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Wednesday, 16 August 2006
Page: 2

Mr MURPHY (9:05 AM) —In relation to the Petroleum Retail Legislation Repeal Bill 2006, it is important to provide a regulatory environment which allows refineries to select business models that are appropriate for the market. However we cannot forget those many small businesses that are also struggling to survive. It is true that if there are no minimum standards for the wide range of contractual arrangements relevant in this industry, many small mum-and-dad business owners will be vulnerable to the market power of fuel suppliers during negotiations. The Oilcode will be introduced as a mandatory industry code under section 51AE of the Trade Practices Act 1974. It will, belatedly, bring the whole industry under a common regulatory regime that provides more protections for all industry participants and consumers. This will include protection being made available to commissioned agents and independent operators, who currently do not have the protections that are available to franchisees. Of relevance, all small petroleum business owners, without the deep pockets of oil companies, will now have access to a low-cost dispute resolution scheme. Furthermore, there will be greater transparency in wholesale fuel pricing for small businesses who do not have the resources to undertake extensive research and analysis on pricing issues.

While the bill before us shows that the government is capable of taking corrective action in the retail petrol market, one must question why it has taken so long. Why has a 25-year-old regulatory regime been allowed to fester until today? Rather than taking the initiative to resolve the issues raised by this bill before Australia approached an oil crisis, the government has waited until we are smack in the middle of one before taking its first steps. True to form, the government is happy to surf on the good times but disclaim responsibility when things go badly. We have seen it with interest rates and we now see it with increased petrol prices.

It was illuminating to read the Senate Economics Legislation Committee report into this bill, which suggested that the government did not proceed with this bill in 1998 because the affected parties could not agree on the Oilcode proposal. On my reading, it appears that it has taken over six long years for the government to broker a compromise on the Oilcode. Clearly, the government has failed to show leadership to bring refineries, distributors, retailers and consumers together to overhaul a 25-year-old system that did not benefit any of them.

There can be no doubt that vigorous marketplace competition is one step to hold down petrol prices as low as possible. Yet, at a time when petroleum retailing was being whittled down to a battle between Coles and Woolworths, the Howard government stood by and watched its anachronistic legislation prevent others from competing on an equal footing. That is outrageous. The best consumers were offered at the time was the Prime Minister’s proclamation that world oil prices were out of his control. That much may be true, but it does not explain the government’s lethargy in reforming the petrol retail industry and showing serious commitment to other energy sources.

More should and could have been done to mitigate the impact of petrol prices on ordinary Australians before we reached a petrol crisis, not while we are in the midst of one. Indeed, more could have been done with this bill. However, given the paucity of offerings from the Howard government on petrol initiatives in the past, it is a natural inclination for us to take anything we are given. Nonetheless, the Labor Party has always held firm the view during this debate that section 46 amendments to the Trade Practices Act are necessary to address concerns about the potential for the abuse of market power in the petroleum industry. There should be no ducking and weaving on the other side in relation to this amendment, which will only ensure huge corporations operate properly and fairly towards small businesses.

Much has been said by greater minds than ours, including Associate Professor Frank Zumbo, who advised the Senate Economics Legislation Committee that the Trade Practices Act required amendment in light of its ineffectiveness to deal with the important issues of predatory pricing and other abuses of market power. This amendment has taken on a heightened sense of urgency in light of the increasing rationalisation of the petroleum industry.

While one aim of this bill is to increase competition, we cannot forget that the main objective of competitors within a market is to eliminate competition. The increasing oligopolisation in this and many other industries pays testimony to this fact. The government should not half complete its job of promoting competition in the petroleum industry by ignoring the vulnerability of small businesses to the blatant abuse of market power. High Court cases dealing with this issue do not bode well for the ACCC securing prosecutions for the misuse of market power under current provisions in the future. Again, we should not allow dysfunctional legal provisions to fester while market share is increasingly being concentrated in the hands of few rather than in the hands of many.

Of course, the reforms in this bill and the proposed amendments are not a panacea for the problems being experienced by millions of Australians. They barely provide the first step. However, given the length of time the Howard government has been dragging its feet on petrol retail reform and energy reform, it is an important first step.

It was pleasing to see the Prime Minister take a leaf out of Labor’s Australian fuels blueprint yesterday and take a number of other steps towards mitigating the petrol crisis. They are small steps, but they are better than nothing. Without going into great detail, far more could be done to wean Australia off Middle East oil and to develop a diversified home-grown fuel industry. I am sure we would all like to see that. I know the Minister for Industry, Tourism and Resources would. I was listening to him on Radio National and on local ABC radio this morning. You have been very busy—good on you.

The Leader of the Opposition and the member for Batman have spoken at length about the conversion of gas to liquid, including petroleum resources rent tax initiatives for developers of gas fields who provide resources for gas to liquid fuels projects. While the Prime Minister has adopted Labor’s  proposals to subsidise the conversion of cars from petrol to LPG, he will slug motorists with an excise on LPG for the first time in the future. What he gives with one hand he will soon take with his other invisible hand.

I am a firm supporter of a sustainable ethanol industry in Australia, and am appalled that not enough has been done to assist its take-up by consumers. While the government says it is committed to the ethanol industry, we know that few of Australia’s 6,500 petrol stations stock E10. I certainly try to put E10 in my car whenever I can. I have listened to the minister over a long period of time in relation to this and I urge him to do more to encourage the production of crops that will produce ethanol. There is a lot of debate on this issue at the moment, and the feeling is that Australia cannot produce sufficient ethanol to meet a mandated 10 per cent. It can if you have the will.

I went to Brazil as part of my study tour last year and I have seen exactly what they did following the oil shocks of the 1970s. They literally stuck it up the oil companies, and the whole country runs on ethanol. It was illuminating to see that every car runs on a mandated 25 per cent ethanol and that they have flex-fuel cars which can take 90 per cent ethanol and 10 per cent gasoline. The whole country is going ahead in leaps and bounds.  I think we should be doing more to promote the production of ethanol. I know there are vast reserves of water in the northern part of Western Australia near the Ord River. I do not know why we are not producing crops that will ultimately produce a lot more ethanol and mean that we will be less reliant on Middle East oil. I hope the minister does something about that, because I know he believes that we have not got the capacity to produce more ethanol. Go and look at the experience in Brazil. They made it happen.

We need to do more to encourage a sustainable ethanol industry here and stem the flow of investment dollars being spent on ethanol overseas in lieu Australia. Alternatively, if long-term projects are far too visionary for this government, it can begin by backing Labor’s proposal to give the ACCC the power to formally monitor petrol prices. As we can see, the repeal of the anachronistic Petroleum Retail Marketing Sites Act 1980 and Petroleum Retail Marketing Franchise Act 1980 is but one of the many small steps the government should have taken a long time ago to alleviate the pressure on Australian motorists. It is a step forward nonetheless and, for that, I guess we should all be very grateful.