Senator COOK (Deputy Leader of the Opposition in the Senate) (10:19 AM) —This debate is on the Excise Tariff Amendment Bill (No. 2) 2001 and the Customs Tariff Amendment Bill (No. 3) 2001. The purpose of the Excise Tariff Amendment Bill (No. 2) 2001 is to amend the indexation provisions of the Excise Tariff Act 1921 to restrict the application of the provision of all excisable goods other than petroleum fuels classified to items 11 and 12 of the schedule to the Excise Tariff Act. As a consequence of these amendments, the Customs Tariff Act 1995 is also amended to remove certain excise equivalent imported petroleum fuels from the table of paired customs subheadings and excise tariff items in subsection 19(1) that are subject to indexation.

According to the explanatory memorandum, the bill has substantial financial implications. The cost to the budget of the abolition of petroleum fuels indexation is $150 million in the next financial year, 2001-02, $425 million in 2002-03, $785 million in the year 2003-04 and in the year 2004-05, $1,135 million. So it is a very substantial change to the Commonwealth revenue.

These bills form part of the government's warm embrace of the policies of the Australian Labor Party. This measure forms part of the backflip crammed acrobatic extravaganza that the government hosted earlier this year. There have been many parts of this great show put on by the ringmaster, the Prime Minister, Mr Howard, and his nimble chief acrobat, the Treasurer, Mr Costello. As part of this circus, we have seen the deferral and abandonment of many of the measures announced as part of the government's highly prized Ralph Review of Business Taxation. These backflips include the indefinite postponement of the Mr Costello commitment to tax trusts as companies, a commitment the government botched in the first instance because it refused to listen to those who were going to be most damaged by the changes and then it put it into the too-hard basket, possibly for good. It is clear that the government regards the entities regime—the taxation of trusts as companies—as simply too hard and too hot for it to handle.

We have seen changes to the administration of the GST and the PAYG entities, which included the introduction of less frequent reporting obligations. These changes were curiously similar to those proposed only weeks before by the Australian Labor Party, although the government lacked the courage to adopt our proposals in full. As a consequence, businesses are still burdened by a compliance regime that takes them away from what they do best—that is, running their core business. Ask any small business person about compliance costs and you will get some idea of how much this sector resents the time they have to give up from their core business responsibilities to work for the government.

But back to the backflips. We also saw the government cave in to repeated demands for the excise on beer to be reduced, despite their best efforts to escape on a technicality. We have seen the government announce last-minute rescue attempts for some of the industries damaged by the GST, including the building and car manufacturing industries. This was attempted by the doubling of the first home buyers grants for the purchase of new homes and the recent scrapping of the input tax credit phase-in mechanism for business acquisitions of motor vehicles.

So one is left to ask: why have the government done all of this? They would have us believe that they had turned over a new leaf; that suddenly they were lifting the shutters and letting the light of public sentiment shine through; that they had become a government who were listening. But the facts paint a very different picture of the drivers behind these backflips. It was not the businesses, the families or the industry groups that the government were listening to; it was their party heavyweights who, after the embarrassing losses in the by-election in Ryan and the state elections in Queensland and my home state of Western Australia, finally got the ear of Mr Costello and Mr Howard. These heavyweights, realising that the coalition were on a direct collision course with certain electoral defeat in the federal election due this year, demanded that the Prime Minister and the Treasurer put their tails between their legs and make changes. It was to these powerbrokers that the government listened and they made the changes, many copied from the policy positions of the Australian Labor Party, positions we had announced previously.

Nothing in the government's behaviour indicates a true commitment to what they have done. I am certain that, if they had the opportunity to govern again, they would reintroduce some of the policies and procedures that they have so recently dismantled. Their behaviour represents a desperate and a cynical attempt to win back those the government have alienated for so long.

I now turn to the issue of fuel prices more specifically. The first issue about petrol prices is the question of world parity pricing. The crude oil market was deregulated a number of years ago and that ended import parity pricing, but effectively we now have the prices of domestic crude oil and petroleum products reflecting world market prices. The ability of companies in Australia to trade internationally ensures that the domestic price reflects the international price, since differences between the two will always result in exports or imports, as the case may be. The bad news is that I do not think Australia has any alternative.

The next question that people ask is: who benefits from the higher world prices for petrol which we have been seeing, and where does the extra money that people pay at the petrol pump go? The answer is that the major beneficiaries of higher prices are the Australian and international producers of crude oil. These are multibillion dollar profit makers who have no interest in seeing fuel prices reduced. The second main beneficiary of these higher world prices generally is the Commonwealth government. It would always get some extra revenue through the petroleum resource rent tax, the PRRT, every time the prices go up. The petroleum resource rent tax is levied at the rate of 40 per cent of taxable profit from a petroleum project.

The next element in the petrol pricing equation and the next chapter in this saga relates back to 1998. On 1 August 1998, the Howard government removed the wholesale price cap on fuel. The ACCC ceased to have any role in monitoring wholesale petrol prices. This was exactly what the oil majors wanted. Labor opposed it at the time, saying that deregulating the petrol industry was a gift to the major oil companies and would lead to higher prices. The Treasurer claimed at the time that deregulation would `promote greater competition which would lower prices over time' and `put downward pressure on petrol prices to the benefit of consumers'. These claims have been proven to be a nonsense. What Labor claimed at the time is exactly what has happened, and the government's 1998 changes have been a failure.

The third stage in the petrol price saga came last year with the introduction of the goods and services tax, the GST. Liberal campaign headquarters said in September 1998:

And Prime Minister Howard had said in August 1998:

In fact, what happened was that the GST had a very substantial impact on petrol taxes. The reasons are as follows. On 1 July last year, the excise dropped by 6.7c per litre, but when the GST came in it added 8.2c per litre, so the cost to motorists was 1.5c per litre and there was a government windfall of $270 million. We then had the August 2000 indexation of 0.65c per litre, which added to government revenue of the order of $115 million. We then had the February 2001 indexation which was another cent or so per litre. That added a further $155 million of government revenue. Added on top of all those things was the fact that, during this period, international prices went up and the GST increased as well. So, as petrol prices rose to $1 per litre, this added an extra 2c in GST—additional costs to motorists, 2c per litre; government windfall, $360 million. So the total increase in petrol tax during this period was around 5c a litre, and the windfall gain for the government was around $900 million. No wonder there was a public outcry concerning the petrol price.

I now turn to the question of why the Howard government were forced to backflip on this particular issue. In the past, when it was put to the government by motoring organisations and others that they should abolish fuel indexation, they said, `No, you can't do that. Fuel indexation is necessary to maintain Commonwealth revenues. On the one hand, you want to index pensions and the benefits, but you won't be able to index the pensions and the benefits unless you are also indexing things like the fuel excise.' They vigorously resisted that type of change. What happened to change their mind? It was the establishment by the federal parliamentary Labor Party of a petrol price inquiry, which I had the honour to chair. At the time, the government said, `This is a stunt; this is of no consequence.' The coalition and the Democrats refused to support a Senate inquiry into petrol prices. We would have preferred an all-party Senate inquiry but, in the absence of that, we initiated and proceeded with our own inquiry into the economic and social effects of higher fuel prices and the significance of the fuel excise indexation adjustment which was coming through in February this year. As part of our inquiry, a number of Labor members and senators visited many locations around Australia. By the time we issued our interim report, the inquiry had conducted hearings in 35 locations, had heard evidence from 180 witnesses and had received hundreds of written submissions. The petrol price inquiry has since received many more submissions, and we remain committed to the task of exploring options that will bring about fairer outcomes on petrol pricing for all Australians.

Labor's petrol price inquiry heard evidence from Australians from all walks of life, including motoring groups, trucking firms, drivers, farmers, fishing representatives, small business proprietors, taxi operators, tourism operators, community groups, volunteer groups, disability service groups, those looking after aged and welfare sectors of the community, and many individual witnesses. Industries for which fuel was a substantial cost component had been adversely affected by rising fuel costs caused by a combination of rising world oil prices, the falling Australian dollar, non-competitive industry pricing behaviour and, of course, rising fuel taxes led by the GST. Some of the most affected industries were trucking, taxis, tourism, farming and fishing.

Taking the trucking industry as an example, owner-drivers in the trucking industry had increasingly been making long journeys for little or no income above their costs, just to enable them to avoid repossession of their rigs by finance companies. Drivers told the inquiry that they could not afford to stay in the industry but that they could not afford to get out of it either because the price of second-hand rigs had been so badly depressed owing to the large number of repossessions. I was particularly concerned that all this was indeed compromising driver safety, as drivers were working for longer periods without breaks in an effort to recover the large increases in fuel costs. If the government defence was that businesses could claim a rebate—that is the defence, and that defence is in part true—the problem for owner-drivers was that they had to pay their fuel costs up-front. Initially, there was a substantial delay in obtaining the rebate after they had diverted themselves from their core business activities by filling out the necessary forms, and many of them were driven into overdraft on which they paid higher interest rates than was the value of the rebate when it belatedly arrived. Even now, there remains a continuing problem in meeting these issues.

I think the following quote from Coral Davidson of Concerned Families of Australian Truckies in NSW sums up the impact that fuel prices was having not only on trucking businesses but on the families of those involved:

Another area that the inquiry heard a lot from was voluntary organisations. In a whole range of areas—volunteer bushfire brigades, Meals on Wheels, aquatherapy groups, senior citizens self-help organisations—we heard from witnesses and representatives about the adverse impact of the GST on all of their organisations. The committee recommended that the federal parliamentary Labor Party propose and support the waiving of the fuel excise increase due on 1 February this year, that we call upon the Howard government to prevent the 1 February indexation from occurring, that we pledge legislative support to achieve this outcome and, in the event that the government fails to act and fuel taxes rise, pushing prices even higher, that we introduce a private member's bill at the first parliamentary opportunity to remove this excise increase. This is exactly what happened. The government, yet again, failed to act, even in the face of the overwhelming evidence that had been adduced.

In response to the government's inaction, I introduced into the Senate and the Leader of the Australian Labor Party, the Hon. Kim Beazley, introduced into the House of Representatives, on 7 February this year, Excise Tariff Amendment (Petrol Tax Cut) Bill (No. 2) 2001. That bill sought to amend the Excise Tariff Act 1921 to prevent the February 2001 indexation of rates of excise duty applying to various petroleum products.

When I introduced the bill, I said that I was seeking not only to ease the pain of high fuel taxes caused by the government's attempt `to leach millions of dollars out of Australians through its fuel tax squeeze' but also to stop this government `lining its pockets at the expense of families and communities, industries, businesses and voluntary organisations, both in the cities and the bush.' The debate on my bill was adjourned, but we now see quite clearly what the pattern of events has been.

Labor have also acted to redress some of the other problems, beyond indexation, with fuel pricing. We introduced the Fair Prices and Better Access for All (Petroleum) Bill 1999—a bill that contains measures to address the lack of wholesale competition in the petrol industry by giving service station franchisees the legislatively guaranteed right to shop around for up to 50 per cent of their petrol. The measures in the bill would also increase competition at the wholesale level, curtail the influence of oil majors over retail prices and produce lower retail prices for customers. Finally, the initiatives in the bill would provide the ACCC with enforcement powers, and thus give retailers the protection from retribution that they need.

Labor has also called on the government to bring petrol prices back under the surveillance of the prices watchdog, the ACCC. In contrast with the quite tough approach it takes to many other retailers, the ACCC has accepted manipulation of petrol prices as a fact of life. While the ACCC has released a discussion paper on reducing fuel price variability this month, it goes a long way to fixing the real problem with fuel—that it is simply too expensive.

I should also note that in the budget there is $4 million for a government inquiry into fuel taxation. The review is supposed to recommend changes to the tax arrangements for fuel, but in a revenue neutral way. That means some fuel taxes up, some fuel taxes down—there is no other way to do it. A copy of the inquiry's terms of reference fell into our hands, and it made for very interesting reading. The inquiry is to examine `the total structure of fuel taxation in Australia', and the only tax quarantined from change is the petroleum resource rent tax—the super-profits tax for oil producers. Therefore, in line for cuts are the Fuel Sales Grants Scheme for regional and remote motorists and the diesel fuel concessions. (Time expired)