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Tuesday, 1 February 1994
Page: 63


Senator SHERRY (Parliamentary Secretary to the Minister for Primary Industries and Energy) (8.11 p.m.) —I wish to address two essential elements in this debate. I may get time to deal with some other matters but, firstly, I want to deal with the allegation that is continually made by the opposition that we gave a commitment not to increase taxes at the last election. We did not give that commitment, and I will go into that in some detail in a moment. Secondly, I intend to deal with some of the technical issues associated with the phasing out of leaded petrol which, unfortunately, were not mentioned by Senator Vanstone and certainly are not mentioned very much in this debate at all. I wish to deal with the problems that oil refineries have in moving from producing leaded petrol to unleaded petrol. I may get time to deal with some other issues.


Senator Vanstone —Why don't you talk about low income earners—that is the substance of the debate?


Senator SHERRY —I may get time to deal with that as well, but the technical problem with the phasing out of leaded petrol by oil refineries is critical and central to the problem we face. It is one of the critical reasons why we have to have a differential in petrol pricing, but I will get to that in a moment.

  I thought that, after Christmas and New Year, Senator Vanstone and those opposite might have switched their focus a little more from the well-worn record that the opposition was robbed at the last election—`We were robbed'; we heard that last year—to what their policies will be to try to win the next election and perhaps deal with the leadership disharmony. But they continue to say, `We were robbed', and the crocodile tears continue to flow.


Senator Vanstone —I didn't say we were robbed; I said you were deceitful.


Senator SHERRY —In the election campaign, we pointed out to the Australian people the consequences of a GST. Those opposite got it wrong. They should not blame us; they should blame themselves.


Senator Vanstone —What about no new taxes?


Senator SHERRY —I have a copy of what the then Treasurer said to the Australian people in the election. The government said that over the last decade Commonwealth taxation had averaged approximately 24 per cent of gross domestic product, that under a progressive taxation system the average tax rate rises as incomes rise and that, in a recession as people's incomes are reduced, the average tax rate falls. There is a cyclical effect on government revenues from taxes on consumer durables. I include tax from petrol in that. The government's commitment not to increase the overall taxation burden did not mean it would hold tax revenues at their recession-induced lows. It did not mean that. Over the four years of the government's medium-term fiscal strategy, the Commonwealth's total taxation revenues will remain below 24 per cent of gross domestic product. I can remember not just the then Treasurer's commitment on this issue but that of the Prime Minister (Mr Keating) that we would not be increasing the total level of taxation revenues in this country above 24 per cent of gross domestic product.


Senator Short —You are deliberately deceiving.


Senator SHERRY —It was quite simply explained in the election. Those opposite are the ones who have been engaged in a deceptive argument to try to reconcile the fact that they lost the last election. That is their problem. The Leader of the Government in the Senate (Senator Gareth Evans) explained very clearly during question time today that the government has redistributed taxation revenue, that we have honoured our commitment about the tax cuts and that the real level of government revenue from petrol taxes is in fact lower today than it was 10 years ago.


Senator Vanstone —You are not wimping out, are you?


Senator SHERRY —I suggest to Senator Vanstone that she go back and check what was said in the election rather than continue to perpetuate her interpretation of it. The second issue I want to deal with is the technical issue of the conversion of refineries from leaded petrol to unleaded petrol.

  Senator Vanstone interjecting


Senator SHERRY —I suggest that Senator Vanstone listen to this because she put forward the notion. She agreed with the need to reduce lead in the atmosphere, and she agreed with the notion of reducing lead in petrol. I think everyone in this chamber agrees with that premise. If we agree with that premise, we then have to look at the practical difficulties of moving from refineries that refine leaded petrol to refineries that refine and produce unleaded petrol.

  The oil refineries approached the government. They said publicly at the round table discussion that was convened by Ros Kelly that they needed a smooth phase-out period, that they needed a predictable phase-out period, because they needed to make investments in the range of $300 million to $500 million to update their oil refineries to cope with producing unleaded petrol. They argued for that very strongly. They wanted a smooth phase-out period. They argued that it is a matter of fact that, because of the recession—I am sure the opposition will argue and make comments about why we have a recession—the conversion of automobiles from leaded to unleaded was occurring too slowly and that, because of that, there were two options. They would be involved in $300 million to $500 million of investment that they should not otherwise incur or, alternatively, we would have to start importing petroleum products that contained no lead at a cost of $200 million or $300 million a year.

  It was because of that technical reason that the government had to look at ways to ensure that the anticipated time frame for phasing out cars using leaded petrol to unleaded petrol had to be maintained. There is really only one way to do that: create a financial incentive for the users of leaded vehicles to move to unleaded vehicles and to look at ways of pre-1986 vehicles using unleaded petrol. We had to maintain that timetable.

  The experience overseas has shown that we can encourage this conversion rate in a fairly predictable way by having a price differential on petrol. That is the reason why we have adopted this policy—a policy that we all agree with. We all agree that it is desirable, and we all agreed some years ago to phase lead out of petrol because of the well-known health risks. The problem is that it has not been occurring quickly enough.

  This technical issue that was advanced by the oil industry is unfortunately not an issue that I have seen debated very much in the media or, indeed, by those opposite. It is a very important issue; it is a very critical issue. One interesting fact is that the usage of petroleum products is about 55 per cent leaded and 45 per cent unleaded. As the years go by, the proportion of leaded product used will decline quite dramatically. The interesting thing is that, if consumers were paying the real cost of producing leaded petrol, they would in fact be paying much more than the differential that is proposed by the government. I do not have the figures in front of me, but the differential would in fact become 10c to 15c to 20c because, as time goes on and the amount of leaded petrol produced by refineries becomes less and less, it becomes much more expensive to produce. So we are entering a period where, if there was not a cross-subsidy of leaded petroleum users, the costs of leaded petrol in fact will skyrocket beyond much more than the government is proposing.

  Senator Loosley interjecting—


Senator SHERRY —Senator Loosley quite rightly interjects. If the opposition agrees with the removal of lead from petrol, that oil refineries should not be required to spend another $300 million to $500 million in extra investment, and that we should not be importing petrol products that contain lead, what is its policy? Unfortunately, the opposition does not have one. It has pursued a continual negative approach since the election. The 1993-94 budget has passed through both houses of parliament, despite the opposition's useless efforts to undermine the government's strategy to repair the budget balance over the last four years. The opposition is incapable of putting anything forward in a positive way. This government, more than any other, has adopted policies to assist low income earners and to ensure sustainable economic growth. The opposition chooses to ignore these measures in this debate.

  For example, we have enhanced health and child care arrangements and increased support for the unemployed. We made a number of positive measures in the last budget. This motion is a desperate attempt by a desperate opposition, led by a very desperate opposition leader who will not be here much longer—


Senator Panizza —Ha, ha!


Senator SHERRY —Senator, do not `ha, ha'. We know what is going on. We can see it everywhere in the corridors of this place. Those opposite are gathered in little conclaves discussing the future of John Hewson.


Senator Loosley —What are the Western Australians doing?


Senator SHERRY —Exactly. What is the future of the Western Australian Liberals and their support of John Hewson? That is another issue, and I will not digress. But we have a desperate opposition with no policies. What positive policies have come from the opposition since the election? None. In fact, those opposite boast about the fact that they do not need policies. They certainly will not get positive policies under the current Leader of the Opposition. It will be interesting to see whether they try in his place a well-known senator who is shortly to depart this place.

  The fact is that the increases in excise on leaded petrol will promote not just the health of Australian citizens but will also promote greater fuel conservation. Government policies are also aimed at encouraging the use of unleaded petrol by having that higher excise on leaded petrol. The excise differential between leaded and unleaded petrol is a response to the serious community health issue—the problem of leaded petrol—that we are all agreed upon.


Senator Vanstone —What we don't agree on is whether you are being deceitful.


Senator SHERRY —We are not deceitful, as I have already explained. There are literally hundreds of thousands of Australians, particularly young people, who are at risk of suffering brain damage—I know that those opposite have some problems in this area as well—through high levels of lead in their blood. There is no doubt about this. There is clear medical evidence on the issue. Lead emissions from motor vehicles contribute 90 per cent of the airborne lead in Australian cities.

  We have had an argument from the opposition today, as well as on previous occasions, that it is a problem in the cities but not in the country; and that the government is discriminating against country people. But how can we have a differential in pricing between the cities and the country because if those opposite propose that seriously then there has to be a border where there is a different charge on one side for city dwellers and a different charge for rural dwellers on the other side—

  Opposition senators interjecting


Senator SHERRY —I would be interested to see whether those opposite can advance that as a practical government policy because there would be people going across the dividing line to buy petrol at a cheaper rate. It is just a ridiculous, unrealistic proposition.


Senator Loosley —Are they going back to Fightback?


Senator SHERRY —Even more absurd than Fightback, Senator Loosley, is the fact that we could have, as a deliberate government policy, a differential in pricing. Certainly there will be a market rate that is different around Australia. I certainly know about that in Tasmania. If honourable senators think petrol is expensive on the mainland then they should come to Tasmania and have a look at the price: it is the most expensive petrol in Australia. But the government cannot have a different policy on pricing between country and city dwellers. It cannot do that constitutionally, let alone practically.

  The evidence from overseas suggests that a price differential will speed up the phase out of leaded petrol considerably. That is the basis of the government's policy. The cost of this measure is a small price to pay for the welfare of Australians. Taxes are not imposed simply to raise revenue. There are other reasons for having taxation, aside from the obvious need to raise government revenue. There are tax measures that can be introduced that have a positive environmental effect and positive health considerations. This is one of those issues where the health consideration outweighs other considerations. There is the need to ensure that we have a consistent phase out of leaded petrol because of the investment requests and considerations of the oil companies. I do not always subscribe to the requests of the oil companies, but I do not want to see the oil companies having to be involved in unnecessarily changing over their machinery used in oil production at a cost of $300 million to $500 million. It would be an absurd policy to impose on the oil refineries.

  They are my contributions to this debate. The motion should be rejected. It is based on this continual false assertion that we gave an undertaking that there would be no increase in taxes at the last election. We did not give that undertaking. The assertion is based on the false assumption that all taxation is purely a matter of raising government revenue; that is not the case here. It is based on sound, medical and health grounds which we all agree on, except that the opposition, as usual, does not have a positive suggestion but purely a negative approach. They say that they agree that we have to get rid of lead from petrol. I pose the question through you, Mr Deputy President: how would those opposite go about it? They have no practical alternative or option. That is why they deserve to be in opposition, and that is why they will stay there.