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Tuesday, 17 February 1987
Page: 76

Senator DURACK(4.54) —This is a major report from the Industries Assistance Commission. Its conclusions are very salutary indeed. Certainly the Opposition would not be drawing from it the same conclusions that Senator Mason seems to have done. Clearly the problem at the heart of the price of petrol is the present Government's policies, but not the policy of world parity pricing of petrol, which is inevitable if Australia is to have and pursue a proper and vigorous exploration industry. Under the policies which apparently the Australian Democrats would pursue, there would be no financial incentive whatever for the industry to expend the enormous sums of money on exploration and development, particularly off-shore but also on-shore.

This report is all about the Government's policy of taxing petroleum products. Its conclusions are certainly worth noting, namely, that petroleum excises are imposing very high rates of tax on the use of petroleum products, that petroleum product excises should not be levied on intermediate use, and that excises such as these have a significant economic cost, particularly given the extensive use of petroleum products in the production of other goods and services. The report identifies the undesirable effects of changes to the rate structure of excises, of implementing general intermediate use exemptions and of extending further exemptions on an ad hoc basis. With very high rates, we have all these ad hoc exercises as well.

This report underlines the concern which the Opposition has had, and which it has expressed, about the way in which the Government's policy has developed, particularly in the last year or so when there has been a 40 per cent drop in the world parity pricing of petrol. That in itself is of great significance to the petroleum industry. As we know, exploration has been greatly curtailed as a result. What to do about that is a separate problem. The Government has certainly known what to do about compensating itself for the loss of revenue from the value of crude oil production by Australian producers; it has simply loaded up excise rates to compensate itself. The Government could not care two hoots about the effect on the industry, and it certainly could not care two hoots about the effect on motorists. Australian motorists have been able to figure out this problem without the benefit of the IAC report. It is interesting that such a body as the IAC has come to the conclusions which clearly the average motorist understands and which the Opposition has been emphasising.

Australian Bureau of Statistics data on average retail prices of select petroleum products shows that in March 1983 the average price of a litre of petrol in Sydney was 43.9c; that was when this Government came to office. In December 1986 that figure had reached 54.9c-in other words, an increase of 11c per litre in the price of petrol during the life of this Government, in spite of and in defiance of Prime Minister Hawke's undertaking when he was elected in 1983 that he would reduce the price of petrol by 3c a litre. This increase occurred at the end of 1986 when, compared with some periods, the price of oil received by most large Australian and world producers had fallen by as much as 50 per cent. This report gives dramatic emphasis to the way in which this Government has loaded up its own revenue raising when the motorist and intermediate producers using petrol should have had significant relief and when Australian costs of production should have been significantly reduced.