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Tuesday, 1 February 1994
Page: 66

Senator WOODLEY (8.27 p.m.) —In addressing the matter of public importance tonight, I want to deal with three issues: firstly, the environmental aspects of this price difference between leaded and unleaded petrol; secondly, to look at the reasons which lie behind today's petrol price increase and to ask of both the government and the opposition what contribution they have made to that increase; and, thirdly, to suggest ways in which the impact—I do want Senator Sherry to hear this—on low income earners may be overcome particularly in relation to that differential between city and country drivers. The case for a price differential, as a number of honourable senators have mentioned, favouring unleaded petrol is beyond doubt on public health grounds. Study after study has attested to the fact that lead emissions from petrol are directly related to neurological problems and to lowered IQ in children.

  In Australia, children living in the inner city areas are most at risk. Children growing up in Sydney have been the worst affected because of the high population densities in the inner city of Sydney and because the lead limit in Sydney is higher than the lead limit in Melbourne, the other city of comparable size. Last year RMIT published a study into lead exposure in Australia. It said that it was easy to be complacent about lead exposure when it was thought that the adverse health effects were associated with a blood level of 25 micrograms per decilitre of blood or higher. If we take that measure, only about 2 per cent of Australian children have levels that high. However, the report goes on to say that the situation is now different.

  Last year the National Health and Medical Research Council adopted a specific goal, to achieve for all Australians a blood level of below 10 micrograms per decilitre. The National Health and Medical Research Council stated that there is a particular urgency in reaching this level in children aged 1 to 4 years because of the adverse effects of lead exposure on intellectual development.

  The RMIT report found that a staggering 44 per cent of Australian children aged between nought and four years have blood lead levels above 10 micrograms. This is appalling. Nearly half of Australian children under the age of four years have blood lead levels above the NHMRC goal. The report also said that adverse health effects occur at very low levels, so that even a level of 10 micrograms may not be safe. As the lowering of lead in petrol has been strongly linked overseas to a reduction in blood lead levels, the report called for a lowering of the lead limit in petrol to 0.15 grams per litre. For some time many European countries have set a limit of 0.15 grams per litre of lead.

  The report also called for more accurate costing on lowering the lead limit to 0.026 grams per litre. This is the lead limit in petrol in the United States where it was adopted as far back as 1986. The report said that even if the costs of achieving this United States lead level are high in Australia, it may be considered justifiable on social justice or human rights grounds. After all, we are talking about the right of 44 per cent of Australian children living now to develop their full human and intellectual potential.

  The Australian Democrats have pushed hard for the US standard to be adopted in Australia. However, last year the government negotiated for a lead limit of only 0.2 grams per litre. This still leaves many children at risk. Unfortunately, the introduction of a price differential was very badly handled by the government. What should have been a positive public health measure ended up as, and being seen as, a revenue grab by the government.

  Today, a price differential of 1c per litre has been introduced. Every study indicates, and the industry knows, that this is simply not enough to encourage a switch by consumers to unleaded petrol. The differential should have been more distinct and should have been introduced in one go in order to cause the maximum effect on consumer behaviour. The incremental nature of the price rise means that consumers are less likely to notice the rise and therefore less likely to look for alternatives.

  A well-funded and effective community education campaign will be needed to ensure that people make the necessary move to unleaded petrol, and thereby lower the risk of lead poisoning to Australia's young children. In the past few days the Minister for the Environment, Sport and Territories, Mrs Kelly, has launched such a campaign.

  Before I leave my concern with environmental health, I also point out that the Australian Democrats were able to negotiate with the government late last year for a lead abatement package, a subsidy for the production of ethanol, so that an ethanol and petroleum mix—known popularly as gasohol—could be introduced so that people using leaded petrol could switch to unleaded petrol and thus achieve the goal that we all have.

  At the moment Australia is facing a very attractive proposition in the record wheat harvest. However, the problem is what to do with our wheat, particularly that which we cannot sell. I compliment those who run the refinery at Manildra which has been able to increase production and use some of that wheat harvest to produce ethanol, which is non-pollutant and avoids the use of leaded petrol. That also creates jobs in value adding to primary industry, which is an objective of all of us.

  I want now to address the reasons for the impact of today's petrol price increase. One central factor should not be forgotten. The petrol tax increase would not have been necessary if the Liberal-National Party coalition had not supported the government in introducing cuts in income tax. There is no doubt that the petrol tax rises were introduced because of the fiscal necessity to pay for the income tax cuts. The coalition must bear its share of the blame for increased petrol prices currently being borne by all Australians, including low income earners and particularly those in country areas.

  The Industry Commission is currently conducting an inquiry on petrol pricing mechanisms and is due to report in July this year. The Democrats will certainly be pushing for a significant reduction in this unfair burden on rural people. Having said this, however, let us not forget the role of the government in foisting this tax on low income earners. Combining this with the government's record on further reducing the adequacy of our social welfare safety net, it seems that the Australian Labor Party has little interest in assisting those at the bottom of the heap.

  We need to address the very real and quite unfair differences in petrol prices between the country and the city. This would tie in with another need to encourage development in regional areas and reduce the infrastructure burden in the capital cities.

  I suggest three ways of looking at this differential: first, improved subsidising of petrol freight costs; secondly, compensation of costs through tax and the social security system; and, thirdly, direct petrol pricing matters.

  Let me address the petroleum product freight subsidisation scheme which has been around in a number of forms since 1965. It subsidises the freight cost of petrol to remote areas. Currently it only subsidises those freight costs which are greater than 13.5c per litre, which helps virtually no-one. The PSA figures reveal that about 200 locations in Australia attract the subsidy. It currently costs the government some $3 million a year. At one stage in 1981-82 this differential was only 0.44c per litre and the cost that year was $147.5 million. If 5c were lopped off the differential, paralleling the 5c per litre unleaded petrol excise increase, a rough estimate is that the cost to the budget would be in the order of $20 million to $25 million.

  A second method is an increase in the zone rebate for income tax and remote area allowance of DSS recipients. Zone rebates are currently $57, $338 and $1,173, depending on the degree of remoteness, plus a greater amount for other rebates, such as dependent spouse, et cetera. These amounts were increased by 25 per cent in the 1992-93 budget. In 1990-91, 364,000 taxpayers were eligible for one of these rebates.

  Remote area allowance uses the same zones, with the exception that the people in zone B are not eligible, and is $15 each a fortnight for couples or $17.50 for individuals, with an extra $7 per child. Currently 44,000 people are in receipt of this. Very roughly, the areas covered are most of Western Australia and South Australia; all of the Northern Territory; parts of Queensland north of Mackay and west of Emerald; only the far west of New South Wales and Tasmania; and none of Victoria or the ACT. Zone B people are not eligible for remote area allowance.

  Most of the people in New South Wales and Queensland, except for Cloncurry-Mt Isa and north of Mossman, would not be eligible for the remote area allowance. Rough costings provided by the library indicate that each 10 per cent increase in the base zone rebates would cost around $10 million. Increasing the remote area allowance by $1 a fortnight would cost $1 million to $2 million.

  The third area in which we would see some possibility is in the pricing mechanisms and controls. With the Industry Commission inquiry under way it might be difficult to get any agreement to change anything before its report comes down. However, we should still put forward our position. I refer to the area of wholesale petrol prices. There are varying views about the role that current wholesale pricing mechanisms have in keeping rural petrol costs too high and city prices too low. Under the Trade Practices Act oil companies cannot set retail prices at service stations. However, the area pricing mechanism used at refineries now sets different wholesale prices for dealers, depending upon the region in which they operate.

  Lately, we have received requests for rural organisations to support terminal gate pricing. Basically, this would mean a universal price for each customer buying from a specific terminal. Some people suggest that this should be extended to inland storage depots rather than simply coastal refineries. The oil companies do not like terminal gate pricing, and they say it would not be possible to maintain the integrity of the price. I am afraid that the same could be said about the current system. Surely no-one would want to say that the integrity of the price is being maintained at the current time. (Time expired)