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Thursday, 21 August 1980
Page: 601

Mr FISHER (Mallee) - The reaction of governments and countries throughout the world to the energy crisis has been varied. Generally, they have developed policies with four essential parts and current indications are that they are proving to be effective. The four main aims of any energy policy must be to conserve existing petroleum resources, to stimulate industrial and domestic consumers to switch to other fuels such as coal, gas or electricity, to encourage oil exploration and development and to stimulate the production of synthetic and substitute fuels.

The initiation of such policies, of course, requires a deep sense of commitment and responsibility. Because central and imperative to these goals is fuel pricing the full force of market prices will operate to produce the necessary structural and conservation changes. This has taken a large measure of political courage particularly in a country like Australia where the availability of liquid fuels is basic to normal social and commercial activities. Our Government has shown that courage.

It is recognised that while price is a significant factor supply also is a critical element to a nation that relies so heavily on competing successfully on world export markets. We know that without further discoveries our own production and our own present position of 68 per cent selfsufficiency will fall away rapidly. It has been estimated that by 1 985 this will be only some 50 per cent to 55 per cent; that by 1990 it will be 40 per cent; and that by the year 2000 only 10 to 20 per cent of our needs could be supplied from indigenous fuel. Therefore, we cannot allow ourselves to become dependent on increased imports to make up the difference. There can be no guarantee in a destablising Middle East that additional or existing quantities of oil will be available. Even if oil were available it would be at excessive spot prices well in excess of present import parity prices.

The major difficulty with relying on imported crude would be the disastrous and prohibitive drain on our export earnings. Today, the annual cost of oil is close to $ 1,500m. On a 25 per cent self-sufficiency rate we would need almost $9,000m to supply our oil. This would create an impossible burden on our balance of payments. Therefore, it is satisfying, despite the admitted cost to our inflation rate, that our policies are working.

With the lead times involved in exploration and the production of substitutes it is, of course, imperative that the policies work. The sad situation in Australia today is that the Australian Labor Party has opted to forsake the long term wellbeing of Australians in the energy area. I believe that this has been simply an effort to achieve short term political advantage. Throughout most of the Western and industrialised world there has been a bipartisan approach to the real energy crisis of the 1980s.

The ALP therefore stands condemned, not just for this, but also for compounding its irresponsibility and abandoning all semblance of a realistic energy policy. What has the Labor Party said it would do? It has said it would price old indigenous oil at the prevailing price and adjust the price every six months, either in line with consumer price index or import parity price increases. It would subject all oil to a resources rent tax, probably of 75 per cent, which would yield more than the existing oil levy. It would socialise the industry by establishing an Australian hydrocarbon corporation. This would be a government body with powers to explore, develop, refine and market petroleum products.

This socialist program, of course, would be financed from taxation. These policies will be radically opposed to the basic goals of any energy policy which is to conserve, explore and encourage alternative and synthetic fuels. Labor's policies would be a serious disincentive in ensuring that Australians are guaranteed adequate energy supplies in the future. Labor's policies would mean dearer and scarcer petroleum products. It would place us infinitely under the influence of the Organisation of Petroleum Exporting Countries and would see the cessation of major exploration and development projects under way.

The debate and discussion of our attempts to ensure a long term availability of energy must therefore be carried on in an atmosphere free of emotion, recognising that changes and adjustments to the Government's policy may be and perhaps should be made from time to time. Presently an additional goal needs to be included in our energy program. This is to ensure that the discrimination that country consumers face in paying higher fuel costs is removed. This morning I checked with some of the service stations in Victoria. I found that in Victoria, petrol prices range from a little over 29c a litre for super fuel to 31c, 32c, 36c, 38.5c and to as high as 39.9c a litre. I believe therefore, that all governments- State and Federal - and oil companies have a role to play to correct this unfair situation.

The Government has implemented the fuel freight subsidy equalisation scheme at a cost of $123m. It is aimed at ensuring that the freight component is no more than 0.44c a litre greater for country centres than it is for metropolitan areas. But this major initiative is not appearing to be effective because of other factors, particularly inefficiencies in distribution and other costs. Oil companies have a responsibility to distribute fuel in specific regionalised areas, instead of competing in the smaller and costly country and remote districts. Economies of distribution to the rural communities can surely be devised by arrangements that are already functioning in other commercial activities.

Of course, there are additional costs involved in servicing rural communities. Depots are required in country regions, whereas in the metropolitan areas deliveries can be made direct from the refinery to retail outlets. Throughput is also a significant factor. Many large outlets retail up to one million litres of petrol a month and can operate on a lc to He a litre margin. Some remote retailers sell only 1,500 litres of fuel a month and obviously require much higher margins to service their clients. Dealers also have different views on the importance of petrol sales to their businesses. Many, of course, rely on workshop income and the retailing of petroleum products is secondary.

The Federal Government also has recently announced its intention to legislate for marketing reforms aimed at bringing stability to Australia's retail petroleum industry. The new policies will provide a sound and secure basis for fairer competition and security for small businesses. We plan to introduce legislation to protect lessee and licensee dealers. Dealers will have a nine-year security of tenure with a three year basic term and two rights of renewal. They will be subject to termination and non-renewal clauses - for example, for a serious breach of contract. We will also be adopting measures to reduce substantially the total number of retail outlets directly owned and operated by the oil companies.

It has been announced that our object is to reduce the number of such petrol retailing outlets owned by oil companies by about 50 per cent. We also intend to legislate to prohibit price discrimination by oil companies in sales to their lessee dealers. The Government has also asked the Prices Justification Tribunal to inquire into whether the maximum wholesale price of petrol now includes a component compensating oil companies for investment in service stations. By doing this we should be able to establish the amount of any such component and also to advise on the implications of removing it from wholesale price calculations.

I grieve today for the situation in which country consumers are being asked to pay more for their fuel simply because they live in a particular geographic location. I think we have to devise policies that are clearly aimed at rationalising and removing some of the complications and discriminations from the present system. An adequate distribution system is equally as important as an adequate crude oil storage and refining capacity. The Commonwealth does not have the power to regulate retail prices or to apply uniform wholesale prices among a range of different oil companies. The States must become involved in and meet some of their constitutional responsibilities. New South Wales has set maximum retail margins but this in itself raises the opportunity for companies to recover lost revenue by raising the price of petroleum products to other unprotected groups of consumers in other States. These, of course, would include rural people - including primary producers and transport operators. Present approaches to remove such discrimination, despite good intentions, are clearly confusing and haphazard. We must have a bipartisan consultation between governments and oppositions. Cooperation between all levels of government is essential.

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