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Monday, 6 December 1999
Page: 12909


Mr Andren asked the Minister representing the Minister for Industry, Science and Resources, upon notice, on 26 August 1999:

(1) What guarantees can be given that the passage of the Petroleum Retail Legislation Repeal Bill 1998 and the rewrite of the Oilcode will lead to (a) cheaper fuel in rural and regional Australia and (ii) more vigorous competition in the provision of petroleum products to regional markets.

(2) Will deregulation of the petroleum industry see efficiency gains passed on to consumers in the form of lower retail fuel prices; if so, why; if not, what measures will be put in place to ensure regional consumers benefit from the industry's deregulation.

(3) When does the Government aim to (a) finalise negotiations about the substance of the new Oil Code and (b) have the Petroleum Retail Legislation Repeal Bill 1998 enacted?

(4) Is it proposed to lift restrictions on the wholesale price of petrol; if so, will the Government legislate to ensure that all daily terminal wholesale prices, plus transport costs, be made openly available to the public: if not, why not.

(5) Is the purpose of the Petroleum Retail Marketing Sites Act 1980 to restrain vertical integration by the major oil companies and to encourage competition; if so, how does the Petroleum Retail Marketing Sites Amendment Regulation 1999 (No. 2), which aims to increase BP Australia Ltd's allocation of retail sites from 102 to 212, conform with the purpose of the Act.

(6) Why is the Government introducing the retrospective Petroleum Retail Marketing Sites Amendment Regulations 1999 (No. 2) when the Petroleum Retail Legislation Repeal Bill 1998 is yet to be secured and the terms of the new Oil Code have not been finalised or agreed to by the petroleum industry.


Mr Moore (Defence) —The Minister for Industry, Science and Resources has provided the following answer to the honourable member's questions:

(1) The (then) Industry Commission (1994) and the Australian Competition and Consumer Commission (1996) both identified that the Petroleum Retail Marketing Sites Act 1980 (the Sites Act) restricts competition and should be repealed. Greater competition in the marketplace, consequent of the repeal of the Sites Act, will narrow the city—country price differential.

(2) The Government's petroleum retail reform package will deliver a more competitive and efficient petroleum retails sector, particularly in rural and regional Australia. Competitive pressures, particularly from independent retailers, which are driving the reform process should ensure that the efficiency gains are passed on to consumers. These benefits will be particularly felt in rural and regional areas, where competition is currently suppressed by virtue of the effects of the existing regulatory arrangements.

(3) The Government will seek to enact the Petroleum Retail Legislation Repeal Bill 1998, and the provisions of the agreed Oilcode, as soon as possible after participants in the industry agree on the future of the Sites Act.

(4) Prices surveillance on the wholesale price of petroleum was lifted by the Treasurer on 1 August 1998 and replaced with a system of retail price monitoring undertaken by the Australian Automobile Association in cooperation with the Australian Institute of Petroleum. Information from this retail price monitoring is posted on the Internet.

The Government has agreed with the major oil companies to a system of enhanced price transparency, both in terminal pricing and transport costs, as an element of the petroleum retail reform package. In addition, the major oil companies agreed that a contestable system of fuel transportation would be introduced as an element of the reform package. As with the other elements of the petroleum reform package, these initiatives will not be implemented until agreement has been reached by the industry participants on the future of the Petroleum Retail Marketing Sites Act 1980.

(5) Both the then Industry Commission (1994) and the Australian Competition and Consumer Commission (1996) recommended the repeal of the Petroleum Retail Marketing Sites Act 1980 due to the anti-competitive effects the legislation was having on the petroleum retail market. As such, if the purpose of the Act is to encourage competition then independent inquiries have determined that it does not achieve this aim. Increasing quotas under the Sites Act, therefore, is unlikely to be anti-competitive (and in some markets is likely to be pro-competitive) and entirely consistent with the competition purposes of the Act.

(6) The Petroleum Retail Marketing Sites Amendment Regulations 1999 (No.2) were introduced to ensure that BP Australia, in seeking to restructure its site operating arrangements as existing franchises expired, was not disadvantaged by the delay in consideration of the Petroleum Retail Legislation Repeal Bill 1998. The increase in site quota was intended as a transitional arrangement with expiry on 30 September 1999. The Petroleum Retail Marketing Sites Amendment Regulations 1999 (No.2) were disallowed by the Senate on 23 September 1999, such that BP Australia's quota reverted to 87 sites.