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Tuesday, 17 March 1987
Page: 930

Mr BRAITHWAITE(5.58) —The Minister for Science (Mr Barry Jones), who is at the table, did promise, as my colleague indicated, a further debate on the legislation, mention of which was left until the last two paragraphs of his speech. Basically, that debate is now left to those other stalwarts within the Government and the Opposition.

Mr Peacock —The Government just did not give any adequate reasons.

Mr BRAITHWAITE —It gave no adequate reasons. A second reading speech which is a page and a half long would indicate that the Minister is truly acting in one of this many capacities in this place. The effect of the Liquid Fuel Emergency Amendment Bill 1987 is to amend the Liquid Fuel Emergency Act 1984 by removing the provisions for automatic expiration of the Act on 22 March 1987. The Liquid Fuel Emergency Act gives the Commonwealth clear legislative authority to act in the event of a national emergency. This Act, when introduced, had a specific time frame for the Commonwealth, the States and the Northern Territory to explore the development of appropriate, mutually compatible, alternative legislation. In the event differences among the States on the nature and extent of the powers they require to deal with liquid fuel emergencies have indicated that common form legislation is not practicable at this time. The amendment Bill now before the House extends the Liquid Fuel Emergency Act by removing the sunset clause in the original Act, thus providing for the continuation of legislated authority to prepare against and manage a national liquid fuel supply emergency.

The Opposition is not opposed to this Bill. There is now no intention by the States to move to common form legislation, as was envisaged in the original Act, and therefore the present Commonwealth legislation needs to continue. No new sunset clause is required, as this would be necessary only if the States and Commonwealth still intended to move to such common form legislation. Most States are happy with the legislation they have and to act under delegation from the Commonwealth in areas where they have no power. States indicated their preparedness to act under Commonwealth legislation at the last Australian Minerals and Energy Council in 1986. Let me give one example: The Commonwealth legislation covers movement of product interstate. Without common legislation this is one area where the States will have to act under Commonwealth direction, so the Bill before the House is fairly straightforward. It does, however, provide the opportunity to expand upon the general topic of ensuring that Australia has adequate fuel supplies in any type of emergency.

The basic point I wish to make is that, under the current excessive and punitive taxation regime, on current projections indigenous Australian crude oil production will decline dramatically over the next few years, leaving a shortfall which will have to be met by either new discoveries or imports. In connection with our imports the trade balance figures today indicate that Australia is already severely in the red, and to put it more into debt on foreign exchange markets by oil imports to meet these shortfalls indicates a massive problem ahead. This will make Australia particularly vulnerable in the event of fuel shortages. Recent statistics released by the Australian Petroleum Exporters Association show a disturbing fall in exploration and development drilling and seismic work. This year petroleum exploration activity in Australia is expected to fall by more than 50 per cent to the lowest level since 1980. Probably only 136 petroleum exploration wells will be drilled this year in comparison with a record of 265 in 1985-almost half.

Let us look at the supply demand outlook for Australian crude oil. Australia's crude oil demand is expected to grow at a modest rate of about one per cent a year. However, at the same time, as I have said, indigenous crude oil production from current discoveries will decline quite rapidly. The combination of decreasing domestic production and moderately increasing demand will leave a widening shortfall, which will have to be met by either new discoveries or imports. The consequences for Australia's balance of trade of increased oil imports would be most unwelcome in the current circumstances. But with low prices and the severe downturn in projected exploration activity the outlook for future discoveries is severely impaired. With only a few discoveries, Australia's self-sufficiency level will drop to only 35 per cent in the period 1995 to 2000. This compares with 100 per cent self-sufficiency last year. Clearly, this outlook demands that urgent steps be taken to encourage exploration and development. Only then will Australia have a domestic industry on which it can rely for supplies.

The scenario I have just painted indicates that Australia will be facing an emergency in the continuation of oil supplies in the very near future. Certainly government action is required. There is no doubt that to allow the optimum level of exploration, development and production the Government must lower levels of taxation on the oil industry. The fact that the Government takes almost $7 billion in tax from the oil industry underlines the need for complementary restraint in government expenditure. The current pursuit of expenditure cuts of some $2 billion is only a part of what is required in the massive restraint of government expenditure. The Government needs to allow the oil industry to retain the financial resources that are necessary for optimum exploration and development. The Government must also allow oil producers to have free access to markets and let the market-place establish prices. Finally, the Government needs to review critically all existing regulations and to remove them wherever the benefits cannot be shown to exceed the cost.

In all of this consumers have been massively affected. The United States price for oil has fallen from $27 to $28 per barrel in 1985 to $13 to $15 in 1986. In 1986 the Government take from crude oil collapsed with the price falling to about half last year's level. However, in a neat little shuffle, the Government increased the excise on petroleum products to offset the bulk of the cut in the crude oil excise. The Government should be criticised, and will be criticised, by the Opposition for not passing on the fall in world oil prices to consumers. This is the only time in the last decade that that has been the case and when the Government has sought to replenish its own resources by not passing on the benefit to consumers. By increasing excise on petroleum products, the Government has maintained its almost $7 billion take from the oil industry, despite the price collapse. As a result the motorist has seen only a small decline in the price of petrol.

It is worth noting that when the Hawke Government took office the excise was 6.155c per litre. Over the period since the Hawke Government came to power the average retail price of super grade petrol has increased significantly. For example, the price in Melbourne has increased from 42.1c a litre in March 1983 to 48.8c a litre in June 1986. Today in Question Time the Minister was asked about the 13c a litre price increase in fuel since the time the Hawke Government came to office on a promise and undertaking to reduce the price of fuel by 3c a litre. It is very far from the promise of the Hawke Government to the realisation today as expressed in the excessive price of fuel. It is important for Australian motorists to realise that the high prices they are paying for petrol do not guarantee a viable domestic oil exploration industry or a continuity of supply in the event of interruption to imports. But that price is being kept extraordinarily high to benefit government revenues in a situation where expenditure remains unrestrained by this Government.

I would like to deal with not only consumers but also the retailers of fuel throughout Australia and the prices they are forced to charge by oil companies and refiners. I know of cases-and this is true of my own home town of Mackay-where there is a price war at the moment. The normal price of fuel to return a reasonable amount to a retailer is about 56c to 58c a litre. Fuel is now retailing in Mackay at below 50c a litre. This is probably good news to the consumer but it means that leasehold properties under lease from major oil companies are forced under the Prices Surveillance Authority to pay a maximum wholesale price for fuel, whereas that same fuel is being made available to freeholders at a discount. It is also subject to rebate, sometimes at a price to enable freeholders to retail the fuel at less than the wholesale prices charged to the leasehold outlets. I understand that freeholders have to make a capital contribution not only for the sites but for tanks and pumps, but it must be remembered that oil companies charge a more than reasonable amount for rental of sites and for the cost of goodwill-key money-in order for people to establish themselves in business. I believe that while the Prices Surveillance Authority is setting a maximum price for wholesale fuel it should also set a minimum price. Those concerned owe it to their own clients in leasehold properties to make fuel available at the same price as they are prepared to make it available to jobbers and freeholders.

What is the effect of all this on Mackay? I am told that leaseholders are selling fuel at a 2.5c per litre mark up when the cost of maintaining their retail outlets is at least 3c a litre or 3.5c a litre, so many of them are going into the red. It is a more than reasonable assumption that the oil companies responsible-I know that one could say they are responding to the marketing activities of others-should acknowledge that leaseholders, the people who pay the rent and the goodwill and who are obliged to buy from the owners, should have that fuel made available to them in exactly the same manner as it is made available to the jobbers.

Over the Fraser years there was some deregulation, or perhaps I should say more regulation in that there was a reduction in the number of retail sites and there were options on purchase. I believe that there is a further problem to be addressed-the one I have just mentioned-and unless something is done about it quickly, many of the leaseholders will lose their capital, their funds, and will have to walk out. I wish to give an example of unequal treatment. As I understand it, in Tasmania the fuel retails at 68c a litre. That is a sovereign State separated from the mainland of Australia by Bass Strait. Yet in other situations refiners can make that fuel available to people in Sydney or Melbourne at 45c a litre. Thus there is massive discrimination between motorists right across this continent.

Mr Nehl —Shameful!

Mr BRAITHWAITE —The honourable member for Cowper regards this as shameful. No doubt he has been in situations in which this discounting on a massive scale has really brought the leaseholding retailers to their knees.

Mr Beddall —It has happened to me, too.

Mr BRAITHWAITE —I am sure that it has happened to the honourable member as well. It is offensive that this type of discounting can be undertaken and that rebates can be made which discriminate so much between one and the other. I suggest that this is an area which the Minister might address. If the Government does not move to address this situation and reduce its take from the oil industry, then very soon it will have no choice in the matter. With the downturn in oil exploration, the Government shortly will have no indigenous oil to tax at all. Indeed, if it pursues its policies on taxation and regulation of the Australian oil industry, it will extinguish all local oil exploration and the Australian oil industry itself.

Mr Barry Jones —I inadvertently neglected to table the explanatory memorandum. I seek leave to table it now.

Leave granted.