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Monday, 4 June 1984
Page: 2412


Senator CHANEY (Leader of the Opposition)(3.16) —I move:

That the Senate take note of the paper.

This is the final report of the Petroleum Products Pricing Authority which was replaced because the Government instituted a prices surveillance authority following the National Economic Summit Conference of April 1983. I wish to use the occasion of our receiving this report to again draw the Government's attention to the very real difficulties that are being imposed on industry by the system of petroleum products pricing which applies. Perhaps I could correct that by saying it is not so much a system but systems. We have a duality of price control in petroleum products which is inefficient and which is certainly having undesirable effects which need urgent attention from the Government.

This is a matter which the Government has under consideration and I urge it to adopt a fairer and more rational approach to this important area. The fundamental difficulties which arise have occurred because of the politics of pricing. Earlier today we heard Senator Walsh in full flight criticising some comments of mine on the Australian Petroleum Exploration Association and saying that I am an advocate of more expensive petrol for the motorist. That is a nice political point to make. But when State governments enter into this area of price control of petroleum products and for political purposes impose further restrictions on price over and above the restrictions that are imposed by the Commonwealth Government, the oil companies are put in a most difficult situation .

Recently I have looked at some of the submissions from the oil companies to the Government, which are now public. They point out very clearly that we have here an industry where there is a great deal of competition between suppliers and price surveillance is less necessary-if it is ever necessary-because of that great competition. The industry is suffering a very severe profit squeeze. Many petroleum distributors have been announcing substantial losses and some are going out of business. There is a rationalisation going on and the number of distributors is decreasing. I believe we are getting to the point of diminishing returns and as a matter of urgency the Government needs to examine this area and come up with an answer that will be commercially reasonable.

I am aware that the Government is likely to say that any questioning of the petroleum pricing arrangements is an attack on the consumer and is a desire to see the consumer knocked to the detriment of the oil companies. That is a very silly approach in a circumstance where clearly many of the oil companies are losing money and where the number of people in the field available to service the customer is declining. It is interesting to see from one of the submissions that between January 1980 and March 1984 one company's general cost component was increased by 1.9c per litre. That is, the cost allowable to the company was increased by 1.9c per litre. During the same time government charges increased by 17c per litre. We have a situation where there is a very fine profit margin for companies; where there is a very competitive market, which means there is price competition, and all honourable senators would be familiar with the kind of price competition that exists at different times in different cities; and where the market is being very severely and improperly restricted by the Government to the ultimate detriment of consumers.

I have requested the Government to examine this area. Given that it has undertaken an examination, I request it to examine the matter speedily and to move away from a situation in which there are competitive price fixing mechanisms at both the State and Commonwealth level. That is wasteful. It leads to simply playing politics with the industry in a way which I think is now beginning to bite and which is probably affecting employment in the industry, with some facilities being closed down and some companies going out of business in Australia. I really believe that we have reached the stage where the arrangements are so clearly counter-productive as to be in urgent need of review . I seek leave to continue my remarks later.

Leave granted; debate adjourned.