of a sudden you are going to have the supplier of the independents’ product also being a competitor in the retail market. We have some obscure belief that somehow their major competitor is going to look after them. Of course they are not. As soon as they prove themselves a viable threat, they are going to put them out of business. Since the Boral case and the running down of the predatory pricing laws, they have every ability to do that. That is another issue that connected to this.

I agree with Senator Bartlett and Senator Stephens that we should be dealing with section 46 of the Trade Practices Act. That is a big issue and it needs to be brought forward. It is a protection for small business. There is a government approved form of section 46. It has been there since 2004. It is just languishing; it is just sitting there. That piece of legislation should be enacted. It should be brought forward. I do not think even the oil companies would have a problem with that. If it were brought forward, we would have a mitigating circumstance that would allow a more relevant roll-out of this piece of legislation.

But this regulation is all one way. The way it goes, it is all in the favour of the incumbent oligopoly of the four major oil companies and Coles and Woolworths. Cole and Woolworths are, by default, Caltex and Shell. Sometimes they pose; Caltex and Shell will say, ‘We can’t do anything about Coles and Woolworths.’ Of course not! They are moving so much product through them that they do not want to do anything about them. They have managed to get about 52 per cent of the retail market in fuel, which links up with their control of the retail market in a whole range of other fields. Of course they are quite happy to move that product.

Then they put their hand on their heart and say, ‘We will deal with ethanol when it has a competitive advantage.’ The fact that ethanol is at about 80c at the terminal gate price and fuel is at about $1.40 does not seem to strike a chord. Of course there is an absolute competitive advantage of about 60c a litre to get ethanol out into the market, but they do not want to do it, because it does not fit their corporate plan. It does not fit their plan to roll out an alternative product to the product they are selling and they control from the oilwell to the bowser.

One of the main mechanisms that we have to do it in this nation is the independents. A clear example of that is here in Canberra. Four sites sell ethanol. Three of them are independent. And what are we going to do? We are going to pass a piece of legislation that those three independents say will work directly against their future in the market. We are passing a piece of legislation that does not promote ethanol; it inhibits it. You cannot say you want to promote a product if you are trying to get it off the market by taking away your mechanism of retailing it. That is another issue. The major oil companies’ move to not be proactive in pushing for the government’s policy of getting a biorenewable fuel industry off the ground will be enhanced because of the continued enactment of this regulatory instrument.

We have heard a lot today that there will be a strengthening of the lease agreements for these new franchisees and branded operators. But of course that avoids the crucial issue: that is only if the oil company chooses to renew them. It is like me saying to you: ‘I’m going to offer you a great deal on the lease of your house, if I choose to lease it to you. But, when there is a commercial advantage of me not leasing it to you, I’m not going to do it.’ The oil companies are not going to be renewing leases if they can make a greater margin out of operating it themselves. But, in these three by three by three year leases which have been talked about today, at the completion of that term they have two choices: to take over the site and operate it themselves or to lease it on to someone else under these new leasing arrangements.

That is the choice, and they can choose not to renew it. They can choose just to say: ‘We’ve thought about it. We don’t have to pay you anything for it. You’re out of there and we’re in there tomorrow.’ There is no protection against that. There is no mitigating measure against that. The protection in the past was exactly this regulatory instrument. They had to deal with it. They had to get their product moving. To get their product moving, they had to have the sites out there, and they were not allowed to own more than five per cent of sites. Now they are allowed to own the whole lot. There is nothing stopping them. The reason they are so absolutely enthusiastic about getting this through, and I know they have been lobbying in the corridors here flat out, is that that is exactly what they intend to do—take over these sites.

Who is going to suffer from that? In the short term it is going to be the mum-and-dad operators, the small businesses that we in this chamber are supposed to represent. They are the people that we are supposed to be looking after. They are the people who do not have the capacity or the lobbying ability to gather together in big numbers; put together a huge budget to come here and knock down every door; be the benefactors, if they have to be, of political parties; and do whatever else to achieve their objectives. Mum-and-dad operators do not have that capacity. What they have is the hope and the sense of goodwill that this place will protect their interests. That is not going to happen with this regulation going through.

We are going to make a clear statement today with this regulatory instrument about whether or not we believe there should be a protection for the smaller operators in the Australian market in general. There is no section 46 to go hand in hand with this. There is no section of the market that is going to be quarantined either volumetrically or by site numbers for smaller operators. It will be a further inhibitor on rolling ethanol out, yet we say that is what we want to do. I do not know how we are going to do it. Twenty million litres a year—that is how pathetic it is—is what the major oil companies have managed from 2001 to now, the year of our Lord 2006. They are managing to put 20 million litres into the fuel that we utilise. Their target is 350 million litres by about 2010. They are actually going down; they are not going up. They are putting less out, not more. They are going backwards in achieving their objectives. Even 350 million litres is only 0.7 of one per cent. It is so small. It is three-fifths of five-eighths of very little at all.

How are we going to try and deal with that? We are going to force them by giving them greater power to not achieve the objective that the Australian government has asked them to achieve. It is going to be interesting. In the future we are going to have major arterial roads with strangulated sites. That means sites on both the left- and the right-hand sides of the road owned and financed by the major oil companies. They are going to have the capacity to move huge volumes of fuel and they are going to have a close proximity to the refining capacity. It is a very efficient way to move the product. The purpose of the retailing arm is to move product. The margin is not made in Australia; it is made overseas. The purpose of the retailing arm in Australia is to move product. So you are going to have strangulated sites on the major arterial roads, and that is going to lead to the most efficient utilisation of refining capacity. There are no intended new refineries in Australia, so the refining capacity will have an absolute horizon of product that they can move.

When they move that refining capacity to the strangulated sites and the major sites they will own and control themselves, you will be left with other remote regional sites which will be very much at the bottom of the pecking order. There is nothing in this about guaranteeing supply. If they say they do not have the product, that is it—they do not have it. And they will probably be telling the truth—they will not have it. They will have utilised it in their own sites. They also, by the way, have a way of getting around that. They have categorisation of product. They have branded product for themselves and other product. Once the other product, which goes off to the independents, is out, that is it; it is game over. So you are going to have small town operators which they always had to rely on the past to get product out basically being left with a completely unaffordable product, which means they cannot pick up the passing trade, which means they are not a viable concern, which means they close down. When they close down, that is yet another service that gets removed from these areas.

I know this is an issue that does not ring bells. It is not going to claim the collective psyche of the Australian people like other issues. It is maybe a little bit dry. But the issue comes down to this—it will affect us all in the long term. In the long term, once there is vertical control, not only will you extract a greater margin on the product you sell—that is, not only will you put up the price of fuel—but you will have a commercial and corporate obligation to do exactly that. You have an obligation to get the best return for your shareholders. So, if there is the capacity for you to raise the price, that is exactly what you are going to do. Of course that is exactly what is going to happen here, and it is exactly what happened in the UK. But we all think there is something remarkable about Australia: ‘No, it’s not going to happen here. It happens everywhere else but it won’t happen here.’ Of course it will happen here. Look at the history and ask, ‘What was one of the greatest mechanisms of forcing a reduction in prices?’ Lo and behold, it was the independents. What are we going to do? We are going to take the independents out of the market.

In the short term it always comes to back to this: the purpose of the economy is not to create the lowest price product for the end consumer, but that is a consequence of a good economy and it has happened here; the purpose of the economy is to create the greatest connection between the wealth of our nation and its people. It does that primarily through small business, primarily by giving the people of Australia the ability to buy and sell a product in a retail fashion, and that is being lost in this nation. We have 73 per cent of the retail market controlled by Coles and Woolworths. They are the largest outlets for liquor, the largest holders of gambling licences and the largest retailers of fuel. These are two organisations. This is also an exacerbation of that process.

It is an issue that might be dry, it might be about a regulatory instrument and it might not have claimed the Australian psyche, but it is extremely important to where we go as a nation. We have heard, and I agree, that this would never be tolerated in the United States; there is no way in the world. They have antitrust legislation. The bastion of free market democracy would not tolerate this. We would, but they would not, and there is a reason for that—they believe that the American people have a right to participate in the wealth of America. It is fundamental. If you read Jefferson, he will tell you all about it. But we are moving away from that.

So there are other sides to this debate beyond the dry and dogmatic, beyond saying: ‘This is just a change in a regulatory instrument. It does not mean very much. It’s not that important. I don’t know what Senator Joyce is banging on about.’ There is a clear outcome for this and a clear reason. In this chamber we have to grab the agenda for small business again. We have to recognise the fact that they are not going to be knocking down the doors of this place. They do not have the capacity to do that. Today the Motor Trades of Australia body passed a unanimous resolution with the 130,000 members supporting that we find some protection for them, supporting that this regulatory instrument in its current form is a bad outcome for them.

It is interesting where the inspiration for this came from. I remember during the first campaign driving up the road at Gin Gin, I think it was, near Bundaberg, and stopping at a small petrol station to grab a sandwich. We introduced ourselves to the owners and said g’day to them—trying to collect their votes, as you all know you try to do. The owner almost jumped the counter just to explain the absolute frustration of his life, the fact that the corporate service station up the road was able to sell fuel at a price he could not possibly buy it at. Yet this is supposed to be a free market, an unregulated market. They were being forced out of a job. I thought about that. You can just walk out the door, think, ‘I’m not going to get his vote,’ and forget about it or you can try to follow the issue through and try to progress the issue. You can have it stored in the back of your mind that this is something that, if you ever got the chance to deal with it, you would deal with. Today is the chance to deal with that issue. I imagine I am going to fail, but the point is you give it your best shot and have a go.

I suppose it will come down to the vote. I implore people just to think about this. Think about this if you think about regional towns. Think about this if you think about small business. Think about this if you think about how our nation is developing—whether we are disenfranchising the Australian people from the wealth of their own nation, whether we are creating the overcentralisation and greater corporatisation of our nation, whether we are creating a mechanism where we are all going to end up as middle managers in business but never owning the business, whether we are creating a nation where what you achieve in life is to go up three or four floors in the building in which you work but you are never going to own the building. If you want to own the building then you have to create the environment for small business to prosper.

My colleagues, that is the issue and one item that we need to address. If we had section 46 on the table, then I suppose you could let this through. But it is not on the table. There is no prospect that we can see for that coming out. We are having the agenda run by people who are not in favour of small business.