House debates

Wednesday, 16 August 2006

Petroleum Retail Legislation Repeal Bill 2006

Consideration in Detail

Bill—by leave—taken as a whole.

9:38 am

Photo of Joel FitzgibbonJoel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | | Hansard source

by leave—I move:

Page 3, after Schedule 1 (after line 9), insert.

Schedule 1A – Amendments to deal with abuse of market power, unconscionable conduct and price monitoring in relation to petroleum marketing

Trade Practices Act 1974

Labor’s support for the repeal of the Petroleum Retail Marketing Sites Act and the consequential Petroleum Retail Marketing Franchise Act is a great leap of faith. It is a leap of faith in the hopeful belief that an unregulated market will work better, more efficiently and more effectively than a market regulated by an antiquated piece of legislation now 26 years old, written and designed for another era. But we are not just taking a leap of faith. Our support for the Petroleum Retail Legislation Repeal Bill 2006, as indicated by the member for Batman, is predicated on the government’s indication that it will finally bring forward amendments to the Trade Practices Act which will protect consumers and of course protect this market. In other words, we do not mind an unregulated market in the modern sphere but, at the same time, we do not believe that adequate protection for small business, independent petrol station operators and consumers will be present without the strengthening of the Trade Practices Act, specifically part IV and, even more specifically, section 46.

People will not be surprised, given the events of this week, when we saw the illusion of what was being portrayed by the Prime Minister as a plan to bring petrol prices down, that, in the context of that, we are not just going to take the government at its word. This morning I have moved those amendments that Labor believe are necessary to also bring the Trade Practices Act into the modern era. This is what these amendments do. This is an unusual bill; it is a repeal bill. It gives the opposition scope to move amendments to any other bill, and that is what we have done this morning—moved appropriate amendments to the Trade Practices Act to ensure proper protections are in place. Whilst the Minister for Industry, Tourism and Resources—who is in the House at the moment—and I might disagree at the margins on what form those amendments should take, I know the minister agrees and I think the majority of the government agree. I know the Independents agree.

Photo of Craig EmersonCraig Emerson (Rankin, Australian Labor Party) Share this | | Hansard source

I agree.

Photo of Joel FitzgibbonJoel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | | Hansard source

Of course. Not only is it time that we should modernise the regulatory regime covering retail petrol but it is also time we modernise the Trade Practices Act. This is not something we have just created. The necessity to modernise the Trade Practices Act flows from a number of Federal Court and High Court decisions, each of which demonstrates that the legislature’s intention in designing and framing the Trade Practices Act has not been achieved. You will find that in the comments of the justices presiding in each of the cases, in particular as they relate to the test of substantial market power in the case of Boral. You will find it in the finding that a firm with market power has taken advantage of that market power in a case such as Safeway. This is clear.

I recall that the chairman of the ACCC at a recent Senate committee hearing on these issues himself agreed that the legislature’s intention in framing and putting through these acts of parliament in this place had not been achieved. But this is not just about petrol retailing, as important as that is. It is about protecting small business in a range of sectors from larger predators and it is about protecting consumers from the consequences of the antics of those larger predators.

The world has moved on substantially, but some things always remain the same. In an industrial agreement, the bargaining power between an employer and an employee will never be equal and the same applies to small business. A small business can compete with a larger retailer on a level playing field, but if the larger competitor is willing—and they are in the minority—to misuse his market power then it is not on a level playing field. It is bad for small business and it is bad for the consumer. I challenge the government on this occasion to get up today and support Labor’s amendments.

9:44 am

Photo of Martin FergusonMartin Ferguson (Batman, Australian Labor Party, Shadow Minister for Primary Industries, Resources, Forestry and Tourism) Share this | | Hansard source

I rise to speak in support of the amendment moved by the member for Hunter. In doing so, can I firstly echo the comments made by the member for Hunter. Not only has the Labor Party taken the government on trust but also, perhaps more importantly, has the Australian community. We all accept, as the Minister for Industry, Tourism and Resources said in his second reading speech, that the fuel market in Australia has changed dramatically in recent times with the entry of the major retail chains Coles and Woolworths. It has taken the government many years and many ministers to finally bring forward this legislation. The opposition has always been supportive of trying to work out a modern structure for an entirely different industry from that which existed when the legislation before the House was first approved. In that context and further to the comments by the member for Hunter with respect to the Trade Practices Act, on behalf of the opposition, the Independents and the Australian community, I remind the government of undertakings given in negotiations around this package with respect to other changes to the Trade Practices Act for which we need public reaffirmation today.

The undertaking was that the government accepts a need to introduce further reform to the Trade Practices Act, to implement its response as soon as is practicable not only to the Dawson report but also to a range of other aspects of the act. These include, firstly, to provide that a corporation must not take advantage of a substantial degree of power in that or in any other market; secondly, to provide that, for the purposes of determining the degree of the power that a corporation has in a market, the court may have regard to any market power the corporation has that results in contracts, arrangements or understandings with others; thirdly, to include two new elements to be considered in relation to a breach of section 46 which could include whether a corporation was selling relevant goods or services at a price below cost and whether a corporation had a reasonable prospect or expectation of recoupment, that is, to recover the losses it suffered by selling at a price that is below cost. In that context, the opposition has been willing to support the endeavours of the government.

In those negotiations, I have dealt at first hand with the Minister for Industry, Tourism and Resources. As a former trade union official, I have always operated on the basis that a shake of the hand must be honoured. I therefore have respect for and accept his word. It is more important—because ministers and shadow ministers come and go—that these requirements as to specific further amendments are recorded publicly as an expression of a view and acceptance by government and opposition as to what is to be done. I seek that undertaking and will then seek to make some additional comments with respect to the amendment moved by the member for Hunter.

9:47 am

Photo of Bob KatterBob Katter (Kennedy, Independent) Share this | | Hansard source

Some people may want to become famous and be deeply appreciated by the people, such as John McEwen in Australia. In the United States ‘Teddy’ Theodore was famous for three things, one of which was that he broke up Rockefeller’s control of the oil industry. When I went to university, albeit briefly, we were taught in economics that, if there is a monopoly, supply and demand does not work and, if there is an oligopoly, supply and demand does not work either. Oligopoly means there are very few buyers or sellers. In this case, there are very few sellers: there are only four sellers in Australia and that is called an oligopoly. We have great free-traders on both sides of the House. The ALP has to come clean and say they were the champions of free trade. They started all of this rubbish. If they want to talk about economic principles, I wish they would read about it and acquire a little bit of knowledge. Maybe a little bit of knowledge is a dangerous thing in the case of people in this place.

Supply and demand determines price—read Paul Samuelson’s textbook Economicsonly when there is an infinite number of buyers and sellers. We have four sellers here. I do not speak from a lack of knowledge on this. When a colleague of mine—and I do not hesitate to say that he is a good friend—Neil Turner, in the Queensland state house, and I decided we had had enough and that we disagreed with the direction of the party leadership, we had discussions with Venezuelans. They said, ‘Don’t worry about the price.’ We said we would have to bring in a 30,000-tonne tanker and find, at that time, nearly $20 million, which would be difficult. They said, ‘Don’t worry about that. We will stoke you for two or three months, but we will not do that unless we have a guarantee from the Queensland government that there will be a minimum price because every time we send a tanker load to compete against the majors they drop the price and we are left with the petrol, regardless of the agreements with the people we distribute to.’

People just broke the agreements and would not take the petrol. Because of the fear that the majors would drop the price if anyone else tried to get into the ball game, what was needed was a minimum price. To bring the price of petrol down you needed a minimum price, but without that protection in the market, without some involvement by government in the marketplace, there is no way anyone is going to pay $30 million for a tanker load. What happened to John Newman on bringing in ethanol from Brazil? He lost literally millions of dollars. I supported the government in trying to stop Brazilian ethanol coming into Australia. Clearly, you can buy ethanol through the bowser in Brazil at 68c. When we say we have a free market operating in this country, why can we not get it here at 68c? I will tell you why: because we have an oligopoly. You just broke whatever power you had to restrain the majors.

Australia has been very unfair to the Fraser government, particularly to Doug Anthony, who put in place this protection to try to overcome the oligopoly situation. I would say that they did not go far enough, but the fact is that they made an effort. The current government and I regret to say here the opposition—and I applaud what they are attempting to do here—cannot fool around with the oil companies. It is like Woolworths and Coles. I am sorry: you can put whatever you like in the Trade Practices Commission but their power and control in this country are such that those laws will never be enforced. In fact, the antitrust legislation—

Photo of Martin FergusonMartin Ferguson (Batman, Australian Labor Party, Shadow Minister for Primary Industries, Resources, Forestry and Tourism) Share this | | Hansard source

It was Theodore!

Photo of Bob KatterBob Katter (Kennedy, Independent) Share this | | Hansard source

No, not Theodore. I am wrong there. I was talking about Roosevelt. That was a slip of the tongue, but I can see where my mind was going. Roosevelt did not introduce the antitrust law. In fact, he was the one who enforced it. (Time expired)

9:52 am

Photo of Joel FitzgibbonJoel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | | Hansard source

On my first, limited contribution to the debate on the Petroleum Retail Legislation Repeal Bill 2006 I spoke about the first aspect of Labor’s amendments. Those amendments were designed to restore the Trade Practices Act to its former glory and in particular to provide the ACCC with the capacity to show, firstly, that a firm has a substantial degree of market power and, secondly, that it has taken advantage of that market power. The second tranche of my amendments are just as important. They provide the power to either house of this parliament or to any committee of this parliament to refer to the ACCC the power it requires to undertake formal monitoring of prices in any market. However, my amendments are about the petroleum retail market.

We have been calling upon the Treasurer for weeks now to pick up a pen and a piece of paper and to simply write to the Chairman of the ACCC, Graeme Samuel, to provide him with the powers that he requires to formally monitor petrol prices and to demand from oil companies, or any other retailers or wholesalers, the information he needs to determine whether price gouging is taking place. It is not a big thing to ask. We do not understand why he will not do it—whether he is protecting someone, whether he does not want a particular company or companies exposed or whether he will not do it simply because it was the opposition’s idea. I am not sure which of those it is. It will not cost him anything. It is not a difficult thing to do, and he has plenty of support staff—in fact, I wrote the letter for him and invited him to put it on his letterhead, sign it and send it off. But he refused to do so.

The question has to be asked: why do we want the Treasurer to solely hold the power to make these decisions? I can understand why the legislature, in the beginning, wanted to put in some protection and to not allow the ACCC chairman to act alone to decide at any time that he will have an inquiry into someone or something. You can understand the legislature wanting safeguards, which is why the opposition have resisted the temptation to simply give the chairman the power to run off and have an inquiry into any matter he wants or to demand information from any company because it suits him. But at the same time, we do not believe it should be the sole domain of the Treasurer. We believe that if a house of this parliament or a committee of this parliament has formed the view that there is something not quite right in any particular market—and in this instance we have petrol in mind—that committee or that house of the parliament should be able to refer that power to the chairman. It is a simple proposition and it is a responsible proposition.

If we had suggested that the chairman should have that power without it being referred, the government would have had an opportunity to put up an argument and to oppose us. But it cannot argue against this proposition that we have put forward. How can the government possibly argue that a house of this place or a committee of this place should not have the power, having heard the evidence, to refer to the chairman of the ACCC that power? There is plenty of reason to refer the power. The evidence is not conclusive but there is plenty of evidence in the petroleum retail market that something is not quite right.

Every motorist in this country instinctively believes as they watch the weekly price cycle that something is not right. In the end it might not be proven, but let us have the inquiry. Let us give the ACCC chairman the power not just to look at retail prices. We can all look at the price board and form our own opinion about what petrol prices are doing, but it does not tell us anything about what is happening along the value chain. It does not tell us anything about what is happening to wholesale prices or to terminal gate prices. It does not tell us anything.

The ACCC chairman needs to look not just at the prices but behind the prices. How disappointing was it when the Prime Minister came in here with his great illusion this week—with great fanfare—to announce his energy policy? He could not even swallow his pride and say: ‘I think the opposition and the Independents have it right. It is time to give the ACCC chairman the chance he requires to potentially have an immediate impact on petrol prices and to finally give motorists and their families and business some relief from spiralling petrol prices. (Time expired)

Photo of Bruce ScottBruce Scott (Maranoa, National Party) Share this | | Hansard source

Order! The question is that the amendments be agreed to. I call the honourable member for Fraser.

9:57 am

Photo of Bob McMullanBob McMullan (Fraser, Australian Labor Party) Share this | | Hansard source

Thank you, Mr Deputy Speaker. I was temporarily distracted by the whip, who was helping me. I rise to support the amendments moved by the member for Hunter, particularly insofar as they relate to the issues of abuse of market power and unconscionable conduct. These are amendments of general application. It is particularly appropriate in the immediate case that they apply to the area of petrol, and that is why the amendments are being initiated here. I welcome that and support that but, in the years in which I have been dealing with this matter, it has become more and more evident that section 46 is the gap in the trade practices regime of this country. It is the gap in the competition regulation of this country.

The former head of the ACCC, Allan Fels, made it clear that he thought that while in every other area there might be need for some finetuning, the Trade Practices Act in Australia works very well. In my view it is in some sense an international leader, but there is a gaping hole that relates to this issue of abuse of market power and unconscionable conduct, typified by section 46 and to a lesser degree section 51.

The High Court’s determinations, which in hindsight are probably correct, have clearly led to the situation where the original intention of the Trade Practices Act—to deal with questions of abuse of market power by major corporations to the original disadvantage of small business and the ultimate disadvantage of consumers—has not been implemented, because the act has been read down to a degree that makes it relatively ineffective. The member for Hunter referred to the case of Boral, which is the most infamous of examples.

What we need to deal with here are a range of issues which are addressed in the amendments. In the long-term, there will probably need to be more, but these are very substantial and deal with the most important issues with regard to the following: the threshold test for determining whether a corporation has a substantial degree of market power; the question of power in more than one market; the question of agreements entered into which can, when taken into account, constitute an agreement that provides the potential to abuse market power; and two criteria. The first criterion is the capacity to sell at below cost, which is evidence of abuse of market power, not in one case—anyone can have a loss leader—but in a continuing, ongoing manner that causes detriment to small competitors and drives them out, which was the principle behind the Boral case.

The second criterion—and I want to concentrate on this in the last minute or two—which the amendments address directly, is the capacity for unilateral variation of contracts. There is nothing more evident of an imbalance in market power than the capacity for unilateral variation of contracts. Who would willingly enter into a contract that says, ‘Yes, we agree these are fair terms but you can change them whenever you feel like it’? No-one would intelligently enter into that—no worker, but they are being forced to do so under the industrial relations legislation; and no small business, but they are forced to do so time and again. If only one of these amendments were picked up—and I support all of them—it should be the capacity to deal with unilateral variation. This would transform the lives of franchisees and small businesspeople around this country, particularly those in the petroleum industry.

If we are going to have respect for free market capitalism in this country, we need to create a framework for handling the imbalance of market power between small and large business and between employer and employee. It is the failure to realise that that lies at the heart of the government’s failure to address this hole in the Trade Practices Act. It lies at the heart of the refusal to make the referral to which the member for Hunter refers, because the government cannot tell the difference between the interests of the largest Australian companies, which lobby against all these changes, and the interests of the economy. (Time expired)

10:02 am

Photo of Craig EmersonCraig Emerson (Rankin, Australian Labor Party) Share this | | Hansard source

I support strongly the amendments moved by the member for Hunter and seconded by the member for Batman. These are amendments to the Trade Practices Act that affect the Australian economy more broadly but that specifically arise in relation to concerns about anti-competitive behaviour in the petroleum retail industry. They are pro-competitive amendments and, given that the government is supposed to be a party that supports competition and free enterprise, I would strongly urge it to support these amendments. They are well considered; they have been developed over a long period of time. If the coalition government truly is a party of competition and free enterprise then it should support the amendments. We will all be very interested to hear from the minister during the summing up of this consideration in detail debate.

The amendments deal more effectively with the abuse of market power and predatory pricing. There has been an emergence of greater competition in many aspects of the petroleum industry. Initially, after the establishment of the market by the ‘big four’ multinational oil companies, that competitive influence was brought to bear through the entry of independents. They have done a service to Australia in behaving as a competitive alternative to the major suppliers. More recently, the emergence of Coles and Woolworths supermarkets, through the shopper-docket arrangements, have provided extra competition. But that is no guarantee whatsoever that the entire industry is going to behave competitively.

Indeed, you would have to suspect that the areas in which anti-competitive behaviour might be more evident would be in remote and regional markets where the market is more segmented and there is not the flow-through of traffic and, therefore, the influences of competition. But even that does not mean that in major urban markets we are assured of competitive behaviour in all circumstances.

A number of commentators and many parliamentarians point to fluctuations in prices during the course of a week as a source of concern. I would say that that does not of itself prove anti-competitive behaviour—although the popular conception is that, when retailers put their prices up and down at the same time during the week, that must constitute evidence of anti-competitive behaviour. However, it can be. It is possible that they can get together and agree to put their prices up or down to the same extent. We should be concerned about this sort of practice, but we have to look behind what has actually happened.

One of the deficiencies of the Trade Practices Act, including section 46, is the burden of evidence that needs to be brought to prove that there has been anti-competitive pricing. As speakers on the Labor side have pointed out, the courts have tended to rule against the Australian Competition and Consumer Commission on this. There was a recent court case where circumstantial evidence was not allowed, even though the circumstances seemed to be providing quite strong evidence of anti-competitive pricing and anti-competitive behaviour.

The member for Hunter has moved amendments that would give greater power to the ACCC to look behind some of the behaviour that goes on and to determine whether in fact predatory pricing or anti-competitive behaviour has occurred. On that basis, I would be bewildered if the government did not see merit in these amendments; therefore, I would strongly urge it to adopt the amendments moved by the member for Hunter and seconded by the member for Batman.

10:07 am

Photo of Tony WindsorTony Windsor (New England, Independent) Share this | | Hansard source

We are talking about an important issue today. It is a great shame that it had to be brought in on the back of the Petroleum Retail Legislation Repeal Bill 2006. It is also a great shame that government members—and I understand the structure of third reading debates—are not participating in this debate, given the issues. It is a shame that the amendments will get voted down, strictly along party lines. I would be interested to hear the comments of the Minister for Industry, Tourism and Resources on the substance of the issues being raised, such as unconscionable conduct in petroleum marketing, and the amendments proposed by the honourable member for Hunter to the Trade Practices Act. It is also a shame that members have not had the benefit of time to examine these amendments more closely to determine their impact on the operations of the Trade Practices Act. I ask the minister to take this debate seriously, and to address some of the issues. I ask the government whether it has any intentions in the future, perhaps in another vein, to address—

Photo of Joel FitzgibbonJoel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | | Hansard source

He’s going to read the amendments now.

Photo of Tony WindsorTony Windsor (New England, Independent) Share this | | Hansard source

Well, that is a start. I am pleased to see that the minister is moving towards addressing some of these issues. I hope he takes them seriously. Even though these amendments will probably get voted down, along party lines, I hope the issues will be addressed in another fashion.

The member for Rankin raised the issue of the independents creating competitive pressures in the petroleum industry. I draw to the minister’s attention some of my concerns. Last week the government announced some significant changes in energy policy. Two of the fuel companies, Caltex and BP, announced they were going to cut the price of E10—ethanol 10 per cent fuel—at certain service stations across Australia. Many people assumed this was a cut in the wholesale price. There has been a 3c cut in the retail price at some service stations. I have been buying E10 fuel from a small independent retailer in a small community who retails Bogas, or Caltex E10 fuel, and has for about six or seven years. I called in there the day after this great announcement that the price of E10 was being dropped by 3c, having heard the government commend itself for not having had to mandate the use of E10 to achieve this great outcome of the 3c discount in price. My retailer, who has been selling ethanol for at least six to seven years, and buying from those same companies, had just received an invoice increasing the wholesale price of E10 by 1.8c a litre. That highlights some of the underlying issues we should be debating, not only in terms of petroleum products, but where the might of the corporation can overcome the competitive aspects for the independent players in the field. Some of those issues may be raised again when the media ownership debate comes forward.

The member for Rankin also said that we need to examine the amendments the member for Hunter has put forward to see whether we have the opportunity to look behind the scenes at the behaviour of the fuel companies and how they operate. The member for Hunter mentioned a moment ago that there is no real transparency in terminal gate pricing. There is great inconsistency in the way wholesale prices are reported. (Extension of time granted)

The consumer is in a haze when trying to ascertain the retail and wholesale price levels of fuel, the country/city issues, the terminal gate price issues, the various margins that apply at certain times in the week and on public holidays, et cetera. There is no real transparency in those issues. The member for Rankin said we should have an instrument that can look behind the scenes at that behaviour. In this place in recent months we have changed the electoral laws so that we cannot look at the behaviour of some of the major corporations in terms of their political activities by way of donations. I do not mean to get off the track—

Photo of Bob KatterBob Katter (Kennedy, Independent) Share this | | Hansard source

Spot on! That is the track.

Photo of Tony WindsorTony Windsor (New England, Independent) Share this | | Hansard source

The member for Kennedy, quite rightly, says that in his view that is the track. We need the capacity for transparency. If we are talking about the Trade Practices Act and transparency in the pricing and other behaviour of major corporations, including fuel companies, and all their international connections, surely we must look in our own backyard—at who is paying the piper. The ethanol debate is a classic example. It is a shame that the minister has been caught up in this, but there is absolutely no doubt that the fuel companies are calling the tune.

We traditionally follow the United States in nearly everything we do. The United States has recognised that its population cannot be reliant long term on the Middle East and others for the provision of energy, and it is starting to address those issues through renewable energy and other activities. The United States is invading the marketplace and putting in place policy that actually drives the energy debate, rather than—as we would do; as we are doing now—allowing the fuel companies, which are international corporations, to drive the debate for it. I think that is a great failing on the part of this government.

The LPG business the other day—and it is a bit like the way you cannot criticise your mother—is not going to do much good. I think everybody recognises that. Even if, at the end of the day, people did accept that the government would not change the taxation regime in the future, that the fuel companies were all going to play a straight game and not gouge the price and that the fitters of the additional equipment, the cylinders et cetera, would not profiteer on the way through, there is a whole range of uncertainties there.

The consumer, the customer, has seen the government put in place in 2001 a renewable energy policy, some mandatory renewable energy targets for renewable fuels. Six years later, we are producing less than we were when we started the policy. To the Labor Party’s shame, too, I notice in their second reading amendment that they are still talking about 350,000 megalitres—less than one per cent of the fuel needs of the nation. The rest of the world is marching on, and we are still playing games with old numbers from 2001: 350,000 megalitres of renewable energy. I think the member for Kennedy mentioned in a speech the other night—a very good speech too, I thought—that we are at about 30,000. There is no way that even the targets that the Prime Minister set out during his cup of coffee with the fuel companies last year have been achieved. They were supposed to be achieved by the end of June or July, I think it was. There is no way that the 2006 targets have been achieved.

It is obvious to anybody in the marketplace that the fuel companies in this country are not going to make any significant changes on renewable energy, ethanol and these other products unless there is a mandate such that it opens up the process of distribution through the bowsers. There is no way that those companies are going to do that. Take a look at America and see what they have done in the States. They recognise that at a policy level. They are agripoliticians, they are state and federal politicians, and they put in place mandates which forced the fuel companies to accept the product and start to market it through the normal processing chain, for a whole range of health, environmental and other reasons. They have had an enormous impact on the agricultural sector and the renewable energy sector. The fuel companies now embrace it in the States. The car companies now embrace it. We could do the same. (Time expired)

10:18 am

Photo of Martin FergusonMartin Ferguson (Batman, Australian Labor Party, Shadow Minister for Primary Industries, Resources, Forestry and Tourism) Share this | | Hansard source

As is evidenced by the participation on this side of the House, we regard this debate as exceptionally important. I will tell you why. I think this debate reflects sadly on the government’s performance generally. The basis of the Petroleum Retail Legislation Repeal Bill 2006 is to reflect a new legislative regime in response to what we all believe is a major change in the structure of the Australian retail petroleum industry. The view of the whole parliament was that we required legislation, because we had an understanding that the new structure of the petroleum industry in Australia was out of step with the legislative framework. It was our view that the legislative framework potentially created a subcompetitive retail environment, as the Minister for Industry, Tourism and Resources said in his second reading speech, which potentially imposed higher costs on Australian industry and consumers. That is important at the moment because it is at a time of record high oil prices. We all appreciate that there is no immediate solution to the issue of record high oil prices because of a variety of factors, including a huge demand in developing countries such as China, with India yet to come on stream.

I am therefore utterly amazed that, given that on Monday this week the Prime Minister saw fit to make a prime ministerial statement to the Australian community—not just to the Australian parliament but to the Australian community—on the issue of energy, with a special focus on transport fuels and that statement went to a total of 23 pages. It dealt with a range of new options, such as an appropriate government focus on trying to spread the use of LPG in the Australian motoring community—and another push, can I say in response to the member for New England, for the ethanol and biofuels industry.

Unfortunately, in terms of the ethanol industry, there is no capacity for government to direct sugar producers in Australia to turn their sugar production towards ethanol and thereby receive a lower price than they are receiving internationally at the moment for the sale of their sugar. In some ways, some issues in Australia are driven by market forces. I would have thought that the member for New England would have understood them, because he prides himself on representing the private sector in the Australian community.

But—having said that—this is a key debate. I would have thought that, given the nature of this legislation, in association with the Prime Minister’s major statement to the Australian community about transport fuel in Australia, there would be some interest in this debate on the government side of the House. I raise this very seriously, because there is no doubt in my mind that, over the next couple of weeks, in all the coalition seats around Australia, all of a sudden, glossy publications will appear in the Australian householder’s letterbox or alternatively in the local newspapers.

It is interesting to note, in terms of that self-promotion out in the Australian community, that all of a sudden we received an email from the Special Minister of State last night, saying, ‘Government has now resolved that you haven’t got enough to spend on publications.’ With no justification, our publications allowance has been increased overnight from $125,000 per annum for each seat in Australia to $150,000 per annum, with a carryover of roughly 45 per cent in an election year, effectively meaning that in an election year you will have over $200,000 per year of taxpayers’ money to spend on promoting your re-election.

Rather than spending their time sitting in their offices over the last couple of days preparing those publications, which are provided by a government media unit to circulate throughout the whole Australian community at taxpayers’ expense, I would have thought that government members could have found some time to come into the House to debate this major legislation and also to express their views about the appropriateness of the Prime Minister’s ministerial statement on Monday on transport fuels.

Photo of Jim LloydJim Lloyd (Robertson, Liberal Party, Minister for Local Government, Territories and Roads) Share this | | Hansard source

Look behind you. You don’t seem to have much support there!

Photo of Martin FergusonMartin Ferguson (Batman, Australian Labor Party, Shadow Minister for Primary Industries, Resources, Forestry and Tourism) Share this | | Hansard source

In that context, as raised by the Minister for Local Government, Territories and Roads, who is participating in this debate, let us see who was sitting behind one another. The second reading motion was moved, appropriately, by the Minister for Industry, Tourism and Resources. It is interesting to note that, on the government’s side, there are 87 members yet only two members of the backbench deemed it appropriate to come into the House and speak in support not only of this legislation but also of the Prime Minister’s statement on transport fuels. Three spoke in total. That is equivalent to the number of Independents who spoke in this debate, and there are only three in this House. Then we go to the opposition, and the minister for local government wants to raise the issue of the willingness of members to come into this House. (Extension of time granted)

Photo of Bob KatterBob Katter (Kennedy, Independent) Share this | | Hansard source

Mr Katter interjecting

Photo of Martin FergusonMartin Ferguson (Batman, Australian Labor Party, Shadow Minister for Primary Industries, Resources, Forestry and Tourism) Share this | | Hansard source

I am sure the member for Kennedy is going to be given the call again, because I know he makes a worthwhile contribution to these debates. Let us go to the opposition. Interestingly, we have 60 members in the House; 23 of our caucus participated in this lower house debate—that is, over a third of our caucus participated in what we regard as a major debate. I will tell you why. This is not only a debate about the Petroleum Retail Legislation Repeal Bill 2006 but also a broad-ranging debate about transport fuels and, perhaps more importantly and even more broadly, transport, oil security and energy security in Australia generally. It is for that reason we have moved further amendments. The Minister for Industry, Tourism and Resources has indicated to me he will be making some comments in respect of the issues I previously raised, going to the reform of the Trade Practices Act and the outcome of negotiations between the government and the opposition.

The member for Hunter has sought to move an amendment to beef up the government’s legislation and to keep the finger on the industry and on government with respect to the application of this legislation in a practical form. This is important, because the legislation also includes a new mandatory oil code. That mandatory oil code will seek to achieve a number of key objectives. Firstly, it will allow collective bargaining amongst independents to give them more market power. Secondly, it will introduce terminal gate pricing arrangements that are supposedly to provide greater transparency in wholesale pricing and open access to all customers. Thirdly, it will establish minimum standards for fuel reselling. Fourthly, it will establish an independent and cost-effective downstream petroleum dispute resolution scheme in Australia. The opposition support the intent of that oil code, and that is why we support the repeal of the current petroleum retail legislation. It goes hand in hand with not only the undertakings given by the government to the opposition on potential reform of the Trade Practices Act but also the additional issues raised by the member for Hunter.

Our amendment is about further improving the whole range of legislation that goes to protecting the Australian consumer and making sure the petroleum retail industry is competitive. For that reason, just as we have to from time to time check up on all aspects of life, we believe that the Trade Practices Act ought to be given some additional powers. That takes me not to the performance of the Minister for Industry, Tourism and Resources but to the non-performance of the Treasurer. The outstanding trade practices legislation does not sit in the responsibilities of the Minister for Industry, Tourism and Resources but solely with those of the Treasurer. It ought to be the Treasurer in the House today, not the minister for industry, addressing this issue. It is his responsibility.

The worry of the opposition goes to the manner in which the Treasurer undertakes his duties. I want to make some specific comments about these issues. The opposition’s very firm view is that the Treasurer has been sitting on his hands for three years. We say that because he has failed, despite numerous requests—not just from the member for Hunter but from a range of people in the Australian community, especially the business community—to introduce the 2003 Dawson recommendations and 2004 Senate recommendations on trade practices reform. He likes to talk about how he is assisting Australian industry. I tell you what: Australian industry is crying out for this legislation, and it is sick and tired of the non-performance of the Treasurer and his failure to bring forward this legislation. We contend, as business says to us privately, it reflects the height of laziness not just of the government but perhaps more importantly of the Treasurer himself. I believe this is exceptionally important. It is not just about industry. It is also about the rights and responsibilities of this government to Australian consumers. We are elected to this parliament to try and do our best for the people we represent, and that includes Australian consumers. I believe Australian consumers deserve more from this government, not only in relation to petroleum marketing but across the board.

I go to the Dawson and Senate recommendations. Those recommendations go to the crux of the debate before the House today, because they refer to strengthening section 46 of the Trade Practices Act. (Extension of time granted) That strengthening of section 46 is exceptionally important, because section 46 goes to the abuse of market power. That is what this legislation is about. It is about a change in structure of the petroleum retail industry to make sure we avoid an abuse of market power. That is about trying to make sure that we conduct ourselves so as to look after the interests of consumers in an appropriate way. It is not just about the retail sector of the petroleum industry; it goes across the industry generally. In broad terms we accept that the government supports the strengthening of section 46. We want to see the colour of its legislation. I do not think we are asking for too much. We are simply asking to see the outcome of the Treasurer’s work. Surely it is sitting on the Treasurer’s desk at this time. I say this to the Treasurer today. Get your act together. Your performance to date with respect to these key proposals is unacceptable. It is unacceptable to the Australian community, it is unacceptable to business and it is unacceptable to this parliament.

That is why we call on the government today to support the opposition’s section 46 amendments as moved by the member for Hunter. I will tell you why they are important. These amendments seek to allow a court to take into account these key principles which go to the basis of a free enterprise system, one that prides itself on the independence of the market: firstly, that the threshold of a substantial degree of power in a market is lower than the former threshold of substantial control; secondly, that the substantial market power threshold does not require a corporation to have an absolute freedom from constraint, it is sufficient if the corporation is not constrained to a significant extent by competitors or suppliers; thirdly, that more than one corporation can have a substantial degree of power in a market; and, fourthly, that evidence of a corporation’s behaviour in the market is relevant to a determination of substantial market power. These principles must be enshrined in legislation. We depend on the independence of the courts, but it is a requirement of the government to give the courts the power to actually act. We are about beefing up some weaknesses in the existing legislation, as is the responsibility of legislators. The government have not taken into account these factors, which seem very fair and clear to me. If you want an example of that, just go to the Boral case referred to by the member for Hunter.

The other important point is that the government should ask the ACCC to formally monitor petrol prices—what is wrong with that?—and accordingly report every six months on price movements, particularly in regional Australia; which is so often spoken about by not only the member for Lyons but also the members for Kennedy, New England and Calare, the Independents who have appropriately spoken in this debate. I am at a loss to understand why the government is opposed to this concept. It is about transparency and accountability. That is what the minister in his second reading speech said the change in the legislation is about; it is about a new competitive model guaranteeing transparency and accountability. Last year the best explanation the competitive watchdog could come up with was, and I quote, that ‘something funny is going on with refiner margins’. Let us give the appropriate authorities some capacity to actually make sure that ‘something funny’ does not occur in the future.

I simply say in conclusion that motorists deserve a better explanation. It is in the interests of industry and in the best interests of government that we are able to prove what we argue in this House. After all it is the industry’s reputation that is being damaged as motorists blame them for price gouging—not just the government. In response to the Prime Minister’s statement on transport fuels, could the minister advise—because I am sure that this work was done in the costings—what expected take-up the government sees for each of the next five financial years in LPG with respect to the conversion of vehicles and the production of new vehicles? What expected growth does it see in each of those five financial years in the spread of ethanol and biofuels? I do not think you need to mandate them; they will stand on their own feet if they remain price competitive. (Time expired)

10:33 am

Photo of Bob KatterBob Katter (Kennedy, Independent) Share this | | Hansard source

We have heard an excellent contribution from the member for Batman, but unfortunately in two areas he was factually wrong. We receive $450 a tonne for sugar at the present moment. At current petrol prices that would reflect back to the sugar industry at $480 a tonne. But nobody in the industry believes remotely that we are going to stay at $450 a tonne. For the last five years we have been at $269 a tonne. I usually do my figures at $360 a tonne. We can give you petrol at a much cheaper price than you are getting it at the present moment. I have said repeatedly in this House, as we are screaming and crying about the price of petrol, that we should just bring in a tanker from Brazil. They retail petrol over there at 68c a litre. There is a distance factor involved so the equivalent price might be 75c. They are retailing it at 75c. It seems to be a point that I fail totally to get through. People say that I get passionate and forceful, but I do not know what I have to do to get it through to this parliament that that is the price over there. You can ring the Brazilians and find out. It may go up in sympathy with the world petrol price; in fact I think it probably would. Our sugar has increased in price because the Brazilians have taken a lot of their cane out of sugar production and put it into oil production, which of course is much more lucrative and attractive.

The point here is that the argument that would allow them in here is of no use. We are right now negotiating. There are no independents left in this country. We are informed that, on present trends, within two years 75 per cent of the market will be held by Caltex and Shell, and their partners Woolworths and Coles. The other 25 per cent are little fellas. You cannot set up an ethanol plant on the basis of getting contractual arrangements with 200 or 300 outlets. That is just not the real world. The only plant being built in Australia is being built by one of the major independents—that is the only way you are going to get it—and that major independent has now been bought out by Caltex. The government keeps preaching free enterprise, national competition policy. The Independents have come into this place and repeatedly asked—and ours are the only voices that do this—in which area did we get competition? We most certainly did not get it in petrol. We most certainly did not get it in airlines. We most certainly did not get it in transportation, which is down to about three companies in Australia now: Toll, Linfox and another one. Where exactly did we get this promised competition? In food retailing and supermarkets we are down to just two players with 82 per cent of the market. Back in 1990 they had only 50.5 per cent of the market. So it has failed miserably.

I have great respect for the Prime Minister, but his policy of incentivism and moral suasion with respect to petrol in Australia has failed miserably. The only answer out there, the only clear-cut answer, is what the member for New England and his area and my area can provide to Australia, which is petrol at a price under 80c a litre. We can do that right now, but we have to have somebody to sell it to. I ask members in this House to please understand that the oil companies do not buy at spot market prices. They own the oilwells. They have contractual obligations that date back 30 and 40 years in other cases. When we discussed it with the Venezuelans, they said: ‘Forget about price. Whatever the price is we can undercut it. Don’t worry about the spot market price. That has nothing to do with the price of production.’ It is something that all of us know. In this country we should know it, because when we had the price at the wellhead, it was $3 a barrel and the international spot price was $7 a barrel. There is no relationship between the price the oil companies buy at and what the world spot market price is. They are entitled, under the free market system—and I agree with that—to take the market price out there, but they are not entitled to close down the industry and not allow ethanol in.

10:38 am

Photo of Joel FitzgibbonJoel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | | Hansard source

This has been a wide-ranging and I think fruitful debate, and some very good points have been raised. I reinforce the fact that the opposition is heavily supportive of the alternative fuels industry, including LPG, ethanol, biodiesel and CNG, and of course we have been pushing hard for the establishment of a gas to liquids industry in this country. But this will turn out to be a very disappointing debate if the Minister for Industry, Tourism and Resources does not take the opportunity to answer some very important questions that we have posed throughout the course of the debate. Of course, the first question is: is he going to support our very important amendments to the Trade Practices Act and, if not, why not? Secondly, is he going to support our attempt to extend the referral powers of the Treasurer to both houses of this parliament or to any parliamentary committee? Those are, of course, the referral powers to allow the chairman of the ACCC to inquire into prices—in this case, petrol prices—if he sees a prima facie case to do so. If not, why not? This is a very responsible approach on our part. The third question is just as important, if not more important. We need the industry minister to tell us—

Photo of Ian MacfarlaneIan Macfarlane (Groom, Liberal Party, Minister for Industry, Tourism and Resources) Share this | | Hansard source

Give me a chance, Joel.

Photo of Joel FitzgibbonJoel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | | Hansard source

We will give you a chance after I conclude. How many people—and/or vehicles—does he expect will take up the government’s LPG grant as announced in the Prime Minister’s energy statement on Monday? This is a very important question, because we are assessing this fuels statement on the basis of its impact, on the basis of how many people it is likely to assist. We know it is not going to help anyone that is stuck on petrol. But, given the amount of money which has been allocated and given the framework which has been announced, how many people will have the opportunity to take up LPG and receive that grant? My back of the envelope calculation is about 400,000 out of 13 million. That equates to something less than three per cent of motor vehicles in any given electorate. That is three per cent or less in the electorates of Robertson, Dobell, Paterson, Parramatta, Adelaide and Braddon. In any seat you want to name, it is three per cent or less.

I am happy for the industry minister to rise to his feet when I conclude this contribution and tell me that I am wrong, but I tell you what he needs to hope. He needs to hope I am very wrong. It is not much help to him if he gets up and says, ‘The member for Hunter is wrong to say it is less than three per cent; it is in fact three per cent’ or it is four per cent or five per cent or even 10 per cent. It is not a very efficient fuels policy if it does no more than help even 10 per cent of those families and businesses that are bleeding out there because of the impact of high petrol prices.

So, minister, we are issuing you with a very important challenge. Get up here to this dispatch box and tell us the answers. Are you supporting our trade practices amendments and, if not, why not? Are you supporting the expansion of the referral powers of the ACCC and, if not, why not? Are you going to tell us—we know you have got the numbers; it would be incompetent of the government if you did not have the numbers—how many people are going to have an opportunity to access your LPG grants scheme? Of course, we would like some breakdowns by electorate as well if you have the capacity to give us that information.

I have said this has been a free-ranging and productive debate. We know the government needs to move on to its legislative program, and we are prepared to be cooperative. I am prepared for this to be my last contribution to this debate. But, if we do not get the answers that we are looking for from the minister, we will have to get up again and again and again until he gives us the answers. So it is his turn now. Minister, just give us the answers we require. Tell us how many people will benefit from your LPG grants scheme.

Photo of Harry QuickHarry Quick (Franklin, Independent) Share this | | Hansard source

Before I call the minister, I would like to inform the chamber that it is my understanding that the minister will not be closing the debate.

10:46 am

Photo of Ian MacfarlaneIan Macfarlane (Groom, Liberal Party, Minister for Industry, Tourism and Resources) Share this | | Hansard source

I thank those opposite for their contributions, misguided though most of them were. With respect to the question asked by the member for Hunter, I remind him that if he reads the Prime Minister’s statement—the one he describes as illusional, but then admits that there will be hundreds of thousands of motor cars converted to LPG by private motorists, without calculating the ones that will be converted and bought new by the business sector—in that area alone, the relief is going to be—

Photo of Roger PriceRoger Price (Chifley, Australian Labor Party) Share this | | Hansard source

What’s the number?

Photo of Ian MacfarlaneIan Macfarlane (Groom, Liberal Party, Minister for Industry, Tourism and Resources) Share this | | Hansard source

I have waited half an hour; I would prefer not to be interjected on while I try to answer the question. Those motorists who will benefit from LPG have the opportunity now to choose this as an alternative fuel. There is no cap on the scheme, there is no means test and there is no exclusion of vehicles. My understanding is that somewhere in excess of three million vehicles currently in the fleet can be converted to LPG. To save the member for Hunter doing his sums, that is about a third of the vehicles in the fleet. There are about 10 million vehicles out there. Of course, this is not the only part of the energy policy the Prime Minister announced on Monday—

Photo of Joel FitzgibbonJoel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | | Hansard source

You haven’t given us the number.

Photo of Ian MacfarlaneIan Macfarlane (Groom, Liberal Party, Minister for Industry, Tourism and Resources) Share this | | Hansard source

I cannot give the number because I cannot read the minds of those 3½ million vehicle owners—

Photo of Joel FitzgibbonJoel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | | Hansard source

How do you cost it if you don’t have an estimate of how many?

Photo of Ian MacfarlaneIan Macfarlane (Groom, Liberal Party, Minister for Industry, Tourism and Resources) Share this | | Hansard source

I cannot read the minds of those 3½ million owners as to whether they will support this proposal and use LPG as an alternative fuel and save money that way or use ethanol and take advantage of some of the discounts that are being offered there. The opposition has already admitted in this House that hundreds of thousands of vehicles will be converted to LPG as people take advantage of the scheme.

I now turn to the ACCC powers that are being requested by the member for Hunter. The ACCC can take action under the Trade Practices Act 1974 if there is evidence of anticompetitive behaviour—and that includes anticompetitive behaviour in the fuel sector. Currently, the ACCC monitors petrol, diesel, ethanol, autogas and E10 prices in metropolitan areas and about 110 country areas across Australia. It can also undertake additional random monitoring in remote areas and will investigate complaints about prices whenever they are made.

Anyone has the opportunity to refer such matters to the ACCC. The opposition is suggesting that we have another inquiry. We are currently in the middle of our 47th inquiry into fuel prices. As the Prime Minister said in his speech on Monday, Australia enjoys prices which are comparable to the rest of the OECD countries, once you remove the excise, and, with excise on, we have the fourth cheapest fuel in the OECD. So the suggestion that Australians are paying more for their petrol than Europeans, Americans or Canadians is sheer nonsense.

With regard to the section 46 proposals, the government is very keen to introduce legislation as soon as the Dawson legislation passes through the Senate—the very same legislation the opposition spoke of earlier and which was opposed by the Labor Party. The government amendments to section 46 in response to the member for Batman will clarify and improve the operation of the provisions of that act. Specifically, they will, firstly, state that a corporation which has a substantial degree of power in a market shall not take advantage of that power, in that or any other market, for any proscribed purpose in relation to that or any other market; and, secondly, they will clarify that, in determining the degree of power that a corporation has in the market, the courts may have regard to the power of the corporation in the market that results from contracts, arrangements or understandings, actual or proposed, with other parties or results from covenants that the corporation is bound by or entitled to benefit from. Thirdly, they will clarify that the matters set out in section 46, which the courts may have regard to in determining the degree of power the corporation has in the market, do not limit the matters the court may consider; and, fourthly, they will provide that, without limiting the generality of section 46, in determining whether a corporation has breached section 46 the courts may have regard to whether the corporation was supplying goods or services at a price less than the cost of such goods or services and had a reasonable prospect or an expectation of being able to recover any losses incurred by supplying the goods or services at that price.

I say again that we oppose the member for Hunter’s amendments, which do not belong to this bill and will be dealt with after the passage of the Dawson trade practices bill through the Senate. I urge members to support the bill as introduced.

10:49 am

Photo of Joel FitzgibbonJoel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | | Hansard source

What a very disappointing response from the minister. I posed three tests for him. Will he support our important amendments to the Trade Practices Act? At least we got an answer: no. Will he support our proposition to expand the referral powers to the ACCC? It was a disappointing answer: no. At least we got an answer. But probably the most important question was a very specific one: how many people do the minister and his department expect to take up the opportunity to secure a grant for conversion to LPG? He completely squibbed that question. Let us not have this rubbish: ‘We don’t know how many people might take up the opportunity—

10:50 am

Photo of Roger PriceRoger Price (Chifley, Australian Labor Party) Share this | | Hansard source

I move:

That the question now be put.

A division having been called and the bells having been rung—

Mr Deputy Speaker, is the minister allowed to interrupt the debate like that and move that the question be put?


Mr Deputy Speaker, can you confer with the clerks and confirm with them that the minister has the capacity to gag the debate, interrupting my contribution, without, at the very least, moving that I no longer be heard?

I will consult the clerks but it is my understanding that the question is before the House and the minister is entitled to put the motion that the question be put.

While someone else has the call?

The Chief Opposition Whip, I understand—

I apologise, Mr Deputy Speaker, but on a point of order: the member for Hunter was on his feet. I am not disputing that the minister can move the motion he did, but he did not have the call at the time and I do not understand why the member for Hunter was not allowed to continue his contribution.

It is my understanding that any member, but especially the minister, can rise and put the motion that he put, irrespective of who is speaking. I have been informed by the Clerk that, after a question has been proposed from the chair, a member may move without notice, and whether or not any other member is speaking, that the question be now put. The matter should be put immediately. I thank the clerks for their wisdom and guidance.

Question put.