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Monday, 23 March 1987
Page: 1317

Mr WRIGHT(5.39) —It is not unexpected, I believe, that the petroleum industry would oppose the proposed resource rent tax that we are considering today. I read an article prepared by the industry which says that the tax is a discriminatory secondary tax. The article stated that it was not properly structured and claimed that it was not a true profit-based tax. I intend to challenge those claims. It went on to say too that the circumstances economically have changed since this tax was first thought of. The idea of a resource rent tax was mooted in the early 1980s and was committed to by the Government in 1984. I think it is always expected that an industry will argue against any type of tax, but I think that it has an obligation to test it out, check it through and find out exactly what is being proposed. It is my belief that if the industry really did that it would find that this tax that is being proposed in this legislation is really in its interests. I think that whilst it is understandable also that there are industries opposing it, governments have a responsibility to ensure that the people they represent-the community and, in this instance, the Australian community-share in the potentially high returns of any type of industry that exploits a nation's resources. In this instance we are talking about the exploitation of our petroleum resources-resources that we need to remember constantly are very scarce and non-renewable.

I listened with some interest to the shadow Minister, the honourable member for Dawson (Mr Braithwaite). He claimed that the proposed tax would be a deterrent to exploration. All I see him doing is echoing the views being put forward by some elements of the industry. But again the claims are not true. The fact is that this tax is not based on production as we have with excises and royalties, but that this tax is based on achieved profits. I will restate that: This tax is based on achieved profits. The cash register has to show the return. It is not a matter of saying `We have produced X numbers of barrels of oil in a day or over a period' and if it is measured in terms of quantity, some sort of tax, excise duty or royalty will accrue. That is the present system and that is the system that it seems the Liberals and the Nationals want to support; that is, that we have a taxing system based on production. But that is not so with this resource rent tax. The new system will replace the existing system and not add to it. Instead of having something based on production, it will be based on achieved profits. This really means that those who want to get into the exploration of our petroleum resources on the off-shore of Australia will be able to get in there knowing that if they do not make profits they will not be paying the tax.

I am quite amazed that members of the Opposition say that they are going to oppose this legislation. I would have thought that they would, first and foremost, want to see a greater share and return to the people of Australia for the exploration and exploitation of our resources. I also thought that, being in an alleged private enterprise party, they would say: `If you have a tax, base the tax on proven profits and achieved profits, not on what is simply set down as production'. In contrast to the production-based secondary tax systems which I believe members of the Opposition are arguing for, the Government's petroleum resource rent tax will be payable-I stress this-only in respect of those earnings which will be achieved. I appreciate that the world oil system in the industry has been very volatile in recent times. There have been constant fluctuations in prices. There is a constant threat of glut and oversupply. If that is the situation, surely the industry should grab this concept with both hands. If there is going to be a tax based on the profits and there is a constant threat on those profits because of the possible manipulations of world prices and the world supply, if I were in that industry I would want to say: `I will pay the tax when I am making the quid, not when I am just producing it and storing it away'. It surprises me that members of the Opposition have taken this position.

Mr Robert Brown —They don't understand it.

Mr WRIGHT —I really do not think they do. What we have here is a proposal that guarantees that the Australian people will get a fairer return and a fairer share from the exploration and exploitation of this country's petroleum resources yet, at the same time, ensures adherence to and advances the concept of risk and reward. Many members of the Government believe that we ought to pursue the idea of risk and reward. But where an industry is prepared to take the risk there ought to be the rewards. In this instance the companies which take the risks will get their rewards because it will be profit based and not just production based. I believe that in the long term we will see an encouragement of the exploration of off-shore petroleum resources simply because of the thrust of this legislation.

I want to use the few moments that I have to canvass some of the comments that were made by the honourable member for Dawson. As a Queenslander I have listened to him tell Queenslanders over and over again and, for that matter as he has done here today, tell Australians that the Hawke Government has caused the price increases. I heard someone interject from cockies corner about all these promises that the Hawke Government undertook to keep prices down. I think it is time we put some facts about fuel increases on the record. First and foremost we have to appreciate that the Federal Government only controls the wholesale price of fuel and that the States have the power to control retail prices. Having accepted that because it is the true position, it is the States that control retailing, but it is the Federal Government that controls wholesalers.

It is a worthwhile exercise for honourable members to have a look at the growth in wholesale prices of fuel since Fraser took over from the Whitlam Government. The wholesale price today-I am looking at Queensland because that is my special interest at the moment-is 49.86c. That is the Brisbane price. That price has risen from 39.54c since Labor came to power in 1983. That is a rise of 10.32c during this period. Over this time we have seen prices rise and fall. In fact, someone told me the other day that wholesale prices have fallen in Queensland some seven or eight times over the last four and a bit years but, regrettably, very few of those falls have ever been passed on to the motorist. The fact is that there have been these rises and falls.

Let us come back to the figures again. The wholesale price of fuel at the time Labor came to power was 39.54c-this is the Queensland price. The wholesale price today is 49.86c, a little more than a 10c increase. Let us compare this with the wholesale prices which applied under members of the Liberal and National parties, who now sit opposite, when they were in government. In July 1975, the wholesale price was not the 39c that it was when we took over, it was 11.69c. So in July 1975 when the Fraser-Howard Government took over from the Whitlam Government it was 11.69c, but during that period it rose to 39.54c-almost an increase of 28c a litre. That is more than a 250 per cent increase and yet members of the Opposition have the audacity to stand up and say that we have caused the massive increase in the price of fuel. Well, the facts do not prove that, the facts disprove that claim. I will state it again-an increase from 11.69c at the end of the Whitlam era to 39.54c to the end of the Fraser-Howard period. If anyone needs to be condemned for the increase in the price of fuel in this country, that condemnation certainly, surely and truthfully can be levelled at the Liberal and National parties. Yet we constantly hear members of the Opposition getting up and blaming us.

Let us also look at the figures that do exist. We should understand as well that we should allow for inflation. If we index and allow for inflation, we find that since the Hawke Government came to power the retail price of fuel has fallen by about 3 per cent. Why? Because the Hawke Labor Government, through the Prices Surveillance Authority has insisted that the wholesale price charged by the companies-honourable members realise that this is the basis of the ultimate retail price-is justified. Yet let it be placed on the record that the Liberals and Nationals want to abolish the Prices Surveillance Authority. I believe that the Hawke Labor Government has an excellent record in the way it has handled the fuel industry and the price of wholesale fuel in this country. It has been the Hawke Labor Government that has acted to ensure that the overall petrol excise has been reduced.

Following the 1986 Budget the petrol excise was 23.884c per litre. Since then it has been reduced to 19.15c per litre. If that does not show an effort to keep down the price to industry and to motorists I do not know what does. The facts are very clear that the Hawke Labor Government has met its commitment and we cannot be held responsible for the fact that Queensland does not care a damn about the retail price. It does not care that in some cases in Brisbane fuel is priced at 50c a litre but in the northern parts of my electorate it is priced at 64c a litre. When one tries to take anyone on about it people try to cover up by claiming that the reason is the high cost of freight. That is certainly not true. It is time the people of Australia, particularly those in my State, Queensland, realised that the State is responsible for the ultimate price that they are paying at the bowser.

I am most pleased that the Prime Minister (Mr Hawke) has pledged that increases in excise will be restricted to 6 per cent. In this way we will retain our present reputation as having the lowest petrol prices in the world. We might say that 50c a litre is still too much to pay-or even 55 cents or 60 cents-as it is when one has to pay for it oneself, but when we compare our petrol prices with those applying in other countries in the Western world we realise how well off we are.

I support the remarks of the honourable member for Dunkley (Mr Chynoweth) about some of the problems in the petrol industry generally, I realise that these remarks do not apply specifically to the measures before the House but they relate very closely to the petrol industry. I make a plea for the people involved in the retailing of fuel as service station proprietors. Many are living on the very edge of poverty. There are some 1,600 service station proprietors in Queensland. It is very clear that unless we can protect these people in some way one-third of them could go to the wall. As I have travelled around Queensland, and central Queensland particularly, I have seen service stations where six and seven people were being employed which are now down to being strictly family concerns. The people there are working long hours for a very low return.

I put it to this House that if oil companies can flog off fuel and give special prices to the independents and jobbers and reduce the wholesale price by 10c a litre to an entrepreneur who can then flog it to his mates and make for himself tens of thousands of dollars, if the oil companies can regularly have a special price 10c a litre below the normal price, why cannot they do so on a regular basis? I have given an instance of one jobber who purchased 700,000 litres-a very large tanker-of fuel at just on 10c a litre less than the normal price. Breaking the rules, he travelled through central Queensland and sold that fuel to a local independent giving that person a 5c a litre cut. He made a profit of $35,000 just by buying the fuel at that price. He then sold it to the independent who reduced his price to the motorist by a couple of cents a litre. He made a profit of something like $20,000.

Good on the jobber and good on the independent for being able to do that. That is part of business. If one can get a decent buy one takes advantage of it, but the whole issue comes back to some type of commercial morality. If the companies can do this-it is not an isolated incident when an oil company flogs off millions of litres of fuel to jobbers and independents and middle people-on a regular basis at a price up to 10c a litre lower than normal I believe the Australian motorist has every right to ask why the price of fuel is so high. Why are these companies not doing it with normal supplies? If they can sell fuel at 10c a litre less at some times why cannot they bring the wholesale price down to the service station proprietor by 5c a litre? I think it is time we had a hard look at the petroleum industry. Whilst I appreciate that the Prices Surveillance Authority has acted within its powers and has kept the hammer on these price increases, it seems to me that there is certainly a lot of flesh in the petroleum industry. That is certainly proven by the special deals being given to jobbers. I support the thrust of the Bills before the House. A profit based tax is in the interest of everybody because those who are making the profit have the ability to pay the tax.