Christine Milne (Tasmania, Australian Greens) Share this | Hansard source

I rise today to make some comments on the Petroleum Retail Legislation Repeal Bill 2006. I remain unconvinced by the government’s argument here. It seems to me that it is really quite simple. We have a situation where the Petroleum Retail Marketing Franchise Act and the Petroleum Retail Marketing Sites Act do need revisiting. Everybody, I think, agrees with that. They have allowed the rise of retailing outside the acts’ ambit, most notably through the entry of supermarkets and the independent importers-marketers into the industry. And, although they were intended to ensure competition, the acts have also restrained competition by limiting the ability of the majors to compete with retailers operating outside the acts’ coverage. But the Greens do not believe that the Oilcode in its current form is sufficient to maintain the competitiveness of the independent retailers, because it does not prevent either below-cost selling or the provision of discounts to large-volume customers in the wholesale market.

It is obvious—as Senator Murray has argued, and as others in this chamber, notably Senator Joyce, have argued previously—that section 46 of the Trade Practices Act needs to be dealt with and strengthened before we move on any of these others, because people need some surety; they need some security about what is going on here. I am glad that Senator Murray for the Democrats has brought in a number of amendments which would strengthen the capacity of the parliament to support small business.

I am always interested to hear the government say it supports small business. From where I sit, time after time the actions that are taken do nothing to support small business—in fact, they undercut them and, really, drive them out of the industry. That is what is going to happen with regard to small independent outlets as a result of this legislation.

Nobody has been able to explain how, when you are allowing the majors to move in and sell below cost and access the discounts to large-volume customers in the wholesale market, the independents are going to compete with that. How could they? Can somebody in the government explain to me how the four majors operating in that way are going to leave any space for the small players? It just beggars belief, because that simply will not happen. The major players will reduce their prices, drive the small independent retailers out, take more market share themselves and then put up their prices, as is consistent with what they have done time and time again in the past.

Senator Murray’s amendments, I believe, are very important ones, because they, at least, move on the following principles. They look at this issue of some organisations having ‘a substantial degree of power in a market’. They look at a whole range of issues which would strengthen section 46, and I think that that is something that the government needs to look at. It is no use the government saying that they will deal with section 46 later. That does not give comfort to anyone because we do not know exactly how it is going to be dealt with. And, whilst this is a mandatory Oilcode, it does not go to those issues that I have just spoken about in relation to the Trade Practices Act.

Obviously, it does seek to prohibit the misuse of market power by organisations with a substantial degree of power in the market, but I think that if we move on that in the way Senator Murray has suggested it will be a very good thing. I note that some in the government are arguing that this view is absolutely wrong and that the mandatory Oilcode has satisfied the concerns of the small retailers. But, in fact, the Motor Trades Association of Australia—and it represents service station operators—has said it believes that the proposed code is defective because it will not ensure a level playing field that would allow small service station operators to compete fairly in the market with the large supermarkets and oil companies. And these are the people representing the small players. They go on to say that the outcome of the government’s changes will be the closure of more small franchised and independent retail outlets, meaning, in rural and regional areas in particular, that motorists will have to drive longer distances to obtain fuel.

We will see increased dominance of the retail petroleum market by the two supermarket chains. We will see loss of competition in the retail and wholesale markets as independent importers struggle to find sufficient retail outlets to sustain a viable import business. There will be detrimental impacts on motorists in the longer term as small competitors exit the market and the larger chains gain a greater share of the retail petrol market, leading to less price competition. And service station operators wonder where the benefits to motorists and the government are in these proposed reforms. The only winners here would seem to be the oil majors and the two supermarket chains. From my point of view, in the absence of the changes to section 46, that is the only conclusion that I can draw. The only winners here are, in fact, BP and Mobil, who will be able to get themselves into the market in a way that they have not been able to because of the dominance of Shell and Caltex.

To suggest, as members of the government have, that if BP and Mobil do not get their own way they might leave the country beggars belief. I do not know of any country in the world where those petrol majors have just up and left. So I would like to be enlightened by the government—by any member speaking for the government—explaining to me on what basis those companies would leave the country when their businesses are in fact extremely profitable, as we know from their annual reports.

We know that the chief executive officer of the Service Station Association, Mr Ron Bowden, predicted that between 1,000 and 1,500 service stations will close and another 200 franchisees will leave the industry in the next two years. So in fact the government’s proposals would increase concentration in the industry and market power would be in the hands of a few large companies, which would ultimately lead to higher prices. There is no doubt that, after discounting or selling below cost in order to drive out the independent operators, the minute they have driven them out they will then up the prices to recoup whatever discount they had put in there in the first place. The Oilcode is not going to prevent them from doing that.

I have some very great concerns about this. The government has been aware of the need to deal with section 46 of the Trade Practices Act for a long time, and it has not done it. I think it is totally irresponsible to come in here with legislation that repeals existing legislation without letting the parliament know and without having introduced the changes to the Trade Practices Act that would supposedly give protection to the small operators in the way that the government says that it has an interest in doing.

In terms of the issue of alternative fuels—and this certainly comes to the point of the majors having control of petrol retailing—we have been trying for a long time to have the rollout of alternative fuels in Australia. The reason that has not happened to the degree that we would like is that the majors have no great interest in doing it. I acknowledge that some of them are moving on this at the moment and may continue to do so, but the fact that they will have control of the majority of the outlets means that that will be something that they are able to control much more readily than anybody else.

We have an oil crisis that is converging with a climate change crisis. We need to reduce our dependence on petroleum. We need to get into the alternative fuels in a big way, and compressed natural gas, particularly in the heavy transport industry, is something that the transport industry itself says it would be interested in. But of course you need a distribution network, a refuelling network, up and down the east coast and on the major transport routes if you are going to get that kind of change from the heavy transport industry. So we come back to the same conundrum about rolling out adequate networks for distribution.

As some senators would be aware, we already have this problem in Tasmania. There is no other outlet for LPG after Sorell, which is just outside Hobart, for the entire east coast of Tasmania. So if you wanted to have 100 per cent LPG, as some councils would like to do for their car fleets, you cannot, because there is not one distribution outlet. Tasmania has an appalling distribution network for LPG. Once again, it is no use putting up conversion to LPG and subsidising conversion if you do not have a distribution network that will actually provide for that to occur. So we have some real issues about not only funding research and development in alternative fuels but actually making sure that you get an appropriate distribution network throughout the country.

But the other issue that I want to speak on for a moment is the Labor Party’s second reading amendment. There are a number of issues in that that of course the Greens are interested in: increasing the market penetration of ethanol and biodiesel, LPG and compressed natural gas; and securing new investment in biofuels. But we do not support investment in coal to liquids. I think this shows the internal lack of cohesion of Labor’s policies. On the one hand they say they want us to reduce greenhouse gas emissions, and on the other hand they want to invest large amounts of money in coal to liquids when the Centre for Low Emission Technology has said quite clearly that, even if you could get into carbon capture and storage and it was a 100 per cent success—and at a price where you would do that—the emissions from the tailpipe of a vehicle running on liquid coal are the same as from conventional oil.

So there is no point in it. What is the point in a greenhouse gas world, in a world that is heating up? Why would you go down the path of spending millions on research into something that you cannot use at the end of the day, whereas if you put the same amount of money into lignocellulose research, which will generate ethanol from waste plant material, then you get a win-win for climate change and for new fuels?

So there are lots of ways of actually addressing the crisis that we have globally. The report brought down by the Senate Rural and Regional Affairs and Transport Legislation Committee is reading that I would recommend to everybody in the chamber. But I think that the internal inconsistency of putting in coal to liquids actually demonstrates that Labor wants to have it both ways on transport fuels and climate change. It is an unacceptable way to go. So I move an amendment to the Labor Party’s second reading amendment:

Paragraph (a)(iii), omit “and coal”.

So gas to liquid stays but coal to liquids goes from the Labor Party’s amendment through the amendment I am moving here.

I am also concerned that Labor is advocating finding more oil and spending more on finding more oil. Yes, of course that is going to be an option. But what we know from the latest information coming to us from all of the exploration companies and academics and so on is that going into deep water becomes extremely costly. So when it comes to any oil that you might find, particularly around Australia, where we are not known for major finds, you might be investing more in trying to extract the oil from the deep ocean than you are ever going to get from the oil.

I would remind senators that the expectation is that, if oil stays at $50 a barrel, by 2015 imports will exceed the value of exports by $25 billion. What is that going to do to the current account deficit? What is it going to do to inflation if we allow that to occur? We are talking about less than 10 years time; we are not talking about a long time away. So the sooner we can get into alternative fuels, the sooner we can improve our own self-sufficiency, the sooner we can reduce our dependence on imported oil, the better it is for the country in terms of energy security and the better it is for the world in terms of greenhouse gases.

In this move away from oil, we should not just be looking at this issue of how we distribute petrol and the issues around pricing, I suggest that at the big picture level we should be pushing for an oil protocol globally. Such an international multilateral protocol would organise a way of gradually reducing in an orderly manner each country’s dependence on oil by a certain per cent, and the same with supply, so that we gradually get there—instead of being confronted by what I believe will be social and economic chaos as this situation with oil depletion plays out over time, especially in convergence with climate change. Quite a lot of work has been done on the notion of a multilateral oil protocol, a protocol that would have no country producing oil above its present depletion rate, no country importing oil above the world depletion rate, and so on and so forth. There is a great deal of detail in relation to these protocols. I float that idea. Whilst we need to look at the day-to-day issues and whilst politics is dominated by petrol prices in the here and now, we know that petrol prices now are nothing compared with what they are going to be in the future. We know that, if we have to suffer $25 billion in imports exceeding exports by 2015, we will be in real trouble.

My view is that at the national legislative level we should be protecting as much as we can the independent and small operators, because they are our best hope for rolling out, particularly in rural and regional Australia, opportunities for taking up alternative fuels. The only way we are going to get real competition is to maintain those independent and small operators in the marketplace. The only way we are going to do that is by amending the Trade Practices Act right now, and not waiting—giving this power to the majors now, going with an Oilcode we know is flawed, and then waiting for some changes to the Trade Practices Act which may never eventuate. I say that because the government said previously it was going to go with a mandatory code for the primary producers of Australia in terms of retail groceries and it totally reneged on that after it had said that was going to happen within 100 days of the 2004 federal election.

We have had the government not act on the country of origin labelling; we have had the government walk away from alternative fuels in rural communities, which has been a big slap in the face for them; and now we have had the government renege on a very clear promise that if the coalition was returned that mandatory code would be in place 100 days after the 2004 election. It is not, and it is not going to be. Saying that there will be an announcement this Thursday about more or less starting the process again is an absolute slap in the face. If those rural communities continue to support the coalition when it has done them in on small business—from the individual fruit and vegetable growers through to the small businesses in the towns such as these independent franchisees and other small business operators—if they continue to vote for a government that is not acting on climate change or oil depletion, then they are only going to see more of their own kind driven off the land. The South Australian Farmers Federation put out a release recently saying that at least 15,000 families have been driven off the land already.

Let us not see rural communities suffer any more in this way. Let us address these issues with the Trade Practices Act. I implore the Senate to support Senator Murray’s amendment and to heed what those people who represent the industry are actually saying—that by repealing these acts without the safety net that is necessary with the changes to the Trade Practices Act what is going to happen is that all these small businesses will be closed. I am not in support of handing over retail petrol sales in Australia to the four majors, and that is what this legislation is about. This is about the government acting on behalf of BP and Mobil so that they can get in on the act because they have been outmanoeuvred by Shell and Caltex. But in giving BP and Mobil what they want and setting up perhaps greater competition between the four initially, what we will see, once those four majors get rid of the people they are in real competition with, is no below-cost selling; and we will see them back to their old tricks.