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Community Affairs Legislation Committee
25/07/2012

CLIFTON, Mr Benjamin (Ben), Business Manager, Indervon Pty Ltd

COFFEY, Mr Gerard, Coordinator, Ngaanyatjarra Council

CHAIR: Welcome.

Mr Clifton : Caltex Indervon is a privately owned Caltex franchise in Alice Springs.

Mr Coffey : It is owned by the Ngaanyatjarra Council, of which I am the CEO.

CHAIR: Mr Coffey, you have come to see us before?

Mr Coffey : No—my namesake.

CHAIR: Your namesake, but from the council?

Mr Coffey : No, he is with FaHCSIA, I think.

CHAIR: I just recognise you. Make a note! Thank you for making yourself available. Information on parliamentary privilege and the protection of witnesses is available. You can get that at any time. Would either of you or both of you like to make some opening comments? Then we will go to questions.

Mr Clifton : I was called on at fairly short notice. I am basically here at your request to answer any of your questions about low-aromatic fuel. Regarding a bit of background on Indervon, we obviously distribute a fair amount of Opal throughout the Northern Territory and WA. That is basically the context of what we do. We supply not only our own organisation but also numerous other Aboriginal organisations throughout the NT and WA.

CHAIR: Mr Coffey, is there anything you want to add?

Mr Coffey : All I would add is that the Ngaanyatjarra communities, 20-odd years ago, invested in Caltex in Indervon. It was previously known as Ampol, I think. There were issues with substance abuse in the Western Australian communities that we represent—petrol sniffing back in the red petrol days. So it has been a big thing for the Ngaanyatjarra Council over the years to do whatever they could in their own backyard to try and reduce petrol sniffing. In 2006, when Comgas—I think that is what it was called originally—came out, within two weeks we had it in every community on Ngaanyatjarra lands. The business is based here in Alice Springs, and it is a business. Ben has been very enthusiastic about trying to get Opal into as many of the communities as we can in this region, because Central Australia is such a big part of the country, and he is doing a very good job at it.

CHAIR: Just for the committee's clarification, could you tell me which part of the world your council comes from and which communities you cover?

Mr Coffey : Just across the border—Docker River is close to the border—and west of that down to Warburton, right down to a place called Cosmo, just this side of Laverton, and then up as far as Kiwirrkurra. They are all Western Australian communities that form part of the Ngaanyatjarra Council. Our administration building is based here in Alice Springs and the health service is based here in Alice Springs as well.

It is a fair distance but geographically, when you are talking that sort of distance, I think here has been as good as anywhere.

CHAIR: Thank you for that. It makes it easier for Senator Siewert and Senator Smith. They are Western Australians and it has cleared it up for them.

Senator SIEWERT: How many outlets are now taking Opal? What are the barriers to people taking it up?

Mr Clifton : With regard to outlets that we distribute it through—we obviously have it in our own service station here in Alice Springs—the rest of the service stations or community stores that we deliver to are all owned by each individual community or organisation or Aboriginal Corporation. It could be up to 12 or 15 outlets at the moment. We are trying to grow that at places that obviously cannot afford the fuel infrastructure to put these installations in, especially when most of the negotiations have been at store level. It goes to a store committee and they vote on that. With regard to taking it up, the most recent ones have basically asked for it: can you get Opal fuel and can we do something? One of the feel-good stories last year was about the Punmu community, which is just west of the Telfer mine, where we got an installation.

CHAIR: Help me with my geography.

Mr Clifton : About 700 kays off Port Hedland, inland. We are currently trying to negotiate with other communities around that area. I guess it all comes down to when they can get petrol off the west coast. We have to transport it from where we get it at the moment, which is all out of Adelaide. The stores have to be commercially viable as well—some have voted for it, some have voted against it—so cost has been a bit of a wavering factor as well.

Senator SIEWERT: Even with the subsidy they get from the Commonwealth?

Mr Clifton : The subsidy is basically to cover the distances that we travel. To travel from Adelaide to Kunmu, it would be around a 6,000 kilometre return trip. When you are only getting 12c a kilometre to get it from Alice Springs it does not cover it. For us to get diesel delivered out of Port Hedland it costs us around 12c and that is only 700 or 800 kilometres. We obviously have to factor that in. The subsidies are handy in trying to offset the cost but, when you are trying to travel that distance—it is basically a blanket cost for an entire region—it is a little hard to gauge. If you are only going to go to Docker River where we get the same subsidy—and if you look at Docker River and then look at some of the other places it does not—

Senator SIEWERT: What if your supply base comes in at Darwin—

Mr Clifton : I do not think it will make any difference. It will for us, coming down into the Territory but in WA it is a bit harder because we still have to bring the fuel down to Alice and then shoot out on the—

CHAIR: Yes.

Mr Clifton : I have made suggestions to the people who I deal with that a facility be installed at Port Hedland and that we get involved in that on the ground level to say: we can transport it from Darwin when it comes online via Kununurra and Broome. We could maybe become involved in the actual fuel infrastructure—the supplying of these tanks and distributing it out from there not just to our communities but to the whole lot. I understand it is available at Kalgoorlie but even then it is a long way distance wise.

Senator SIEWERT: How have those discussions with the department gone?

Mr Clifton : They have not gone anywhere.

Senator SIEWERT: There has been a push in Western Australia—on and off—for action from Port Hedland.

Mr Clifton : Yes.

Senator SIEWERT: What are some of the other issues that you are experiencing with the rollout?

Mr Clifton : Not having the product available in Darwin means that it is a very hard push to go north. Once it comes online there, you might get some conversion there. The main consensus has been around the initial product. When BP first released it—from the reading that I have done—there was a lot of bad publicity and press around the product. I understand that BP have changed the specification of the product, and, to be honest, in the last 18 months I have not had any comments from anybody or claims against our businesses in regard to the product. It was around the time of the initial rollout that the marketing of Opal was tainted.

CHAIR: Did you read any of those responses to those claims at the time? In terms of the information this committee has had, whilst there were numerous claims about the original rollout, it was very hard to find anything that was substantiated.

Mr Clifton : I would probably agree with you. There probably has not been anything that has been documented. I think it has purely been bad press—as in, word of mouth.

CHAIR: I think so too.

Mr Clifton : Just because it has happened to somebody and they do not actually follow it through. I think that is what has happened. When the product was rolled out, vehicles were quite old around that period; whereas, now, as with anything, people have moved on and bought newer models or else cars that have not been affected by the product. So it is hard. Caltex Australia do not make it. BP make the product. We just have to onsell their product with their brand name. I see Shell have changed the name completely. They do not market it as Opal. They call it 'Shell low-aromatic fuel'.

Senator SIEWERT: Which is why the bill is called the Low Aromatic Fuel Bill.

CHAIR: It is not very catchy.

Mr Clifton : From my limited knowledge of marketing, I think it would have been done to escape some of the bad press. On their bowsers, they are putting 'unleaded 91', without the marketing saying 'Opal fuel here'; because, if someone turns up from interstate, they can think it is just normal petrol. In an engineering sense and in its practicality in motor vehicles, it is; it is 91 octane.

Mr Coffey : I would like to make one comment. As I mentioned earlier, the Ngaanyatjarra communities put it in every single bowser and every single community—I think that was in the second week of January 2006—and we have never had one issue. I was here in Alice Springs at the time, and on the front page of the local paper it said 'Do not use this product'—I am not going to mention names—by mechanics in town. That scared people.

I put it in my vehicle—this is back in 06. I am the coordinator on the Ngaanyatjarra council—that is 1,500 to 1,800 people—and no-one has ever mentioned to me, 'Don't bring that stuff out here because it's bad for our cars.' When I have asked people, they have not been able to give me any real answer about what the problem is. It was just out there. The bad press was there.

CHAIR: Yes. And it has lingered.

Mr Coffey : Yes.

Senator SIEWERT: In some of the public comments, there were reports yesterday that Caltex was not supporting Opal, or implying that. It sounds like there was a bit of misreporting going on?

Mr Coffey : Absolutely. Yes. My board is an Aboriginal owned business and, even though it is not Ngaanyatjarra people in here, they recognise there are issues in this part of the country as well and they were very insistent that we have Opal out of our bowsers here in Alice Springs.

Mr Clifton : We have just rolled it out, a month ago, in a service station in Tennant Creek. No other supplier is even interested in doing that. So the fact that we have Opal in Tennant Creek is a good thing. I think we have had it there for nearly two months now. We do the odd spot-sale north. We did a sale to Renner Springs.

So we are getting little bites, but to say we are not supporting it is—

CHAIR: A bit of verballing, I think.

Mr Clifton : Yes. We represent our fuel company, and there are other companies out there that obviously want to capitalise on slander and so on. At the end of the day, I have tried to promote the ethics behind it—what the Ngaanyatjarra group does and what the Indervon arm of that group does.

Senator SIEWERT: I am going to go back to this, because I have a bit of a bee in my bonnet about boosting up supply. It is going to help the north, but something in the west would help. Without verballing you, is that right?

Mr Clifton : I would like to know when it is going to come on in Darwin, because no-one can tell me—not even Caltex Australia can confirm that it is coming on. It is rumoured and I have been told it is happening, but as—

Senator SIEWERT: Contracts have now been signed. I am pretty certain they said that at estimates.

CHAIR: That is my understanding.

Senator SIEWERT: The contracts have now been signed, I think.

Mr Clifton : Okay. It is good to get a good lead-in so we can start to try and market it and push it into different communities as we head further north.

CHAIR: We will get the information we can find back to you tomorrow.

Mr Clifton : That would be great. I ask these questions all the time at a base level through our contacts in the petrol-sniffing department and a lot of those questions just never get answered. Geographically, Port Hedland is probably a good fit. I guess it all depends on what sort of push. It is always about funding, I guess. Fuel infrastructure is not cheap. All the stuff that we have done has been off our own bat. We have asked before about some partial funding or even transporting the tanks out, but we have never had anything, not even from the communities, because they just cannot afford it. With the mining boom that is going on at the moment and the amount of infrastructure that is carried on, it would be a good time to put something in place. I am not sure of the other problem areas. We are in negotiation at the moment about putting a line out at the Tanami, where Rabbit Flat used to be. That was always an advocate of not selling it.

CHAIR: It was very famous.

Mr Clifton : And it is. If you look it up on Google it is there. We have been working with the CLC to get the installation in there and that has been good. It has taken a long time. Basically the TOs of Lajamanu and Balgo will be travelling along these roads, not so much from a commercial aspect. The fact is that tourism is pretty much non-existent on that road due to the closure of the roadhouse. One of the big pushes has been that this installation will have Opal and they have all been supportive of that. We are trying to do something on the Queensland border as well.

CHAIR: How far north? You know the problem areas we have been talking about, going through to Lake Nash. One of the issues has been that in that part of the world people are travelling through from Mount Isa.

Mr Clifton : We are in discussion with the Warte Aboriginal store, which is at Lake Nash. An initial proposal has been agreed by the committee. I have to go out there shortly and will basically do a presentation to the community about having an Opal installation at their store. There currently is an installation there by another competitor and they do not do it. From my point of view, if I can have a bit of a snipe, we push it in these remote areas and all we offer is Opal, along with, obviously, diesel.

Lake Nash is one, we have started conversations with Bonya as well. We are being as active as possible. But it is all off our own bat. I guess that probably comes from me personally driving it. I do not think any other fuel companies are really that interested in pushing it. It is low volume, they are not turning over millions and millions of litres out there, and the initial cost to get it up and running is quite substantial. Who I work for and who we present is where we go, that is where we are heading.

Senator SMITH: Mr Clifton: much has been said about the 10 or 12 outlets that are not prepared to provide Opal living in and around the area. Without naming any names, what is their motivation? Is it philosophical, is it commercial: what is driving it?

Mr Clifton : I am happy to say that none of them are ours. A lot of them have been in business for a very long time. We are talking about guys who have been there for probably 25 years. As ever, people are reluctant to change. Some of the places I am not going to mention we have approached and trying to push it. A lot of their thoughts have been about the bad press. I do not think they would ever be able to produce something to say, 'We had 50 cars come here in 2010 and all 50 blew up,' I do not think they would have any concrete evidence but it has all been around bad press. Whether that has flowed through from the parent distributor of that group is another question for that distributor. But a lot of them fall under the one banner group. That is something to do with their supply chain, I would assume.

Senator SMITH: That is a powerful piece of evidence. We will not ask you what the banner is but we will inquire about that. Do current-day motorists still carry that concern about Opal? What leads a motorist to want to put a non-Opal fuel in their car as opposed to an Opal fuel?

Mr Clifton : It is a good question. If we take Opal out of the equation completely, I go to conferences and so on about the energy market. Unleaded is on the decline in general in the rest of the country and it is all heading towards premium fuels. A lot of that has got to do with the car manufacturers saying, 'You can only put premium 95 or premium 98 in our car,' let alone Opal being not up to the specification but regular unleaded. The biggest emerging market in the next 10 to 15 years is biofuels. If anything was to come out of this BP would look to make a bio-blended low aromatic fuel. It seems regular unleaded is on the decline, as are unleaded car sales on the decline. It has been documented that diesel has taken over as the preferred choice of vehicle based around fuel economy.

Senator SMITH: Is there a differential in price between Opal and unleaded fuel at the browser?

Mr Clifton : Not that I am aware of. We would have to have someone selling it in Alice Springs town to see that. As far as I am aware, everyone in town sells Opal.

Senator SMITH: I want to go back to the comments you mentioned that you have been having conversations with government but they have not been getting anywhere. In the last six months how many conversations have you had with the Commonwealth about your attempts to get Opal distributed at more outlets, your attempts to have a discussion about what government can do to help offset some of the upfront infrastructure costs et cetera?

Mr Clifton : There have been a lot of emails thrown back and forth about trying to get into Port Hedland and set up a tank farm, or even just something small, and getting something there—probably three or four times in the last six months. When we put our installation in at Punmu, which is just off the WA coast, we went ahead and did it anyway without asking for funding. Once we had it up and going and everyone was riding the wave of great work, I do not think we even got much of a plug out of it, which does not matter. But when all that happened I asked, 'Is there any funding to get some more of these up and going?' The only comment was, 'We've only got the subsidy for the freight.' From what I am aware of, there is zero incentive for new infrastructure. I am not talking about existing, because the cost there is minimal—we just change the product and change the seals on the bowsers, and away we go—but any new infrastructure.

Senator SMITH: Can you give us an indicative cost for what new infrastructure costs?

Mr Clifton : Depending on the size of the facility, if we just do a basic tank—let us say a 20,000-litre tank on site for a commercial one—for bowser freight, the Tanami one we are looking at at the moment would probably be about $150,000.

CHAIR: To get started.

Mr Clifton : Just to get started. That is without even buying the fuel. So when you put something forward to a community and they say, 'We'll do it ourselves,' I say that once they get the fuel and a road train—and you are not just going to get petrol; obviously you are going to have diesel there as well to make it viable—they are looking at $130,000 or $140,000 just to get the product freighted in. So it makes for a costly start-up.

CHAIR: And these are two areas which have not had fuel services before.

Mr Clifton : For the Tanami one there is zero; there is nothing there. This is at the Lajamanu turn-off, which is halfway between Alice Springs and Halls Creek—so an ideal place for an installation. Currently we are getting a lot of help there from the mine, which is doing the ground infrastructure and building the ingress/egress points. That has been handy. But, again, you look at something like Yulara and down that way, or even south of here. It is hard to do something different if you do not have access to commercial land. So we are trying to negotiate with the land council to start seeing where else we could put these ideas, and they have been very good at facilitating meet-and-greets and getting the ball rolling, which has only started in the last six months. We just kicked off with that.

Senator SMITH: So one thing that government could put its mind to is a program that offsets some of the infrastructure costs to make it easier for communities and organisations like Caltex to roll out Opal fuel across a much broader area than where it is currently available.

Mr Clifton : Really only for new installations—places where they do not have access to it. That would be the real push, but they do not have it.

Senator SMITH: Just going back to the marketing issue, I would have thought that, if Shell is—by way of example—rebranding Opal fuel and Caltex decides to rebrand Opal fuel, that should actually help in building motoring confidence that that fuel is suitable for cars given that petrol proprietors spend so much money on their brands and their image and on sustainability and those sorts of things. So encouraging fuel companies to rebrand Opal fuel might actually be a positive, cost-effective way of addressing motoring concerns.

Mr Clifton : I think that is a great idea. If I could change the name of the product then I would. But obviously we are constricted by contractual arrangements with our fuel suppliers to market what their products are called.

CHAIR: Like Caltex low aromatic fuel?

Mr Clifton : 'Outback 91'—whatever you want to call it.

CHAIR: As long as you keep the low-aromatic stuff in there.

Mr Clifton : As long as you have got something in there. I do not know. It is hard. If you were to compare it with another product out in the market that is not fuel related—there are that many ways to put a turn on it where the consumer will go, 'Pfft!' They would not even comprehend. That is what you want. You want them to just pick up the pump and fill their car without even questioning it or saying, 'What is this?' Again, the Opal name is a long way gone in trying to promote it. When I talk to people about Opal they know what that is, but trying to resell it to the general public is a very hard push. That is going to have to be changed at a corporate level of people in high offices at BP, Caltex, Shell or Mobil.

Senator SMITH: You may not know the answer to this—we can find it—but what is the peak industry association for fuel distributors? Is there one in the Northern Territory? Is there a national one?

Mr Clifton : No, there is not. I can only speak for Caltex in that we have our own distributor group of franchisees or, I guess, bulk resellers—the Caltex reseller group. I would not know about the other fuel companies. A lot of them have now retrenched back from that model of having distributors selling. Shell will only sell exterminal now. Shell do not own any trucks to distribute fuel; they subbie it out. The Mobil brand has retracted back to the terminals to sell fuel from there. Caltex probably has one of the biggest distributor body groups in the country.

CHAIR: For you that is Adelaide.

Mr Clifton : For us that is a national body—it is everyone in every state; all the independents that have formed together.

Senator SMITH: My last question: what are the major banners selling fuel across the Northern Territory or, rather, Central Australia?

Mr Clifton : I think the biggest three, in no particular order, would be Shell, Woolworths and Ausfuel Gull. They would be the biggest brands.

Senator SMITH: Great. Thank you very much.

CHAIR: Mr Clifton, if you could take this on notice, I would really like to get some of those costings really clear. I know you have given some answers. You have talked about the cost impact. Rather than do it publicly, because I am sensitive to commercial processes and it is a really competitive market, would you mind giving to the committee the actual costs? From your point of view as a distributor, working in this area very closely with the traditional owners and the constraints under which you are operating—and that is true with Opal or Opal-like processes—what does it cost? What are the real cost impacts? That would be really useful.

Mr Clifton : It all comes down to location as well. That is one of the main ones. I would be more than happy to.

CHAIR: That would be very useful because we are trying to look at all the things that have to be taken into account. I would also like to know from your distributors' point of view—from your market—the difference between the volume of diesel you sell and the volume of unleaded you sell, in this part of the world where everyone is selling low-aromatic fuel. Just the kinds of vehicles and the product—you would sell X amount of diesel and X amount of the other stuff.

Mr Clifton : That information would be readily available anyway through the Australian Institute of Petroleum. They publish that stuff all the time, but I can get some of that info.

CHAIR: That would be really useful because it is all part of the whole market impact.

Senator SMITH: Also, any suggestions you made about how the subsidy could be further improved to capture the regionalisation, if you like—the different distances between towns and how the subsidy could be amended to better compensate.

Mr Clifton : From what I gather, there is no-one in that department who really knows what it is worth logistically. I could put forward a subsidy to that area and it gets, 'Are you sure? Is that what it is?' There are a lot of questions that get thrown back and forth. That is one of my recommendations—that when we talk to people in these departments we find there is a bit more background knowledge and expertise in the logistics side of it to create a subsidy.

I do not know where that subsidy fear was pulled from or how it was calculated. It left WA but we have recently had one for Tennant Creek, which is great. That was purely based on the fact that I personally calculated what the rate should be for distributing from there. Whether it will get the same subsidy rate for other fuel companies, I am not sure.

Senator SMITH: Mr Clifton, when you talk about speaking to 'the unit' or speaking to 'these people', is it the petrol-sniffing prevention unit? Is that who you are speaking to? Is that the primary point of contact?

Mr Clifton : Yes, it is the petrol-sniffing prevention—

CHAIR: Is there anything else that either you or Mr Coffey would like to add?

Mr Coffey : No, I think it has been pretty well covered.

CHAIR: Mr Coffey, we heard this morning from APY, and they were talking about the concerns they still have in WA. I do not have the geography, but Laverton was mentioned and you said your community goes down to Laverton. Do you go to Warburton?

Mr Coffey : Warburton is our biggest community.

CHAIR: We had evidence saying that the petrol-sniffing situation, from the APY understanding, is still very bad at Warburton. Is that something you are aware of?

Mr Coffey : I have been around for 20 years. There is still petrol sniffing; I would not deny that. But in my time it has improved dramatically. Since the BP in Laverton did the install down there to—

CHAIR: That is pretty recent, isn't it. They were making the same point: that the install has been quite recent.

Mr Coffey : Yes. Kalgoorlie is that much further away, so by the time people are coming back they are already stocking up with fuel again and they are topping up with Opal. It is getting it out to the lands. Yes, it still does come in, but I would say it has reduced.

CHAIR: They actually made the same point: that it was really bad and it is much better than that now, but in comparison to other areas which have progressed much more so they are still very concerned about Warburton. As it was your area I just wanted to see whether that was a view you shared or did not agree with.

Mr Coffey : I probably cannot comment on some of the Eastern Arrernte areas as much, but when I first started up in the early nineties, when there was red petrol, it certainly was bad and there was evidence of the effects of petrol sniffing just in the streets. I seldom see that now, but obviously petrol sniffing still goes on out there. As I said, I cannot really comment on the Eastern and Western Arrente mobs because I do not have any firsthand experience apart from what we are trying to do in business, delivery and promotion of Opal.

CHAIR: Thank you very much. We appreciate the fact that you have been really helpful in coming along.

Mr Coffey : It is a position of our board in our own area—because they could see it as being something that was causing a great deal of harm—but we do not just limit it to our area. We are a commercial business and that arm of the council, but it is something that the board strongly believes in so it mandated us to go as far and wide as we could and get as much support. Hopefully with some of the information that you guys have heard here today you might be able to go back and make things a little bit easier for people like Ben, who is trying to get it out to these communities. At the end of the day they are saying, 'We can't really go down that path because it is going to cost us too much money or will be a change of name' or something like that. We are pushing a product that people do not have a six- or eight-year-long fear of. I never spoken to a person in Western Australia and the Ngaanyatjarra lands who has given it bad press at all.

CHAIR: Thank you very much and good luck.

Mr Coffey : My pleasure, and thanks!