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Wednesday, 10 October 1984
Page: 1544


Senator McINTOSH —Has the attention of the Minister for Resources and Energy been drawn to a recent statement by the Opposition spokesman on trade in which he suggested that deregulating the oil market in Australia would lead to a 10 per cent reduction in retail petrol prices? Does the Government share this view?


Senator WALSH —The Government certainly does not endorse the statement which was put out by the shadow Minister for Trade-I think that is his title-better known as the Deputy Leader of the National Party of Australia who, incidentally, was the member of parliament who announced his intention to retire from the Ministry in the previous Government but managed to come back in opposition as Deputy Leader of the National Party. I would have thought it says something about the dearth of talent available in the National Party that somebody who, on his own admission, regarded himself as finished as a politician has now been resurrected as Deputy Leader of the National Party.

One could forgive him for that if it were not for the fact that he has a gaggle of factual errors in the Press statement he issued. He claimed that substantial savings of up to 10 per cent in retail fuel prices could be achieved if the oil market were deregulated. That is approximately 5c a litre, which translates into about $7.50 per barrel. Implicit in that is an assertion that the import parity price at which Australian crude is priced to Australian refiners is $7 to $8 a barrel above the price at which comparable crudes could be imported. That is sheer nonsense. Because of transport costs in both directions, spot market sales and so on there could be some difference in the price, but it certainly would be less than half that magnitude. He also said in his Press statement that the import parity pricing was extended to all oil in 1977 during a period of world shortage. There are two factual errors in that. It was extended in 1978, not 1977. Since that was done by a government of which he was a member one would have thought that he would have had some knowledge of that. Secondly, there was no period of shortage in 1978 when that import parity pricing policy was adopted by the previous Government. The shortage appeared some 12 months or so after that, following the political turmoil in Iran.

The basis of the statement of the Deputy Leader of the National Party is that Australian commodities should be priced at export parity levels. In a completely free market one would expect the price of Australian crude to settle somewhere between the export parity price and the import parity price. The difference between the export parity price of Australian crude oil and the administered import parity price is, as I indicated, of the order of $2 to $3 a barrel at present, due primarily to transport costs. So to get any significant reduction at all in oil prices, Mr Hunt is endorsing the principle of export parity prices .

I am amazed, to say the least, that the Deputy Leader of the National Party should argue for export parity pricing for Australian-produced commodities. There would be a 75 per cent reduction in the price of sugar if on the domestic market it were to be priced at the export parity price instead of its present administered price. The price of dairy produce would fall by something like 50 per cent if it too were to be priced at export parity prices instead of administered prices. The price of eggs would fall by something like 75 per cent also if the same principle were to be adopted for them. In addition, there would be a fall of the order of 20 per cent in the price of Australian wheat sold for human consumption. So I must say that I am amazed to find the Deputy Leader of the National Party, a party which purports to represent agricultural interests, advocating a policy based on the pricing of Australian-produced commodities at export parity levels. I would expect that the agricultural constituency, which he purports to represent, ought fairly quickly to send him a rocket dissociating itself at least from the principle of export parity pricing which he is expounding and endorsing. Quite clearly, if that were to be adopted it would have a devastating effect on a number of major agricultural industries.