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Wednesday, 10 May 2000
Page: 16148


Mr MURPHY (11:48 AM) —After listening to the member for McEwen say what wonderful things the government is doing for people living in the bush, I would like to mention—as many members know—that I was born and raised in the bush in a little country town called Dunedoo and I know only too well how people feel in the bush. What the member for McEwen failed to tell the House this morning was that the fuel sales grants scheme represents a vindication of the position argued by the Labor Party prior to the last federal election, namely, that including petrol in the GST will widen the city-country petrol price differential. It ought to be recorded in the House that these were the very things that we were saying before the last federal election. I will get to the member for Hunter's bill later in this debate.

I start by saying that I support the amendment moved by the member for Wills earlier this morning, and I support the Fuel Sales Grants Bill 2000, the Fuel Sales Grants (Consequential Amendments) Bill 2000 and the Product Grants and Benefits Administration Bill 2000 because they will provide compensation to people living in the bush, who have to pay a very high, unfair price for fuel, and any relief that is given to people in the bush from the crushing effects of the GST has to be a very good thing. At this stage of the debate, I would also like to make the point that we know that, when the GST comes in, inflation will rise, that petrol excise is linked to the CPI and that therefore petrol excise will increase and the GST component will increase on top of this. Also, by July 2001, people will be paying another $600 million in petrol excise. This money will not be going into the pockets of the motorists; it will be going straight into the pockets of the oil companies. No doubt the shareholders are rubbing their hands with glee because the profits of the oil companies will continue to soar.

These bills operate as a package. As we know, they provide a tiered system of grants for petrol sales to consumers in non-metropolitan areas, with a higher rate of grant to be provided for sales in remote areas. They standardise the administrative framework for grants and benefits administered by the Commissioner of Taxation and ensure that the grants are covered under the Taxation Administration Act 1953 like other taxes in such areas as prosecutions and offences, collection and recovery, and so on. The scheme is estimated to cost about $500 million over four years from 2000-01, and this represents a further cost to the budget that was not factored into the ANTS package; I want to make that quite clear. I have to say that the way we are debating this bill this morning is a farce, much like the Treasurer's so-called surplus announced in the budget last night in this House. It is simply a political measure designed to alleviate some political stress caused by the usual set of misleading statements by the government. In 1998, prior to the election, the government promised:

The price of petrol at the bowser will not go up. ... The excise will come down by the amount that's equivalent to the GST and the price will not go up 1 cent at the bowser.

The government thought that the excise reduction was meant to achieve this result, but it will not.

It took the government months to accept what the opposition has been saying: that the excise reduction would not result in no price increase at the bowser. It was a simple argument. If you take 7c off the price of petrol and then add the 10 per cent, you can only achieve a zero price effect if the price of petrol starts at 77c or lower. This was obviously not going to work. To fix the broken promise, we have a half-baked measure, and this half-baked measure has even been dressed up as a positive by the government. In the budget, the government sold this measure as the second biggest benefit to the country. That is a lie. It is not an extra benefit. On 7 September 1998, before he had dreamed up this scheme, the Treasurer said:

Petrol and diesel excise will be reduced so that after the application of GST the pump price remains the same for consumers.

This is clearly a lie now. Excise has been reduced, but it is not enough, is it? It is a scheme to deliver on a promise that the government could not deliver on. We must be clear on this. As I said, the package of bills—the Fuel Sales Grants Bill 2000, the Fuel Sales Grants (Consequential Amendments) Bill 2000 and the Product Grants and Benefits Administration Bill 2000—are designed to lower the price of petrol. The grants scheme will introduce a minimum of a two-tiered system to ensure that the price of petrol does not increase. The first tier is to apply to sales in non-metropolitan areas and the second tier to remote areas. The Treasurer said that there may well be a third tier. I suppose they are keeping that in reserve as a GST implementation emergency fund.

The bill is long on promise but short on details. The bill does not contain details of what areas are in and what areas are out, nor the amount of the rebate on each tier or how the rebate is calculated. We have to rely upon easily changed regulations for the detail. So this bill is basically a blank cheque for fulfilling a promise. It allows the government continual attempts to shut the gate after the horse has bolted. So far the blank cheque is worth $500 million over four years, but we will have to rely upon further press releases from the Treasurer to see whether that changes. The opposition will not be opposing the legislation because we believe that the compensation that exists for the introduction of the GST is not enough. It will not compensate for the price increases that will flow as a result of the GST.

The issue of fuel is always a contentious one and I can understand why. People in non-metropolitan areas complain that the prices are higher than they should be in the country and the city people complain that there appears to be collusion in the marketplace as the prices at different stations follow each other and regularly appear to increase on the eve of long weekends. Cynicism abounds in the marketplace. It is not clear that the bill will achieve its aim either. Instead of fixing the problems in the oil industry that lead to price differential between country and city, the Prime Minister has decided to provide a subsidy to the major oil companies. This rebate is paid to the service station owner once he has bought the petrol. The major oil companies are going to realise that the service station owner has just got his petrol a cent or two lower than he used to. What is to stop the oil companies simply increasing the base price of petrol by a cent a litre? Nothing. They have the private health companies to follow as an example.

The government must get serious about petrol prices and do something positive about the regulation of the industry. Labor wants to do something positive to try and fix the problems at the source. A while ago in this debate the shadow minister for small business, Joel Fitzgibbon, pointed that out in relation to the private member's bill that he is trying to introduce into this House but which is being thwarted by the government. He wants to address the lack of wholesale competition in the industry by giving service station franchisees the legislatively guaranteed right to shop around for up to 50 per cent of their petrol. What is wrong with that? The measure will increase competition at the wholesale sales level, curtail the influence the oil majors have over retail prices, and produce lower retail prices for consumers. These days both leaded and unleaded fuels are very much homogenous products and independent resellers already retail fuels from various sources. The bill will also provide the ACCC with enforcement powers, thus giving resellers the protection they require from retribution.

The government's 1998 reforms have been a failure. This rebate scheme is an admission of that fact by the government. In 1998, upon announcing the deregulation of the industry, the Treasurer said:

This wholesale shake up of the petroleum retail and marketing sector is designed to give better prices for motorists, and, in particular, to give a better deal to rural and country motorists.

Did it give a better deal to country motorists? No, it did not. Time and again the Treasurer has announced a better deal on petrol prices, yet they keep rising. The Treasurer is a serial offender when it comes to petrol, constantly giving false hope. Labor's plan will address many of the fundamental problems by allowing genuine competition at the wholesale sales level.

This bill also represents a portion of the unexpected pay-offs for the GST that were not anticipated in the original ANTS package. It is part of the reason why the budget is in such a shocking state. The $2.8 billion cash surplus for 2000-01 becomes a $2.1 billion deficit as soon as all the budget diddles are moved. The surpluses this year and next are constructed largely out of the sale of spectrum. The Treasurer has now admitted that that figure is $2.6 billion out of the $2.8 billion surplus. This is the biggest fiddle of them all—a $2.6 billion gift from the heavens. The Treasurer and the Prime Minister are now running around telling everyone that this is not a sale of the asset—that this is not the same as the asset sales that were included by previous Labor governments in the bottom line. But that is a lie. Spectrum is a capital asset according to the Treasurer's own head of budget policy.

The Treasurer also argued from opposition that the proceeds of asset sales should not be used to prop up the budget bottom line. A business could not get away with it, but the Treasurer thinks he should be allowed to. In his 1995 National Press Club budget speech the Treasurer promised that his charter of budget honesty would require that the structural deficit be shown in the budget. He did it in his first budget but it is not there any more. With Access Economics stating that the structural deficit is of the order of $5.6 billion, is it any wonder the Treasurer now refuses to show it in the budget papers. This is double standards of the highest degree, just like the fuel grants legislation.

I wanted to make those points in light of the budget that was handed down in this chamber last night because they are relevant to this debate. As I said at the outset, we support these bills because they will give relief to people living in remote areas of Australia in particular. They have been crucified with very high levels of fuel prices for far too long. Notwithstanding what has been said by the government this morning in the debate, it was the Labor Party prior to the last election that foreshadowed the problems arising from the GST in this area. That needs to be said again and again. To the extent that these bills will provide relief to people in rural Australia, make it fairer for them and give them some relief from the GST, which is to come into effect on 1 July, they are something that we on this side of the House must support.