Ian Campbell (WA, Liberal Party, Minister for the Environment and Heritage) Share this | Hansard source

I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

PETROLEUM RETAIL LEGISLATION REPEAL BILL 2006

At a time when high fuel prices are impacting on all Australians, I am pleased to introduce the Petroleum Retail Legislation Repeal Bill 2006 (‘the bill’). This bill is a central component of the Government’s Downstream Petroleum Reform Package (‘the Reform Package’). It will facilitate a more competitive retail fuel market with the potential for positive impacts on fuel prices at the pump.

The bill will repeal the legislation currently governing the retail petroleum industry, that is the Petroleum Retail Marketing Sites Act 1980 (‘the Sites Act’) and the Petroleum Retail Marketing Franchise Act 1980 (‘the Franchise Act’). These Acts have failed to keep pace with changes in the structure of the retail petroleum market and have created a sub-competitive retail environment, which imposes higher costs on Australian industry and motorists.

As part of the Reform Package the Government will also introduce a mandatory industry code, the Trade Practices (Industry Codes—Oilcode) Regulations 2006 (‘the Oilcode’), under Section 51AE of the Trade Practices Act 1974. The Oilcode will institute a more effective regulatory regime to allow all industry participants to respond and adapt to changing conditions in the retail petroleum market without distorting or reducing levels of competition.

The Sites Act restricts, via set quotas, the number of retail sites that the oil majors, that is BP, Caltex, Mobil and Shell, can own or lease, and operate either directly or on a commission agency basis. Current quotas are based on the volume of fuel each company has the capacity to produce at their domestic refineries and vary from 87 to 136 retail sites. The total number of sites under the quotas represents about five percent of all service stations nationally.

The Sites Act operates concurrently with the Franchise Act, as service stations run under a franchise agreement with an oil major are not subject to the Sites Act quotas. The Franchise Act sets out the minimum terms and conditions for these agreements, including tenure, renewals and associated disclosure requirements. No such legislated terms and conditions are afforded to small businesses operating under oil company, supermarket or independent retail chain commission agency agreements in this industry.

In 1980, the Sites Act and the Franchise Act were considered to be an appropriate response to limit the potential price setting activities of the oil majors and to promote a viable small business sector in the retail petroleum industry.

The market has, however, changed substantially since 1980: independent retail chains and supermarkets, whose operating structures are not constrained by the legislation, have entered the retail fuel market; fuel quality standards have tightened in line with global environmental best practice; and global supply capacity has been stretched as demand from China and India continues to grow.

In this commercial environment it is not surprising that industry rationalisation has also occurred. And at this point I would like to note that any change in the environment regulating the retail petroleum industry will not eliminate the rationalisation of retail sites that has been experienced by this industry over the past two decades. This has been driven by increased competition due to the factors I have just mentioned. However, I expect that rationalisation will eventually plateau as retailers compete on the even playing field facilitated by the Oilcode and the number of retail sites reaches an optimal level in response to the demands of the domestic market.

The existing retail petroleum legislation needs to be seen in the context of the entry into the market of the large independent retail chains and supermarket retailers, whose business structures are not constrained by the legislation. The legislation serves only to place an additional compliance burden on the oil majors and hinder the oil majors’ freedom of choice in the selection of appropriate business models at all retail sites. The legislation also retains the disparity between the conditions provided to franchisees, who generally run oil major-owned service stations, and those provided to commission agents, who tend to run service stations on behalf of the independent retail chains.

It is for these reasons that the Government is reforming the regulatory environment governing the retail petroleum industry. The Reform Package and in particular, the Oilcode, will deliver positive outcomes for the retail petroleum sector and for Australian consumers, including a streamlined regulatory framework.

The package will recognise the power imbalance inherent in the substantial interdependency between some small businesses operating under franchise and commission agency agreements and their wholesale fuel suppliers, whether those suppliers are the oil majors or the independent retail chains.

The Oilcode regulations will achieve this outcome through three key policy initiatives. It will establish minimum industry standards for fuel re-selling agreements between wholesale fuel suppliers and fuel retailers to provide a baseline for negotiations on those agreements. These minimum standards build upon, and strengthen relevant provisions in both the Franchise Act and the more general Franchising Code of Conduct and will provide greater certainty and protection for all parties to fuel re-selling agreements.

The Oilcode will also introduce a nationally consistent approach to terminal gate pricing arrangements to improve transparency in wholesale pricing and allow access for all customers, including small businesses, to petroleum products at a published terminal gate price. This approach will not negate the ability of parties to negotiate individual supply agreements nor will it prevent the offering of discounts by wholesalers.

Finally, the Oilcode will establish an independent downstream petroleum dispute resolution scheme to provide the industry with an ongoing, cost-effective dispute resolution mechanism as an alternative to taking action in the courts.

The Oilcode represents a compromise on behalf of most industry participants and I note that there are still a few interests, representing some of the independent operators, and some of the small businesses in the industry, who remain concerned that the Oilcode does not prevent either below-cost selling or the provision of discounts to large volume customers in the wholesale market.

The Government does not seek to hinder discounting or other initiatives, such as shopper dockets, which have the potential to reduce the cost of fuel for Australians. Indeed, the introduction of such measures would hinder the competitive nature of the market and be contrary to the Government’s competition policy objectives.

Through the Oilcode, the Government will institute a more effective regulatory regime to allow all industry participants to respond and adapt to changing conditions in the retail petroleum market without distorting or reducing levels of competition.

Consistent with this intent and to prevent market uncertainty and potential breaches of the Sites Act while this bill is under consideration of the Parliament, I will shortly table an amendment to the Petroleum Retail Marketing Sites Regulations 1981. This amendment will suspend the oil majors’ reporting and compliance obligations under the Sites Act. It will not affect commercial arrangements under the Franchise Act in any way.

The bill I introduce into the Senate today is the first step in long awaited reform in the retail petroleum industry. Coupled with the subsequent introduction of the Oilcode under the Trade Practices Act, it will allow all businesses in this industry greater flexibility when selecting the business structure for individual service stations. It will provide greater coverage of standard contractual terms and conditions for fuel re-selling agreements where there is a substantial degree of interdependency between the retailer and the wholesale fuel supplier.

The Oilcode will provide greater transparency and consistency for all market participants and consumers in terminal gate pricing arrangements. It will provide all industry participants with access to a low-cost alternative dispute resolution service.

Above all, the Oilcode will increase competition in the retail petroleum industry by removing the constraints the current legislation places on the oil majors and instituting a more effective regulatory framework for this industry.

The Downstream Petroleum Reform Package represents a significant improvement in the operating environment of the retail petroleum industry and I commend this bill to the Senate.

TAX LAWS AMENDMENT (REPEAL OF INOPERATIVE PROVISIONS) BILL 2006

In 2003, in accordance with the government’s aim of reducing complexity in tax laws, the Board of Taxation commenced a project to identify inoperative provisions and to repeal those parts of the taxation law which were no longer required. In October last year the Board of Taxation reported that it had identified about 2,100 pages of inoperative provisions in the income tax law and recommended that they be repealed. In November last year the Treasurer accepted the recommendation of the Board of Taxation.

In April of this year, the Treasurer released a draft of the present Bill for public comment. On 22 June 2006, after consulting in relation to the proposed Bill, a revised version of the bill was introduced.

The bill repeals over 4,100 pages of inoperative tax law, including about 2,600 pages of income tax law. That amounts to almost a third of the income tax law and over half of the Income Tax Assessment Act 1936. The bill also repeals about 1,500 pages of other acts relating to taxation, including 48 sales tax statutes that are wholly inoperative. As such, this represents a major improvement in the shape of the tax law and a major reduction in the volume of the tax law.

Repealing inoperative material will significantly reduce the length of the law. It will make it easier to use and lower the compliance costs borne by those who use the tax law.

As well as repealing inoperative tax law, the bill also makes other improvements to the tax laws which will make them easier to use. For example, it replaces multiple definitions of some terms with a single definition. Rationalising definitions will bring greater consistency to the tax law and make it easier for taxpayers to understand and meet their obligations.

The bill also rewrites some remaining operative provisions from the 1936 Assessment Act into either the 1997 Assessment Act or the Taxation Administration Act 1953. This allows us to incorporate those provisions into the more straightforward structure of those Acts and to do so in the more contemporary language they use.

The flow-on effects of the repeal of inoperative provisions will provide further benefits for taxpayers and tax practitioners. The Commissioner of Taxation has advised that approximately 200 public rulings, which contain references to provisions which are being repealed, will be either revised or withdrawn. The Commissioner is also working with tax professionals to improve the readability from the ATO’s legal database of other public rulings affected by the bill.

Repealing the inoperative provisions and making these other improvements are important parts of the government’s continuing efforts to reduce the complexity of the tax law. The government will look for similar opportunities in the future to improve the tax laws and reduce the regulatory burdens and compliance costs faced by business and other taxpayers.

Full details of the measures in this bill are contained in the explanatory memorandum.

SOCIAL SECURITY AND FAMILY ASSISTANCE LEGISLATION AMENDMENT (MISCELLANEOUS MEASURES) BILL 2006

This bill will make numerous minor amendments to social security, family assistance and related legislation, to improve the operational effectiveness of that legislation. It is a minor housekeeping bill that will remove anomalies, clarify the legislation in line with established policy and make technical corrections and refinements.

The bill introduces no significant new policy and has no or negligible financial impact.

Among the measures in the bill is one to make sure that child care benefit customers who use registered care for their children cannot be paid child care benefit that exceeds the actual fee they paid for that care. This new rule is equivalent to an existing limit in the legislation on child care benefit for care provided by an approved child care service.

In a further child care-related measure, a new rule is being set up for care provided by approved child care services, to mimic an existing rule for registered carers. It is being made clear that neither registered care, nor approved child care service care, will attract child care benefit if the care is provided as part of a compulsory education programme. Child care benefit should not be available while children are in the care of their teachers as part of their normal schooling.

The bill includes a measure to confirm that two members of a couple who are living apart on a temporary basis may generally be regarded as a ‘temporarily separated couple’, whether they are legally married or a de facto couple (noting that couples separated through illness or respite care are covered by different provisions). The temporarily separated categorisation allows the couple to attract a higher rate of certain payments such as rent assistance and remote area allowance. At present, only legally married couples fall within the definition, whereas the general social security and family assistance law treatment of de facto couples suggests this is an anomaly that should be corrected.

Minor anomalies in the income test for the low–income health care card are addressed by this bill. Notably, a portion of the income test that applied before some 2001 concession card amendments and that was unintentionally omitted from the new provisions is being reinstated. The correction will ensure that a social security pension or benefit is included in income, as comparable Commonwealth and other payments of an income support nature are already included. Similarly, two veterans’ entitlements payments of a similar nature, the Defence Force Income Support Allowance and the income support supplement, are clearly identified as income for the purposes of the card.

The bill corrects an inequity in the social security law, by aligning the definition of homelessness that currently applies for special benefit with the similar definition that applies for the larger customer groups of youth allowance and young disability support pension recipients. However, the existing additional requirements for special benefit homelessness, that the customer be unpartnered and not have a dependent child, will continue to apply.

Seven Acts relating to housing that are no longer operational are being repealed by this bill. This helps in maintaining the statute books when Acts become redundant.

Most of the remaining measures in the bill are technical corrections and refinements. Many of these are consequential on the commencement of the Legislative Instruments Act 2003 and reflect the new concepts and arrangements established by that Act.

Debate (on motion by Senator Ian Campbell) adjourned.

Ordered that the bills be listed on the Notice Paper as separate orders of the day.