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Issues relating to the Fuel and Energy Industry

CHAIR —I invite you to make a brief opening statement and then the committee will ask you some questions.

Mr Taskunas —Briefly, about the organisation that I am representing today, the RACT is Tasmania’s largest membership based organisation. We have 173,000 Tasmanians, who are members of the RACT, out of a population of just over 500,000. There is more than likely more than one but at least one car in the majority of Tasmanian homes, so the private motor vehicle is essential to the lifestyles of Tasmanian families, the connectivity of our decentralised communities and to the sustainability of the wider Tasmanian economy and community in general.

It is highlighted by the fact that the penetration of registered vehicles in Tasmania is 799 per 1,000 residents which is substantially higher than the Australian average which is 719 per 1,000 residents. The importance of the family car and the work car to Tasmanians is reinforced by this fact and also by the lack of adequate public transport in many areas of Tasmania. For example, people who are familiar with Melbourne will know they have bus, tram and train services. In Tasmania we only have one of those three, so the private motor vehicle is really important.

The club’s interest in fuel—the cost of petrol, diesel and LPG for its motorist members and the security of fuel issues—is based on the interest of our members in terms of their use of their vehicles and obviously associated issues around that. So my evidence is going to be somewhat limited and perhaps less technical than some other witnesses in that respect, but there are obviously issues.

To give you some context, the club is a member of the Australian Automobile Association, as are all the state based and territory based motoring organisations in Australia. The AAA, in total, represents just over six million motorist members in Australia. As a member of the Australian Automobile Association, the RACT and its sister clubs—for example, RACV and NRMA—send a delegate to a meeting known as the public policy forum, or PPF, which happens three times a year in different parts of Australia. The PPF will be meeting here in Tasmania this year. The public policy forum discusses issues of national policy importance for the clubs, which go to things like alternative fuels, fuel supplies, alternative vehicles et cetera. I want to confine the comments I make to a discussion paper which is before the clubs through the public policy forum which is discussing our position on alternative fuels, alternative vehicles and associated issues.

I might contextualise that a little bit, and then let you go for it. The Australian Automobile Association relies on regular a two-yearly set of qualitative and quantitative research which is carried out by ANOP every couple of years to listen to members and find out what motorists are actually thinking about these sorts of issues. One of the contexts for us is a question which has been asked over the last three research projects about realistic solutions to reduce the impact of cars on the environment and associated fuel issues. The key finding in our research is that all motorists are now suggesting that the development of alternative cars is the solution to fuel dependency and reducing the environmental impacts of motor vehicles as opposed to perhaps alternative fuels or a mix of incentives, taxation or whatever. It is quite stark. In 2003 13 per cent of respondents thought alternative cars were the answer. That went up to 27 per cent in 2005 and 43 per cent in 2007. We are respecting our next set of findings relatively soon. We expect that alternative cars—

Senator BUSHBY —When you say a ‘alternative cars’, you mean hybrids or electric—

Mr Taskunas —Yes, as opposed to some of the other answers—such as improved public transport, alternative fuels, improving vehicle emissions or driving less—which were seen as realistic solutions to reducing the impact of cars on the environment and the dependence on oil based fuels.

One of the premises that we can start from is that the clubs, the Senate’s own reporting in 2006 and the most recent report from the CSIRO all agree that there is obviously a dependence on oil, it is a scarce and reducing commodity and we need to look at alternatives. So that is an area which the motoring organisations, though their policy people, are engaging with very strongly. We have been developing a range of positions. The NRMA, our sister club, endorsed quite recently a report called the Jamison Group report which has quite a significant roadmap for governments and regulators to look at. So it is an area of policy interest for us.

CHAIR —Thank you very much, Mr Taskunas; is that all for your opening statement?

Mr Taskunas —Yes.

CHAIR —Then we will go to questions.

Senator BUSHBY —Thank you, Mr Taskunas, for coming along today. It is good to hear from the RACT. I am interested in your comments about Tasmania’s dependence on the private motor vehicle. You highlighted the fact that we do not have a public transport system that is capable of moving, effectively, as high a proportion of the population as those in other major cities do. What has been the impact on our public transport network of Tasmania’s dispersed and relatively low population?

Mr Taskunas —I think it is a real issue. It is certainly a real issue for our members, especially older drivers in Tasmania. A lot of older drivers in Tasmania have conditions affecting them which are specific to Tasmania, one of which is that, in some less populated areas, there are fewer alternatives for them to use to get around. That is why their private motor vehicles are so important to them as they age in their communities. They are less confident with using public transport, not because it makes them uncomfortable but because it is physically not as comfortable for them or not as reliable as their private motor vehicles. That is the case not just here in Tasmania but across Australia. It is another area that the clubs are very much interested in. However, what we also find—and it was encouraging to see the Tasmanian government do something about this in the last state budget—is that it has forced communities to develop alternative strategies. Community transport strategies are one way of overcoming this and there have been, as I said, some resources put into that in the last state budget. But the RACT believes that older drivers should be allowed to drive for as long as is reasonably and safely possible. So one of the things that we want to see is that regulatory impacts on our older members are minimised to ensure that they are actually able to do that. Public transport in metro areas is adequate in some respects but, in a lot of popular, regional and rural areas in Tasmania—areas where a lot of our older members of the community want to age; they want to live there—public transport is nonexistent.

Senator BUSHBY —But the issue of mobility is not just an issue for older people—

Mr Taskunas —No, absolutely.

Senator BUSHBY —though I admit that there are specific needs that must be catered for in that respect. Tasmania’s is a very dispersed population and Tasmania is also fairly thinly populated compared to Melbourne, Sydney and so on. What is the viability of public transport? I guess that is really the question I am asking. We have heard in recent times in Tasmania that there have been a lot of changes to the way that the Metro bus system works—

Mr Taskunas —That is right.

Senator BUSHBY —and that the cost of tickets has gone up considerably because the system is losing a lot of money. So you have to even question the viability of buses as a form of public transport. Community transport strategies, as you mentioned, can work very well at the edges, but they are not going to provide the baseload ability to move the bulk of people around to where they need to be.

Mr Taskunas —That is right.

Senator BUSHBY —Do you think that public transport is a viable option to significantly replace the private use of motor vehicles in a place like Tasmania?

Mr Taskunas —The RACT has consistently shown its concern over a number of years on that very point. We are not quite sure that services are adequate to replace the private motor vehicle. That is why we lobby government very strongly on these sorts of issues, because we do believe that, for Tasmanians at least, the private motor vehicle remains the most reliable and the best form of transport for Tasmanians. The issue about backbone services in Tasmania is really important, and we want to see more investment in that area. It is not our bread and butter, if you like, in terms of what we talk about, but it must be complementary to the systems that we have in place, and a vibrant public transport system must be an element of that.

Senator BUSHBY —As I understand it, your evidence is that the use of private motor vehicles for Tasmanians is important and will continue to be an important factor.

Mr Taskunas —Absolutely.

Senator BUSHBY —From the survey that you have done, and which I commend RATC for doing, you suggest that looking forward the answer is not in public transport, although there are ways of improving that, but in looking at alternative vehicles. Presumably that is in view of the impact on the environment but also the issue of peak oil, which we are going to hear about again later today. Oil is not going to be available forever in the quantities and at the price that it currently is. So, in terms of moving Tasmanians around, we need to look to the future and how we actually address that, and your research is showing alternative vehicles are the way to go on that.

Mr Taskunas —That is right. This is national research which the AAA commissions every two years. It is state by state, and we are using figures which are based on Tasmania respondents. Having said that, the reliance on liquid fuels for vehicles and for getting around—mobility in general—is one of the significant issues in this. Also, the existing infrastructure in Tasmania supports motor vehicles. As I said, we do not have trams or passenger trains. We have limited public transport systems and we have private motor vehicles. The existing infrastructure that we have certainly, as you look forward, has to support vehicles which are using either liquid fuels or a mix of liquid and alternative energy sources such as hybrid based or electric based. But, in terms of the mode of transport, it is going to be on roads because of the existing infrastructure that we have.

Senator BUSHBY —With the individual sitting in there driving themselves and their friends and families.

Mr Taskunas —Exactly, or in other community based strategies, as we were saying. For Tasmania, the road ahead is very much that—it is a road.

Senator BUSHBY —That is looking at the road ahead. At present, however, the vast majority of the Tasmanian motor vehicle fleet is petrol powered. Do you have any comments to make on the issues of security of supply for motorists in terms of petrol and the cost of petrol in Tasmania?

Mr Taskunas —On the security part of the question, my colleague Mr Moody was going to be here but, unfortunately for me but fortunately for the members, is out doing free community winter safety checks for Tasmanians, so he is doing a great service for Tasmanians. There is a focus on security of supplies here in Tasmania right now. Recently the government department of infrastructure reconvened a fuel security and associated issues committee, and the RACT has a voice on that in Mr Moody. So security is currently in the frame.

Senator BUSHBY —What do you see as the challenges for Tasmania motorists?

Mr Taskunas —For a start, we do not have a refinery in Tasmania, so we are reliant on everything coming from the mainland. The issues in terms of fuel supplies have been very few and far between for Tasmanians. We certainly have not seen some of the shortages that other states and territories have in the past. So it is a relatively stable and reliable supply in Tasmania, and the pricing in Tasmania reflects that. It is very stable, and from time to time it is quite flat.

Senator BUSHBY —How does it compare with mainland prices?

Mr Taskunas —On average it is more expensive here in Tasmania than it is anywhere else, except in the Northern Territory.

Senator BUSHBY —Is that accounted for by freight?

Mr Taskunas —Some of it is accounted for by freight. From time to time the RACT speaks publicly about concerns about the differential in pricing between Tasmania and, say, Adelaide or Melbourne or somewhere where we can do some decent averages. We are getting better information on prices in Tasmania.

Senator BUSHBY —Do you have access to that information? Do you regularly compare between Tasmanian prices and prices in—

Mr Taskunas —Yes, absolutely. We have dedicated resources within the RACT that are monitoring and analysing and commenting on this. But, more specifically, for Tasmanian consumers the RACT has run a price-monitoring service on a weekly basis for a long time. With the assistance of the Tasmanian government, we are extending that to a five day per week price-monitoring system as we speak. Towards the end of this month—

Senator BUSHBY —Is that web based?

Mr Taskunas —It is web based.

Senator BUSHBY —Do you have any records of the numbers of hits that you get?

Mr Taskunas —We have had significant hits. We have had up to 20,000 views per month of our fuel page over the last four to five years that it has been running.

Senator BUSHBY —Is that a consistent level?

Mr Taskunas —It has been consistently high for a long period of time, and we expect that with five day per week information we will probably get even higher views. The club tries to provide as much information as it can to Tasmanian consumers about fuel prices.

I will just focus very quickly on diesel prices and LPG prices in Tasmania and make a comment about LPG availability. One of the issues in Tasmania for us and our members is that diesel prices tend to be a lot higher than they are on the mainland, and this has been a trend for quite some time in Tasmania. We get a lot of feedback from our members, particularly members who travel interstate and see—

Senator BUSHBY —Presumably, once again that price differential is not accounted for entirely by freight costs?

Mr Taskunas —No, it is not.

Senator BUSHBY —To what do you attribute the higher diesel prices and also the remainder of the higher petrol prices that you referred to?

Mr Taskunas —There are a number of issues. One would be margin, to be frank.

Senator BUSHBY —Is there a lack of competition down here—they can get away with it?

Mr Taskunas —Yes, I think that that is part of it. I am not sure that there is a profiteering angle to it. There have also been lots of periods of time when margins to the retailers have been very narrow and they have been competing—

Senator BUSHBY —When you say margins, are you talking at retail level or wholesale level?

Mr Taskunas —I am talking from wholesale to retail at this point—from distributor to retail.

Senator BUSHBY —There are plenty of service stations, so presumably there is plenty of competition.

Mr Taskunas —That is right. There have been a number of different supply issues in terms of price where they have been making a loss and at other times they recover those losses. That is how the market works in Tasmania. Our analysis of prices over a long period of time shows that. What we do not have operating in Tasmania, which perhaps places like Melbourne and Sydney do have, is price cycling, where you have a cheaper Tuesday or a cheaper Wednesday and the majority of fuel is sold on those days in those markets and at the higher prices there is less fuel sold. It is a lot flatter here in Tasmania. The RACT has absolutely no argument with price cycling or anything like that happening here in Tasmania. We merely comment that it does not happen.

On diesel, the higher prices cause a lot of negative feedback from our members when they compare them to diesel prices on the mainland. Again, that might be a market based thing from the supplier.

Senator BUSHBY —How much higher are they?

Mr Taskunas —They can be 5c or 10c more expensive at the moment.

Senator BUSHBY —That is diesel?

Mr Taskunas —That is diesel. Over on the mainland it is probably 5c or 10c lower for retail. LPG is also an area, but again there is a smaller number of outlets and a smaller market for those products, which is making the price a bit higher.

Senator BUSHBY —So scale could be part of it.

Mr Taskunas —Scale is the issue. Scale is the issue in diesel as well, but that is starting to change. There are more diesel vehicles coming onto the market and there are a lot more people driving on diesel. A lot of our members are buying diesel for environmental benefits and for fuel economy benefits. So we are seeing that change.

There is plenty of LPG as a fuel supply in the near or short term. The clubs have discussed at length about what we can do to make it more available. In Tasmania we only have a few outlets selling LPG in comparison to petrol or diesel. There may be a role there for government to provide some sort of incentive or to organise some sort of market assistance to make more outlets sell LPG to lower the price to customers, which again would encourage people in Tasmania to use LPG. There is plenty of supply of LPG in the near term in comparison to some other oil based fuels.

Senator BUSHBY —I am conscious that we have a number of other senators who may want to ask you questions. I will move on. We have seen the recent collapse of the Tasmanian rail network and that, as a result, has led to an increase in the number of trucks on the road. What does the RACT believe would be the most efficient way of transporting goods or even people? Do you believe there has been enough done to improve efficiencies in Tasmania’s transport network overall including rail?

Mr Taskunas —For a number of years the RACT has argued that there needs to be a dual system of rail and road.

Senator BUSHBY —This is in terms of freight.

Mr Taskunas —In terms of freight. It has obviously ongoing concerns about the increased potential for conflict between passenger vehicles and freight vehicles on road. For senators from other states, log trucks are the big bogeyman in terms of the heavy transport sector in Tasmania. There is a lot more than just log trucks on the roads in Tasmania. A lot of containerised freight is taken on highways on which a lot of our members are driving in their light passenger motor vehicles. The potential for inevitable conflict between the smaller vehicles and heavy vehicles is the basis for the club’s continued support of freight rail in Tasmania.

Senator BUSHBY —It is a safety issue as well.

Mr Taskunas —It is a safety issue for us. The 2007 AusLink corridor study said there was about 19 million tonnes of freight going on road on the AusLink highways in Tasmania and about 2.8 million tonnes of rail freight. If we did not have rail, that would all go on to road. In the recent breakdown where the north-south rail line was not working, we saw additional trucks going onto the roads. We also unfortunately had a big weather pattern at the time, we had the most rain we have had for a long time in Tasmania, and immediately we saw some surface problems, especially in areas where roadworks were being conducted. It is an issue for us from the safety perspective and it is an issue from a perspective of wear and tear on the roads.

Senator HUTCHINS —I remind Mr Taskunas and also Senator Bushby that there is a current enquiry into public transport being conducted by the Senate. You might well take the opportunity to make a submission there on behalf of the RACT. You said 799 per 1,000 Tasmanians have a motor vehicle and Australia’s average is 719. That reflects a lot of reasons. You said in the surveys that the AAA had done that most of the respondents wanted alternative cars. Did they break that down state by state?

Mr Taskunas —Absolutely. You will find that if you went to the NRMA in your home state, they would have some New South Wales based figures, which we could not extrapolate out of a national survey. I certainly have a set of figures for Tasmania?

Senator HUTCHINS —Is it similar?

Mr Taskunas —In fact, it is quite similar. As a general comment on that, the Tasmanian results reflect a higher environmental awareness consciousness than some of the other states and territories. For  those of us who live and work in Tasmania, that would come as no surprise because we do have higher general awareness of those sorts of issues in the state. The numbers for Tasmania in terms of the impact of cars on the environment or environmental concerns about cars were slightly higher than they were for the national average as well.

Senator HUTCHINS —You are the first motoring body that has appeared before the inquiry on energy and fuel security, so I will put this question to you. We have had submissions in relation to biofuels and mandating of ethanol and all that. Does RACT have a view about mandating ethanol and fuel?

Mr Taskunas —I thought you might ask me this question, so I actually brought something in writing on that. As a state based organisation we actually have a policy on the books which opposes mandating the use of ethanol. As some context—and my colleague from the TACC would attest to this—there is a lower amount of ethanol blended fuel sold in Tasmania. That is a supply issue. There are just not many outlets selling it in Tasmania. United are the only people who sell it. The majors do not yet sell an ethanol blend in Tasmania. That is probably a market effect in terms of supply in Tasmania. As a general rule the AAA leaves it to the state bodies to have their own positions on issues like ethanol mandating. At our last policy meeting, the general feeling was that we oppose ethanol mandating. Obviously there are other market based issues like in Queensland where it is a very significant industry as opposed to here which affect what is going on up there with the government seeking out biofuels.

Senator HUTCHINS —I know what your members save but what does the professional body think about biofuels rather than alternative cars as a greater need for supply and security in the future?

Mr Taskunas —I think it is fair to say that the RACT’s position is that there is no one fuel or technology that is going to be the solution. There are issues with ethanol production and the use of it in terms of efficiencies, life cycle, emissions and those sorts of things. But there are also some potential advantages to ethanol production here in Tasmania based on the mix of industries here. This is something that we have done some work on in the past. My predecessor did a fair bit of work on this. Obviously technologies like cellulose and wood product and wood waste—the organic production side of things—have some possibilities in terms of the mix of industries in Tasmania. For example, for forestry products and that side of things there may well be competitive advantages for the mix of industries in Tasmania in terms of ethanol production in the future. However, again, there are risks and benefits around the production of it. There emission issues as well. You have to ask, when you compare it to other things, how it stacks up in a carbon constraint environment.

Senator HUTCHINS —As I said, you are the first motoring body we have had appear, so you got the question.

Mr Taskunas —Thanks, Senator!

Senator BUSHBY —I have one final question. Essentially following on from Senator Hutchins’ question, how does the RACT view Tasmania’s natural gas resource as an alternative fuel? We have this pipeline pumping. We heard from the TCCI that it is a resource that could last 150 years. I note what you said about alternative fuels as opposed to alternative cars, but we have this resource and we could at least be using it for running trucks.

Mr Taskunas —Absolutely. Recently I attended the ATSE—Academy of Technological Sciences and Engineering—conference at the RACV in Melbourne, which was all about external sources of fuels, and fuel security, biofuels et cetera. In terms of natural gas, the RACT has previously put into its submissions to the Tasmanian state government budget submission process a position that supports government incentives or support for LNG or CNG, whatever the technology, in Tasmania in terms of a network of refuelling systems for heavy transport. There are some very good examples of this in mainland Australia—Wesfarmers et cetera. There are a lot of transport fleets running this sort of technology. There is some already happening here in Tasmania. The RACT has supported it in the past, and we continue to see that a mix of solutions, especially ones which are suited to certain sectors, should be incentivised by government.

Senator BUSHBY —Okay, thank you.

CHAIR —Mr Taskunas, thank you so much for your contribution.

Mr Taskunas —Thank you.

[11.31 am]