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Monday, 23 March 1987
Page: 1313


Mr CHYNOWETH(5.12) —It is with great pleasure that I rise today to speak on the Petroleum Resource Rent Tax Assessment Bill, the Petroleum Resource Rent Tax Bill, the Petroleum Resource Rent Tax (Interest on Underpayments) Bill and the Petroleum Resource Rent Tax (Miscellaneous Provisions) Bill. I rise to speak on behalf of the people of Australia and of the many service station proprietors in Australia who must be suffering repetitive strain injuries occasioned by the daily changing of petrol prices on their hoardings. I saw an electronic one in Mentone in Victoria at the weekend where the operator can change the price by the pressing of a few buttons.

I also stand to orate a totally unsatisfactory malaise that confronts the motorists of this country who are the unwilling pawns in a petrol price merry-go-round that ensures that the price that we pay for petrol today will be nothing like the price that we will pay tomorrow. I could open a vast medical casebook to support further my two doctoral examples of the petroleum industry, but I am sure that honourable members will find that this is unnecessary. The greed of the petroleum industry cartel in Australia can be seen to be a cynical rip-off that frustrates service station operators back into the ground-I suppose towards the earth's inner crust where this black sticky substance called oil is found. Hence the causes of these ills are all the same. The symptoms are well known. A prescription is imperative. These Bills are in part a remedy for a state that happens far too often and is allowed to occur far too easily.

Upon entering the oil industry one discovers a web of intrigue that is very hard to unravel. I suggest that the oil companies prefer the scenario to be this way as it suits their convenience. The web becomes complicated when we realise that it is also a sensitive amalgam for the Government as it stretches to encompass petrol prices, petrol excise regimes and government revenue. Nonetheless, this Government is not afraid, and nor should anyone else be, to face the oil companies and question the spirit of rules by which they play.

The resources that the oil companies exploit is a scarce, non-renewable asset that should belong to all Australians. It appears that this maxim is true only while the resource is awaiting extraction. As soon as the oil has been extracted, it suddenly becomes the property of a multinational company. The multinational oil companies have had a blatant disregard for the average Australian. They toy with the motorist like a yo-yo as petrol prices rise and fall. They cajole the outlet operator in a fashion more attuned to wildcatting. Finally, they impinge their needs upon the Government, with the hope of creating what they believe to be the utopian situation of industry deregulation.

Why is the average speechless, powerless, abused, inadequate and naive motorist the butt of the oil companies' wheeling and dealing? Why is the honest, battling, hardworking site owner on the receiving end of the oil companies' taunts and threats? Why is the Government's oil industry policy labelled by the cartel as deficient and as a stunt to economic growth? The simple answers lie intertwined within a notion of survival. The motorist, dependent on petrol, cannot buy it anywhere except in an oligopolistic market-place. The service station operator must accept the lot that his oil company casts him; otherwise his business is on the line. Finally, the oil companies are venomously critical of government policies in the industry because these policies hinder the companies' ability to record even more enhanced profits while still holding the strings of the motorist and the outlet operator. Call it intimidation, if you will; call it tyrannical if you think it is unfair: I prefer to call it downright un-Australian.

The fact remains that oil companies still make vast profits from Australia whilst petrol prices fluctuate violently in a smog of talk about trigger prices, import parity and dollar rates. The approximate profit of Ampol Petroleum Ltd, the Shell Co. of Australia Ltd, Mobil Oil Australia Ltd, BP Australia Ltd, Caltex Oil (Australia) Pty Ltd and Esso Australia Ltd in 1984 was $574m. In 1985 these multinational oil companies made $307.6m. This figure does not include Esso which, in the previous year, made a profit of $412m. I hasten to add that Esso handed over to its American doyen a dividend of $280m. In 1986 the combined profit of Esso, whose profit fell, and Caltex, whose profit was unsatisfactory to shareholders, was only a mere $375m-just over $1m a day. These profit results are amazing and, at the same time, alarming figures for they represent the moulding of motorists, Government and station owners to fit the needs of BP, Shell, Caltex, Ampol, Mobil and Esso. Undoubtedly these oil companies are an aggressive collection of entrepreneurs who put their case very forcefully and very effectively. However, in the mind of the average Australian the force and direction of the oil companies should be ruthlessly questioned when the following newspaper headlines appear:

B.P. profit surges 460%

A leaner Mobil makes a tidy $40m profit

Esso profit dives to $350m

Mobil exceeds profit target with 363% leap to $54.5m

Esso earning doubled to $412m

I would like to read something from the Age of last week, from the oil companies and their friends. It is headed: `Gloom, doom and despair to colour APEA meeting'. It states:

New taxation legislation before Federal Parliament . . . more than 6000 job losses in the past year . . . the oil price still a third below its 1986 peak . . . an exploration effort which has stalled . . .

This is the background against which the oil industry will meet next week at the annual Australian Petroleum Exploration Association conference.

On the same page of the Age is the heading `Oil, gas stocks push market to a record'. It states:

The all ordinaries index reached a record high on the national sharemarket yesterday as unusually heavy investment in the oil and gas sector prevailed.

The all ordinaries index closed at a record 1648.8 points after a 9.4 point rise. The 48.6 point rise in the oil and gas index was a major reason for the record close.

This is the doom and gloom. The intention of the multinational oil companies must come under further scrutiny when, in the light of these headlines, they proclaim rather hysterically that present Government oil policies, under which, I add, they achieve record profits, are inadequate, placing the nation's economy at risk and likely to weaken the future security of oil supplies. I suggest that this is a blatant and poorly disguised bid to increase profits even further at the expense of the average Australian motorist, service station owners and the Australian Government.

I cite three pieces of evidence to reinforce this suggestion. Firstly, the Broken Hill Proprietary Co. Ltd's 1985 annual report appears to corroborate this opinion when it cautions that `a new resource rent tax will reduce the incentive to explore for and develop new oil fields'. The big Australian's eagerness to prospect and drill is admirable, but it must be put in the context of a multinational company where profit is the only desired zenith. It seems that for Esso-BHP `a dollar earned from the oil today is more valuable than a dollar earned in five years time'. The incentive to produce as fast as possible, therefore, is obvious.

Secondly, the Australian Petroleum Exploration Association, in its 1984 report `Petroleum Exploration: The case against more tax', chided that `the rate at which Australian industry discovers and develops new oil is more a function of economic expectation than geology'. Once again it seems that shareholders have an uncanny leverage over the rationale of the petrol industry. There is certainly no place for the motorist in this discussion.

Finally, to what extent can the multinationals be trusted? Regrettably the oil industry in Australia and overseas has been confronted with one of the most serious challenges since its beginning. Rapidly falling prices have placed great stress upon all quarters of the industry. It cannot be forgotten that Esso, for example, is wholly foreign owned and that 100 per cent of its profit is repatriated. I very much doubt that the parent company feels any overwhelming obligation to Australia.

This raises a central question in this debate. In a world of petrol bowsers, radiator flushes, automatic car washers and 24-hour food marts where do Australian motorists and service station owners stand? The golden age of service stations has passed. Twelve thousand of Australia's petrol retailers have gone out of business since 1966. Most operators have no choice if they want to survive-they must run motor repair workshops, hire out videos and sell America's Cup souvenirs or food. The retail market-place is all but totally controlled by the major oil companies. The consequences are disastrous. The glorious age of motoring may also have been overtaken too, for petrol consumption is declining. Today's motorists face wildly fluctuating prices which are discreetly manipulated by the oil companies. For example, it is a Christmas tradition that there be higher prices in late December when the companies know that people will be travelling more.

Let me give some prices that my staff have located today throughout Australia. These are the prices that Australians are paying for BP petrol. They point out the discrimination that is happening to the Australian motorist. Today in Hobart people are paying 65.5c a litre for super and unleaded petrol. In Sydney they are paying 49.9c a litre. It was claimed just before that the Prime Minister (Mr Hawke) gave a promise that the price of petrol would come down by 3c a litre. There is a difference of nearly 15c per litre charged today between Hobart and Sydney. Other prices are: Brisbane-54.9c; Canberra-56.9c; Broome-57.5c; Wyndham-63c; Alice Springs-62.6c; Gympie-54.9c; Cairns-56.9c; Broken Hill-63.9c; Albury-58.9c; Ceduna-62.5c and Melbourne-51.9c. The highest price today is 65.5c a litre in Hobart and the lowest price is 49.7c a litre in Sydney.

The petrol companies are the villains and their discounting is costing motorists and service station owners a lot of money. There are four ways in which the companies dispose of product. Firstly, they supply it to high volume jobbers such as Delta Petroleum or Solo Oil Australia Pty Ltd. Secondly, they sell it to the owner operators of the service stations. These people, because they are not tied to an oil company, are wooed to a certain extent and given some substantial price benefit. Thirdly, the greatest number of outlets are people who regard the oil companies as landlords. These people who rent the premises from the oil companies have no choice about the price, pay exactly what the oil companies invoice them and sell their product at virtually the price that the oil companies dictate to them. Their position in the market-place is very much determined by the extent to which they can afford to engage in competition, given that the maximum margin available to them is under 4c per litre.

The remaining form of distribution is through company-owned sites which are usually in prime locations offering high volume sales from multi-lane sites which are known in the industry as gas pumpers. These service stations are usually run by commission agents who often receive less than 1c a litre for the petrol they sell. The price at these commission agent sites is determined by the oil companies. Technically companies are not allowed to telephone ordinary service stations and say that the price has changed, but the companies do instruct their commission agents to adjust the price of petrol up or down. I cannot believe that all petrol companies in Melbourne suddenly have the same thought to increase their price by about 9c overnight. Someone must be directing them to do it.

The price at these commission agent sites is determined very strongly by the oil companies. Thus the oil companies clandestinely operate directly in the retail market. They justify their presence by proclaiming that they are a spur to price competition. This is just the type of encouragement that the Australian community does not need. In the present set of unfortunate circumstances this would appear to be so, for frequently oil companies, acting individually or in concert, do create price war conditions. They promote a strain of guerilla warfare in the suburbs either through the provision of bulk supplies at preferential prices to the secondary market and/or by dropping prices at their commission agency operated outlets. Such wars are created for any number of reasons, not the least of which is to quite temporary overproduction or excessive stockholdings. However, the resulting price competition generated is mainly in the retail market and not at the wholesale level.

I put it to this House that price reductions of this nature are temporary and selective, and are clearly discriminatory between retailers. If a retailer is discriminated against, so are the customers of the retailer. The shameful fact is that the oil industry has cleverly created a market where there appears to be price competition but where in fact there is little, if any, price competition at the wholesale level. This is possible because the major companies have a captive group of retailers-lessee dealers-and there is no incentive to provide dealers with the best prices on a permanent basis. There must be no doubt by now that the price of petrol at the retail pump is not decided by consumers or by retailers. Price rises and price falls are based upon the decision of oil companies. Should the oil companies ever be successful in driving out the remaining independent dealers, the ability of the multinationals to increase prices contrary to public interest will be undoubted.

It is really a pitiful state of affairs. The oil companies claim that they are presiding over healthy discounts initiated by retailers, but this is untrue. The discounting is initiated by the oil companies, and the retailers are obliged to contribute to the cost of that discounting. Far from being good for customers and consumers, the end result is that discounting means that occasionally motorists can buy petrol at the right price. Clearly this is unsatisfactory; yet the multinational oil companies are crying out for taxation relief to undertake greater exploration and eventually rip off the motorist even more.

I believe that these actions of the oil companies should not be tolerated. The Bills provide for a rent resource tax to be based on profits earned and it will rise and fall with the level of profits. This will not only redress the situation of unprofitable producers paying excise but also will allow the Government and the people of Australia to share in any windfall profits that may arise. The `quiet deceivers' of the petroleum industry have been promising to do more than sell petrol for a number of years. Perhaps the passage of the Bills will ensure that the resource wealth of Australia is shared more fully among all Australians. It may also bolster a new public perception of the oil companies that, despite their protestations, sometimes their `toils ain't toils' at all.