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Wednesday, 10 May 2000
Page: 16225

Mr O'KEEFE (6:52 PM) —I would like to follow on from those very formidable comments by the member for Capricornia who has hit the issues right on the button concerning this legislation. It has been something that the government have had to cobble together to deal with the fact that once petrol prices get to over 77c per litre their formula does not work any longer in country areas. The government have been faced with a number of pressure groups and a number of issues in the lead-up to the introduction of its GST and they have been forced to bring in 700 amendments to the legislation that was tabled originally. There have been all sorts of pressure groups that the Treasurer has had to say no to, or chosen to say no to, and some that he has acceded to. But on the country petrol prices issue they could not get there fast enough with this piece of legislation.

We have to ask why this is. In what has been mooted for the last five years in the lead-up—in fact, going right back to Fightback and the whole intellectual debate that has gone on about the introduction of a GST in whatever form—there was always a reference to the huge offset for country areas: there would be a reduction in fuel prices that would lead to a lowering of costs for people in country areas. That has been one of the prime tenets of the whole argument for the last decade. They were going to deliver a reduction in fuel costs that, in turn, would lead to a reduction in general costs in country areas.

Last night in the budget speech there was one reference by the Treasurer to the reduction in diesel fuel prices that will occur as part of the budget measures. He did mention this legislation as a top-up to try and make sure that country petrol prices do not go up any further. But how can it be that for a decade you present as a major tenet of your rationale this major reduction in fuel prices, leading to a major reduction in costs, and then by the time you get to the crunch point you do not want to talk about it any more? When the Minister for Transport and Regional Services was at the box answering a question today in question time, the day after the budget, there was not a word of this claim about the reduction in transport costs and, therefore, a reduction in living costs in country areas. Why not? The answer, as I heard the member for Calare saying earlier in this debate, is that they are starting to become very careful about making this claim because they now understand that it has been a hoax. At all stages it has been a hoax.

The member for Capricornia spoke about country petrol prices. In the early stages of this debate I think they actually believed, because they were so fervent about it and it was such a common line across the whole backbench as well as the frontbench, that a reduction in transport costs would lead to a reduction in costs. If you take anywhere in Victoria, which is my state, as an example, where country petrol prices range from 3c and 4c a litre through to 10c and 15c a litre above those in Melbourne—the bigger states, the more remote states like Queensland, Western Australia and the Northern Territory, would virtually regard anywhere in Victoria as a metropolitan area—the differential can get as high as 15c, even in Victoria. But at no point in Victoria is the transport component of that litre of fuel any more than 1¼c per litre. In most places the transport component is less than 1c per litre. If, as they have continually promised, transport costs come down, even if it were by 20 per cent, that amounts to 0.2 of 1c per litre in Victoria. That is why the claim has suddenly disappeared—because the closer we get to the crunch point, the closer it becomes clear, firstly, that there is not going to be a reduction in transport costs and, secondly, whatever there is, it is certainly not going to flow on in prices to anybody in country areas. So the claim suddenly disappears from the rhetoric. It will not be allowed to disappear from the rhetoric.

Let me give another example, just in case I have not put this clearly enough. I remember in the lead-up to the last election the then minister for transport, Mr Vaile, going around country Australia in particular saying that, as part of the package, diesel fuel for the transport industry would decrease by something in the order of 20c per litre. Because these trucks use about one litre per kilometre in terms of fuel efficiency, that meant a saving in the operating costs of such a truck—a normal semitrailer, double bogey triaxial—of about 20c a kilometre.

That sounds fantastic—until you actually apply it to the consumer product. I did a little sum based on a semitrailer picking up a load of tinned tomatoes from the SPC plant at Shepparton in the Goulburn Valley and carting it to the supermarket warehouses at Dandenong and Clayton—a trip of about 200 kilometres. At 20c a kilometre, that amounts to a saving in the fuel bill of $40. To the transport operator I am sure that is significant, and it is significant until you ask what is on the truck. On the truck is 20 tonnes of tinned tomatoes. If they are 500 gram cans, which is a bit bigger than the normal can on the supermarket shelf, that is 40,000 tins. And 40,000 tins spread across $40 is one-tenth of 1c per can of tomatoes. That is the transport saving.

There are two bunnies at either end of the spectrum. At one end is the farmer who supplied the tomatoes. Is there any farmer—and they have all been fed this super-huge hoax—who seriously thinks he or she is going to get one-tenth of 1c per can more for the tomatoes that went in the tin? At the other end of the spectrum is the consumer. Is there any consumer who seriously thinks that the supermarket will be passing on a saving of one-tenth of 1c per can? The group that believes that they will receive more for their goods because in-built taxes will be reduced or because transport costs will be reduced—the farmers—and the group that believes that prices will go down because transport costs will go down—the consumers—have been fed a huge hoax. It is not being mentioned in this parliament any more because the ministers on the frontbench have come to understand that it is not going to be delivered and it cannot be delivered. Instead, here we are with a $500 million piece of legislation, trying to patch up one little end of it in the extreme.

Let me give another example of the fuel debate. I am particularly sensitive to this because my electorate starts on the outskirts of Melbourne and goes out about 100 kilometres in a north and west direction. A lot of people living in towns in my electorate commute to the city, and a lot of them have converted to LPG. LPG is the big time bomb waiting to go off for this government. People are complaining—quite justly—that LPG prices have gone up even more than petrol prices, and I will put forward a view as to why I think this has happened and why LPG prices are going to change even more relative to petrol.

To understand this, you have to understand the regime that has operated in Australia in relation to LPG for nearly 20 years and has never actually been legislated. An understanding was reached with the industry when LPG was first introduced, and that was: provided the industry did not charge at the retail point any more than half the price of petrol, the government would not put excise on LPG. This occurred prior to the Labor government, which was elected in 1983, but Labor continued the understanding. We wanted to encourage an alternative fuel source and we wanted to wean ourselves off importing oil to the extent we could, so LPG was given huge encouragement. That encouragement was that LPG would not have federal petrol tax slapped on it. The price of LPG has always been half or less than half of the price of petrol because (a) there were no petrol taxes on it, and (b) it was generally recovered in the mining and refining process at the same time as petrol. The infrastructure was already there, so it was possible to bring out LPG at the prices we have been enjoying it and the retailer and the industry could still make a nice profit out of it.

Now the deal has been broken, because for the first time petrol tax is going on LPG, in the form of the GST. That means that the petrol companies no longer feel bound by the longstanding rule of thumb that LPG would not be more than half the price of petrol. That is why, in my electorate today, LPG is 45c a litre while petrol is at about 82c. So LPG is more than half the price of petrol for the first time. Because the government has broken the deal with the industry that has been in place for 20 years, the industry now feels that it is no holds barred—and they have actually gone up over the halfway point already. What does that mean? It means the petrol companies are either absorbing the GST prior to its introduction and they are going to leave the relativity at about where it is now—in which case they are in exactly the same situation as Mr Fels says Video Ezy is—or they are going to add a bit more on when the GST comes in.

Whatever way it comes about, though, the differential between LPG and petrol has been closed. Let me tell you this: people who have spent $1,500 converting their car to LPG are very price sensitive. They are much more price sensitive than the normal motorist, and we all know how price sensitive the normal motorist is. These people are now demanding an explanation: `How come when petrol went up and gas went up, gas went up more; how come petrol has come back a bit but gas has stayed up; how come the gap is closing?' For a government that claims to be interested in regional people and regional electorates, I cannot believe that they have been so dumb about LPG. When they go scurrying back into the party room next week and start asking a few of the members about this, they are going to find out that LPG is all over their electorates and that people are just starting to wake up and are going to ask why. So we are going to have to concoct a tale, but we are going to have to bring in an amendment to this piece of legislation to solve the LPG problem as well.

I finish where I began by saying that for a whole decade of canvassing and promoting this great policy of John Howard, the GST—a policy that he first toyed with as Treasurer in the seventies—it was never possible to get it through the backbenchers representing country areas or even the ministers representing country areas without the promise that there would be very large reductions in the price of fuel and that that would mean that the cost of living in country areas would go down. It was never possible to get it through. That was the line Tim Fischer ran when he first came out with it. Now, of course, nobody is game to say it. They have run a million miles an hour from it, because it has now become very evident that it just is not there and that it was always a hoax—although I am not claiming that government members ran around participating in a hoax. I think they actually believed it. I think they actually believed their own rhetoric that the reason country prices are higher than city prices is the transport costs.

Of course, as I said much earlier, when you examine the transport cost in a particular item, it is actually quite negligible. When you talk about a negligible reduction to a negligible item, you suddenly see standing up on the floor of the federal parliament those who have been promoting all these supposed benefits suddenly bringing in legislation to start plugging the holes. I have just thrown on the table another little hole that is particularly relevant to country travellers because they are the ones who have the LPG in their cars. You had better go and fix that one as well. We are happy to give passage to this legislation. All it does is verify what we have already been saying. But it does not, as the member for Calare and as my colleague the member for Capricornia said earlier in this debate, do a thing to move away from that snowball that is looming and rolling down the hill towards the government, which is the claim that was made about the reduction in prices in country towns coming from a reduction in fuel prices. It is just looming there as: `Why didn't it happen, why did you tell us it would and what are you going to do about it now?' It will be an interesting six months.