Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

It is good to go back to exactly where we are. We are coming to the end of Fuelwatch—if you have seen The Castle, Fuelwatch has ended up heading straight off to the poolroom, straight off to the cabinet. Fuelwatch is going to sit up in the cabinet with GroceryWatch, with the war on obesity, with the war on binge drinking, with the education revolution—it is a very violent party, the Labor Party; a lot of wars and revolutions going on. We have the highest interest rates, the highest inflation and the record lowest consumer confidence—with a $10.4 billion expenditure of our surplus with no modelling. Now we have a motor vehicle package. I hope a bit more thought goes into the motor vehicle package. We have a deficit heading towards us. And the good news is that they have not even been in government for a year yet. This is the sort of government we have got. In the Labor Party poolroom are going to be all the adornments of what a marvellous government it is, what an absolute blessing to the nation this Labor government is.

It is interesting to go back through Fuelwatch. I was just having a bit of a read of the notes and looking at all the people who did not support it. The AAA, the RACQ, the RACV and the RAA in South Australia have all indicated that they did not support it. It was also indicated by the ACCC that figures for Perth motorists were based on buying petrol at prices greater than the average price over the cycle. What was Fuelwatch’s purpose? That is the question that is going to be finally left on people’s lips: what was the purpose of that exercise? The purpose of that exercise was the same purpose as the exercise that Mr Rudd used when he disclosed a private conversation with the President of the United States. The purpose of that exercise was purely and simply the media. That was it; that was the purpose of that exercise. The ramifications of that exercise are complete and utter embarrassment. I see Mr Dimasi from the ACCC waiting for the day when he can let the remnants of Fuelwatch slip into dark, distant memory.

What we can learn out of this Fuelwatch debacle is that we have to watch the Labor Party very closely when it comes to detail because they are lacking. When it comes to detail, when it comes to homework, they are very dangerous in how they actually go about spending our money and delivering a program for the nation. What we learned from Fuelwatch is that if the acumen that they deliver into that program is delivered into how they run the economy, if it is delivered into Minister Carr’s motor vehicle package, we will have the expenditure of funds for no outcome. We believe that we should have a strong and vibrant motor vehicle industry. We just do not believe for one moment, on the record that the Labor Party have presented so far, as ably displayed in the Labor Party pool cabinet, that they have any capacity to actually show diligence and efficacy in outcomes. The Australian people are going to start looking at the Labor Party pool cabinet, the trophy cabinet in the poolroom, and start asking themselves this question very soon: do these people know what they are up to? There have been so many reviews and programs and so much spin doctoring going on, but on delivery of an outcome that can be discernible, that can be attributable, that can actually show the nation benefit, they have not got one run on the board—not one. Not one thing can they show to the Australian people as a program that worked. But we have the instigation of a multiplicity of marvellous ideas. Anybody can come in here with marvellous ideas, but your capacity to govern is your capacity to deliver an outcome—not the initiation of an idea but an outcome of an idea. Not one outcome has this Labor government so far been able to present to the Australian people.

One outcome that we do have is that we started with a surplus in excess of $20 billion and we have now lost most of it. We are now heading towards a deficit. The Australian people are going to have to go to the marketplace to borrow the money to run a nation which was left in surplus. We will go into the most tenuous credit market in the world to borrow those funds. And think of the profligate waste of money! On 8 December money will be spent in lump sums that will appear in retail therapy, and everybody will be happy to get it. I am not denying for one moment that people are going to be happy to get it. But a lot of it will end up in poker machines and being spent on alcohol. In some areas of our nation, 8 December will be like Guy Fawkes night, the Fourth of July and Christmas all rolled into one. Unfortunately there will be the abuse of alcohol, the abuse of gambling and the assaults and everything that get rolled into that practice. I know because I will see some of it outside my window—I live next door to a pub.

This also is part of Labor Party management. They actually lack the acumen to see the social implications of some of their policies and exactly what happens next when the big lumps of money turn up in certain bank accounts in one fell swoop. This also is a reflection of the lack of Labor Party planning. After the money has been squandered on 8 December, the thought that the people of Australia will have to go to the market to borrow back the money I find absolutely incredible. But it fits well with Fuelwatch. If someone said, ‘Describe the Labor government to people from another nation, another planet,’ I would say, ‘Fuelwatch. That is the Labor Party.’ That is them to a tee. They think it is a marvellous idea, but they have absolutely no conviction whatsoever to bolster the powers of the Fuelwatch commissioner so they could actually do something. It was all rushed, with the ridiculous situation whereby people had to work 36 hours straight towards the delivery of a program with no efficacy or modelling on what the outcome was going to be. Then there was the huge charade, the absolute rubbish of a launch, with all the earnest faces that said, ‘Look at us bringing the price of fuel down.’ That was so insincere when you actually got behind and saw that they did not do the homework. That is the issue that I hope the Australian people start connecting to. The Labor Party do not do the homework. They can spend half the nation’s surplus without doing the modelling. I believe that if you ask them right at this moment, you would find that they still have not done it. This is the sort of management that is now running our nation. The results are so clear.

We are heading towards a deficit. We now have one of the highest inflation rates in recent history. We are now heading towards record growth in unemployment. We now have one of the lowest levels of business confidence on record. We have interest rates at their highest levels on record. That is certainly a quantifiable and salient picture of Labor Party management. It cannot be attributed to anybody else. If they say that it is unfair, you only have to balance it up with Fuelwatch. And the next fiasco tearing down the path towards us is GroceryWatch. You would think after you made one complete and utter botch up of a job that you would be smart enough to curtail the embarrassment and not continue down exactly the same path in another field. But, no, not only have they botched up the job, they have the arrogance to not be able to reflect on what they have done and improve the process.

Fuelwatch today will be taken off to the poolroom to be stored in the trophy cabinet where it will gather dust and be an item of ridicule. Slowly, that Labor Party trophy cabinet in the poolroom will fill up to such an extent that the people who come to visit will ask: do these people know what they are on about? This sort of banal and kitsch policy, which it is, will be seen clearly as the emblem of Labor Party government. The honeymoon is over today, ladies and gentlemen, with the purposeful burial of Fuelwatch. It will be interesting to hear the requiem that is now going to be sung by the Labor Party about the proposed benefits or losses to the Australian people for what could have been had things been different. What any person looking at this has to ask is: why would things be any different when the planning was so completely lacking?

Mr Walker is a classic endorsement of the Fuelwatch package. He was the person in charge of it and he bolted. That is the ultimate indictment of the package. The boss was appointed with such lauding and fervour and one of the first things he did was to run for his life because it was an absolute and utter mangy dog. This has to be seen. But, no doubt, Mr Bowen is going to come up with some other political fascinator to be worn on his head in the near future. We will wait for that and we will treat it with the same contempt with which we treated Fuelwatch.

Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I heard Senator Joyce commence his tirade last night, and I thought it was a bit flippant, a bit lightweight and a bit without substance. Well, it did not get any better this morning. Here is the National Party criticising the government’s economic capacity. Let me tell you that the nation will not be running down to put money into poker machines, they will not all be getting drunk and they will not all be fighting outside the pubs. Our economic security package is there for hardworking families in this country. I think it is an absolute disgrace for Senator Joyce to come in here and flippantly run those tired old lines that people cannot look after themselves and they should not have access to the government security package. Listening to Senator Joyce this morning, you would think that nothing has changed in the world, that we are still in the middle of an economic boom and that there is no economic crisis or no failed banks around the world. Senator Joyce continues with the same claptrap that he went on with for the 11½ years that the Libs were in government.

I will now turn to the National Fuelwatch (Empowering Consumers) Bill 2008. I appreciate the opportunity to participate in this debate. This is an extremely important bill that will provide significant benefits to the Australian public. The public are entitled to get some access to information on where the cheapest fuel is; it should not be just the public who do not have access to information. Fuelwatch will go directly to the problem of the lack of information available to consumers. It will provide detailed information to consumers. It will not leave us with the current situation whereby the only detailed advice or information on petrol prices belongs to the producers, the wholesalers and the retailers. This inequality of information is described in economic terms as ‘information asymmetry’. We did not hear any argument about this economic issue from Senator Joyce; we just heard a flippant rant about the government. Joseph Stiglitz, who won the 2001 Nobel prize for his work on information asymmetries in the market, put it this way:

Efficiency requires that information be freely disseminated. The private market will often provide an inadequate supply of information … there are various market failures associated with imperfect information …

That is exactly the position that the Australian public find themselves in in relation to fuel. The public do not have access to the breadth and depth of information available to the big oil companies, the wholesalers and the retailers. Yet we are going to see Liberal senators get up and argue that the public should not have access to information while their mates in big business, their Maserati-driving mates who do not need to find cheap fuel, have better access to information than the Australian public do.

The public are expected to predominately rely on petrol station billboards—that is the Liberals’ answer to Fuelwatch—which requires the visual sighting of a number of billboards at different petrol stations to establish the lowest price amongst that range of petrol stations. That is what the Liberals are saying to the Australian public: you depend on the billboards and let the retailers and big business have access to minute-by-minute information on petrol prices which you will not get. The public have to rely on an extremely inefficient, time-consuming and—for most of the public—frustrating exercise to find cheap fuel. During a Senate Economics Committee inquiry the cheap fuel day was described as ‘magic Tuesday’. Nobody could explain during any of the committee hearings that I was involved in how magic Tuesday worked. Magic Tuesday, in my view, is a manipulation of the market. It gives big business a very big incentive to make sure petrol prices stay high. Nobody could explain to me whether magic Tuesday was about black magic or white magic. Everybody knew magic Tuesday was there, but nobody could explain how it worked. Yet the Liberals want magic Tuesday to stay. I do not want the Australian public to have to face magic Tuesday, the black magic of big business, supported by the Liberals, keeping proper information from the public.

It is interesting to note that the Australian Competition and Consumer Commission have commented on this information asymmetry and its potential to distort the market in favour of the petrol industry. The industry uses a private company, Informed Sources, to provide instantaneous advice on movements in petrol prices to it. Using Informed Sources is an extremely expensive proposition that is beyond the reach of the general public and even a lot of businesses within Australia. Evidence was given to the committee in Rockhampton by Mr Steve Marshall of WIN Television—and WIN Television would not be the poorest lot around and not the poorest company in the country—that the cost of obtaining price information was extremely high. WIN Television wanted to provide a community service in the Rockhampton region. They conducted their own surveys. But Mr Marshall told the Economics Committee it was going to cost ‘an extraordinary amount of money’ to pay Motor Mouth, which is a subsidiary of Informed Sources, to collate that information for WIN Television. He said they were quoted $50,000 per year per market to get access to the information that is available to big business. All WIN Television wanted to do was provide that information to the community of Rockhampton. As WIN Television cover five Queensland markets, it would have cost them $250,000 to participate in the Informed Sources program.

This demonstrates that, if you have money and power, you can participate in the Informed Sources program to give you an advantage in the market. That is what the Liberals are going to stand up here today and support: an advantage for big business, an advantage for the retailers and a disadvantage for ordinary Australians. If you are an ordinary consumer, according to the Liberals, you are to depend on the billboards. But if you are one of their big business mates, you can spend money and get access to the computer technology that lets you manipulate the market. If you are a small independent petrol station operator and you cannot afford to participate in the Informed Sources program, you have to either hope for the best or seek to conduct your own local survey of prices at significant cost to your small business.

This is not a good system. This is a system that the Liberals wanted to continue. This is a bad system. It is a system that provides benefits to the business users of Informed Sources and, in my view, disadvantages Australian consumers. This is what the government wants to fix. We want to deal with it in an economically credible manner. We want to deal with the information asymmetry. We do not want to deal with the rant that we heard from Senator Joyce. The unfair advantage that business has over consumers has prompted the ACCC chairman, Graeme Samuel, to comment on the current system. He said that while the use of Informed Sources information by large retailers was not illegal—and I say that in inverted commas—it could be described as being as close to illegal collusion as you can get. So what do the Liberals want? They want ordinary Australians to depend on the billboards, and they want their big business mates to have access to illegal collusion to disadvantage ordinary Australians. Fuelwatch will move the retailing of petrol from a system which is close to illegal collusion to one which is open and transparent for the Australian public. Why should the Australian public not have an open and transparent system? Why should the Australian public not have access to the same information that big business has? Do you know why? It is because the Liberals do not want the Australian public to have access to that information. It is an absolute disgrace.

Concern has been raised about the 24-hour rule, which requires companies to lock their prices in for 24 hours. There has been an argument put that this would be anticompetitive and that it would distort the market. There was no substantive argument put to the committee in support of this unfounded proposition. The people who argue this proposition are the same people who take advantage of the collusion that now goes on in the industry at the expense of ordinary Australians. I expect it is also supported by the mates of big business on the other side, the Liberal Party. To the contrary, on this proposition, evidence from the ACCC, the NRMA, the Western Australian Department of Consumer and Employment Protection, Professor Wang and Commerce Queensland supported the 24-hour rule. The NRMA said:

By having to quote fixed fuel prices for a 24 hour period, petrol retailers will have to make better judged and more competitive choices on fuel prices.

Thus the pressure comes back onto the retailers, not the consumers. Professor Wang, an international expert on fuel prices, said:

The disincentive to be the first to hike price is much greater under the 24-hour-rule. Without the rule, the price leader for a cycle knows that once its price is hiked, other firms can respond very quickly (within hours) by hiking their prices as well. If other firms do not respond quickly, the price leader can quickly retract its price hike to avoid losing much market share. However, under the 24-hour-rule, after a price leader hikes its price, other firms cannot respond within 24 hours. The price leader has to lose market share for an entire day—it cannot retract its price hike either.

Senator Joyce’s rant this morning suggested that we were not dealing with economic reality. The economic reality is that the Treasury, via evidence from its executive director, Mr Jim Murphy, has clearly said that it is in support of the need to provide consumers with some counterbalance to the unfair advantage that petrol retailers have by their use of Informed Sources. So it is collusion. It is an unfair advantage. That is what the Liberals are standing up to support this morning: maintaining a position that disadvantages Australian consumers. Jim Murphy, from Treasury, said this:

Realistically, if you want to get the best deal you can for Australian consumers, you have to start looking at getting pressure coming, at the grassroots level in my view, from consumers to be seeking out the best prices for petrol. Hopefully they will then put pressure on the retailers to actually compete more aggressively in the supply of petrol. The only way you can do it, given the introduction by the retailers of this informed sources device or mechanism, is to actually try to redress that and get an energetic consumer awareness out there.

How do you get energetic consumer awareness out there? How do you try and get this disadvantage against consumers dealt with? You do it with Fuelwatch. If there are other issues that are problems in the industry, they should be raised and dealt with, but what we can do immediately, in the short term, is to even up the disadvantage that ordinary Australian consumers have against big business in this country in the retail petrol industry and give them access to the same information that is available to big business.

I am sure we will hear the same refrain from the Liberals here this morning about the econometric modelling, so let me turn to that. Opponents of Fuelwatch have asserted—in the absence of any evidence—that the scheme led to higher petrol prices in Western Australia. The reason for this assertion was never put in a proper manner to the committee. The reasons were never stated. In the face of the criticism, the ACCC conducted a model of the Fuelwatch scheme to test the assertions that had been put by those opposed to putting more market information in the hands of the consumer. The overall conclusion of not only the ACCC study but also of the analysis done by Professor Harding, Professor Davidson, Access Economics and Concept Economics, is that, since the Western Australian Fuelwatch scheme was introduced, the average retail margin in Perth relative to other mainland capitals had fallen. This was the evidence that was put forward, and what the Liberals want to do is to deny consumers access to the information that is paid for by big business in order to give them an advantage over ordinary Australian consumers. It is an absolute outrage.

It was clear that the wild fluctuations in fuel prices that had characterised the petrol market in all the capital cities no longer existed in Perth. So what the econometricians really argued about was whether Fuelwatch, some other factor or a combination of factors contributed to this highly beneficial phenomenon in Perth. Let me tell you what we heard from some of the econometricians in their arguments to the committee. They said that Perth is just different from the rest of Australia.

Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

Senator Mark Bishop interjecting—

Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

It might have been their strongest point. They said that Western Australians think differently to Victorians; that Melbourne is in a valley and Perth is not; that Melbourne is the home of Coles Myer; that the introduction of the GST had had different effects in WA than it had in the rest of the country; that there is only one refinery in Perth; and that Perth is closer to Singapore than the rest of the country is. The committee was left to determine what effect any of these factors have had in WA, if any.

The ACCC found that the introduction of Fuelwatch in WA had had the effect of dropping the retail margin by 1.9c per litre. The ACCC’s conclusions are supported by Treasury, which found their methodology ‘reasonable, valid and robust’. Professor Joshua Gans described the ACCC’s work as ‘a far more rigorous investigation of the WA scheme than anyone had ever done’. These were the facts that were before the committee, and all the support for big business to have an advantage over Australian consumers will not hide the facts about the need for the Fuelwatch scheme for the benefit of ordinary Australian consumers. If the Liberals want to protect their big business mates, they should be upfront about it. Do not hide behind some crook econometric modelling. Do not hide behind an argument that says this is bad for consumers. Because none of those points can be sustained. None of those points were argued with the committee. This is a good thing. Fuelwatch will be good for the economy and good for consumers. It will fix up the information asymmetry in the industry and give ordinary Australian consumers a good old Australian fair go. (Time expired)

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

It is apt and fortuitous that the Senate is discussing the National Fuelwatch (Empowering Consumers) Bill 2008 and related legislation on the eve of the first year of Rudd Labor. It is apt because the Fuelwatch legislation typifies Rudd Labor’s first year in office, and it is fortuitous we are debating it because it allows us to summarise the ever-emerging flaws in Rudd Labor. When people think of Rudd Labor they think of overpromising and underdelivering. They think about spin over substance.

Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

They think of progress; they think of change and progress.

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

They think about the abuse of the Public Service for political purposes. They think about the manic prime ministerial behaviour. They think about policy based evidence rather than evidence based policy. And they think about abuse of parliamentary processes. Fuelwatch is all that and more, wrapped up in this one packet of legislation.

During Mr Rudd’s desperate attempt to win the election, he made promises to the Australian people he must have known he could not keep. Mr ‘I feel your pain’ Rudd told Australians he would reduce petrol prices for them. He has not. The only way he could have done so would have been by reducing the excise tax, but the only positive move to reduce petrol prices was deliberately rejected by Mr Rudd and Labor.

Kim Carr (Victoria, Australian Labor Party, Minister for Innovation, Industry, Science and Research) Share this | Link to this | Hansard source

And Mr Turnbull.

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

The coalition would decrease petrol prices by reducing the tax by 5c per litre.

Kim Carr (Victoria, Australian Labor Party, Minister for Innovation, Industry, Science and Research) Share this | Link to this | Hansard source

Turnbull’s going to drop it and you know it.

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Every Australian knows that, if the coalition were in power, petrol would be 5c per litre cheaper.

Kim Carr (Victoria, Australian Labor Party, Minister for Innovation, Industry, Science and Research) Share this | Link to this | Hansard source

What happened to Turnbull’s promise?

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

So, despite all the electioneering and promising of reduced petrol prices by Labor, it is only the coalition that has a decisive plan to reduce the burden that pensioners—

Steve Hutchins (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Order! Minister Carr and Senator Bishop, could you restrain yourselves for a moment to allow Senator Abetz to continue.

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Thank you, Mr Acting Deputy President. We are not at Trades Hall at the moment. So, despite all the electioneering and promising of reduced petrol prices by Labor, it is only the coalition that has a decisive plan to reduce the burden of petrol prices for pensioners, wage earners, small business and, indeed, everyone.

Opposition Senators:

Opposition senators interjecting—

The Acting Deputy President:

Order! Senator Abetz is entitled to be heard in silence.

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Mr Rudd promised to reduce petrol prices. He has not. Labor has failed and broken this fundamental pledge, like Labor has done with grocery prices. So Mr ‘I feel your pain’ Rudd has failed to provide pain relief through price relief at the bowser. The coalition has the plan and the will to ease the burden.

Another hallmark of Labor is the triumph of spin over substance, and Fuelwatch is the exemplar of spin over substance. First we were told that Fuelwatch would reduce petrol prices by 1.9c per litre. Then it was to be 2c per litre. Then we had the hapless Fuelwatch commissioner—remember him?—saying it would be 5c per litre. Then we were told Fuelwatch was not even about reducing petrol prices. And then we had the Treasurer, in a most desperate and quite pathetic effort, claim that savings of $10 per tank, or 20c per litre, could be achieved. And all these quite ridiculous and misleading claims were made in the face of all the evidence clearly indicating the contrary and, indeed, suggesting that prices would increase under Fuelwatch.

So overtaken by spin were Labor that they spent $100,000 of taxpayers’ hard-earned funds to develop a logo for Fuelwatch—before it was even passed through this place. Before the legislation was passed, they arrogantly concentrated on getting a slick logo to help us overlook Fuelwatch’s failures. I could have saved Labor that $100,000, because a perfect logo for Fuelwatch would have been the visage of Mr Rudd wearing a dunce’s hat with a big ‘F’ on it—F for failure, F for fatally flawed, F for foolish or F for ‘foolwatch’! Take your pick, the logo would be a great and accurate descriptor.

Throughout this disastrous process, we also witnessed the shameful and unacceptable abuse of the Public Service. We had Treasury trying to advocate for Fuelwatch before the Senate Standing Committee on Economics when we know that they, along with three other senior economic departments, had advised the government against Fuelwatch because it was so badly flawed. But Labor forced these public servants to appear before committees to support Fuelwatch against their advice to the government. They also forced individuals in Treasury to work 37 hours around the clock to get this legislation ready for tabling. Why? What was the urgency of it? We still do not have an answer despite that question being raised at Senate estimates.

Why was it done? It was done to answer the coalition’s popular and highly regarded budget response to reducing petrol prices. Mr Rudd unconscionably forced Treasury and other officials to work 37 hours straight in a pathetic attempt to regain the political agenda. There was no imperative other than Mr Rudd’s partisan political agenda. It was an abuse of the Public Service, which is totally and utterly unacceptable. This behaviour links in with Mr Rudd’s quite bizarre and manic predisposition. Why would any self-respecting Prime Minister make such a bizarre and manic demand of his Public Service to prepare, in 37 hours straight, that which the department itself had recommended against? It was simply for politics and for no other reason.

What was the reason the departments recommended against Fuelwatch? The evidence did not support the policy. Having promised evidence based policy during the election, Labor again broke faith with the Australian people and embarked on Fuelwatch, deliberately ignoring the wealth of evidence against it. In desperation, Labor even abused the parliamentary process of the Senate committee system. We got an urgent interim report in August because of an alleged urgency to get this report out to the community. That was in August. And here we are, three months later, debating it. The government could have brought this legislation on for debate in August if they had wanted to, but they did not. They made bureaucrats work 37 hours straight to get the legislation ready—because it was so urgent it had to be rushed—and now we have had a hiatus of three months. What happened to the urgency?

Even more concerning was the maltreatment of witnesses and the deliberate misquoting of evidence in the Senate economics committee report. Labor did not cherry-pick the evidence; they manufactured it. Witnesses wrote into the committee complaining of exactly that. It was not only the Australian Institute of Petroleum—who you might think may have had a vested interest—that made a complaint. The respected Royal Automobile Association of South Australia made a similar complaint. If there is one thing the Royal Automobile Association of South Australia are concerned about, it is representing the consumers—the petrol buyers—in South Australia. And they themselves were moved to write to the Senate committee to object to the way that the evidence had been mishandled, mistreated and, I would say, distorted. Although urgency was claimed in relation to bringing down the interim report, the final report was tabled two weeks after it could have been tabled in this place. There was no explanation from Labor as to the reason for that, and I think the Senate is entitled to one. What all this highlights is that Labor will stop at nothing to pursue their flawed agenda.

Let us now turn to Fuelwatch proper. This $21 million impost on Australia’s taxpayers will, if anything, increase petrol prices and not reduce them. Indeed, the one independent fuel provider quoted by Labor senators in the Senate economics committee report into Fuelwatch said that he favoured Fuelwatch—and that is where Labor stopped the quote, of course. They did not go on to tell the readers of the report why this independent vendor of petrol supported Fuelwatch. And do you know why it was? It was because Fuelwatch would increase his margins; he would make more money out of Fuelwatch. But the Labor senators deliberately cut and pasted the quote to make it read as though there was an independent fuel provider who actually supported Fuelwatch. The only one who supported it did so on the basis that he was of the view that he could make even greater profits. Who do you think would bear the consequence of that? The petrol-buying public of Australia—the consumers of Australia. That is why I compliment Senator Xenophon on his very strong stance against Fuelwatch. If there is one state and one lot of consumers in this country who would suffer very heavily under Fuelwatch, there is no doubt that it would be South Australia and the petrol buyers of South Australia.

The one place where Fuelwatch does operate, Western Australia, has been unable to provide any proof that there is in fact a reduction in price in that state. What is more, when we as a committee were over there in Western Australia asking questions of that department, they admitted as much. They agreed that they could not point to a price reduction for Western Australian consumers as a result of Fuelwatch.

I must say that the conversion of the ACCC to supporting Fuelwatch after years of opposition and ridiculing of Fuelwatch smacked of the adoption of the government’s agenda. To change their mind so conveniently around the time of the change of government in November last year does not build confidence or trust in the ACCC’s objectivity. Indeed, if we accept their evidence now, it leaves big questions over their previous advice to the Senate committees.

Kim Carr (Victoria, Australian Labor Party, Minister for Innovation, Industry, Science and Research) Share this | Link to this | Hansard source

Here we go. This is more abuse of the Public Service, is it? More abuse of the Public Service!

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

They cannot have it both ways. I can accept that they have come to this view and have now been converted along the road to support Fuelwatch, but what it shows is that all their previous reports and discussions on Fuelwatch have been flawed. As a result, one has to question the robustness of the way that they approach their business—and that is the point that I am seeking to make.

Confronted with the ACCC’s new approach, we have to balance against that four independent Public Service departments that all recommended against it. And, of course, now, thankfully, Senator Carr has stopped his interjecting, because I am sure he would have been at the cabinet meeting where those four departments’ recommendations against Fuelwatch were presented. Despite all the evidence against Fuelwatch, he and other Labor ministers in cabinet voted for Fuelwatch for one simple reason. It was for politics—for the spin—not the substance, because cabinet ministers were told by their own departments that there was no credibility to the claim. Then, of course, on top of the view of the four departments, you have got such distinguished people as Professor Don Harding, Mr Henry Ergas and Associate Professor Frank Zumbo—whom I see in the gallery and who has shown very real interest. When you combine all that evidence, and the late conversion of the ACCC as the only ones who actually support Fuelwatch, I confess that I do have some questions about the way that they have arrived at their conclusion.

But, above all, Fuelwatch would be, without any doubt, anticompetitive. Retailers could not reduce their price for 24 hours because, if they did, they would be fined. How could that be of benefit to Australian consumers? Of course, it would not be. It cannot be and it never will be. Fuelwatch will overwhelmingly hurt the small independent operator and the small chains. Interestingly, the supermarket chains seem quite comfortable and relaxed with Fuelwatch. Yet Mr Rudd disingenuously inserts into the public debate that somehow the opponents of Fuelwatch are the friends of big oil. I can tell you that the Senate Standing Committee on Economics heard time and time again from independents and the small chains that they were opposed to Fuelwatch and the big companies told us that they could live with Fuelwatch. Who is on the side of big oil? But, once again, it is all about spin—say whatever you like and hope you can get away with it. That is where the importance of these Senate committees comes in, because we can unravel the spin and get to the substance. What we have done in this case is expose the huge flaws in Fuelwatch.

The legislation will impose penalties—and this is interesting—as of 30 November 2008 on those retailers not providing price information. Today, if I am correct, it is 12 November. There are 18 days to go before its implementation, and the small operators will have to be set up for that. I hope, without reflecting on or suggesting the way the Senate will vote, that this will not happen—and I suggest to the Senate that it cannot happen. Interestingly enough, though, Labor have got a logo in place but not the mechanics to make it work. So they have got the spin in place but they do not have the substance in place. That is the hallmark of the Rudd Labor government—spin above substance each and every time.

It is time for Labor to level with the Australian people. Labor should say they should never have made their promise about reducing fuel prices—a promise they knew they could never keep. They should also acknowledge that all this Fuelwatch nonsense was about trying to create an impression of taking action rather than actual action. Labor should admit their spin contained no substance. Labor should repay the Australian people the $100,000 wasted on developing a logo for Fuelwatch.

Hopefully, today, Fuelwatch will be laid to rest. Fuelwatch has been running on empty now for a very long time. Labor, still sitting at the wheel, despite the needle being on empty, think they can still drive this vehicle. Well, it has been on empty for a long, long time, and I think later on today, hopefully, we will see Fuelwatch coming to a spluttering halt. That is what happens if you keep trying to drive on empty for too long. That is a lesson that I hope Labor will learn from this exercise. The people have a right to be angry with Rudd Labor. They are right to be angry over the electoral deceit, the spin, the waste of money, the abuse of the Public Service, and the overpromising and the underdelivering.

I conclude as I began: the exercise of Fuelwatch provides us with a great insight as we approach the first anniversary of the Rudd Labor government. It provides us with an insight as to how Rudd Labor does business: overpromise and underdeliver. Spin first; do not worry about the substance. If need be, abuse the Public Service. If need be, for your political agenda, abuse the parliamentary processes. If need be, manufacture the evidence. If need be, have policy based evidence rather than evidence based policy. This has become the hallmark of the first year of Labor in office, and Fuelwatch embodies all those fatal flaws of Rudd Labor. That is why, sad as it is that the Senate has to be debating Fuelwatch, it does provide an excellent window into the operations of Rudd Labor. Fuelwatch is a dud and should be opposed. (Time expired)

Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

I rise, proudly, in support of the National Fuelwatch (Empowering Consumers) Bill 2008 and the National Fuelwatch (Empowering Consumers) (Consequential Amendments) Bill 2008. As a Western Australian, I believe I can speak with some authority on the intent of these bills. The reason for that is that Fuelwatch has operated in metropolitan and regional areas in Western Australia since January 2001, so we have had almost seven years of comprehensive experience of how Fuelwatch operates and the benefits it provides to consumers in Western Australia. Fuelwatch in Western Australia was introduced by the Court Liberal government in response to a select committee report. Since that time it has been supported by both the Gallop and Carpenter Labor governments and it will be maintained by the Barnett Liberal government.

So how does Fuelwatch work? At 2 pm petrol retailers are required to provide a price at which they will sell petrol the next day. At around 4 pm that information is available on a website. Fuelwatch also operates a personalised email service. On evening news bulletins, information on the cheapest petrol prices and the suburbs that have the cheapest petrol prices is listed for viewers. The information is also available regularly and readily on radio, and the next morning the daily paper also lists the daily petrol prices. It is an extraordinarily popular scheme. Why? Because motorists know what petrol prices will be for that day. If there is going to be an increase, they have 14 hours to decide whether they need petrol and to take advantage of the lower price. Consumer surveys have reported that over 90 per cent of Western Australian motorists are aware of Fuelwatch. A Royal Automobile Club of WA—the RAC—survey shows that 57 per cent of motorists use the service. Over 32,000 motorists receive daily emails on petrol prices. The point is that almost all motorists are generally aware of the range of petrol prices on any given day.

Much has been made about how supplying pricing information to motorists will lead to a reduction in competition, but that has not been the experience in Western Australia for the last seven years. Pricing information in the eastern states is available but you have to pay for it. Large petrol retailers subscribe to a company called Informed Sources, which collects information on petrol prices in defined geographic areas. Updates are then provided to large retailers several times a day. Informed Sources was not willing to disclose the cost of collecting data on retail prices throughout the day or what it charged its clients for the service. I would imagine that it is rather an expensive service. Apparently the company relies heavily on people driving from service station to service station to get the information. So what we have are large petrol retailers with information on competitors’ prices throughout the day. If their competitors are cheaper, they drop their prices. But what if their competitors have a higher price? Do they maintain the price advantage they have or do they make a decision to maximise profit? It is a fair question that is difficult to answer because petrol prices can change throughout the day.

I understand it is common for someone who is looking for the best price on their way to work to find that the same retailer is not the cheapest on their way home. Receiving updated information on petrol price fluctuations throughout the day is not an illegal practice; however, the ACCC has described it as being ‘as close to illegal collusion as you can get’. Fuelwatch, by comparison, will provide retailers and motorists alike with up-to-date and accurate information on petrol prices in their particular suburb. The information would also be available to independent retailers who, I understand, are not regular subscribers to Informed Sources. It is my understanding that independents drive around a few times a day and do their own research on local competition. However, by far the greatest advantage is that Fuelwatch will provide motorists with information on what petrol prices will be tomorrow, not what they were half an hour ago.

There is considerable merit in a national Fuelwatch scheme. The Senate was not so sure about that and referred the matter to the Senate Standing Committee on Economics back in June 2008. Unusually, the committee was told not to report until 29 September 2008, and that report was tabled around the middle of October. The report properly recommended that the Senate support the introduction of a national Fuelwatch scheme. It also recommended that a review of the scheme be undertaken 12 months after its introduction and the data collected by Fuelwatch be released to independent academic researchers.

But, in what has become common practice, those opposite have chosen to issue a dissenting report. Their main opposition to the plan is that watching fuel prices will not bring them down. What an obvious comment to make. What an obvious theme to have in their report. Clearly the opposition do not understand the intent of the bills, which is to provide consumers across Australia with information on the price of petrol at each service station in the metropolitan and major regional areas every day.

The value of the scheme comes from its utility. The utility lies in the fact that every evening on each of the major news bulletins there will be 30 seconds in which the price of petrol by suburb and by retailer will be disclosed. The price will then be fixed for a 24-hour period so that we as consumers will know that, for example, tomorrow the cheapest fuel will be available from Caltex in Belmont. The utility, the drive, lies in the disclosure. Disclosure leads to price competition, price competition leads to consumer choice, and consumer choice leads to maximisation of welfare. The benefit of disclosure is that it is an aid to effective price competition. Consumers will be able to ask the most obvious of questions: why? Why are petrol prices 20c a litre higher in an outlet 300 yards away from another? Why is there a 20c a litre differential? This in turn will require responses from major wholesalers and fuel companies to justify to the public their price settings and margin settings. Again, it will assist in the elimination of hyperbole, disinformation, misinformation and outright lies about a product critical to industry and households alike. The bills will also give compliance and enforcement powers for the scheme to the ACCC.

There are many critics of this scheme. They are found only on the benches opposite. However, there is no—and I quote from the dissenting report—‘overwhelming evidence that it provides a greater certainty of higher prices’. The truth is that price volatility does not equal competition, that weekly price cycles cannot guarantee motorists get the best price if they fill up on a Tuesday and that supermarket shop-a-docket discounts have not led to a measurable increase in competition in petrol prices. I quote from the dissenting report:

The evidence also suggested that a national scheme would adversely affect the position of independent retailers, making the market less competitive.

The truth is that there is the same percentage of independent retailers in the Perth market as in other capital cities and that they are not disadvantaged by fixing petrol prices for 24 hours. Motorists and independent petrol retailers in my home state support Fuelwatch and want it to continue. And, in the Western Australian experience, the Fuelwatch scheme has received for the last seven years, with different governments, bipartisan support.

Coalition members recommend in their dissenting report that the bills be opposed. My question to those opposite is: why is it only motorists under a Liberal government that are permitted to enjoy the benefits of a Fuelwatch scheme? This is a scheme that will empower motorists to make informed decisions about where and when they fill up their cars. It will increase the reliability and certainty of fuel price information for motorists every day of the week, and it has done so every day of the week for the last seven years. It will also provide motorists with information that in most Australian cities is only available to large petrol retailers.

In summary, Fuelwatch is a scheme that was championed by the Court Liberal government in 2000. It was supported by the Gallop and Carpenter Labor governments. And in the lead-up to the last state election, barely two months ago, Mr Barnett—now the Liberal Premier for Western Australia—said he would not tamper with the existing state Fuelwatch scheme. As late as 3 October 2008, the daily paper in Western Australia reported the Liberal state Treasurer as saying that he had received advice from his department, the Department of Consumer and Employment Protection, that Fuelwatch in Western Australia was working successfully. He went further and said to the West Australian that allowing petrol stations to lower their prices on the same day to match those of their competitors would ‘undermine the integrity’ of the system. He also said:

What Fuelwatch does is provide information to consumers to allow them to make decisions as to where they buy their petrol …

That is precisely what the national scheme is intended to do, it is precisely what the national scheme wants to do and it is precisely what the national scheme, if enacted, will do. It will provide information on a website and through reports in the media on the price of petrol for the next day. It will allow consumers to identify when and where to buy fuel at the lowest price.

It is incomprehensible to argue that competition will be eroded by fixing the price of petrol for a 24-hour period. It is incomprehensible to argue that a motorist who stumbles across a retailer offering a lower petrol price at, say, three o’clock in the afternoon is participating in a competitive process. Fuelwatch will provide a competitive environment because it will allow motorists to buy the cheapest petrol at the cheapest petrol stations at the cheapest times. You cannot ask for a better scheme. There will be no guesswork involved in picking the best time and place to get the best price. Fuelwatch is not a silver bullet that will lower petrol prices, but it will ensure that drivers do not pay one cent more than they have to or one cent more than they choose to. The government has committed to a review of the effectiveness of the national Fuelwatch scheme after 12 months. I am betting that consumers across Australia will be as supportive as those in Western Australia. I commend the bills to the Senate.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Over the past few months the issue of Fuelwatch has been debated extensively in this parliament, in the media and in the broader community.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

Why do you hate Australian motorists?

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Here we go. Senator Conroy asks: why do I hate Australian motorists? I love Australian motorists. Senator Conroy should know that I want to do the right thing by consumers, and that is why I have taken the position that I have.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

Senator Conroy interjecting—

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Just as I have listened to other speakers in silence, I hope that Senator Conroy can afford me the same courtesy.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

Senator Conroy interjecting—

Guy Barnett (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Order! Senator Xenophon, you have the call.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Thank you, Mr Acting Deputy President—that is apparent to me but not to others! It is a matter of record that I was initially attracted to the idea of Fuelwatch when I was a member of the South Australian parliament. That was in 2004, and the initial indications from Western Australia were that the scheme could help motorists. I was subsequently contacted by the RAA, the peak motoring body in my state, which cast serious doubts about whether such a scheme could assist in reducing retail petrol prices. And, just as significantly, I was contacted by independent petrol retailers who told me unambiguously that Fuelwatch could well squeeze them out of the market because small players could not spread the risk if they locked in a price for 24 hours and got it wrong, compared with the larger operators who had the financial muscle to be able to do that. The independent operators told me that the most effective way to make a difference with fuel prices at the pump would be to tackle the wholesale market and the stranglehold that the big four oil companies have in this country over the supply and distribution of fuel.

I subsequently moved for a select committee inquiry into the wholesale fuel market in South Australia and the impact the mothballing of the Mobil Port Stanvac refinery and storage facility was having on consumers. The evidence that that inquiry heard was clear. It showed that consumers could get a benefit of some 4c a litre, possibly more, if the wholesale market was freed up and made more competitive. So in a sense I agree with Minister Bowen’s intended policy destination—to reduce the price of fuel. Where we differ is on the best path to achieve that. At this stage I want to thank the minister for his time in discussing this issue with me. I am also grateful for the meeting I had with ACCC chairman Graeme Samuel a few weeks ago on this issue, when Mr Samuel well articulated the ACCC’s views in support of Fuelwatch. But, after significant research and discussions with motoring groups such as the RAA in my home state, and after talking with independent fuel retailers, I am convinced Fuelwatch is a bad idea.

I note that the RAA, the RACV and the RACQ do not support Fuelwatch. The RAA, in its submission to the Senate inquiry on this issue, stated that by forcing retailers to lock in prices for a full 24 hours you actually flatten the price cycle and reduce the opportunity for motorists to seek out a bargain. To quote directly from the RAA submission:

RAA has long opposed the introduction of a Fuelwatch scheme into South Australia (1) due to the absence of comprehensive modelling which shows South Australian motorists would benefit from such a scheme; and (2) on the basis that Adelaide’s retail market is highly competitive and operates under a distinct and predictive weekly discount cycle. Indeed Adelaide’s discount cycle clearly demonstrates that the price available at the bottom of each week’s cycle (Tuesdays) is consistently lower than those prices likely to be available under Fuelwatch.

The RAA goes on to conclude:

Analysis of current pricing data suggests SA motorists would be no better off should a national Fuelwatch scheme be introduced. In fact, such a scheme has the potential to deliver higher fuel costs.

Mr Acting Deputy President, I want to achieve a reduction in the retail price of fuel. And I believe there are significantly better ways for the government to achieve this than by running a Fuelwatch scheme. One way forward is that the whole issue of oil retail prices needs to be simplified. Price boards are almost written in code these days, and motorists are the ones being left confused or, worse, misled. I believe the ACCC should work with petrol retailers to develop a price board protocol to minimise confusion amongst motorists. So-called discounted prices can be deceptive. If you do not have a discount docket, what is the price then? Sometimes the discounts are 4c, sometimes they can be 20c—depending on whether you have gone to an associated liquor outlet. Sometimes it is not a true discount—if the retail price is inflated, as it has been in recent times. How can motorists really know what they are going to be paying? But that is at the retail end. It is important, but it is not the main game.

I believe that, if the government is serious about helping motorists, it needs to be tackling the wholesale market. It is here that significant savings can be achieved. We need to inject new competition at the wholesale level. This means opening up the current buy-sell arrangements between the big four oil companies to competition rather than letting these arrangements continue to operate as a cosy club between the oil companies to the detriment of independent retailers and to the detriment of motorists. We need to open up access to terminal and storage facilities, controlled by the oil companies, to inject new competition into the market. Without access to these facilities importers simply cannot get the product into Australia to help break the oil companies’ stranglehold over the wholesale fuel market.

Associate Professor Frank Zumbo, from the Australian School of Business at the University of New South Wales, has made a number of recommendations to tackle this vexed issue, including, firstly, introducing complete transparency surrounding the wholesale-pricing practices of the oil companies, including transparency about the level of preferential pricing given to Coles and Woolworths and the level of discrimination faced by independent service stations; secondly, having an immediate review of the current operation and possible abuse of import parity pricing; thirdly, giving the ACCC the power under the Trade Practices Act to formally monitor LPG and diesel prices; and, finally, the government immediately strengthening the Oilcode regulations under the Trade Practices Act to ensure independents continue to play an important and competitive role in the retail market. On this I note the work of Minister Ferguson in reviewing the Oil Code. That is important because the Oil Code needs to be reviewed and reformed to give the independent operators a fighting chance.

I had a discussion with Professor Zumbo earlier this morning and I believe that these recommendations have real merit. I also want to refer to the removal of the ‘sites’ act from our legislative framework several years ago. It was supported—and I believe shamefully—by both the coalition and the Labor Party. It was opposed by some crossbenchers, including Senator Joyce, who crossed the floor to oppose the abolition of the sites act. The sites act had a ceiling of five per cent on the control that oil companies could have over petrol sites. That has been lifted. We are now seeing a slow, creeping but steady acquisition of sites and a greater degree of vertical integration in the market.

So when the government talks about trying to do something at the retail level, that to me just does not cut it. It does not address the fundamental issue that, where the wholesale price can be manipulated and is less competitive than it should be, that obviously impacts on the retail price. That is what we need to do. We need to have real transparency at the wholesale level. Without this transparency we will never know if the pump price is a fair price.

I refer you to a 20 October article in the Age by economics correspondent Peter Martin entitled ‘Petrol giants quizzed over margins’. The article reported that petrol prices had fallen by less than 14c a litre at a time when the international oil price had more than halved. Even after factoring in the slide in the Australian dollar, the crude oil price had fallen from a peak of $153 a barrel in July to $100 a barrel back on 20 October. Whilst I accept that there are a number of factors at play, the question has to be asked whether consumers are getting the full benefits of a reduction in world oil prices. I and many other Australians would suspect not.

In reference to the raw deal independent fuel outlets are getting in the current market, can I say that just a few days ago in Sydney Marie El-Khoury, the owner of the BP petrol station on Sunnyholt Road, Blacktown, received enormous community support when she and other independent operators took on the big four oil companies. She slashed the unleaded petrol price to 94.5c a litre in protest against the petrol companies and supermarkets, which she says are killing small business enterprises. Yesterday in Adelaide a number of independent fuel outlets made similar complaints about this unlevel playing field.

Recently I met with the Petrol Commissioner designate, Joe Dimasi. It was a good meeting and I certainly wish Mr Dimasi well in his new role. One of the issues I would urge him to investigate is whether oil companies are passing on the full extent of the drop in world oil prices.

The Motor Trades Association of Australia also supports real transparency at the wholesale fuel level. They are also seeking a review of import parity pricing in the way that the benchmarks are set.

I am strongly committed to cutting the cost of petrol for motorists, but Fuelwatch is not the answer. I support the RAA when it says ‘there is more merit in looking to expand the availability of real-time pricing information to motorists rather than introducing a national Fuelwatch scheme’. The RAA said:

This option would make real-time price information available to the public for each petrol retailer—ideally through a website managed by the ACCC and/or utilising the Australian automobile clubs.

There has been a suggestion that those who do not support Fuelwatch support the big four oil companies. I think it is clear from what I have said that that is not the case. We need to tackle the big four oil companies, and there has been a lack of political will in this country over many years, under both coalition and Labor governments, to take on the big four oil companies and their cosy arrangements. I do not think anyone could possibly suggest that Associate Professor Zumbo is in any way a friend of big oil, given his outspoken criticism of the big four oil companies. Indeed, he was at the hearing of the Senate Standing Committee on Economics only last night giving evidence in relation to the North West Shelf and the joint marketing arrangements there.

I agree with the destination Minister Bowen has been seeking—that is, to lower the price of fuel for motorists. But Fuelwatch is the wrong road to achieving that. I look forward to working with the government to find the right road to cheaper petrol. If the government want my support in tackling the wholesale price of fuel and retail transparency and in tackling the power of the big four oil companies over fuel supply and distribution in this country, they have it. If you want to drive down fuel prices, you need to tackle the wholesale market and you need to tackle the big four oil companies. We must find better ways to help motorists, but Fuelwatch is not that way.

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

I rise today to comment on the National Fuelwatch (Empowering Consumers) Bill 2008 and the National Fuelwatch (Empowering Consumers) (Consequential Amendments) Bill 2008, which concern the Fuelwatch scheme. I note that the basis on which Fuelwatch was proposed was increased petrol prices in Australia. For the 20 years that I have been in politics, every time fuel prices go up governments rush around and announce yet another inquiry into fuel prices, and that inquiry comes out with a whole range of recommendations and very little ever happens. The main reason for that is that you can run around all you like and have as many investigations as you like into fuel prices—and I have absolutely no doubt that there is manipulation in the market to a certain degree—but the underlying driver of increased fuel prices is the increasing price of oil at a global level and the underlying driver of that is that the world is running out and has already run out of cheap, easily accessible oil.

Global oil, in my view, has peaked. That is not to say that it has run out. It is saying that from now on extracting oil globally is going to become more and more expensive as the explorers have to go into deeper water, more difficult terrain and, of course, have to deal with the extreme weather events of climate change, which we have already seen in terms of reduced field capacity, especially when you have a look at what is happening in the Caribbean as a result of extreme storms, cyclones and the like. The issue is, as the International Energy Agency said recently:

The future of human prosperity depends on how successfully we tackle the two central energy challenges facing us today: securing the supply of reliable and affordable energy; and effecting a rapid transformation to a low-carbon, efficient and environmentally benign system of energy supply.

In my view, Fuelwatch is actually fiddling while Rome burns. We need to deal with the fact that Australia is no longer self-sufficient in oil. We are already importing more than 50 per cent of the oil used in this country, and it is to the detriment of motorists and farmers. You only have to look at the increased price of petrochemical fertilisers to see the impact on agriculture and the flow-on effects to food prices. There is the whole dependence of the working fleet in Australia—whether it is in agriculture, fisheries or whatever it is—on petroleum based product. We are now in a situation where Australia has lost its independence in terms of energy security and we, just like the Europeans, are reeling from the fact that we are not sustainable or self-sufficient. We are now dependent on what is out there.

We had the oil inquiry, which I initiated when I first came into the Senate in 2005, to look at Australia’s future oil supplies and alternative fuels because at that time it was obvious to me that this dependence on foreign oil was a bad thing not only for climate change and our dependence on oil products but also for Australia economically. We had, at the time, ABARE telling us that it did not matter because Australia could always buy oil on the global market and that we could be net energy positive because of our gas supplies. To an extent that is true in terms of the exports but it does not alter the fact that, when you import that much foreign oil and are vulnerable to the machinations of the oil supply globally, you are going to end up in this scenario.

Fiddling around with a scheme that is just to give motorists a more informed choice is really not delivering on the critical issue, which is: what are we going to do to get off our dependence on imported foreign oil, which is also driving up our greenhouse gas emissions? That is what we should be doing. That means that the government should have a national energy and transport strategy that gets Australia off its dependence on foreign oil and makes a significant contribution to our targets, which we have already under Kyoto but also under a post-2012 scenario.

The first thing the government should be doing is looking at the issue of urban design and how we might redesign and rethink our cities and convert them into urban villages linked by rapid mass transit. Then they should look at our national transport system to get off our dependence on road based transport and get our freight onto the rail networks. To do that we have to spend money through Infrastructure Australia. We need to get our north to south, eastern states freight rail link in place and fix up the bottleneck in Sydney.

We need to consider the fact that aviation fuel is one of the few fuels that, at the moment, is not substitutable with anything else and that we are going to see increased prices for aviation fuel. We saw it in the price spike earlier this year and it is going to come again. That means that we need to start looking in Australia at building, particularly between Sydney and Canberra, for example, the kind of fast rail networks that you have in Europe. It is a logical thing to do.

When we look at rescuing the car industry we need to not only go with a strategy of electrifying the car fleet and moving to plug-in hybrids, which I support, but also look at building public transport systems. We need to be actually building those systems and rolling them out in Australia as part of a national transport strategy. When the fuel prices went up, people went to get out of their cars and onto public transport, but the public transport was not able to do the job because it has been run down over a long period of time. People will use public transport if it is safe, clean and efficient. At the moment, depending on where you are, there is a variety of combinations of how that might be achieved.

We need to look at having this national strategy which recognises that we need to get off oil and to electrify the transport fleet, to get the freight onto the trains, to get more people out of their cars and onto that public transport. We need to ensure that the cars are plug-ins and that they are powered by renewable energy sources, which goes to the national strategy on energy security. This means rolling out more renewable energy and enabling consumers to be energy suppliers by putting photovoltaics on their roofs, by having small-scale hydro, by having small wind turbines or whatever they are going to have domestically, plus plug into solar thermal and the like. This is the kind of big picture thinking Australia ought to be engaged in to come up with a really bold national strategy which looks at squarely facing climate challenges and oil challenges.

I will just go through the way the government is responding. You have Fuelwatch, which is a tiny fiddling-around-the-edges program. I agree with Senator Xenophon and others who have spoken in here—particularly Senator Joyce—about the need to actually look at the wholesale market and at the transparency issues with regard to that. We need to look at the import parity issues and the Oil Code regulation. All those sorts of things need to happen, and I do not think there would be anyone in the Senate who would object to those things happening.

That will make a marginal difference, but Fuelwatch and even dealing with those wholesale issues will still only make a marginal difference. If you are serious about acting and acting fast, we need to get on to mitigation strategies and planning strategies for the long term. As the Hirsch report to the US Energy Agency said in 2005:

The obvious conclusion from this analysis is that with adequate, timely mitigation, the costs of peaking can be minimized. If mitigation were to be too little, too late, world supply/demand balance will be achieved through massive demand destruction (shortages), which would translate to significant economic hardship …

That is what we had recently when the oil price went above $100 a barrel and approached $150 a barrel. Then you start getting chronic dislocation and shortages in places, like Western Sydney, where there is very little public transport. We know that the way Australian cities have developed the poorest people live furthest from the centre of the city; drive the oldest, least efficient cars and have the least, if any, access to public transport. So they are the people who are disproportionately affected when you get higher oil prices flowing on to high petrol prices. With Fuelwatch you might be able to give them some certainty around one or two cents, but in the longer term we need to ensure that there are better options for moving those people so that they are protected permanently.

It is actually cruel to keep building cities that do not take into account the need to mitigate greenhouse gases and oil prices. I know there will be some people saying, ‘Oh well, this doesn’t really matter so much because the underlying issue is not peak oil; there is plenty out there.’ I would draw their attention to the International Energy Agency report which has just come out on 6 November which is pointing out that, whilst there is a global economic slump that has curbed energy demand and pushed oil prices down in recent months, it will only provide a short-lived respite for consumers. The International Energy Agency is saying that supply shortfalls that pushed oil prices into triple-digit territory this year are far from resolved and could lead to a new period of high prices. In fact, it goes on to say that we are going to see oil consumption reach 106 million barrels a day in 2030, up from 86 million barrels a day this year. If that is the case, where is this oil supply going to come from? There have been several large-scale new developments announced but they have not been taken forward—the investment has not been forthcoming. We are rapidly going to reach a time when the economic stimulus packages get the economies going again, the demand is going to rise but the supply is not going to be there for the reasons I mentioned in the beginning—the cheap, easily accessible oil is gone and now we are into accessing oil from much trickier scenarios: deeper sea, more difficult terrain and extreme weather events.

What I would like to see the government do is actually give a sense to Australians of whether they believe in peak oil—whether they think peak oil has occurred and what we are going to do about it. How are we going to get rural Australia off its dependence on petrochemical fertilisers—off its dependence on petroleum based products, whether it is in fisheries or farming? How are we actually going to do that? When are we going to say there is a win-win scenario here by getting our rural community back to more sustainable farming practices and by giving them adaptation strategies to farm renewable energy as well as to increase their soil carbon, build more resilience in the face of climate change, and reduce their prices and improve their margins? That is the kind of strategy we should be looking at as a nation rather than what I see as a political exercise to disguise the reality of the situation. Governments are going to wring their hands and say, ‘There is nothing we can do about the international oil price.’ That is right; there is nothing we can do about that. What we can do is get ourselves off the dependence on foreign oil and that oil price and at the same time meet our climate objectives.

It is not a sensible policy to spend millions on coal to liquids, which is what the Australian government strategy is at the moment, saying: ‘Yes, we could well be in a situation where we can’t run our cars on petrol because we cannot afford it. Therefore we are going to run them on coal.’ That is a terrible strategy. It is a bad climate strategy. You cannot be serious about addressing climate change if you go down that route, and that was one of the conclusions of the oil inquiry conducted in the Senate three years ago—that we ought not to be issuing policies to deal with energy security that undermine our climate strategies. So I would like to see that work on liquefying coal finished, over, done with, and instead the effort going into electrifying the car fleet and, as I said, rebuilding the rail network so that we have that freight network along the east coast of Australia and the Sydney bottleneck dealt with—and at the same time the rollout of public transport systems, urban metros and a fast train between Sydney and Canberra, for example.

I just think what we have got with Fuelwatch is a political reaction to high fuel prices that disguises the actual problem we are dealing with. Yes, you have got manipulation by the oil companies. I am sure that is the case. As Senator Xenophon said, we can deal with those things; bring them in here and let us deal with the Oilcode, let us deal with import parity and let us deal with transparency in pricing. But it is not going to change anything when the oil price gets to $150 or even goes north of $150 and higher towards $200 a barrel. That is what I would like the government to exercise its mind on. There is an opportunity to do it now when there is a respite in the oil price, where it has fallen back in the short term because of the global economic downturn and less demand now. The pressure is not on so much now, so now is the time to bring out a national strategy to tell Australians how we are going to get off oil, how we are going to electrify the transport fleet, how we are going to invest in the rail networks and how we are going to roll out renewable energy so we can electrify the fleet. It was exciting news to hear that we had a company here ready to invest in three Australian cities with plug-in stations for the electric cars. That goes hand-in-hand with the investment in what I hope will be plug-in hybrids.

The second thing we can be doing is looking at second generation biofuels. We certainly do not want to go down the track of substituting food-growing land for fuel-growing land. That has been a bad strategy globally and has had many perverse outcomes, including the loss of tropical forests, which is a disaster. The second generation of biofuels using lignocellulose and actually generating a fuel from a waste product is well worth investing in. Also, ANU have developed algae grown from salt pans which can be put in the centre of a solar collector and the chemical reaction makes a high-grade transport fuel. That is a win-win for rural Australia because it means that people who have salt pans and high levels of salinity on their properties can actually do something with that, and frequently those areas also have very good solar radiation. So it is a win-win scenario, again providing rural Australia with an alternative to the kind of farming they do now. They could be not only farming renewable energy but also generating a transport fuel if we get behind that research.

What we need is a national strategy that deals with energy security and climate change that says, upfront, it is an unacceptable scenario for Australia to be left so vulnerable and exposed as to be dependent for more than 50 per cent of its oil on foreign imports. It is an unacceptable scenario for us in a climate change world to go down the route of liquefying coal. Therefore, what do we do that addresses climate change, that gives us self-sufficiency in transport fuel, and, at the same time, builds competitiveness and new jobs? The competitiveness and new jobs will come from the investment in those technologies and the rollout of the green new deal infrastructure. Fuelwatch, as I see it, is just fiddling while Rome burns.

The kind of strategy I am talking about is what Australians want to hear from their government—a strategy that says there is a whole-of-government approach that is internally consistent. Infrastructure Australia with its building fund will roll out public transport systems and the freight links that we are talking about. We then go to Resources and to Education and say, ‘Let us invest in commercialising those technologies which give us self-sufficiency, keep our best brains in Australia and get the jobs out there in rural Australia.’ We go to Agriculture and say, ‘Adapt to climate change. If you can’t continue to do what you are doing on your land now because of the temperatures and the climate then let us farm renewable energy.’ The Greens position is that we will support Fuelwatch because, on average, we think it will not do any harm and it may do some good, but it is fiddling while Rome burns. I implore the government to see that there is a big picture here. This is a political gesture towards a problem which is going to come back as the oil price goes up to $150 again, before they will have made any decisions about how to address it, and we will have another inquiry at that point and be no further advanced.

Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

I seek leave to incorporate speeches by Senators Ronaldson and Bushby.

Leave granted.

Michael Ronaldson (Victoria, Liberal Party, Shadow Special Minister of State) Share this | Link to this | Hansard source

The incorporated speech read as follows—

During the great fire of Rome in AD 64, the historian Seutonius tells us that the Emperor Nero played the lyre while his city burned. And in the best imperial tradition, our pretentious Prime Minister is similarly engaged in a game of trivial pursuit during a crisis.

The American economy is in a shambles. The European markets are in utter disarray. The ASX has plummeted farther and faster than at any time over the past three years. Business confidence throughout Australia is the lowest in over a decade. The prosperity of millions is at risk like at no time since the Great Depression.

And what does the Prime Minister offer us? What solution to our economic woes does Kevin 07 provide in 08? Well, among his overseas jaunts; among his speeches at the UN, and his hobnobbing with the global glitterati; the Prime Minister has offered us a panacea to our petrol pump pain.

This Hail Mary manoeuvre goes by the name of Fuelwatch. But Fuelwatch is nothing more than bread and circuses. It is nothing more than a gigantic distraction. The Prime Minister’s Fuelwatch policy is like the chariot race scene out of Ben Hur. The only difference is that it is the Australian people who are in danger of being devoured, not by lions, but by the bear market.

Before last year’s election, Kevin Rudd promised new thinking on the question of fuel costs. Wayne Swan promised to “crack down” on “skyrocketing petrol prices.” During their election courtship dance to win the votes of the Australian public, Rudd and co. promised effective action to reduce prices at the pump. But now that those votes were firmly in their party’s pocket, the Labor Government is trying to pass off a mere website as a solution to this problem that has inflicted so much pain to Australian hip pockets. The government contends that this scheme will ease the squeeze on motorists by informing the public of where fuel prices are lowest in their area. And petrol stations would be obligated to set their prices for a 24 hour period, on pain of a hefty fine.

In other words Fuelwatch is a giant government-mandated price-fixing scheme. And price-fixing constitutes the antithesis of competition. The Coalition Critique of the Labor’s interim report on Fuelwatch in the Senate Economics Committee explained this basic economic principle as follows:

“Fuelwatch, with its requirements to fix a price a day in advance and then to hold that price for 24 hours, does not make the market more competitive, and tends to a higher average price.”

Now, few have ever argued that the former trade union hacks who dominate the Labor government are endowed with a sense of economic sophistication. Few have ever argued that economic management is the ALP’s strong suit. But even economic semi- literates who occupy the government front bench should be aware that constraints on competition will raise prices rather than lower them. Even an economic dilettante like Treasurer Wayne Swan should understand that anything that reduces the flexibility of the fuel market will only make petrol dearer.

And then there are the gaping inconsistencies in the government’s claims about the benefits that Fuelwatch will supposedly provide. First you have the Prime Minister, who asserted that the scheme would bring about a reduction of 1.9 cents per litre in the “relevant weekly average price margin.” Then Labor’s petrol Tzar, Pat Walker, who walked off the job after only four months, claimed that the national implementation of the scheme would lower prices by 5 cents per litre. And finally, you have the Treasurer himself, who is peddling the Fuelwatch fish story that motorists will save $10 per tank, which works out to a whopping 20 cents per litre. So which is it? 1.9 cents per litre? 5 cents per litre? Or 20 cents per litre? This government is the political equivalent of the gang that couldn’t shoot straight. They can’t even get the lines straight on their Fuelwatch sales pitch.

But I must note that all is not entirely lost where the Rudd Government’s economic comprehension is concerned. There is at least one member of the Labor ministry who understood that Fuelwatch is a triumph of style over substance. There is one member of Kevin Rudd’s front bench who understood that the Fuelwatch scheme would harm Australian consumers rather than help them. And Labor Minister for Resources, Energy and Tourism Martin Ferguson was not reticent about his concerns.

In a confidential letter published last May by The Australian, Ferguson warned his colleagues that Fuelwatch would fail working families and hurt the small business sector. But the publication of Martin Ferguson’s letter was merely the first Fuelwatch related leak.

Pretty soon Kevin Rudd’s Fuelwatch agenda began to look like the hull of the Titanic after that meeting with the iceberg. Channel Nine’s Laurie Oakes came into possession of internal cabinet documents that cast serious doubt on Fuelwatch. Now, I don’t wish to digress from the topic of this debate into what these leaks say about the modus operandus of the Rudd government. But there must be something seriously wrong for such serious breaches of confidentiality to occur so early in a young government’s tenure.

Yet beyond the question of how these documents reached the public domain, it is far more germane to see precisely what they say about Labor’s Fuelwatch initiative. Kevin Rudd’s own department, the Department of Prime Minister and Cabinet, said: “econometric modelling undertaken by the ACCC is somewhat inconclusive with respect to the overall pump price, but indicates that a small overall price increase cannot be ruled out”. And the Department of Resources, Energy and Tourism expressed concern that “the scheme will reduce competition and market flexibility, increase compliance costs and has more potential to increase prices.” No wonder that Department’s own Minister, Martin Ferguson, had second thoughts about the wisdom of Kevin Rudd’s Fuelwatch media stunt.

The Prime Minister claims that Fuelwatch is modelled on a similar government scheme in Western Australia, which Kevin Rudd claims was a raging success. But local fuel market analysts tell a different story.

“It was the introduction into Perth of Woolworths and particularly Coles which actually triggered the price war that occurred in Perth,” said West Australian analyst Alan Cadd. And so we see that it was competition, rather than the heavy hand of government mandates, that caused petrol prices in Perth to drop by 2.5 cents per litre.

Labor’s Fuelwatch media stunt is an insult to the intelligence of the Australian people. It is a gratuitous boondoggle that has already cost the Australian taxpayer thousands, perhaps even millions of dollars. The Fuelwatch media stunt is entirely unnecessary because the private sector has already moved to provide free information on fuel prices to anyone with a computer.

MotorMouth Pty Ltd. is a company that was established in July 2000 in response to the demand by Australian motorists for information on the fluctuating prices of unleaded petrol. It was initially set up to cover the major routes within a 15-kilometre radius of the Brisbane CBD. Ralph Waldo Emerson once quipped that if you build a better mousetrap, the world will beat a path to your door. And the quality of the service provided by the MotorMouth website caused many thousands of Australian consumers to travel the pathways of the internet in search of a better deal.

The MotorMouth is entirely independent from the oil companies. And its website declares that its core objective is the provision of information to consumers to facilitate informed decision making on petrol purchases. Increased demand for MotorMouth’s petrol price monitoring service soon triggered its expansion to the Gold and Sunshine Coasts, Sydney, Melbourne, Adelaide, Hobart and Perth.

MotorMouth is simply a voluntary conduit for consumer information. It has no power to fix prices and impose fines like Kevin Rudd’s Fuelwatch media stunt. And thus the private sector MotorMouth serves to nurture competition while Labor’s government Internet white elephant serves to neuter it.

So it turns out that Kevin Rudd’s great innovation to provide salvation for Australian motorists isn’t so innovative after all. It turns out the private sector beat the Prime Minister to the punch by years. It turns out that MotorMouth trumped Kevin Rudd’s bigmouth by a large margin.

There is a saying that fools rush in where angels fear to tread. And the Rudd Government is rushing, with great fanfare, through a gaping door left wide open long ago by MotorMouth Pty Ltd.

But this is a classic pattern with this Rudd Labor government. This is a government values form over function; chicanery over honesty; and the appearance of action over the reality of action. And it has no hesitation about claiming credit for the hard work done by others. This whole scheme is a hoax, a put up job, a gigantic humbug that richly deserves to be described as Kevin Rudd’s Fuelwatch media stunt.

With this government I am reminded of that scene in the Wizard of Oz where Dorothy and her companions discover that things in the Emerald City aren’t as they first appear. “Pay no attention to the man behind the curtain,” says the Wizard while he is exposed as a fraud.

But you can rest assured that we in the Coalition will pay close attention to what goes on behind the curtains of this government. That is what we were sent here to do by the Australian people who elected us.

David Bushby (Tasmania, Liberal Party) Share this | Link to this | Hansard source

The incorporated speech read as follows—

I rise today to contribute to the second reading debate on the National Fuelwatch (Empowering Consumers) Bill 2008.

Can I start by saying emphatically that I support fully the spread of better information on petrol prices.

However, I will not support anti-competitive price fixing in the petrol market and hence cannot support this bill

Almost 12 months ago, the Rudd Labor Government was elected on the promise that it was listening to Australia’s working families and that Labor had heard they were suffering under the dual yoke of rising grocery prices and increasing petrol prices and that, enough was enough.

It went to the people saying it had a plan to fix the cost of living pressures that grocery and petrol price increases were introducing.

Mind you, it didn’t say what the plan was for either —because, I suspect, it didn’t have one - but it did say that it had a plan.

And many Australians, who were finding the increase in the price of petrol and groceries difficult to manage, liked the sound of someone who said they had a plan.

They didn’t want to know the details, or the realities of how prices of both are delivered, or the effects on petrol prices of international factors, or even the lack of competition in both the wholesale petroleum markets in Australia and the retail grocery market and how that affects retail prices.

All they wanted to hear was that someone could bring the prices down—and that is what the then Labor Opposition told Australians—regardless of Labor’s ability, inability or otherwise to actually implement this promise.

Why are petrol prices so important to Australians? Because many Australians have limited or fixed incomes that are stretched already. Combine that with the importance of the mobility that having their own car provides and increases in petrol costs suddenly start to seriously impact upon their lifestyle.

Of course, there are worse things that can happen to Australian families than having to use their car a little less, or even a lot less. But it is important to understand that the personal mobility provided to Australians by being able to afford to drive their car is significant to most. And the impact on lifestyle by reducing that mobility is not something they want to accept.

As such, and make no mistake about this, the drift in votes to Labor at the last election—a drift that delivered them government—was in a large part contributed to by people who heard Labor say they would bring the price of petrol down and that they expect them to do so.

So where are we at today?

We have before us a Bill that is the Rudd Labor’ Government’s total commitment to addressing petrol pricing—a bill to take a scheme in place in Western Australia and turn it into a national scheme—a scheme that at best in Western Australia has been spectacularly ineffective at reducing prices and at worst, has introduced anti-competitive pressures and largely removed the ability of WA motorists to access their petrol at the bottom end of the price cycle.

Prime Minister Rudd was quoted earlier this year as saying ‘we have done as much as we physically can to provide additional help to the family budget recognising that the cost of everything is still going through the roof cost of food, cost of petrol, cost of rents, cost of childcare.’

At the same time, he went on to say ‘when it comes to things you do not have direct control over, obviously in terms of the global price of oil, then what you can do is simply act in the other areas to make sure that there are some more dollars to draw upon in terms of the family budget’.

At the time, this statement by the Prime Minister attracted a lot of negative press and the justified ire of many Australians

It is not that he is so wrong. The fact is that a lot of what was driving up petrol prices earlier this year were outside the sphere of influence of the Australian Government

What annoyed so many Australians was the fact that this was no different prior to the 2007 election, when he was travelling around the country quite happily telling people that there was a lot that could be done, the then Coalition government wasn’t doing any of it and that a Labor Government would

Yet here we are today with a bill before us that will achieve little, which in fact will most likely reduce competition and increase prices and the overall fuel bill for Australians and, a Prime Minister who says the government has ‘done as much as we physically can’.

I am sure that there are Australians all over the country who expected a little more of Mr Rudd when he told them he felt their pain on petrol costs, who heard him say that he had a plan and who thought the plan would be something more than a half baked copy of a system that had delivered little or no price benefit in Western Australia

I am sure they expected real, tangible lower petrol prices to result from the plan

So given the Prime Minister’s own admission that he considers there is nothing else that can be done, this is it. The pinnacle of the Rudd Government’s plan to reduce petrol prices for struggling Australian ‘working families’ and the sole answer to those problems

I will look in more detail at the proposed scheme in a few minutes, but initially I would like to take a bit of a look at what factors actually influence petrol prices in Australia

This issue has been the subject of countless inquiries by state and federal government bodies as well as private consumer and motorist organisations

The main factors influencing petrol prices at the bowser are well understood and generally not in dispute.

At an international level, they are, the international price for refined petrol and the Australian/US dollar exchange rate.

State government policies and subsidies also can affect petrol pricing, for example, policies relating to fuel quality and petrol retailing arrangements and Australian Government policies and grants (eg as they might index excise and impose fuel standards and set the regulatory environment in which petrol is wholesaled and retailed)—and excise and GST all impact significantly on the price paid in Australia for a litre of petrol.

Of these factors, the Australian government is only able to influence in a meaningful manner, its own policies and the level of excise and GST.

Many of the inquiries into petrol pricing I have already referred to, examine these issues and particularly the first of them—that is the policies implemented at an Australian government level affecting the regulatory environment in which petrol is sold and the level of true competition at both a wholesale and retail level

the government has argued that the Fuelwatch scheme, the subject of the bill before this chamber today, is designed to address the issue of competition in the petrol markets and that the new regulatory environment it creates will promote additional competition.

Sadly, the evidence taken at the Senate inquiry into this matter demonstrated unequivocally that this will not be the case.

Even the Government’s rhetoric surrounding the benefits of the Fuelwatch scheme changed dramatically following its announcement, as the evidence piled up proving that it would not deliver lower fuel bills to working Australian families.

When they announced the scheme, it was all about ensuring motorists would not pay anymore than they had to for petrol.

For example, the Prime Minister was quoted as saying ‘What we want to do is ensure motorists are not paying one cent more than they have to as the bowser what we want to do is ensure that motorists are able to buy the cheapest petrol at the cheapest prices at the cheapest petrol stations at the cheapest times’.

And on 16 April, Assistant Treasurer, Chris Bowen said on the ABC that Fuelwatch would lower fuel prices by 2cp1.

Within a week, in the face of the barrage of criticism and evidence thrown up in horror at the prospect of a national Fuelwatch scheme, the rhetoric of the Minister responsible, Chris Bowen, had dramatically changed.

No longer was he, or the government claiming the main reason for the scheme was price. On the contrary ‘the much more important reason for doing this is to give consumers more information’.

Ah, I see now, when Labor went on the attack about petrol prices before the election, when they aggressively accused the Coalition government of being asleep on the job with petrol and that they would put a ‘cop on the beat’—they weren’t talking about petrol prices —and the difficulties Australia’s ‘working families’ were having with rising petrol costs—no they were promising to give motorists more information!

And I am sure that the many Australians who voted for them because they ‘had a plan’ did so because they thought that plan would ‘give them more information’.

Unfortunately for the many Australians facing real and worrying cost of living pressures as petrol prices remain high and grocery prices and rents keep rising, more information is not what they want or need.

Australians were hoodwinked by Labor prior to the last election —the government promised something they knew they couldn’t, or possibly more accurately, wouldn’t deliver.

The Prime Minister’s statements that there is little that can be done by the Australian government to affect international oil prices is correct.

But he knew that before last year’s election.

Yet Labor deliberately worked towards creating the impression that they would tackle petrol prices head on and make a meaningful difference.

It was a con of a grand scale conducted on the Australian public and the Labor Party should stand condemned.

But as mentioned, there are measures the government can take that can either directly reduce petrol prices, or genuinely lead to pressures that will keep it lower than it would otherwise have been.

A cut in excise is the obvious, easy direct route in lowering petrol prices —such as the 5 cents a litre cut in excise tax as promised by the Coalition.

This would deliver a real cut in petrol prices—and I don’t for one minute accept the intellectually dishonest argument posed by many on the other side of this place, that 5 cents is nothing and would be swallowed up by small changes in the international price of oil, or a fall in the Australian dollar.

This trivialises the challenges faced by Australians in meeting their cost of living challenges.

The fact is that a 5 cent cut in the excise is the one petrol price measure that can’t be taken away by international factors.

No matter what the international price of oil, no matter what the exchange rate, if you take 5 cents off the excise, petrol will always be 5 cents a litre cheaper than it would have been.

This is fact and presents a 5 cent a litre saving every time Australian motorists fill up, for so long as the excise remains at the new rate - for ever—whether petrol is $1 a litre, $1.50 a litre, or $2 a litre.

Sure it is a costly measure in terms of the Government’s budget, but we are in Australia in a fortunate position of having had a substantial surplus—despite the current woes, we can arguably, as a government, afford the measure. But even more so, given the current economic crisis and the almost certain slowing of the Australian economy, taking a few billion out of the hands of the government and giving it back to the people is the economically responsible thing to do.

We have been saying this for some months and the government itself finally acknowledged this with its $10.4bn plan to stimulate the economy for most of this year, the government has been strenuously arguing that we need to maintain a high budget surplus … and their approach to this was to take the money off the people so they can’t spend it, thereby cooling an overheating economy.

Indeed, any of our efforts to stop them taking money from taxpayers lead to an accusation that we were economic vandals.

But the reality is that Malcolm Turnbull, as the then Shadow Treasurer, has been warning the government about the potential effects on the growth of the Australian economy of rising petrol prices and the international financial crisis, since February this year he has consistently called for the government to hold back a little on its zeal for cooling the economy, because these two factors were going to have a major cooling effect and that it would be prudent to take a more cautious approach.

Well, he was right, and this has been acknowledged by the Government as the likely impact of the international financial woes on the Australian economy finally sank in.

It is important to understand that the objective of their $10.4bn package is the very opposite of the objective upon which their entire 2008 Budget strategy was based. It is a complete reversal of policy.

The budget was intended to cool economic growth, this package is intended to stimulate economic growth.

We have told them all year to take it easy on their efforts to slow economic growth in Australia, because there are bigger things at play and, now, finally, they have acknowledged that —but because they had been trying to achieve the exact opposite of what is now openly acknowledged as being required, the government’s efforts to stimulate the economy have to be far more significant than they would if the government hadn’t been trying to contract the economy.

It also highlights how hollow the accusations levelled against us for holding up some of the budget measures are.

If we had let them sail straight through, they would have been in effect out there cooling the economy, slowing economic growth and making it even harder to stimulate the economy as is openly agreed by all, now needed.

Similarly, the economy would need less of a heart starter package, if two of the Coalition policies had been accepted by the Government.

As has been noted by various commentators in the context of our policy to increase pensions, widespread economic stimulation is best achieved by returning taxpayers funds back to them to spend in the economy. The same principle applies to Australians and a cut in the excise tax.

Cutting excise tax will deliver both cheaper petrol prices and help to domestically stimulate an economy facing many factors trying to slow it down—a win win situation —but one the government has yet to adopt—despite its acknowledgement yesterday of the need to backflip on its policy of trying to slow economic growth.

Hopefully they will see the benefit of cutting petrol excise tax soon. Because implementing Fuelwatch certainly isn’t going to deliver economic stimulation, or cheaper petrol.

Rather, it is in fact likely to increase prices through a minimisation of competition and removal of deep discounting during price cycles.

The proposed Fuelwatch scheme is based on the existing scheme that has been operating in WA for some 7 to 8 years.

There are varying claims about the success or otherwise of this scheme, the truth of which is clouded to a significant extent by the variable nature of other relevant factors in the price of petrol in WA and the other states that make it hard to do direct comparisons.

Nonetheless, various learned persons and organisations have looked at the success or otherwise of the scheme using both sophisticated econometric modelling taking into account a wide variety of factors as well as simple straightforward comparisons of outcomes not affected by the variables.

The first major examination of the scheme was conducted by the ACCC in 2002.

Its findings were—to put it simply—damming of the WA Fuelwatch scheme.

In considering the outcomes of the WA scheme, the ACCC states it had regard to the objectives of the arrangements put in place by the WA government and what they sought to achieve

These included:

• Greater competition;
• A fairer and more transparent petroleum market;
• Greater price transparency;
• A reduction in the volatility of metro prices; and
• A reduction in the differential between city and country prices.

The data collected by the ACCC in 2002 found that Perth prices increased relative to 3 benchmarks, namely: Sydney and Melbourne prices, the Commission’s import parity indicator and Western Australian maximum wholesale prices.

The ACCC acknowledged that a significant part of the price increase could have been due to higher fuel standards introduced at the same time as WA Fuelwatch, but it also concluded that some of it is likely to be due to other factors, specifically mentioning the 24 hour rule.

With respect to the greater transparency objective, the ACCC concluded that the publishing of petrol prices on the Fuelwatch website did increase price transparency, but also found it introduced unwanted distortions into the market.

In terms of the reduction of volatility objective, the ACCC found that, contrary to wide held views, petrol prices were already relatively stable within a day —with Perth prior to the Fuelwatch scheme only experiencing an average of 1.18 changes per day, and that the change therefore had a minimal effect on volatility.

And finally, the ACCC also found that the city country price differential blew out, totally in the face of the objective of reducing this differential.

The ACCC concluded that on those findings, it was hard to see how that the WA Fuelwatch scheme had been successful, stating that it appeared a number of the Western Australian fuel pricing regulations may have been introduced quickly, without full consideration of their implications or the necessary administrative details for their successful implementation.

Sounds eerily similar to the fast-track approach taken by the Rudd Labor Government in the face of dramatically rising fuel cost earlier this year.

In their panic given the public clamour for them to live up to their promise, they announced the scheme and as petrol prices continued to rise and as the Coalition started to gain the public’s acceptance as the party capable of doing more in this regard, they rushed through legislation to implement their scheme, forcing a number of treasury officials to work 36 hours straight to meet their unreasonable and ill-considered deadline.

The result was again, legislation that was introduced too quickly, and without full consideration of its implications or the necessary administrative details for its successful implementation.

Since then, there have been a number of objective outside examinations of the WA Fuelwatch scheme and the weight of evidence has clearly demonstrated that it failed to deliver lower prices and may actually lead to limiting the opportunities for motorists to minimise their fuel bills.

Of course, the most comprehensive consideration of the effectiveness of the WA Fuelwatch scheme was undertaken as part of the recent Senate Standing Committee examination of the potential impact of the bill before us today.

The overwhelming evidence presented to that inquiry was that there are a number of significant risks to petrol pricing as a result of this bill, that there are a number of very likely scenarios that will lead to higher petrol prices for most if not all Australians and that there is very little evidence, if any, to suggest that motorists will be any better off as a result.

Of course, the majority report —ie the Labor Government Senators —recommended the bills be passed.

However, as noted in the minority report, any objective consideration of the evidence would, at minimum, have to have raised alarm bells that the scheme might actually raise petrol prices as a result of a lowering of competition and that the best that could be hoped for was that it would not harm motorists.

Given the multi-million dollar spend involved—not a great return on investment!!.

Of course, the ACCC in its most recent report to the government, considered and written after the election of the Rudd Labor Government, takes a completely different tune to its past comments and findings.

The ACCC’s methodology on its previous examinations of the WA Fuelwatch scheme were always made public and understandable by peers looking to review those results.

But with this most recent consideration, the modelling upon which they base their findings has been kept secret.

The reason why this is the case has been speculated on ad infinitum and I could put forward some obvious theories myself today—but I will decline to do so.

Suffice it to say, the ACCC prior to the election of a government looking to nationalise the WA Fuelwatch system, had publicly panned that system as failing to deliver the benefits to consumers it was intended to deliver.

After the change of government, it has a different view, but has refused to release—or is not allowed to release—the modelling upon which it says it has based this flip flop.

As the ACCC’s modelling has not been publicly released and can’t be objectively peer reviewed, the unfortunate reality is that the weighting given to their findings must be lower than if it could be objectively tested.

In its 2007 report, the ACCC pointed to a reduction in price of 1.9c per litre in WA, but also stated clearly that a lot more needed to be done before the scheme was rolled out nationally.

The view of independent economists on this report suggested, even though the methodology was not released, that it was clear there were issues with it, including:.

• The ACCC failed to take account of the entry into the WA market of Coles.
• The ACCC has since claimed to have adjusted for the Coles effect, but will not say how it did so.
• The ACCC analysis looks only at prices and not the volume sold at a particular price—for example, a service station with a price of $1.80 but selling no petrol is given the same weight as one with a price of $1.50 and selling high volumes, and.
• The ACCC refused to release its methodology so other economists can fully test its analysis and results.

The ACCC has also been quite inconsistent in its comments about the potential benefits from a national Fuelwatch scheme.

As mentioned, in its 2007 report, it talked about 1.9epl savings in WA as a justification for taking the scheme nationally.

But in May this year, ACCC Chairman told the ABC that Fuelwatch was ‘not about saving motorists money’.

Again, I find such statements incredible.

Remember, the Rudd Labor Government was elected partly on its promise to tackle petrol prices and after announcing the twin measures of Fuelwatch and a dedicated ACCC ‘petrol commissioner’ who has no additional powers, the Prime Minister said there was nothing more that could be done.

And here we have the senior public servant responsible for implementing Fuelwatch and the boss of the petrol commissioner, saying that the government’s measures to tackle fuel prices aren’t intended to deliver lower prices.

Millions of Australians who believed the Prime Minister had a plan to reduce petrol prices must be bitterly disappointed.

So given that the ACCC advice, so heavily relied upon by the government in justifying its petrol price plan, appears to be unconvincing and based on methodology that has not been released for peer review, maybe there was other advice received by the government that clearly outlined the potential benefits to Australians from implementing such a scheme?.

• The reality is of course, that all other departmental evidence the government received was completely contrary to that the ACCC says it provided the government.

In fact, four key relevant departments, including the Prime Minister’s own department and Treasury, advised the government that the scheme should not be adopted and warned of potential negative consequences and that the scheme would push petrol prices up.

Even the Minister responsible, Energy Minister Martin Feguson argued against the adoption of such a scheme as he believed it would be counterproductive to the interests of Australian motorists—especially those in locales with a high proportion of Labor’s ‘working families’, like Western Sydney.

This from the Minister who is advised by the most expert department in Australia on energy policy.

He said that Fuelwatch would put petrol prices up, will decrease competition and will hurt working families … but did the Prime Minister listen to this evidence based advice?

No, he did not.

And then there is the Department of Treasury’s regulatory impact statement, or RIS.

This document points out:

• 72 per cent of consumers in cities other than Perth always or usually try to purchase unleaded petrol when it is cheapest, whilst 59 per cent of Perth consumers always or usually try to buy petrol at its cheapest—suggesting where Fuelwatch is operating, more motorists are forced to buy petrol at a higher price.
• the RIS also said it is possible that the introduction may have anti-competitive effects.

let me repeat that …

• as the RIS notes, Fuel Watch in WA has ‘harmed the competitive position of independents as it allows large operators to adopt a strategy of rolling price leaders. Operators with small networks are less able to employ this pricing strategy and are therefore placed at a competitive disadvantage in the market’.
• and, ‘the provision of this taxpayers funded service creates greater opportunities for price co-ordination amongst retailers, especially in more concentrated markets;.
• The RIS also stated that the benefits of a national scheme are likely to be very limited in regional and rural areas—where petrol is already higher than metro areas.

Prior to last year’s election, the Prime Minister said he was going to govern on the basis of evidence and the basis of getting the best advice.

Yet here he and his government are, making decisions that fly in the face of the best advice provided to it—all so it can create the dishonest impression it is delivering on its promise to address rising petrol prices.

This is not a government developing evidence based policy, but one that looks for evidence to back its policies.

The stated objective of the National Fuelwatch (Empowering Consumers) Bill is to “provide intra-day price stability and decrease search costs for consumers.”.

It is clearly not intended to deliver cheaper petrol.

Only the Coalition’s promise of a 5cp1 cut in excise tax will do that.

There are many issues and problems with the proposed scheme that I don’t have time to examine in detail today, but I am sure others will, although I will try to mention a few, such as constitutional questions about the scheme’s implementation.

The government plans to use its corporations power to implement the scheme—but it remains unclear how this will work for unincorporated family business owned petrol retailers.

As mentioned, there is no evidence that a national Fuelwatch scheme will lower petrol prices nor that the WA scheme lowered prices there.

Monitoring over many years shows that the average price in Perth is consistently higher than in other mainland capitals.

Also, the weekly price cycle present in Perth prior to Fuelwatch and still present in Brisbane, Sydney, Melbourne and Adelaide, stretched out to a two week cycle upon the introduction of Fuelwatch.

This means that Perth motorists who have to fill up weekly—(and around 76% of Australian motorists do) - and who are looking to find the best price, miss out every second week as the discounting phase only happens once a fortnight.

The fact is that it will not save motorists any money—despite the Government’s clear weasel words designed to create the perception that the bill will relieve petrol price pressures.

Both Minister Chris Bowen and the Prime Minister initially said it would save around 2c a litre, the now defunct petrol commissioner Patrick Walker said it would save 5c a litre, the ACCC originally said it saved almost 2c a litre in WA, but now none of them say it will save money.

The purpose of the bill now is to ‘provide motorists with more information, not savings’.

Again, I say that if this is the government’s implementation of its plan to reduce the price of petrol, by ‘giving more information’, Australians should be very disappointed.

The fact is the scheme proposed in this bill is bad for competition and will drive independent retailers out of business, leaving only the big petrol companies and major supermarket chains in the petrol retailing business.

Evidence from motorist organisations—almost all of them—is that the scheme proposed in this bill will be detrimental to motorists and would create higher average fuel prices and remove much of the opportunity for canny motorists to buy their petrol at the heavily discounted end of the petrol cycle.

It will deliberately iron out the discounting cycle, stopping completely heavy discounting in that cycle, reduce competitive pressures in the market and reduce the opportunities for families to fill up at the bottom of that cycle.

The scheme is nothing more than an expensive con so that the government can say it has done all it can, but it will deliver nothing.

It will cost motorists, not benefit them and accordingly, the bill should be rejected.