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Wednesday, 10 May 2000
Page: 16150


Mr NAIRN (12:00 PM) —These three bills—the Fuel Sales Grants Bill 2000, the Product Grants and Benefits Administration Bill 2000 and the Fuel Sales Grants (Consequential Amendments) Bill 2000—are good news for rural and regional Australia, and certainly good news for my electorate of Eden-Monaro. They deliver on the promise that was always made, that fuel prices in country areas would not change as a result of the removal of excise and the application of a GST. These bills with a grants system totally deliver on that promise.

A lot has been said about fuel prices over the last couple of years. When looking at these bills we need to look at some of the history of fuel prices to put into context some of the things that have been said on both sides of the House. Since I was elected in 1996, I have kept copies of petrol receipts when I have bought fuel around my electorate. I have a large and diverse rural and regional seat. Petrol is something that country people rely upon. They do not have public transport—there is no public transport through my electorate—so if people want to go anywhere they have to get in their cars. So I think petrol prices are much more relevant to people in my electorate than they are to lots of people in city areas.

The difference between city and rural prices has certainly been prominent in people's minds. When we came into government we put in place a number of things to address the whole issue of petrol pricing. The first thing we did was get rid of the Laidley agreement. The Laidley agreement was basically a deal between the former Labor government and their union mates to guarantee jobs for union workers. It was part of the `no ticket, no job' philosophy that they had right across the board. You had to be a particular union member to be able to drive trucks with fuel and deliver throughout Australia. That was the first thing we did: we got rid of the Laidley agreement so that there was not that sort of monopoly as far as the transport of fuel was concerned. The second thing we did was create some transparency at the wholesale sale price end of it. All sorts of funny deals were going on, so we opened up the pricing mechanisms to get better competition.

It is interesting to look at the price of fuel over the last few years around some of the towns in my electorate as we implemented those changes and as other things happened in the fuel cycles. Shortly after I was elected, in Cooma, for instance, we were paying around 80c a litre for unleaded fuel. I have a graph here showing my purchases of fuel in Cooma going back to 1996 and coming right up to today. All of a sudden there was quite a marked drop in the price of fuel. In Cooma, it was when Woolworths came in. So it shows that if you can get competition you can drop the price of fuel. Fuel went down, in fact almost to 70c a litre. It was hovering around 80c; it went down to around 70c. Then it went up a little bit and, over the next couple of years, basically it stayed reasonably the same with a slight drop as these reforms came in. So, over the last few years, until about April or May last year, the price of fuel in Cooma was running at around 74c or 75c—a good 5c a litre cheaper than it had been back in 1996. From about April last year on, the price of fuel has gone up because the price of crude oil has gone from about $US11 a barrel to about $US30 a barrel. And that is reflected in the price. The rule of thumb is that $US1 a barrel equates to about 1c a litre. Crude went up by about $US20 a barrel, so the price of fuel went up by about 20c a litre to over 90c a litre in the last year.

Similar patterns have shown up in places like Bega. Back in 1996 we were paying 82c or 83c a litre. We got it down with those reforms to about 77c a litre in the early part of last year. Once again, that was a fall of a good 5c or 6c a litre. Once again, when crude oil went up the price of fuel went up. Batemans Bay has been similar. It was around 82c a litre; it went down to about 74c— probably a little bit more of a reduction there—for that period last year. Once again, after crude oil went up the price went up. In Queanbeyan, near the ACT, similarly the price of fuel back in 1996 was 74c or 75c a litre. It went down to as low as 68c a litre after many of the reforms were put in place, but now it is back up again. Contrary to what lots of people feel, there was actually quite a drop in the price of fuel over the last few years until the price of crude oil took off. That has happened over the last 12 months. Opposition members have stood up here and spoken, but you cannot really tell whether or not they support these bills. They virtually speak against them, and then at the end they say, `We actually do support them.'


Mr Slipper —No policy base.


Mr NAIRN —No policy at all—they just swap and change whichever way the wind is blowing. It fits with what has happened over a number of years as far as they are concerned. There has been a lot of rhetoric about fuel prices, but, during their time in government, excise went from about 6c a litre to 36c a litre. There were huge increases—total tax takes. Some of the big tax takes were in fact during their last five years in office when they were having higher and higher budget deficits. Even though they were increasing taxes, they were pulling even more money out of people's pockets. They were spending it much faster than they could get it.

The history of fuel prices over the last couple of years has seen some action towards reform. We could go further if we could get some support from the Labor Party in the Senate for further legislation to improve competition in the retail sector. This grants system is certainly there to make sure that, with the introduction of the GST, the price of fuel will not go up. We have heard ramblings from the ALP that this is something we had to do to fix up a problem. We are honouring a promise: we said the price of fuel would not go up. That is what is happening. We are taking off excise and applying the GST. The rebate will apply throughout rural and regional areas to ensure that there is no need for the price to go up.

I think the opposition spokesperson said that there is no guarantee that this will be passed on. Their comment about the GST generally on this aspect is, `Dreadful business'—as far as they are concerned, anybody in business is dreadful—`will not pass these savings on.' What absolute rubbish. They have no idea how the marketplace works. I do not think a single one of them on the other side has ever worked in the marketplace. You would have to ask the question: what is stopping these dreadful businesses from putting up their prices today? You do not have to wait for a GST to put up your prices. Anyone in business can walk out and stick their prices up tomorrow. What is stopping them from doing it? Competition—the marketplace—is why they are not doing it. The argument from the opposition is that retailers will not pass it on. I hope that all the small retailers in the fuel business out there hear that the opposition reckon that the poor old business owner in the service station is not going to pass on this rebate. That is what the opposition are saying. They are saying that small business owners running service stations are not going to pass on the benefits to the consumers.

That is exactly what the opposition spokesperson said earlier on in the debate. The argument is such nonsense. They have made the same argument about prices on items generally after the GST. They believe in a tax system where you totally hide the wholesale sales tax at all sorts of different rates and nobody knows how much is in there at all. Nobody knows what is happening in that respect, whereas with the GST you know that there is that 10 per cent. Those opposite want to maintain that tax system along with their mates from Swaziland and Botswana—although Botswana is going to change. They want that type of system rather than a much more open system. The argument that price cuts and reductions in tax will not be passed on to the consumer is an absolute nonsense, because there is nothing stopping businesses today, irrespective of the taxes, putting prices up. The thing that stops them is competition. That is what you have to ensure occurs.

In addition to this particular grants system, the great benefit that will occur in the bush is in relation to diesel fuel, particularly with transport. We know that the cost of many things in rural and regional areas is significantly more than in urban areas because of the transport costs. Transport costs are built into just about everything that you buy in rural and regional areas. Reducing the cost of transport, where we are dropping the excise on diesel from 45c a litre to 20c a litre, will have a huge impact on the cost of transportation and, therefore, on the cost of goods.

I spoke at a breakfast here this morning about the budget, and I was intrigued when one of the other speakers—the Leader of the Opposition in the ACT Legislative Assembly, Jon Stanhope—was complaining that the ACT will not get the benefit of the diesel rebate. In fact, they will get it for trucks over 20 tonnes but they will not get it for trucks between four and 24 tonnes operating within the ACT. He did not understand that you could still operate from Canberra; that what counts is where you do your deliveries; that it has nothing to do with where you are located. Anyway, they never do read these things. He was complaining about it and I thought, `Why are you complaining about it? You should go and talk to your federal Labor mates who actually voted against it.' They are the ones who voted against it and prevented the ACT from being involved. I found it quite staggering that he was complaining that the ACT was not getting that benefit. When you add those sorts of benefits, plus the fact that anybody running a business will have the full GST aspect of their fuel refunded—which once again brings down further costs not only in rural and regional Australia but also in urban Australia—in rural and regional Australia, it is all a very positive aspect.

One other point I would like to make before I finish is in relation to the previous speaker, the member for Lowe. He was complaining about the aspect of putting the GST on fuel. The Labor Party were always opposed to it because it could have this extra effect of different fuel prices. We are overcoming that with this legislation. I found that interesting coming from a party that has defended and wants to keep a sales tax system that has worked very much against rural and regional Australia with respect to freight. And if they were honest with themselves, of course, they would go out and say that they will bring it back.

I notice the member for the Northern Territory here today. I remember that when I first went to the Northern Territory I had to buy a part for my Land Rover. The part had a price and then applied to that was wholesale sales tax—at the time I think it was between 20 and 30 per cent; the rates had changed; they went up quite a bit under the previous Labor government—and then they applied a percentage for freight. So we were actually paying freight on wholesale sales tax.

That was the system that they defended, and defend to this day. That was probably one of the greatest added influences on the cost of things in rural and regional Australia, adding a percentage for freight over and above a very high wholesale sales tax system. That is where you got a huge disparity between the cost of an item bought in Adelaide or Sydney or somewhere, compared with a rural or remote area. For the opposition to stand up and complain about the GST applying to fuel is hypocrisy to the nth degree, as usual. All in all, these grant bills ensure that the price of fuel will not increase as a result of taking off excise and applying a GST. It is a fair system, and it is what we always said we would do. Combined with the other benefits of the huge reduction in diesel, it will be of great benefit to businesses and any consumers living and working throughout my electorate and in rural and regional Australia in general.