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Monday, 23 March 1987
Page: 1334

Mr O'KEEFE(8.57) —During the speech of the honourable member for Curtin (Mr Rocher) I could not help noticing the chuckle from the honourable member for Charlton (Mr Robert Brown), who is the chairman of the Government's economic policy committee. I know that he will want to make some of the points I am about to make and I apologise to my colleague for stealing his thunder. I wondered whether the honourable member for Curtin was speaking for or against the Government's legislation. He has just made a speech that I am sure will come back to haunt him within the Opposition ranks over the forthcoming weeks. I am not quite sure which side of the hexagon of factions which make up his side of this House at the moment he sits with or represents, but he missed a very serious point. He spoke of the trade weighted index, the resources issue, self-sufficiency and petroleum exploration, but he did not speak of the efforts of his Government during the early 1980s to talk up a resources boom and to talk up investment in a number of these areas without reference to the substantial decline in world prices for crude oil. The simple facts of the matter are that exploration in this industry has nothing to do with incentives or disincentives by government; it is governed mainly by market perceptions and, in the Australian petroleum industry, by the prices that can be extracted from the end user. I want to comment on this during this debate.

We are debating 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 cognately. This package of Bills gives effect to the Government's decision to introduce a petroleum resource rent tax on profits from certain off-shore petroleum projects. These resources are community property and the Government believes that the community as a whole should share in the potentially high returns from exploitation of this scarce non-renewable resource.

I cannot help contrast the Queensland Government's proposals to sell off and lease parts of the Great Barrier Reef, another great natural resource. As an aside, I welcomed the assurance in Question Time today from the Minister for Arts, Heritage and Environment (Mr Cohen) that this Government simply will not allow the Queensland Government to proceed with these proposals. We are faced with the fact that every major country is entitled-every country is entitled-to protect its community assets. These off-shore petroleum assets are entitled to be explored under the control of the Government, and they are entitled to return a reasonable return to the community.

We believe that the resource rent tax, related to achieved profits-I emphasise the point that it is a major shift in policy; it is a shift to tax the profits that are made; it is not simply a levy on the oil that is turned out-is a more efficient and equitable taxation regime than the excise and royalty system that it replaces.

I go to the claim alluded to by the honourable member for Curtin (Mr Rocher) that this will lead to disincentive for the industry. The Minister in his second reading speech made it very clear that this proposed tax replaces the existing system; it does not add to it. It cannot be claimed down the line that there are additional costs to production that will in turn flow on to retail petroleum outlets. In other words, it is nonsense for anyone now to go out into the community and start telling consumers that because of this Bill there will be an increase in petrol prices. (Quorum formed) Before I was interrupted by the honourable member for Mayo (Mr Downer), who is another one of those who sit opposite who must be in one side of the hexagon of factions that are represented on that side of the House-I am not quite sure which one-I was thinking that were he to intervene I might mention that he should make his contribution now because I understand that Mr Ian McLachlan from the National Farmers Federation has the seat of Mayo lined up as his way of entering the Parliament. We had better hear a contribution from the honourable member as soon as we can. I was making the point that the Opposition will no doubt go out and attempt to claim that this legislation will lead to an increase in petrol prices. I was making the point that this legislation involves no additional tax. It is, in fact, a change in the proposals and it replaces the existing system; it does not add to it. So there are no additional costs and there can be no claims that there will be. I make this point because the community is very sensitive-and rightly so-to the issue of petrol prices.

Just recently I received a questionnaire from the Australian Automobile Chamber of Commerce which, in effect, was complaining about the relationship between the oil companies, the producers, and those who man the petrol retail outlets-the service station owners. Clearly, it is very concerned about the pricing policies of these companies and it wants to move towards a more independent system. It wanted to know my response. I made the point in my reply that its claim that these matters have been ignored by the Government and the political parties is a wrong one. The point ought to be made that the major shifts in petrol pricing policies occurred during the period 1976 to 1983 with the introduction of import parity pricing and a greater reliance on petrol excise as a form of general government revenue. This is a fact of life in our economy, inherited by our government and I can assure the House that it is high on our agenda for redress as economic circumstances permit.

I give an example of country petrol prices. We are often told that things like excise and freight levies and this sort of thing are the reasons for prices being at the level they are. In the city of Bendigo-and I notice that the honourable member for Bendigo (Mr Brumby) is present and he can confirm this for the House-petrol prices last week were 52c a litre.

Mr Brumby —And today?

Mr O'KEEFE —Today, they have risen to 58c.

Mr Brumby —Fifty-nine cents.

Mr O'KEEFE —I am corrected by the honourable member for Bendigo; it is 59c. There is no rational reason for that. There is no rational reason why petrol should rise 7c a litre in Bendigo-100 or so kilometres from Melbourne-to 59c. It was simply a decision by the petroleum companies to change the price irrespective of the consumer, irrespective of the effect on country people. One of my colleagues from the other place Senator Cooney, who has a broad ranging interest in western Victoria, tells me that at Portland, where there is a major store of imported crude oil and petrol, the prices are several cents dearer than they are some 50 kilometres down the road at places such as Hamilton and Warrnambool. In other words, there is no rationality in the different petrol prices around Australia. The position of the Federal Government is one whereby we are able to impose a maximum wholesale price on petrol, but we have no control over the retail pricing policies of the companies. What I want to discount before we even start is the claim that is starting to be made by members on the other side of the House that this tax will lead to some sort of flow on, and an increase in petrol prices.

I also want to refer to what we call the $3 billion of soft money that was achieved through the shift to import parity pricing. That was the great failure of the Opposition. In its time in government, under Treasurer Howard, it introduced import parity pricing and ripped into Government coffers an extra $3 billion straight off the top of the petrol pumps. What was done with that money? Was it used to reduce the deficit? Was it used to do all the things it is now saying should be done? No, it was left in the system to fund unemployment benefits caused by throwing people on to the unemployment scrap-heap. The result was a $9 billion deficit at the end of the former Government's show. It was a boost to revenue that was not treated responsibly. The way the system was introduced made it, as I describe it, `the great tax of deceit'. It was the great exercise of deceit carried out by a government during the late 1970s. The Opposition's deceit, as my colleagues in the House know, can be no better highlighted than by today's front page of the Australian Financial Review. I quote from an article on `The Liberal Party's secret agenda':

The plan says that while many cuts should not be announced before an election-apparently because of public outcry-they should be planned in detail beforehand.

What an exercise in deceit-as was the way the former Government dealt with import parity pricing.

We acknowledge the effects of petrol prices in the community and we are moving towards a new approach to encourage exploration and self-sufficiency. The new regime operates on a payment by result system. Evidence of the fact that we recognise the importance of petrol pricing policies has been the approach of this Government to the rural sector. The country task force of the Prime Minister (Mr Hawke) has gone to great lengths to emphasise the importance of fuel to the rural sector, to country people. Because of those representations the Government has maintained the diesel fuel rebate and full deductibility of motor vehicle costs when the use of the motor vehicle can be substantiated for business use. We are prepared to accept that petrol and related costs are reasonable and acceptable deductions in that sort of system.

I want to make another point about petrol pricing which goes right back to the heart of the system that was introduced under the Howard-Fraser regime. I wish to look at it particularly in the context of the fringe benefits tax. There has been much discussion of petrol prices. It is fair to say that one example above all shows the way the system operates unfairly. All those who bleat for those with company cars and the rest-remember that honourable members opposite would abolish the fringe benefits tax and give back company cars and the rest-never point out that those cars are fuelled by petrol which is fully tax deductible. So the cost does not come out of the after-tax dollars. The ordinary worker, as my colleague the honourable member for Charlton (Mr Robert Brown) recognises, pays for his petrol with his after-tax dollars and usually buys it with his take home pay on the way home from work. We have been talking about the petrol pricing policies of these companies. Last week employees at the Ford factory in Broadmeadows told me that the price of petrol goes up 2c a litre on pay day as they leave the plant because the workers have to fill up their petrol tanks to go to work. But the Opposition supports those sorts of policies, that sort of approach from business. No wonder Mr McLachlan wants to replace the honourable member for Mayo (Mr Downer) with himself.

An article in the Melbourne Sun published on 11 March reports two of Australia's leading accounting companies, Hungerford's and Price Waterhouse, as saying that business is `disturbed by the Liberal-National parties' promise to tear up Labor's tax reforms'. The Opposition's own people are making these comments. They say that businesses have adjusted to the capital gains tax and the fringe benefits tax and do not want any more tinkering. They know that the Opposition's promises to abolish this, that and everything else without doing the sums, without making the $14 billion add up, are both irresponsible and disconcerting to the business sector. Leading firms are now saying to the Opposition: `Forget about it, fellows'. The business sector will not wear it. It knows that it will not wash. It knows that the sums do not add up.

This legislation has been introduced to change the approach to the taxing of a resource, petroleum, which is mined off-shore. It changes the approach almost to a payment by results, a system which is more efficient and more equitable. I reiterate the point that the measure does not in any way add any costs to the petroleum exploration industry. It is a system which replaces the existing regime. So let us not have any more emotional junk claims that the Opposition so often runs around with. Let us not have Opposition members out there talking about potential increases in the cost of petrol because I say to the Opposition right now that if it does it will be hoist on its own petard. Its performance on import parity pricing, its performance with the $3 billion of soft money and its exploitation of the ordinary worker while it prospered from and encouraged fringe benefits has not gone unnoticed in the general community.