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Wednesday, 31 May 2000
Page: 16766


Mr MARTIN FERGUSON (11:18 AM) —In rising to speak on the Petroleum Excise Amendment (Measures to Address Evasion) Bill 2000, I want to particularly speak in favour of the second reading amendment moved by the member for Wills. In doing so, I want to draw attention to the horrific experience of the Australian aviation industry earlier this year. I believe it is intimately related to the issues that are before the chair for discussion this morning. When I think about the experiences of the aviation industry with the avgas difficulties earlier this year, I very firmly believe that the second reading amendment standing in the name of the member for Wills is intimately related to the problems being experienced by the industry.

To summarise the nature of the second reading amendment, in thinking about the avgas dispute, the member for Wills, in putting forward the amendment, has picked up the key elements that reflect the views of the industry. The second reading amendment condemns the government for its inaction on the dangerous practice of fuel substitution. It notes that fuel substitution is a dangerous practice which goes to the safety of the travelling public and those employed in providing a service to the travelling public, including consumers. It also notes, which I think is very important, the responsibility of the Commonwealth parliament to ensure that fuel substitution does not occur.

This bill is not just about the Treasurer collecting excise, because that is only part of the responsibility. Obviously, excise is revenue for the purpose of the provision of government services, but in the collection of revenue via excise there is also a responsibility on government to look after those who are basically required to pay the excise and, in doing so, to provide services which mean that the Australian public are protected as a result of the collection of that revenue. The amendment finally, and I think rightly, says that the government not only has a responsibility on this front but has got to bring fuel substitution to an end as a matter of urgency.

It is for those reasons that I join the member for Wills and others on this side of the House in condemning the Howard government, of which you are a member, Mr Deputy Speaker Hawker. You have a responsibility to also stand up on this issue as a representative of regional Australia who depends on quality fuel and also on a proper and accountable regional airline service, which I believe is seriously in question as a result of the failure of the Treasurer to face up to his full responsibilities with respect to these matters.

We condemn the government for its inaction on the dangerous practice of fuel substitution and, importantly, for allowing the Australian Taxation Office and, in essence, the Treasurer—someone who would like to carry the baton to be the Prime Minister of Australia—to cease random testing of fuel. That is the crux of the problem before the House this morning. It is about the Treasurer effectively deciding, `Yes, I will rip off Australian taxpayers anything I can when it comes to revenue.' He then has the hide to waste it on the promotion of a GST that no Australian actually wants, including the majority of people in your own electorate, as you know, Mr Deputy Speaker, without also in turn facing up to his responsibilities to make sure that, as part of his right to collect that excise, he also goes out of his way to put in place mechanisms to protect the Australian public from rip-off merchants who are, more often than ever, because of inaction on the part of this government, substituting lower quality fuel. That is what it is all about.

Those rogues are only allowed to get away with this because of the failure of the Howard government and, more importantly, the direct lack of responsibility, and willingness to accept that responsibility, by the so-called would-be Prime Minister, the current Treasurer, Mr Costello.


Mr Danby —The man who would be king.


Mr MARTIN FERGUSON —Yes, the man who would be king. To be king, and to be able to spend revenue, requires that you face up to your responsibilities on a broader front. That is where the Treasurer and the Howard government fail with respect to the bill, which is about addressing evasion, protecting Australian consumers and guaranteeing safety in all forms of transport. That is what the debate is about, and the failure of the Treasurer to accept his responsibilities on that front.

I believe that this bill gives all of us the perfect opportunity to remind the Australian public that the aviation fuel crisis is, frankly, not over. That has also been clearly revealed in Senate estimates in recent times. The truth of the matter is that not only is the Treasurer responsible for Australian travelling difficulties but so is the Minister for Transport and Regional Services and Deputy Prime Minister, the so-called lion of the Australian regional development movement, Mr Anderson, a resident of Canberra around Red Hill. So much for his concern for and attachment to regional Australia. The problem is that the minister for transport, as you know, Mr Deputy Speaker, has let the issue of the avgas fuel difficulties languish, ignoring the statistics that show that the issue has not passed for those directly affected.

The feeling of deja vu was overwhelming when the toluene fuel substitution crisis emerged. The issue of fuel quality and the role of the Civil Aviation Safety Authority were raised by the aviation fuel contamination crisis. Fuel quality and the role of other government authorities have emerged as the key issues in the toluene fuel substitution crisis. The distribution of contaminated fuel by Mobil and its agents at the end of last year put lives at risk and will result in a cost of tens of millions of dollars and affect the livelihood of a range of small businesses around Australia, especially in regional Australia in areas such as Flinders Island.

The aviation fuel contamination crisis actually had a much longer history than is generally appreciated and, perhaps more importantly, accepted by the Howard government. The role of the aviation authority in overseeing the distribution of aviation fuel has been the subject of considerable debate within CASA and, before it, the Civil Aviation Authority from 1991 onwards. It is not a recent issue, but one from 1991 onwards. In fact, from that date, staff at district offices continued to monitor fuel distribution even though it was no longer mandatory to do so.

In September 1993, a meeting was held with Sydney, Melbourne and Moorabbin based Civil Aviation Authority staff to discuss the auditing of fuel distribution. The meeting proposed that audits of fuel companies commence immediately and that legislation be introduced to provide for enforcement of the audit trials of the complete fuel distribution chain. At the end of 1995, a number of CASA officers were even involved in a special training program that went to the issue of fuel security, but that training program was prematurely terminated by the authority. At the same time, the then general manager of airworthiness with CASA, Mr Frank Grimshaw, told a regional manager, Mr Alan Frew, not to proceed with a planned aviation safety surveillance program audit of Shell Australia.

In an email dated 26 March 1997, Mr Grimshaw said that the CASA Safety Committee had recommended that existing certificates of approval held by oil companies under regulation 30 be cancelled. Mobil was issued with such a certificate of approval under Civil Aviation Regulation 30 as far back as 12 April 1974. That certificate, I might note, required Mobil to manage its affairs in relation to the distribution of fuel in accordance with, among other things, an effective Civil Aviation Authority audited quality control regime. While the conditions imposed by the certificate and the role of the then CAA did not go to the manufacture of aviation fuel, the audit process imposed on companies was an important discipline on both the production and the distribution of fuel.

On 11 January 1996, Mobil applied for a new certificate of approval from CASA which related to the manufacture and distribution of aviation fuels. A CASA document dated 16 June 1997 said that that application was put on hold until the situation with regard to whether or not oil companies would hold a certificate of approval was resolved. It is still not resolved today.

In a letter to the Technical Director of the Australian Federation of Air Pilots, Captain Tom Russell, dated September 1997, the acting CASA director, John Pike, said that a review of requirements regarding the control of aviation fuel would be done as part of the regulatory framework program. This debate then continued until 1998, with a number of district offices still continuing to audit fuel distribution systems.

The minister for transport has, I note, required the Australian Transport Safety Bureau to conduct a comprehensive inquiry into the whole issue. That review started in January this year during the crisis and it appears is ongoing. According to the current CASA director, Mr Toller, there has been yet another organisational change, and this process is now a matter for the aviation safety standards area. So the debate about the role of CASA in the supply of fuel to the aviation industry has continued within the authority for nearly a decade without resolution. While that debate was going on, and no effective monitoring and regulatory action was taken, the aviation fuel crisis emerged and hit home. Just ask regional Australia, including people in your own electorate, Mr Deputy Speaker. And still the transport minister has not fixed CASA's internal bumbling to ensure that fuel is tested and regulated.

We hope that the Australian Transport Safety Bureau investigation will make recommendations to ensure a closer monitoring of this area. Meanwhile, it is important to stress that the aviation fuel crisis is not over. The implications of that crisis are continuing and ongoing. At recent Senate estimates hearings, my colleague, Senator O'Brien, ascertained that the total number of aircraft grounded during the crisis was between 1,500 and 2,000. Of that number there are approximately 300 aircraft still grounded. Of those, many will not fly again because of the prohibitive cost of replacement parts. They just cannot afford to get the planes in the air again.

In terms of compensation, this fuel contamination crisis has also cost financially, especially small business. The estimates process revealed the payments to date under the various compensation programs. As at 1 May 2000 under the hardship program there had been 345 payments made to a total of $2,157,047. Of the second category of compensation, which is for reimbursement for the cost of meeting CASA airworthiness directives, there have been 1,722 payments to the value of $3,725,581. In the third element of the package, the business compensation package, there have been 57 interim payments and 59 final payments totalling $1,716,556.

Those are the figures to 1 May of this year. However, the truth is that that is not the end of the compensation issue. To quote the words of the departmental official, Mr Gemmell, when describing what will happen to the payments at Senate estimates of 2 May 2000, page 88, he said:

The expectation you would have is that the hardship will start to die away and the reimbursement claims will start to die away. The big issue will be, of course, the business loss compensation package, and that is likely to increase significantly over time.

On that note, I will touch on the experience of one of the affected businesses I visited during this crisis, the abalone operation of Gail Grace on Flinders Island. At the time, Mrs Grace estimated the cost to her business was in the order of $200,000. The truth is that her abalone business relied on transporting the produce to interstate markets by air. Over the period of her crisis, her business, Furneaux Aquaculture, missed a key annual event for the sale of her produce—the Chinese New Year celebrations. I know this is small bickies to a Treasurer and would-be Prime Minister, Mr Costello, but so be it. It is my responsibility to remind this parliament of the inadequacies with respect to the monitoring and regulation of fuel and the unwillingness of the Treasurer to actually think about the implications to small business.

In that vein I go to an article in the Mercury where it was reported that Mrs Grace normally sends two tonnes of live abalone by air per week for three to four weeks during this time. This year the total was 1.5 tonnes over the four weeks. So much for this government's support, understanding and commitment to the needs and concerns of regional Australia and small business. Just ask the abalone operators on Flinders Island about the fuel contamination crisis and the importance of this bill.

Mr Deputy Speaker, I believe that the fuel crisis left the island isolated, and affected the standing and reputation of her business with her markets in Sydney and Melbourne. We all know what that means in the business world. It is about quality of product and reliability of producing that product on time and at a reasonable price. The problems of this government with the fuel contamination crisis have actually set back many small businesses for a long time.

As an aside, I simply wish Mrs Grace well in her business. I appreciate her problems because, having visited Flinders Island as part of my responsibilities, it is hard doing business from Flinders at the best of times, let alone through a crisis like this. The survival of businesses through this adversity is a credit to the resilience of the inhabitants of Flinders Island and many other areas of regional Australia.

The bill before the House relates to measures to improve the ability of the government to prosecute those engaged in fuel substitution. When the excise function was transferred from Customs to the Australian Taxation Office in 1998, systematic testing unfortunately ceased. It is all about the grab for money and no responsibility—no care, understanding or responsibility about the needs and concerns of people who, when they purchase fuel, expect sufficient attention by government to ensure that when they pay a reasonable price for products such as fuel they get a quality product.

When it comes to the consideration of these matters by this government, it is all about the bottom line and to hell with consumers and the travelling public and, in doing so, the safety of the travelling public. I believe the tax office claims it is only concerned with the revenue issue and collection. It has left the quality and consumer functions absent and the government, the consumers and the community totally exposed. The toluene substitution racket was what resulted.

In aviation, the same exposure of the government and the community resulted from the neglect by CASA of this function. In aviation, as we have seen, flying operators and business have been exposed from a safety point of view and financially. The bill before the House addresses some measures to stamp out the practice of fuel substitution. I sincerely doubt it goes far enough, hence the second reading amendment moved by the shadow minister and member for Wills. I suppose it can be said that the government has, at best, moved to stitch up the financial exposure. However, the real crux of the debate from our side of the House today is not just that issue but the quality and consumer issues that are not covered comprehensively and appropriately.

This government has us in the same position with regard to aviation. The opposition will continue to monitor and pursue the aviation fuel crisis and CASA's general operations to ensure that proper measures are in place to ensure fuel quality is appropriately regulated. I support the second reading amendment moved by the member for Wills, because it places the finger directly on the Treasurer and the tax office. It simply condemns the government for its inaction on this dangerous practice. It is about consumers being ripped off and the safety of the travelling public being placed at risk. Why would any government endanger, for example, our children through allowing the substitution of inadequate fuel because of lack of regulation and accountability? Only the Howard government and the Treasurer would do that. (Time expired)