Steve Fielding (Victoria, Family First Party) Share this | Link to this | Hansard source

My question is to Senator Minchin, the Minister representing the Treasurer. I refer the minister to Terry McCrann’s response to the government’s refusal to cut petrol tax by 10c a litre and its attempt to divert the public with promises to subsidise the installation of LPG; and, in particular, I refer to his statement:

John Howard clearly believes that he—and the rest of us—have not yet returned to a 2001 future ... that’s why you spend only $150 million or so pretending to do something about the price of petrol rather than the $3-4 billion that it would cost to actually cut the price at the pump.

Minister, given that Terry McCrann points out that only a few thousand drivers might benefit from the government’s policy, why does the government pretend that this policy is an adequate response to spiralling petrol prices?

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

I did answer a similar question from Senator Fielding last week and I will, for his benefit, simply repeat that the government have made it clear from the outset that, while we are very concerned about the impact on Australian families of the rise in the price of petrol at the bowser, there is only so much that can realistically be done—and I think that is acknowledged on both sides of this chamber—and that anything that the government could do would be at the margin. The government, like every other government in the world, are dealing with the reality of the explosion in the price of crude oil and, as Senator Fielding would know, that is a result of the very significant economic growth in China, which is causing massive and unprecedented demand for crude oil right around the world. We have the Indian economy experiencing similar growth and putting similar pressures on demand for crude oil. We had a long period where crude oil prices were relatively low and that led to a decline and a vacuum in investment in refining capacity. So you had the combination of a significant increase in demand with inadequate supply capacity. That has caused a real spike in the price of crude oil. It is not possible for any government around the world to deal with that reality other than, in reality, at the margin.

The package that we announced earlier this week I think is a very good package. One of the critical things is to ensure that there is diversity in the supply and use of transport fuels in this country. It is no good just significantly damaging the revenues of the government by putting a $3 billion per annum hole in our revenues from excise on petrol, which, of course, would have the impact of affecting demand for petrol and do nothing to encourage diversity in the supply of transport fuels. What we are doing most sensibly, I think, is encouraging that diversity. We are doing what we believe to be appropriate to encourage the use of renewable fuels like biodiesel and ethanol.

I acknowledge the enthusiasm of my National Party colleagues for encouraging the use of ethanol and biodiesel, and commend them on their sterling efforts to encourage consumers to take up those alternative fuels.

Opposition Senators:

Opposition senators interjecting—

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

We are also, as a result of our package, doing what we can responsibly to encourage the use of LPG. I think our initiatives on LPG have been very warmly received as sensible and responsible expenditure by the government to encourage the use of LPG.

George Campbell (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Except by politicians.

Paul Calvert (President) Share this | Link to this | Hansard source

Order! Senator George Campbell and other senators on my left, including Senator Sherry, Senator Carr and Senator Sterle, come to order.

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

I repeat for the sake of Senator Fielding that, with great respect to Terry McCrann, most economic commentators do strongly support the government’s position in not cutting the excise. As Senator Fielding knows, we did freeze Labor’s indexation of the excise. We cut the excise twice, in 2000 and 2001, but any cut in excise that was going to have any impact on the cost of petrol to families at the moment would require a 10c cut. That is about $2½ billion to $3 billion of revenue forgone per annum. We do not think that is responsible and, as I have said in this place, we are pleased that the opposition acknowledges that that would not be responsible. We are doing what we possibly can to encourage diversity in alternative fuel supplies and, in this case, this week we announced a very significant initiative in relation to LPG.

Steve Fielding (Victoria, Family First Party) Share this | Link to this | Hansard source

I ask a supplementary question, Mr President. Given that the LPG solution is a limited solution to the spiralling petrol prices and given that Terry McCrann points out that the government is raking in $15 billion in tax from fuel, why won’t it help struggling families to cope with high petrol prices by cutting it by 10c a litre?

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

As a result of our ending of indexation, we are forgoing something like $2 billion plus in revenue—

Michael Forshaw (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Oh!

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

This is your policy as well. You are saying that you will not cut the excise, so don’t you moan about our policy. It is your policy as well. We have already cut the excise by over $2 billion a year—

Opposition Senators:

Opposition senators interjecting—

Paul Calvert (President) Share this | Link to this | Hansard source

Order, Minister! Senators on my left will come to order! I remind the minister to address his remarks through the chair.

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

Mr President, we have already cut the excise effectively by over $2 billion a year by freezing it and, as a result of the magnificent cuts in income tax that we made in this year’s budget, which we could only do because of our responsible fiscal policy, we are helping Australian families pay for higher fuel prices.