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Thursday, 20 May 1965


Senator KENNELLY (Victoria) . - To be fair to myself and to the Senate, I must say that it is a shame that bills of this nature have to be introduced at this stage of the sessional period, lt is true that the Prime Minister (Sir Robert Menzies) gave notice of this Bill in his policy speech last year, but 1 do not think we can be fair to the Bill by attempting to grapple with its terms in the short time available. We are making the passing of legislation a bit of a farce.

The purpose of the Bill is to provide that nowhere in Australia shall petrol and certain petroleum products cost more than 4d. a gallon over the price charged in the capital cities. I have read that the measure will not operate completely in Western Australia because of the resellers' margins. The Bill provides arrangements for petrol companies to receive reimbursements through the respective State Governments. The Commonwealth Government will pay to the States the amounts they need and it is estimated that in the first year the cost to the Commonwealth Government will be £6 million. I understand that this arrangement to pay the money to the States has been made necessary by section 96 of the Constitution. The States are to pass appropriate legislation so that they can reimburse the oil companies.

The preparation of this scheme has taken some 15 or 17 months and one would have expected that the Commonwealth would have asked the States that have price control legislation to apply such control to this subsidy. Broadly, the Commonwealth Government will be giving £6 million a year to the oil companies for the benefit of consumers of petroleum products. This could mean an increase in the consumption of petrol and the other oil products concerned. There should at least be an obligation on the States with appropriate powers to ensure that petrol prices will not rise. If they do rise, the Commonwealth Government will have to pay more than the estimated £6 million.

As the estimate of £6 million is based on a provision that the normal price of petroleum products will nowhere in Australia be more than 4d. a gallon above the level of capital city prices, an increase in prices of Id. a gallon would make a difference of about £1 .5 million. I am not saying that the petrol companies will increase prices and I think they would be foolish to do so; but we have to protect the finances of the nation. If the Commonwealth is going to disburse money under the provisions of this Bill through the State instrumentalities, because that is what the Constitution requires, at least appropriate action on prices should be taken by the States that have power to do so through State legislation.

As a subsidy is being granted under this Bill I should have felt more satisfied if such a provision had been made at least for the period that this measure will operate. I understand that the Commonwealth Government will have another look at the scheme in three years, not necessarily with any idea of amending it but to ascertain whether it is working as well as the Government expects. It is true that the Government hopes no extra costs will be involved in rail fares and road transport as that would mean that its contribution would have to be increased. I think the Government has a duty to safeguard the people's interests, and I am concerned that the Government appears to be taking rather less care than it should, in my opinion.

This legislation covers motor spirit, power kerosene, automotive distillate, aviation gasoline and aviation turbine fuel. I have had only limited opportunity to study the scheme but I was amazed to discover how much the companies using aviation gasoline, whether it be 80 or 100 octane, will receive compared with the subsidy they will get on ordinary petrol and power kerosene. I suppose aviation gasoline is carried in much smaller quantities and therefore transport costs are higher.

This brings me back to one of my favourite themes. Indications are that an airline company which uses its fleet in intrastate flights in all States will be in a much happier position than a company which is not allowed to fly intrastate services in more than two States. I wonder also whether the assistance the airline companies receive will help them to give something back to the people by way of reduced air fares or lower air freight charges, lt seems to me that if the airline companies do not give something back they will be getting a much bigger rake-off than they would otherwise get. On the other hand, the Government might estimate that the granting of the subsidy will increase taxation revenue from those who benefit from the scheme, because they will make larger profits whether they be farmers or manufacturers in country centres. However, this scheme should help to keep people in the country and may encourage the decentralisation that we would all like to see. Whether it will or not remains to be seen. lt is true, as the Minister for Customs and Excise (Senator Anderson) said in his second reading speech, that a bill of this kind raises very difficult administrative problems. The intention is, first, to ensure that the money provided by the Government is passed on to the consumer. It is hoped that costs associated with the delivery of petrol to country areas will not be increased and so require bigger payments by the Commonwealth. It can hardly be said that each of these conditions is met in a very satisfactory manner.

With regard to the first of them - that is, that the consumer receives the full benefit of the subsidy - I think it is true to say that the subsidy is paid to the oil company. The oil company concerned has to be strong enough to see that whoever distributes its product keeps within the bounds of this Bill. No doubt, the people consider that they will derive a great benefit in this provision. 1 do not think that the administration of this provision will be as difficult as some people believe, from the point of view of whether or not the consumers receive the benefit of this subsidy. The scheme could hardly be described as a watertight one. The Minister, in his second reading speech, admitted that the distributor of the petrol cannot be completely supervised to see that he carries out the requirements of the legislation. But. as I said, I suppose that supervision will largely be the job of the wholesaler or the petrol company concerned and, no doubt, a certain amount of the work involved will have to be done by the person who purchases the petrol.

Secondly, there is a provision in the Bill to ensure that the subsidy is nol offset by other cost increases. This provision will come up for consideration at some future time. The Government will be able to inform itself about the position only after the scheme has run for some time. The Minister said that the Government hopes that increases in rail freights, road taxes and other distribution costs of petroleum products will be avoided as far as possible. This is in the lap of the gods.


Senator Morris - And in the laps of the State Railways Departments in some cases.


Senator KENNELLY - Yes, that is true. State Railways Departments have to look after their own financial positions. I do not suppose they will be very concerned if they have to increase freight charges, for instance. The Railway Department in my own State has me wondering whether it will ever get tired of putting up fares.


Senator Morris - If the honorable senator lived in Queensland, he would not have that problem.


Senator KENNELLY - I do not think Senator Morris would want me to live there because there might be a battle between the honorable senator and myself for the right to sit here.


Senator Morris - If that is the case, I would welcome the honorable senator.


Senator KENNELLY - You would?


Senator Morris - Yes, with confidence.


Senator KENNELLY - That is very nice, but the honorable senator knows that that will not happen.

As the Minister has said more than once, this is not an easy Bill to analyse. The Government has stated that it will refund the administrative costs and other costs paid by each State in connection with this scheme. This is fair. I do not desire to keep the Senate at any length, but there is one clause of the Bill on which I would like an explanation from the Minister when we are in Committee. This is clause 5 (5.), which provides -

The scheme -

(b)   may provide for the payment by the State to registered distributors of eligible petroleum products -

(ii)   in respect of expenses incurred by them in connection with the scheme.

After reading the Minister's speech, 1 do not know just what expenses that provision refers 10. lt is the duty of the State to register the distributors. I do not know what other duties there are. The States will have to submit accounts to the Government for payment, but one wonders what other expenses will be incurred. I ask the Minister to give us some information about this provision in Committee.

This Bill should be a great boon to country people. I am hoping that the Government will see that the Bill will reduce the price of petrol, and that this legislation will be a means of helping industry in the country. I refer not only to secondary industries but also rural industries. I hope also that the Government will get something in return by way of petrol tax. This tax. as has been said here on many occasions in connection with other Bills we have discussed, plays an important part in our economy. Speaking purely from memory - and I do not want to be held to this figure - I think about 27 per cent, of our costs are represented by transport costs. I remember reading that the figure was 19 per cent, in the United States of America and 18 per cent, in Great Britain. I hope that this Bill will do all that the Government wants it to do.

Senator SCOTT(Western Australia) [1 1.18). - 1 support this measure. I am very pleased to see that the Deputy Leader of the Opposition (Senator Kennelly), on behalf of the Opposition, has stated that his parly does not oppose this measure. In fact he has given it the blessing of the Opposition. This measure is one of the items that was promised to the people of Australia in the policy speech of the Prime Minister (Sir Robert Menzies) in the election campaign of 1963. lt is interesting to note that, of the 14 specific promises that were made in that policy speech only two remain to be fulfilled, and this is one of them. The other promise to be fulfilled is in relation to the Trade Practices Bill 1965 which was introduced in another place last night. I assume that that Bill will not be opposed bv the Opposition so that when this Bill is passed together with the other measure I have mentioned, all the promises made in the policy speech of our Leader, the Prime Minister, in the 1963 election campaign will be fulfilled

This measure is designed to help people in outback areas of Australia by reducing the costs of transport. If we look at the schedule we find that places such as Halls Creek in Western Australia are referred to. After this Bill becomes law the people at Halls Creek will be able to purchase motor spirit at a price not more than 4d. above metropolitan prices, which means that a subsidy of 22d. a gallon will be payable in that instance. That is not the highest amount of subsidy. Higher rates of subsidy will be payable in other parts of Australia, including the Northern Territory.


Senator O'Byrne - How many people live at Halls Creek?







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