Glenn Sterle (WA, Australian Labor Party) Share this | Hansard source

I rise to speak in support of Labor’s second reading amendments to the Petroleum Retail Legislation Repeal Bill 2006. Australians who do not have the luxury of getting fuel cards, like we all do, have been doing it very tough since the last election. When the Howard government was re-elected in October 2004, the average petrol price in the Perth metropolitan area was 104.7c a litre and to fill the tank of a Holden Commodore would have cost $78.52. As at June 2006, the average petrol price in the metropolitan area of Perth had risen to 134.5c per litre and to fill the petrol tank in that same Commodore in June this year would have cost $100.87. That means that, since the Howard government was re-elected in October 2004, the cost of filling that tank in the Holden Commodore has increased by $22.35. The average family in High Wycombe, a suburb of Perth in the marginal government-held seat of Hasluck, would easily go through a tank of petrol a week going to and from work, dropping their kids off at sporting events and training, or going to the shops. Four tanks of petrol a month—and I am sure many families use more than this—adds up to an extra $88 a month that a family has to find just to get around.

I have probably burnt through more diesel than anyone else in this parliament. In my 11 years as an owner-driver, carting freight to and from the northern sectors of Australia, including Darwin and the Kimberley region, I have filled the tank on my rig more times than I care to remember. When I fill it, I put in 1,500 litres of diesel at a time. The average cost of diesel in the Perth metropolitan area has risen from 112.9c per litre at the time of the last election to 143.9c a litre in June this year. It now costs $465 more to fill my truck with fuel than it did at the time of the last election.

Mr Acting Deputy President Hutchins, you are probably the last person I need to explain this to, because you would fully appreciate—as I am sure many senators on the other side of the House do as well, although sometimes they have a habit of forgetting—that goods do not just appear on the shelves in shops. Clothes do not accidentally fall onto the racks in the shopping centres. These goods are all carted on the backs of trucks. Unfortunately, when the price of fuel goes up so too does the cost of goods to consumers.

If we consider the needs of people in rural and remote Western Australia, we should realise that most of their food gets to them on the backs of trucks. These trucks are travelling all the way from Perth. If we also consider that the industry standard for heavy-freight fuel consumption is around one litre for every kilometre travelled, then we know that a round trip, for example, from Perth to Kununurra and back again—a distance of about 6,200 kilometres—would use approximately 6,200 litres of diesel. As a rough estimate it means that, since the last election, an extra $1,900 in fuel costs has been added to the cost of one roadtrain of freight to Kununurra. Thankfully, there are signs at the moment that fuel prices are going down; but, as we have all seen in recent years, it takes only a cyclone or a maintenance shutdown on a major pipeline to send the price skyrocketing once again. Sadly, this bill will do little to address these problems.

The main purpose of the Petroleum Retail Legislation Repeal Bill 2006 is to repeal the Petroleum Retail Marketing Sites Act and the Petroleum Retail Marketing Franchise Act. Labor supports the repeal of these acts for two reasons. The first reason is that the minister has already put forward a regulation that undeclares the four major oil companies from the operation of the Petroleum Retail Marketing Sites Act, so it applies to no-one. The second reason is that, even if the act applied to the four major oil companies, the Petroleum Retail Marketing Sites Act 1980 and the Petroleum Retail Marketing Franchise Act 1980 are outdated acts and serve no useful purpose in today’s petrol retail industry. Even if the minister had not undeclared the four major oil companies from the operation of the act, well over half the industry by volume of sales is not covered by current legislation—and that includes the retail stores Coles and Woolworths.

Over the years, the major oil companies have effectively been able to circumvent the act, particularly by way of creative multisite franchise arrangements. We have also seen in the market the emergence of partnership arrangements between Coles and Shell, and Caltex and Woolworths. The Petroleum Retail Marketing Sites Act, which was designed to limit the number of service stations the oil companies could run directly, does not cover Coles or Woolworths. The rules for participants are inconsistent and unfair. That is bad for industry and, far more importantly, it is bad for Australian consumers, who are doing it tough at the moment.

The repeal of these outdated acts is only the start of putting in place a regulatory regime 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 for the government is to introduce the Oilcode as a mandatory industry code under section 51AE of the Trade Practices Act. In 1998, the opposition said that they would support petrol reform as long as the Oilcode was agreed to, and it has taken the government another eight long years to get around to it. Labor have said all along that we should support the government in its efforts to repeal these acts and to reform the fuel industry, as long as the government implemented the Oilcode to address the gaps in the existing regulatory regime to protect smaller operators and consumers. Because of the Howard government’s incompetence and failure to show leadership, it has taken eight long years to secure agreement from industry and consumer representatives for an oilcode that was acceptable to all involved.

The Oilcode’s dispute resolution scheme will provide a low-cost and rapid means of addressing disputes as an alternative to legal action. These changes are likely to lead to increased competition in the sector, with the potential for positive impacts on fuel prices, particularly in rural and regional areas. Unfortunately, the Oilcode does not go far enough. 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, reform should also include amendments to section 46 of the Trade Practices Act in order to prevent the potential for abuse of market power.

It is to the continuing detriment of small businesses in the petrol retail industry that the Howard government continues to stuff around with delivering on the recommendations of the 2003 Dawson report and of the 2004 Senate inquiry. Australia needs a national transport fuel policy that guarantees supply for the long term and that gives us options to deal with global fuel supply and price emergencies. We need to reduce our dependence on fuel from unstable regions in the world. We cannot rely on foreign oil if the Strait of Hormuz is closed, if the Alaskan pipeline has to be fully shut down, if war escalates in the Middle East or if civil unrest shuts down West African production. It is obvious to everyone, except the government, that, if we do not have home-grown fuel industries in Australia, we will remain at risk. If we do not develop large-scale alternative fuel industries in Australia, we will increasingly be hostage to supplies from the Middle East, West Africa and Russia. To prevent our country becoming hostage to foreign oil, we need to begin weaning ourselves off traditional fuels and to develop domestic alternatives.

High petrol prices are driven largely by the high price of crude oil. Oil is a finite resource. We are running out of oil. On the basis of the law of supply and demand, demand for fuel is going up and supply is coming down, so the price is naturally going to go up. When the price of crude oil is high, it is all the more urgent that governments act. We have to wean ourselves off Middle Eastern oil. In fact, we have to wean ourselves off all traditional fuels. Unfortunately, the Howard government is asleep at the wheel. If it has taken the government eight years just to develop an Oilcode, I have no faith that it will be able to develop an industry plan to wean Australia off foreign oil.

The Howard government is all over the shop on its policy towards alternative fuels. In the last parliament alone, the Howard government changed its mind not once, not twice, but on three occasions with respect to the excise regime not only for ethanol but also for the LPG industry. Despite his May 2002 view that applying an excise to ethanol and LPG was a bad idea, the Treasurer announced in the 2003 budget that he would do just that. He announced that biofuels and LPG would be subject to an excise from July 2008. In December 2003, guess what? He changed his mind again, announcing a new excise regime to apply from July 2011.

Senators will be aware that there is a Senate inquiry currently underway into Australia’s future oil supplies by the Rural and Regional Affairs and Transport References Committee—which I know has now changed its name. The committee, of which I am a member, along with Senator Milne and Senator Joyce, has taken evidence on a range of matters, including on the question of whether the world oil supply has hit peak oil. Briefly put, peak oil is the point at which world oil supply peaks before beginning to fall. With the Senate’s indulgence, I would like to share some statistics that show that Australia at least seems to have reached peak oil in domestic production.

In 1998-99, the Australian production of crude oil, condensate and LPG came in at 32,265 megalitres. This figure rose steadily to 42,279 megalitres by 2000-01. Since then, Australia’s production of crude oil, condensate and LPG has fallen steadily to 29,995 megalitres in 2004-05. Unless there are more major finds and capital investment in the very near future, it appears that Australian production hit peak oil in 2001-02.

As a consequence of our reducing domestic production of crude oil, condensate and LPG, we have become increasingly reliant on imported fuels to meet our consumption. A consequence of this is that the value of petroleum imports as a percentage of the value of total imports has increased from 3½ per cent in 1998-99 to around 10 per cent in 2005-06. No wonder Australia’s trade deficit is looking so crook.

Australia’s capacity to fulfil its petroleum consumption needs from its own petroleum resources has fallen markedly in recent years, at the same time as there has been an escalation in the world demand for crude oil. From 2001-05, world oil consumption increased by approximately eight per cent. In the previous five years, world consumption of oil grew by only 4.3 per cent. Furthermore, from 2001 to 2005 the average price of a barrel of crude oil increased by approximately 150 per cent. In the five years previous, the world price increased by only approximately 3.5 per cent.

In the face of all this, the entirety of the Prime Minister’s response has been to repeal two acts and give a handful of Australian motorists a couple of thousand dollars to change over to LPG—that is, if they can find someone with the skills to do the conversion. The point is that the Howard government has let Australia down badly. Labor, on the other hand, has a plan to reduce our dependence on imported oil and to put in place new policies that can encourage alternative energy use. The solution is home-grown fuel industries in Australia. That requires that we accept that there are policy options available to ensure that the wheels continue to turn for Australian consumers and Australian industries to ensure that Australians can afford fuel and to ensure that Australian industry can afford energy.

I am advised that there are currently seven refineries in Australia with a combined capacity of around 800,000 barrels a day. This is more than sufficient to meet the entire Australian demand, currently about 750,000 barrels a day. But I am also advised that, at present, alternative fuels make up less than two per cent of the overall market for petroleum products. The two most common types of biofuels that are being developed and used are ethanol and biodiesel.

Contrary to Senator McGauran’s rantings about the Australian Labor Party, the Labor Party started the ethanol industry in this country with capital assistance grants back in 1993. We have supported pushing out further the application of tax on ethanol. We did not oppose the government’s total removal of import competition. We have supported all the later rounds of capital assistance grants for new plants. We have done all the ethanol industry has asked of us, short of supporting mandating.

Ethanol is good for regional jobs, it is good for the environment and it is good for the agricultural sector. It helps the competitiveness of independent service stations because they can blend the product—having no tax makes them more competitive. But we make only 37 million litres of it in this country at the moment. If we mandated it at 10 per cent, we would need at least two billion litres.

Even Senator Boswell—yes, Senator Joyce: Senator Boswell, the cultural attache from the Queensland National Party—said on 14 August 2006 that the Howard government needs to do more to promote ethanol fuel. According to Senator Boswell, the Howard government said:

... really have to get fair dinkum about ethanol and bio-fuels because we’re only playing at the edges at the moment.

I could not agree more with Senator Boswell. I suspect Senator Boswell knows that only the Labor Party is serious about reducing Australia’s reliance on foreign fuel. Senator Boswell knows he is part of a government that got elected in 1996 promising to keep Labor’s ethanol bounty but scrapping it in their first budget. He knows he is part of a government that attacked the ethanol industry and then rearranged the support so that it helped only one person. The Prime Minister needs to understand that the ethanol industry is about more than just helping out his mate Dick Honan.

The other main biofuel is biodiesel. Biodiesel can be made from several types of oils such as soybean, rapeseed and vegetable or animal fats. Biodiesel fuel is biodegradable, requires minimal engine modification when used either as a blending component or as is, and is cleaner burning than the diesel it replaces.

I would like to take the opportunity to congratulate Gull Petroleum in Western Australia, which in a number of its service stations is offering biodiesel to consumers as a fuel additive in 20 per cent blends with petroleum diesel. They have set a fine example to other retailers, and I hope their product is well received by the market. The Labor Party has always been a great supporter of both gas to liquids and coal to liquids, which are integral to the commercialisation of clean coal technology for power generation in Australia and which are part of the environmental debate.

Although the technology to produce GTL diesel has been available since the 1920s, it has been too costly to be commercially viable. Over the last decade, however, costs have reduced by 50 per cent, and there is reason to believe there will be further progress in cost minimisation and process optimisation. The advantage of GTL diesel is that it contains almost no sulfur or aromatics and is well suited to meet current and proposed cleaner fuel requirements of developed economies.

It is now almost five years since Senator Minchin, the then minister for resources, appointed a GTL task force to investigate the feasibility and benefits of establishing a GTL industry in Australia. Five years later, no action has been taken. It is just not good enough.

Another policy initiative the Labor party has announced is Labor’s green car challenge. Around 18 per cent of new cars in Australia are bought by federal, state or local governments. Labor has said that, if the Australian car industry could build a competitive, value-for-money green car, a federal Labor government would put it into the Commonwealth fleet. As Mr Kim Beazley, the Leader of the Opposition, put it, ‘You build it; we’ll drive it.’ Labor will use 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 ensures not only good outcomes for the environment and lower fuel bills for Australian families but also good outcomes for the Australian economy and Australian jobs.

This policy has the support of the Australian Manufacturing Workers Union, which does an excellent job representing and protecting the workforce in the motor vehicle industry. Like Labor, the AMWU knows that, if we stand still while the rest of the world is moving forward, we will get left behind. Fuel prices are hurting Australian families and adding inflationary pressures to the economy. The Howard government has been asleep at the wheel when it comes to developing alternative fuels to reduce Australia’s reliance on oil. Labor has a vision for an Australian economy that does not buckle under the weight of a global oil shock. That is why Labor released a blueprint in October last year that outlined plans to develop existing alternatives, for example, LPG, ethanol and biodiesel; to develop emerging alternatives, for example, gas to liquids; and to develop future fuels, for example, hydrogen. Labor’s plan stands ready to be put into action. If all the Howard government is going to do is tinker around the edges, then it should call an early election so Australians can get the kind of leadership they deserve.