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Wednesday, 28 March 2001
Page: 25805


Mrs DE-ANNE KELLY (10:04 AM) —I rise to speak on the Excise Tariff Amendment Bill (No. 1) 2001. The purpose of this bill is to reduce the excise on petrol, diesel and other petroleum products by 1.5c a litre, to increase the excise on aviation kerosene by 0.036c a litre and to introduce the new three-tier excise structure for beer. I want to speak about the fuel excise reduction because that is of most interest to my constituents and certainly something that they widely welcome.

At the time the tax reform was introduced—at the end of June 2000—the commitment was made that 6.7c a litre would be taken from the excise on fuel and that 1.5c a litre would be contributed to that reduction by savings that the oil companies would make from tax changes. Overall, this would ensure that there was a negligible influence from the imposition of the new tax arrangements. Regrettably, the oil companies were poor corporate citizens and did not fulfil their responsibilities. There is no doubt that this approach on the part of the oil companies has caused a great deal of heartache out in the community. I am pleased that the government has stepped in to keep faith with the commitment that was made—that they have done what the oil companies should have done. The government has now delivered in full on the promise that was made at the 1998 election. It is regrettable that taxpayers' dollars have to be put in place because major companies in Australia, which were proponents of tax reform and which will be beneficiaries of tax reform, have failed to keep faith with the Australian people. However, the government has done so. The effect of this bill will reduce the excise on unleaded petrol and diesel to 38.143c a litre. It will reduce the excise on leaded petrol to 40.516c a litre. I am pleased that the government listened, acted and delivered for Australian motorists and fuel users.

I would like to give a short history of fuel excise in Australia. When the Australian Labor Party came to office, fuel excise was 6.155c a litre—I will repeat that for the House: it was effectively 6c a litre. When they left office, it was 34.183c a litre, from 6c to 34c a litre. That is an increase of 28.028c a litre, or over 450 per cent. Ten cents a litre resulted directly from the ALP's budget increases—without any compensation to motorists—half of which was contained in the 1993 budget. It is interesting now to recall the description that the Leader of the Opposition used at the time to describe this 10c a litre increase. It was seen as a `small adjustment'. If 1.5c a litre is widely and quite understandably welcomed by motorists and fuel users around Australia, it shows the most appalling disregard for motorists and fuel users for the Leader of the Opposition to call 10c a litre a `small adjustment'. The increase in fuel excise under the Labor Party was 35 per cent—not 35 per cent in total, it was 35 per cent per annum for 13 years. Compare this to the increase under the coalition government: 2.3 per cent per annum. It was in fact the Labor Party that introduced automatic indexation of fuel excise in 1983-84.

This bill contains measures, which came into effect on 2 March 2001, to reduce the excise on petrol and diesel by 1.5c a litre. It is important to mention that many of the small country service stations were not able to pass that on on 2 March 2001. In the cities, where there is a high turnover, it was a simple matter to do so—what they won on the swings they lost on the roundabouts, as the saying goes. But small service stations in the country, many of which at the time had, say, 47,000 litres in their tanks, had to wait until that was used—because it had been purchased at the old excise price—before they could pass the savings on. Unfortunately, spurred on by some of our opponents in politics, there was a degree of anger directed towards the staff and owners of the small service stations, who earnestly wanted to pass on the savings and keep faith with the commitment that was made. Exploiting the situation by others in politics was a very poor approach.

The excise rate on other petroleum products which have concessional rates will also be proportionately reduced under this bill. I am pleased to see that the ACCC has increased powers to ensure that the benefit is passed to motorists and not absorbed by the oil companies. The Treasurer has also called on state governments to play a role in reducing fuel prices. The reality is that state governments receive payments equivalent to 8.35c per litre collected by the Commonwealth. The only state that passes that on to motorists is Queensland, although I notice that at one stage Premier Beattie did try to claw it back but public anger and opposition resulted in a reversal of the decision. Other states should consider doing likewise. It is of considerable assistance to motorists if there is not a state tax on fuel. I commend the member for La Trobe, who I understand is a strong proponent of this measure.

The coalition has also done one other thing which is not readily appreciated at this point in time and that is to remove the automatic indexation of fuel excise. This will have the effect of freezing the fuel excise at the lower level proposed in this legislation. In other words, it will be frozen from now on. For any government to change that, they will have to bring a bill into the House of Representatives and the Senate. They will have to say to the Australian people that, once again, they are going to use automatic indexation, twice yearly increases, to take advantage of motorists and fuel users in Australia.

This is a significant decision for country areas. For the people out there who have seen the excise increase year after year, accompanied now by crude oil increases and of course commensurate increases in the price of diesel and other fuels, it has been a sore burden to bear. But I am very proud to be part of a government that has said: `This is a big country with big distances and hence big fuel bills; we are not going to allow either a coalition government or a future government to take advantage of motorists and fuel users by automatically increasing the tax on fuel. Any government that wants to do that will have to go to the parliament and hence to the people, to a public debate.' I think that is entirely appropriate and I applaud the government for taking a stand against continuing taxation on fuels. It hits us hardest in rural and regional areas where people have long distances to take children to school and products to market—a whole range of business and personal activities. I have to say that this commitment implements National Party policy, which has always been to oppose the automatic indexation of fuel excise.

But it is interesting to look at what the opposition would have done. While they were happy to promote this issue throughout the rural and regional areas, while they were happy in my area to put out petitions calling for a change to fuel excise, let us see what the ALP in government were actually proposing to do—because it is fine to stir up an issue; it is fine to go out and raise community anger. In fact, it is the role of opposition to oppose and encourage governments to make decisions—that is probably justifiable—but you have to have the honesty to be able to say, `Well, having focused on this problem, we will also address it in a responsible way.' Let us see what in fact the ALP in government were proposing to do about fuel excise. Allow me to read from an interview with the Deputy Leader of the Opposition and shadow Treasurer. The compere said:

What about fuel excise, Mr Crean? That causes a lot of problems too. What sort of commitment can Labor make regarding fuel excise?

Simon Crean said:

Well, what we've—basically our position has been that there needs to be this mix between indirect taxes and direct taxes. We always had fuel excise in that mix. We were not proposing to make any changes to the fuel excise regimes.

That was not the issue. It is quite plain that the Labor Party were opportunists in this debate. They were not going to make any change to fuel excise at all. I am going to widely distribute this interview in my electorate—in fact, I am reproducing it in all of my literature. It is not appropriate to go to country people, stir up an issue, opportunistically take advantage of it, and then say, `But we're not going to do anything'—and never were. That is not an acceptable way to behave in either government or, particularly, in opposition.

I would like to move now to another statement that Mr Crean made which is inaccurate. He goes on to talk about the city-country differential. There is no doubt that this is a matter of great concern. When you have a difference between city and country prices of up to 10c a litre, there is no doubt that motorists and fuel users are angry about that. They hear the prices their relatives are paying, perhaps in Brisbane, and they wonder why they have to pay more. Allow me to read from Mr Crean's interview again. He says:

I mean, the reason you've got low prices in the cities is because you've got a lot of independents in the cities—in Melbourne and Sydney—driving the price down. What we really need to do is to encourage that sort of direction.

If only it were that simple. In fact, it is not. The reason for the differential between city and country prices, according to information that I have been given, which I intend to pass on to the ACCC, is, once again, the major oil companies. We know they are poor corporate citizens. They continue to be that. They take advantage of the country in order to benefit the city. I have no problem with city prices being low. We do not begrudge the city lower fuel prices at all. But what they are doing is taking advantage of the situation.

Allow me to explain how it is suggested that this happens. It is very difficult, in such a simple industry, where you have a homogeneous product delivered by four major companies to outlets, to find out what happens. You would imagine that this would be the simplest industry in Australia in which to track down what happens. But the oil companies have been able to make it very complicated—in order, I think, to cover their tracks. We know they are poor corporate citizens.

In a country area, the average turnover might be 130,000 a month, compared to turnover in a large outlet in Brisbane of, say, 350,000 litres a month. However, for these two establishments the basic costs are the same. Their rates are pretty much the same; labour costs are the same; rentals are much the same. Their fixed costs are generally the same. Certainly there are more shop sales in a city area, because there are more customers. There is a boost there to the profits of the business in the cities. But what happens is this. The oil companies will tell you that they supply their fuel to all of their outlets at the same price. For argument's sake, if that price for delivery is 80c a litre, then, as far as it goes, that statement is true. Then how is it that, when motorists in Brisbane are paying, for instance, 75c a litre for fuel, motorists in my area are paying 85c a litre? The natural conclusion is to say that the service stations are taking advantage of us. They are not.

Allow me to explain what the oil companies have been doing. Let us look at a little country area to start with. The margin there is about 5c a litre. It certainly varies, but anything less than that and they are really not viable. They are running on 5c a litre. They buy at 80c per litre, they have a margin of 5c a litre, and they sell at 85c a litre. That is a pretty simple equation.

What happens in the city however is that the service stations buy at 80c per litre and their margin is 3c per litre. They have a greater turnover so they can operate at a slightly lesser margin. What the oil companies do in the cities is give a rebate of 8c per litre, effectively. That of course allows them to sell at 75c per litre. The oil companies are happy to give a rebate in the cities of some 8c per litre, apparently, according to the information I have, but they will not give the same rebate in country areas. There is a rebate if it falls below 4c per litre. As most country service stations tell me, under 4c per litre, and you are not there anyway. It is simply not viable to operate a business at that level. So of course they avoid getting into that situation and never receive the extra rebate.

I believe this is a very serious matter. It is not a matter of more competition; it is a matter again of oil companies playing country and city off against each other. We know they are poor corporate citizens. They have demonstrated that to every motorist in Australia. I trust when this information is supplied to the ACCC that, with their increased powers, they will take this matter up. It is unfortunate that national competition policy can focus on farmers and the small mechanisms they have to assist them on the world market and that it can bully many of the small producers in Australia but when it comes to the big players it seems that all of these matters cannot be properly investigated, brought to book and rectified.

The argument that transport costs encourage the differential between city and country is simply not so. Transport costs from, say, Brisbane to my area are about 1c per litre, maybe a bit more. That does not go anywhere near accounting for the up to 10c a litre differential. One of the other tricks that the oil companies get up to is not maintaining faith with their distributor network. The distributors in country areas might sell, for argument's sake, 130 million litres a year. But if one of their customers buys, say, 3.5 million litres a year they will sell to them at a far better price than their wholesaler, their distributor. Why should that be? I would have thought that under the trade practices legislation you cannot have it both ways. If you are going to preferentially price on the basis of quantity, it does not work both ways—you cannot preferentially price if someone buys less. Again, the oil companies have proved that they can make and break the rules as they wish.

This has to be looked at. I trust that Professor Fels will live up to his formidable reputation and investigate properly through the inquiry that the Commonwealth is setting up, and the coalition government has instigated, as to why there is a differential between city and country prices. I do not believe it is because country service stations are taking advantage of motorists. They do not have the capacity to do that. When you see most of their operations, they are really struggling. I do not believe it is transport, which equates, as I said, to about 1c per litre. I do not believe it is because there is more competition in the city areas. Yes, there may be but in some of the larger centres such as Toowoomba and Townsville, and so on, one would imagine that there would be adequate competition—plainly, it is not competition. Again, I think it is our poor corporate citizens, the major oil companies. (Time expired)