Chris Ellison (WA, Liberal Party, Minister for Justice and Customs) Share this | Link to this | Hansard source

On behalf of the Prime Minister, I table a statement on energy initiatives.

Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Transport) Share this | Link to this | Hansard source

by leave—I move:

That the Senate take note of the document.

It is again wonderful to see the government following the lead of the opposition in relation to initiatives for the Australian people! The blueprint that Kim Beazley announced in October 2005 indeed foreshadowed a number of the initiatives that the government now takes. Of course, we know that the government has no eye on the needs of the Australian motorist; its eye is on its own survival. That is the basis on which we now see the government making an announcement on a number of initiatives relating to fuel.

Many motorists who have the capacity to convert their vehicles to LPG will appreciate that there is an additional benefit which will now be available to them. Indeed, Labor was talking about additional benefits last October in our energy blueprint. But the problem for motorists who now wish to convert their cars to LPG is that there is already a three-month backlog for most converters to convert existing motor vehicles to LPG. If demand rises, that backlog will of course be pushed out.

One of the explanations that the converters such as the Gas Man give for the delay is that they cannot get enough skilled tradesmen to make those conversions. So, again, another of the problems that this government has presided over, the skills shortage, will have an impact on Australians and delay the implementation of LPG conversions for those who are in a position and have the ability to make a booking and convert their car.

I was having an informal conversation with Russell Scoular of Ford last Friday in relation to Ford’s program. Ford has an e-gas car that they sell off the factory floor, but there is a three-month delay in ordering vehicles because of the ability of their suppliers to give them the necessary parts to produce only those vehicles that are now in demand. So if demand increases, unless something changes rapidly, we are going to see an even greater delay in the ability of motorists to purchase an e-gas vehicle from Ford—that is, to Ford’s capacity to get the parts from suppliers to produce the cars even earlier.

Kim Beazley, in October last year, announced Labor’s blueprint in relation to these fuel issues that the government have been asleep at the wheel on for some time. Labor want to make alternative fuel vehicles tariff free, cutting up to $2,000 off the price of current hybrid cars—a real benefit for consumers. We announced that in October last year. We want to work with state and local governments to give city traffic and parking advantages for these vehicles so that there is an additional benefit for motorists in taking them up. At that time, we wanted to examine the granting of tax rebates for converting petrol cars to LPG but we see that there are some difficulties in achieving that conversion on a timely basis. To do all of that, Labor announced back in October that we would also be looking at other fuels because Labor were very keen to see some foresight in the management of Australia’s energy needs for the future.

Labor announced we would conduct a feasibility study into a gas-to-liquids fuel plant in Australia. It has taken this government effectively another eight months to announce the same thing, in that Minister Macfarlane is apparently now looking at those proposals. We proposed to offer petroleum resource rent tax incentives for developers of gas fields which provide resources for gas-to-liquid fuels projects. I encourage the government to look at that. We proposed to examine a new infrastructure investment allowance for investment in Australian gas-to-liquids infrastructure—something this government could also well think about. We would develop a targeted funding scheme for research and development in this area and work with industry to improve engine design and fuel quality standards. Labor is the party that has had the foresight on those matters—not like the government, simply pursuing a matter to try and win some votes as the election draws closer.

What was the government thinking back before October last year when Labor announced its initiatives? The Prime Minister said at that time:

I can fully understand the anger of motorists at the price of petrol …

          …            …            …

World oil prices are not something the Australian Government, or any government, can influence. They are out of our control.

At that time, the government had not done any hard thinking on the matter. Back in June last year, Mr Lindsay Tanner asked the Minister for Industry, Tourism and Resources a number of questions on notice to identify any work the government was doing to prepare Australia for the effects of future peaks in oil prices. He asked if the government had estimated when these peaks might happen; what the decline in global production might be; what the impact on prices might be; and, if the government had done any modelling on the impact on the Australian economy. The minister’s answer to each and every one of those questions was no—no in every case. The government had done nothing. The government had given no consideration to these matters. The industry minister has also said—this is prior to October last year:

At this stage Australia’s fuel security is still good … Do we need to find more oil? Yes we do. But short of finding more oil I don’t know what the solution is.

So we have a government with no ideas. Labor has produced its blueprint, and the government is keen to pick up anything it can to save its miserable electoral skin.

Let us not just talk about what Labor says about itself. The editorial in the Australian today, which does not often give Labor credit for its initiatives, has congratulated opposition resources spokesman Martin Ferguson. It says:

Martin Ferguson has raised the issue of gas or coal to liquids as the best long-term answer to the current oil price shock, and he is correct. The Government should send a clear message that it is serious. And it should explore everything, including tax incentives, to encourage the multi-billion-dollar investment necessary.

So the Australian is prepared to say that Labor is on the right track, and it is about time this government was listening. But, of course, we will see this government take decisions which it perceives are in its electoral interests, not the interests of the Australian public.

In terms of those rather pathetic comments in the ministerial statement with regard to ethanol and Labor’s position on ethanol, let me say this: Labor was critical that the government would not implement a standard which would give motorists certainty about the fuel they bought and the ethanol content. For months, Labor was talking about the adoption of an E10 standard so that motorists, when they bought fuel with ethanol content, would know that their warranties would not be voided, as some manufacturers were suggesting, and that there would be consistent quality in the fuel. There was evidence that some fuel, particularly in the Sydney market, had quantities of ethanol far in excess of 10 per cent, and the government did nothing for months. But what did they do in the end? They picked up Labor’s proposal. They implemented an E10 standard, and there is a basis for secure ethanol content arrangements which give motorists in most of the vehicles on the Australian roads confidence that they can safely put ethanol fuel into their vehicles without voiding their warranties and damaging their motors.

Labor’s position, again, has been vindicated by the actions of this government. But now the government is seeking to portray Labor’s position as something different from what it was. Labor had the foresight to see that there needed to be proper standards. The government ultimately adopted them. Now it is pure, shabby politics for the minister to say what is in this statement.

Lyn Allison (Victoria, Australian Democrats) Share this | Link to this | Hansard source

Unfortunately, this statement on energy initiatives is another example of the government lurching from one knee-jerk reaction to another with regard to oil policy. It was not that long ago that we had the energy white paper and then, lo and behold, a matter of months after that was released, we had a full-on debate about nuclear energy, which was not even mentioned in the energy white paper. Then we had legislation, which was passed more recently, completely cutting the excise for diesel for off-road use. Then we had the decision to designate five per cent biodiesel blends as being the standard—advantaging BP—but then ruling out higher blends, which are perfectly able to be used. Even fuel with up to 100 per cent biodiesel can be used safely in vehicles. Then we had the decision to introduce an excise on alternative fuels which will start in 2011-12. Again, that is another example of leaping from one illogical policy step to another without a sensible plan in mind for what we now have, which is an entirely predictable increase in the cost of petrol. This should have been thought about some time ago. In fact, the Democrats are pleased to see the ALP come on board with some of these issues, because they have been almost more reluctant than the government on some of them.

I actually put together a paper for the edification of the government some years ago saying that Australia’s future has got to be in a range of fuels; that we could not just rely on oil, because peak oil is fast approaching; that we should not just rely on LPG, because we do not produce enough of it to make a difference; that we should not just rely on CNG, because there is nothing out there as yet and CNG needs a lot to get it kick-started; and that we could not rely on biofuels entirely either because we would have to turn over the entire country’s food production to biofuels if we were to look at that being the only fuel into the future. So there is some recognition of that in this announcement by the Prime Minister today.

There is a grant of $2,000 for the cost of converting new vehicles to LPG for private use and $1,000 for converting old vehicles—though it may be the other way round, I am not sure. In any case, if you do the calculations on that, we are talking about the conversion of somewhere between 340,000 and 670,000 vehicles on the road over the next eight years. That is all very well, but we already have hundreds of thousands of vehicles on the road using LPG. And that is a very good thing—most of them are taxis. But, still, the best possible outcome on this in terms of the numbers would be a million cars running on LPG. That is about the maximum that Australia, in any case, produces in terms of LPG. What is going to happen with this? Is it again going to be used mostly by taxis and the like? What happens to those others who are stuck with old vehicles and very fuel-inefficient cars? They are the ones who are currently complaining, because this government has never said anything about fuel efficiency. It has never encouraged our auto manufacturers to build fuel-efficient vehicles, despite the huge handouts to the auto industry. Billions and billions of dollars have gone into vehicles, but most of the time they were six-cylinder large vehicles that have now turned out to be big gas guzzlers.

As I said, this was entirely predictable. We knew that oil was not being discovered at the rate that it might have been in the fifties and sixties and that eventually demand would overtake the production. We are not going to run out of oil tomorrow. No-one is saying that. But there is absolutely no doubt that worldwide demand will push up the price of petrol. When that peak production is lower than the demand being made on it, we are going to see petrol become entirely unaffordable, and we could see economies around the world wrecked by this. That is why it is important for the Australian government to have had a serious think about this and put together a plan for the long-term future. Good though this announcement may be, several hundred thousand more LPG cars are not going to solve the problem.

There are some carrots for service stations to carry ethanol. That—at last!—is a good thing but it is not going to make the big difference that some people might want. There is still a limit of 10 per cent on ethanol blends, and that was agreed to by the Labor Party. The government in its wisdom decided this was the way forward. Yet over in Brazil, as we all know, there are 85 per cent blends. And you can get yourself a car which will run on 85 per cent ethanol and 15 per cent petrol. But, of course, you cannot find that fuel here because it is actually against the law to sell it. It does not make any sense, but there you go.

I applaud the extension of the Renewable Remote Power Generation Program. I remind the Senate that this was negotiated by the Democrats at the time of the GST and diesel changes. I was talking the other night to someone at the renewable energy conference, and he said that that program has been a huge success. Farmers have benefited enormously, as have Indigenous communities. Shifting from diesel generators to a combination, usually of diesel generation and renewable energy, has been enormously successful. That in fact should be an ongoing program. We should not stop until all of those who use diesel in this way have had the opportunity to convert to renewables. Only a tiny fraction of those who might take advantage of this program have so far been able to do so. So it is really important that it is there, and I would encourage the government to make sure it is ongoing. Again, National Party members should be up here saying what I am saying—but no.

There is nothing there for compressed natural gas conversions. We did negotiate, again as part of that arrangement with the government back in 1998, for compressed natural gas conversions, but it was a failure. Why was it a failure? It was a failure because the government did not uphold their end of the bargain, which was to fund compressed natural gas service stations. There is no point in having a natural gas car without the stations. I had one for a while; there was one gas retail outlet in a very dark industrial area in North Melbourne, which, frankly, was not safe to go to at night and was out of the way. Until we get natural gas compressors, at the domestic scale, the fleet scale or the public retail outlet scale, we are not going to use this hugely valuable resource, which many cars could be running on. Natural gas has great potential, particularly for fleets but also at the domestic level.

So, as I said, we do not have an ethanol mandate. We have $17 million worth of carrots to hand out to the oil companies, again, to get them to put in bowsers that have E10. They are really not interested in doing that, quite frankly. Oil companies are saying: ‘Why should we promote ethanol blended petrol when we can have 100 per cent of the product and make sure that all the profits come to us? We do not have to buy ethanol from someone else.’ Not all of them are saying that. There are one or two that are doing the right thing; BP in Queensland is, in this case. But try to find one in Victoria; it is almost impossible. The petrol companies will not do it until the government says: ‘We are going to mandate it. This is how we are going to ramp it up and get ready for it. We will plan it with you and so on, but at some stage we mean to get 10 per cent of all fuel sold being ethanol.’ And then we have to change the law which restricts it to 10 per cent, because vehicles can easily run on 20 per cent. New cars certainly can and, if they cannot, then they should be able to. We know that vehicles being sent to Brazil can do it. Why do we not say to our auto manufacturers, ‘Make sure the vehicles that come off the production line can take higher levels of ethanol’? But no; that seems to be beyond the government’s thinking.

There is no relief for biodiesel from the onerous testing regime for so-called backyard producers such as small producers and farmers. Again, the National Party should be in here, involved in this debate. Because the excise has been removed from diesel it is now cheaper for farmers to buy petrodiesel than it is to use waste products, grain or whatever they grow in order to make their own. They will eventually cop an excise. At the present time, going through the onerous regime of getting tested and accredited for producing biodiesel makes it that much more expensive. I am told that farmers out there are pretty angry about what this government has done. (Time expired)

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

Albert Einstein once said that you cannot solve a problem with the same thinking that created it. What we have seen here in the Senate, with the tabling of the Prime Minister’s statement on energy, is exactly the same thinking that created the problem in the first place. It is apparent that the government do not understand what the problem is; and, frankly, from the presentation by the Labor Party, it seems they do not understand what the problem is either. We are facing—

Government Senators:

Government senators interjecting—

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

You might well think it is amusing, but we are facing a global crisis with climate change and oil depletion. The ice sheet in Greenland is melting at three times the rate that scientists thought. The sea level rise is predicted to be half a metre by 2100 and they are now revising that upward. That is why I am saying you cannot solve this problem with the same thinking that created it.

Neither the government nor the Labor Party are prepared to recognise that we have to move to reduced fossil fuel use. We need to reduce fossil fuel use, not shift from one fossil fuel to another. We hear that coal to liquids is now the answer. The Centre for Low Emission Technology has said emphatically that, even if carbon capture and storage were 100 per cent successful, the emissions from tailpipes would be the same as from conventional oil. So what is the point in it? What is the point in investing millions or billions in liquids from coal as a transport fuel when you are going to be exacerbating the greenhouse effect? What’s more, they have said that coal to liquids becomes economical only when the oil price goes high enough. They say that it would cost the equivalent of $30 to $40 a tonne to sequester the carbon and avoid one tonne of greenhouse gas emissions. So the price of oil is going to be very high before gas to liquids becomes feasible, and the price at the bowser way higher than it is now. It is not a solution.

The Prime Minister did not mention once in his entire speech that we need to reduce our dependence on oil. And the best way of reducing our dependence on oil is to redesign our cities to maximise investment in public transport. No. 1, we should have used the surplus in this year’s budget to redesign our cities. The Greens said so at the time; we voted against the budget cuts, the tax cuts, in order to say that the money should have been invested in oil-proofing the country. But no, Treasurer Costello and Prime Minister Howard did not even recognise increased oil prices as a risk to the budget and to the Australian economy. Neither did they see the greenhouse effect, global warming, as a major risk to the economy. The Prime Minister says in his paper, ‘Oh, yes, Hurricane Katrina disrupted refinery supplies.’ He mentions the Alaskan technical problems. Why are they having technical problems in Alaska? It is because their oil is running out. The field is running out. They are injecting more and more water to push the oil out, and that is resulting in corrosion and sedimentation. That is the cause of the technical problems. The hurricane season is about to worsen because of global warming; what is the government’s solution? It is to exacerbate global warming and bring on more storms and more problems. That is not a solution.

We need rapid investment in alternative fuels. We need investment in public transport to reduce our dependence on oil. We need mandatory vehicle fuel efficiency standards; the government votes again and again against mandatory fuel efficiency. We need these things right now. The Treasurer gave $52 million to the Ford company without tying it to vehicle fuel efficiency design. It would have been a simple initiative, but he was not prepared to do it.

In terms of alternative fuels, the greatest hope is lignocellulose; it is not using food crops for fuel crops or petroleum based fertilisers to grow fuel crops to put into ethanol. The greatest hope for ethanol is lignocellulose, and that is where the investment ought to be going today, not into coal to liquids. When we put it to ABARE that we cannot go down the road of coal to liquids because of climate change, what did they say? ‘You put climate change to one side.’ You cannot put climate change to one side.

The Prime Minister also talks about his various initiatives in terms of solar power. I would remind the Senate that Senator Brown many years ago brought in his sun bill, which was designed to take away the diesel fuel rebate and assist people in remote and rural areas to switch over to solar. Wouldn’t it have been a good thing if that had occurred at that time? Now the Prime Minister has suddenly discovered solar.

We also have Martin Ferguson speaking about nuclear power. Suddenly he is really interested in climate change when he wants to expand uranium mining, but when he wants to support the coal industry he is back to coal to liquids. You cannot have it both ways. Either you agree that the world needs technologies that reduce carbon and you act accordingly, or you do not take a consistent position on climate change, and I am afraid that is what is going on here.

The Prime Minister says that a carbon tax would cripple the industry. We had the oil industry in the hearing last week saying that they wanted transparent and finite evidence of subsidies. We are subsidising every one of those oil companies every day, with the ramifications of climate change. I put it to them: at what price should we be putting this climate impact and how long should we give you that subsidy? Every day the taxpayers of Australia subsidise the coal industry and the oil industry, and this package is yet more money for the coal industry and the oil industry. Almost all the money in the Prime Minister’s package is going to the coal industry for coal to liquids or to the oil industry. Their solution to the fact that we are running out of oil is to say, ‘Let us go and find more.’ I would suggest that the Prime Minister has got his head so far in the sand that he is looking for the oil himself, frankly. That is what the problem is here: they are using exactly the same thinking as they did previously. Why not do what Sweden has done and say, ‘We cannot afford dependence on foreign oil; let us go oil-free by 2020.’ They may not achieve it but at least they will move a long way down the track.

I would also like to remind the Treasurer and all those commentators on economics out there of the appalling news on the current account deficit. We had evidence in the oil inquiry last week from the companies themselves that the shortfall in terms of importing foreign oil could be in the range of $A12 billion to $A25 billion per annum by 2015. The difference between the $12 billion and the $25 billion depends on what you estimate the oil price to be. If you estimate the oil price to be $US50 a barrel, by 2015 the deficit in Australia will be $25 billion per year. Isn’t that a major shock to the Australian economy, and why didn’t Treasurer Costello identify that as a major shock coming down the line? By 2015 we will be importing more than 50 per cent—more like 60 per cent—of our oil. So, in the face of a hideous current account deficit problem facing us right now under the inflationary pressure of having to import foreign oil, does the Prime Minister use the words ‘public transport’ once? Not even once in his whole response. He does not talk about demand-side reduction.

There are two ways of looking at things. You can just assume ‘business as usual’ and try to dredge up more supply at greater cost, or you can say, ‘We can reduce demand by redesigning the way we live, investing in those technologies that will solve both the oil prices and climate change.’ If you are going to exacerbate climate change, you are going to make the global situation worse and it will cost a lot more in the longer term.

The Greens’ proposal is to start seeing oil depletion as real. Peak oil is real. Stop imagining that you just have to go out there and find more. Get your head out of the sand, Prime Minister, and oil-proof Australia, not come up with these short-term, knee-jerk reactions that will make climate change worse and expose us to more shocks in the economy. Let Peter Costello, the Treasurer of this country, focus on a $25 billion deficit each year—and it will go higher than that after 2015. It will go significantly higher in later years, say the oil companies themselves. It is a very sobering thought, very sobering for people pulling up to the petrol bowser today. Let us get off our dependence on oil. Let us do what Sweden has done. Let us aim for an oil-free Australia by 2020 and let us invest the surplus in public transport now. Take the GST off public transport and get this country focused on the real challenges for the future.

Question agreed to.