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

I appreciate the opportunity to address the Prime Minister’s ministerial statement on the issue of energy. If one goes through his lengthy speech—big on the number of words but little on potential impact on the Australian community—one will note that the Prime Minister’s energy statement will effectively cost taxpayers $1.6 billion. The problem is that it does nothing on one of the major challenges confronting Australia: our reliance on imported oil from unstable parts of the world like the Middle East. It will certainly do nothing to put downward pressure on petrol prices. So it fails two very key tests: how we do something about petrol prices and, perhaps more importantly in the medium term, how we front up to putting in place a process which allows us to become less reliant on unstable oil from the Middle East.

Before I come to the statement, let me remind members that there has been an important debate in the parliament this week on the Petroleum Retail Legislation Repeal Bill 2006, a bill that repeals the outdated sites and franchises acts and will hopefully free up competition in the petrol retail sector. The opposition believes that this bill is more likely to put downward pressure on petrol prices than anything in the Prime Minister’s energy statement, yet I must report to the House that, despite the importance of this bill, only the Minister for Industry, Resources and Tourism, Ian Macfarlane, and two other coalition members bothered to speak on it. For all the posturing of the government, both the Liberal Party and the National Party—actually the National Party could not even get one speaker—do not care. The bill included consideration of petrol stations potentially carrying ethanol. It is clearly a public statement by the National Party that they do not care about petrol prices in the bush. From the Liberal Party point of view, they do not care at all generally in Australia.

There were three speakers from the coalition government from a caucus of 87. They could not even do better than the three Independents in the House with respect to the number of speakers on the bill. This compares to the 23 who spoke on the Labor Party side out of a caucus of 60. I think this shows who is prepared to put the time into this House and debate the issues that are of major concern to the Australian community. I suppose they were all in their rooms getting ready to rort the increase in publications entitlements of $125,000 or $150,000. When I was elected in 1996, the average expenditure by members of parliament was about $33,000.

Cameron Thompson (Blair, Liberal Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. I would ask the member to return to the statement. It has got nothing to do with entitlements. We are talking about energy initiatives, on which I was a proud contributor.

Barry Haase (Kalgoorlie, Liberal Party) Share this | Link to this | Hansard source

I understand the member’s point of order. He will resume his seat. The member for Batman will return to the paper under discussion.

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

I understand the coalition government’s concerns about the rorting of entitlements, because it also reflects badly on their failure to debate issues. Rather than debating issues in the House, they are more concerned about rorting entitlements, with over $200,000 in an election year available to try to spin an alternative story about petrol throughout the households of their electorate. As far as I am concerned this represents a corruption of the Australian political system and is something we should all be ashamed of. It is double-dipping. There is public funding available to political parties in Australia. This is absolute corruption, in my mind.

Having said that, I also want to discuss some other serious issues about the government’s performance. The Labor Party moved amendments to strengthen the ACCC’s powers and to strengthen the Trade Practices Act to provide greater scope for dealing with abuse of market power as well as to promote new and expanded domestic fuel industries. Despite the practical importance of these amendments to give consumers confidence that the prices they are paying are fair and reasonable in the short term and to reduce our reliance on foreign oil in the long term, only Minister Macfarlane from the government side bothered to show up to debate these issues. The problem is that when the minister got tired of it, he guillotined the debate. Imagine guillotining a debate about petrol in Australia. With ordinary motorists and households doing it very tough at the moment, they were not even prepared to let the debate go on in the House. He sat down, dismissed the amendments and basically said, ‘We’re not interested in further debating how we get a better deal for Australian consumers.’

These amendments would be able to put downward pressure on petrol prices and to provide for Australia’s long-term energy security far more than the Prime Minister’s energy statement. Let us go to some of those issues. Firstly, let us deal with LPG. The opposition is a great supporter of LPG. It was the Labor Party that proposed a rebate in October last year for LPG conversions, so obviously we welcome that announcement. But I am concerned that the details of the implementation of the measure are ill thought out. The Prime Minister says LPG is readily available in 3,200 service stations in Australia and that nearly half of those are in rural and regional areas. The fact is there are 6½ thousand service stations in Australia, so in reality LPG is only available in about one in two. Also, in many parts of regional Australia, the hardest hit by record high petrol prices, there are very few LPG refuelling outlets and it is not possible to obtain a vehicle conversion from petrol to LPG or to obtain servicing for LPG vehicles.

For example, in Western Australia, there are no workshops in Karratha or Port Hedland which deal with LPG conversions. The only option for residents in the north-west is to send their vehicles to Perth for conversion at a transport cost of approximately $7,750 for the round trip of 3,200 kilometres. The Prime Minister has to face up to the fact that it is not just the availability of LPG in rural and regional areas that is a problem. It is also the availability of workshops and skilled people who can do the conversions and repair the vehicles, so a rebate is only part of the question. There is a lot more that the Prime Minister will have to do to make LPG a realistic option in rural and regional Australia.

I am told that the only workshop owner with an LPG conversion licence in Port Hedland does not get enough inquiries to justify setting up his workshop for regular conversions, especially when each conversion takes at least a day. That is only one vehicle per day, and he is the only qualified mechanic at his business. On top of that, he cannot get apprentices and says there is no incentive to compensate him for the time and expense involved in training. He says he has to compete with companies such as BHP paying $30 an hour for basic labour, and customers will not pay that for car maintenance and conversion. He also says that when he finds qualified people, they use his business as a stepping-stone into the mining industry where they can earn up to $120,000 per year plus air fares and subsidised accommodation.

This unfortunately is a reflection on the Howard government’s abject failure to invest in training in the traditional trades over the last decade, and also generally reflects on the fact that too many employers also treated training as a cost rather than an investment and walked away from some of their apprenticeship training responsibilities over the last 10 to 20 years. I simply say: what confidence can the motoring public have that once they commit to LPG the Howard government will not up the tax yet again? I refer to the fact that, since 1996, we have had a variety of changes to the excise rate with respect to LPG.

I also want to go to the issue of ethanol. Far from discrediting the Labor Party, I simply say to the Prime Minister we have always supported the biofuels industry. The House should recall that it was the Keating government that introduced an 18c a litre production bounty for ethanol in the 1993-94 budget in addition to the zero excise rating for the product. It was the Howard government that abolished the bounty scheme one year early, in the 1996-97 budget, and has consistently undermined the industry by changing the playing field on a regular basis over the last 10 years, including having three different positions on excise in the last parliament alone. Nevertheless, the measures to provide incentives for converting retail infrastructure to sell E10 are welcome.

Just as the Prime Minister was forced to adopt Labor’s call to use ethanol in the Commonwealth car fleet last September—following in the footsteps of Labor governments in New South Wales and Queensland—the new measures announced also follow the Queensland government’s lead earlier this year to provide incentives to convert disused tanks to E10.

I now turn to what I think is a real problem, and that is the Renewable Remote Power Generation Program. As the Prime Minister points out, remote and regional communities are doing it tough because not only do they rely on diesel for their transport but also they rely on it for power generation. The Prime Minister has thrown extra money—an extra $123.5 million—at a program which, unfortunately, does not exist, because it basically does not work. In 2004, the government forecast $26.4 million spending on this program for 2005-06 but, interestingly, only spent $2.1 million. Similarly, back in 2004 the forecast for 2006-07 was $18.8 million, yet today just $325,000 is budgeted for 2006-07.

The fact is this program is not working properly and is dramatically underspent. There is no point in allocating another $123.5 million when the money will not be spent. One of the reasons the money is not being spent is that the scheme is not working. This is because remote communities have to pay 50 per cent of the initial investment costs themselves. How can Indigenous communities, where this would be exceptionally important—they are probably in the greatest need of all—afford to do that? They simply cannot and we all know it. The application of this scheme has to be reviewed to try to make it more attractive, especially to remote and regional communities and Indigenous communities, and to make it work on the ground. That is a challenge to all of us, especially those with a special interest in areas such as Queensland, Western Australia and the Northern Territory. I ask the Prime Minister to review these fundamental flaws in the program. It is not just about additional money, it is about making the program work.

The extra funding for Geoscience Australia is very welcome, but more needs to be done. I am also disappointed that the government failed to recognise and support the Labor Party’s second reading amendment to the retail repeal legislation which would have gone to flow-through share schemes for smaller operators. I understand that the Minister for Industry, Tourism and Resources has tried to get the scheme up on about three or four occasions but has been rolled yet again. Smaller fields are not economically attractive to the major players. What that means effectively is that because they can contribute to the national oil production we have to encourage small explorers and developers to look for and exploit these fields. The issue has to be reviewed by the government. The government also needs to review petroleum resource rent tax deductibility for frontier oil exploration. More has to be done yet to retain the integrity and stability of this scheme.

I am also concerned that, yet again, the statement failed to embrace a challenge to Australia in terms of less reliance on imported oil from the Middle East. We are a resource rich country; we are an energy rich country. We are the envy of many countries around the world. I would have thought that we should be seeking to lead the way by embracing some of the new technology, which would not only contribute to our energy security as a nation but also create other opportunities in the world. That is no different from our endeavours to invest, for example, in clean coal technology, which is not only important to Australia but also important to emerging economies such as China in relation to the challenge of greenhouse emissions. I am dismayed that the Prime Minister’s announcement on gas and coal to liquids on Monday shows that he is out of touch with the potential of this industry. As the editorial in Monday’s Australian newspaper correctly noted, ‘The technology exists to convert gas into high-quality low-polluting diesel fuel.’

A fund for research is naturally welcome, but it will not help develop the industry in Australia. The Prime Minister should support our second reading amendment to call for an immediate feasibility study into gas-to-liquids plants in Australia. He could have dusted off his 2001 gas-to-liquids task force report and actually acted on it. Unlike other alternative fuels, I believe the Prime Minister has done nothing to provide an industry framework to encourage the establishment of industries in Australia to convert our coal and gas resources, which are vast, to clean diesel. This is the new technological challenge we could be confronting and leading the world on in association with places such as Qatar and, in doing so, creating a sense of energy security for Australia which is essentially important. The issue of access to energy and the security of supply is the new Cold War and, if we are not careful, Australia will be left behind yet again. I commend the second reading amendment and the repeal legislation bill to the House. (Time expired)

Barry Haase (Kalgoorlie, Liberal Party) Share this | Link to this | Hansard source

I call the member for Slipper.

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

I thank you, Mr Deputy Speaker Haase, for suggesting that an electorate should be named after a member while he is still serving in the House. It is very uncommon for that to happen, but I do take it as a vote of confidence and a vote of respect, and I thank you sincerely for that very positive suggestion. Maybe the Australian Electoral Commission, in its contemplation of Queensland electoral boundaries, might well look at that. I say that in jest, but I thank you for that particular comment.

I welcome you, Mr Deputy Speaker Scott, to the chair. I know that, like me, you were particularly interested to listen to the Prime Minister’s energy announcement earlier this week. As you go around the country there is absolutely no doubt that there is concern in the Australian community about petrol prices. When one looks at the prices listed outside the various service stations on the Sunshine Coast and elsewhere, it is pretty clear that on a daily and weekly basis a great deal of pain is inflicted on motorists when they drive in to fill up their vehicles. Of course, owing to conservative governments in the past, petrol prices in Queensland are lower than in other parts of the country and that is indeed a positive thing.

While the Australian community understands that the Australian government is not responsible for high petrol prices, there is no doubt that there has been angst in the community and a level of concern, a level of ongoing worry as to whether it will be possible to fill up the family car in the future on a regular basis. In his announcement, the Prime Minister has made it clear that this is not the fault of the Australian government. However, the Australian government is expected by the Australian people to endeavour to do something—to do whatever can be done—to alleviate the situation.

When one looks back historically, the Australian government have reduced fuel excise and we have done away with Labor’s indexation of fuel excise. Had those very important initiatives not happened a number of years ago, petrol prices would have been inflicting so much more pain at the bowser than they do now. That is a reasonably glib response to give to people who object to high petrol prices, but it is a simple fact that, if it had not been for the reforms of this government in doing away with fuel indexation and reducing fuel excise, the price at the bowser would have been considerably higher than it currently is.

When one considers that the price of fuel in Australia is largely caused by world fuel prices, I think that whenever possible we ought to become more fuel efficient and look at alternative sources of energy. That is why I for one was particularly pleased at the Prime Minister’s announcement, because the Prime Minister’s announcement, while appreciating that with the stroke of a pen we cannot solve the difficulty of high petrol and fuel prices, indicates that the government has a plan to be more fuel efficient and to make it possible for—to indeed encourage—people to use alternative forms of energy.

Included in the Prime Minister’s address was an announcement of a tax-free grant of $2,000 for converting private vehicles to LPG and a tax-free grant of $1,000 to buy new vehicles which are LPG ready. Service stations are eligible for a $20,000 grant to install ethanol fuel pumps, and the Prime Minister announced that there will be $134 million for increased exploration for, and mapping of, energy sources; expansion of a renewable energy program for remote communities; and the creation of a fund for solid-to-liquid fuel research. These announcements will not solve the difficulty of high petrol prices overnight, but the government has looked at what we, as elected representatives, are able to achieve to try to make sure that we are more fuel efficient and to give people choices.

Ethanol is a product that I believe has a great future, provided it is used appropriately. All of the indications are that fuel which has a certain percentage of ethanol is as good as fuel without ethanol. If ethanol is able to be produced economically—and I understand that it can be—then this will reduce the cost of petrol. It will make driving more affordable and the Australian community will substantially benefit.

While fuel prices are high, we ought not to forget that they are nowhere near as high here as they are at the bowsers in many other countries. One only has to look at the situation in Europe and the United Kingdom to see that vehicles there cost so much more to fill up. In fact, the cost of fuel in those countries is horrendous and we ought to give thanks that the cost of petrol and other fuels in Australia is so much more reasonable than in the United Kingdom or Europe.

You might say that in those countries you do not have the distances to travel that we have in Australia—and that is absolutely correct—but the cost at bowsers in Australia is very much less than in so many other First World countries. While it is important to give thanks for this and to appreciate that this is a very positive situation, it still does not ease the pain of those who have to produce their plastic or cash to fill vehicles with petrol at bowsers in Australia.

There will be some challenges, I imagine, for the infrastructure in bringing about the conversion of vehicles to use LPG. The infrastructure is probably limited and it may take some time for all of those who want to take advantage of this tax-free grant of $2,000 to change their vehicles and make them LPG ready, but I would hope that, as time goes on, factories will produce more vehicles which are able to take LPG so that the delay in conversions will not be ongoing. I suspect that, while there might be a delay to start with, it will only be temporary. The bulge will move through and then more people will be able to get cheaper fuel by using LPG, and as the factories produce more vehicles which are LPG ready, people will be able to buy, off the production lines, vehicles that are able to use LPG. In doing so, they will be able to access the lower fuel prices which apply.

Australia has the capacity to produce substantial quantities of ethanol through sugar cane and wheat, and I think it is important that we always look at alternative sources of energy, whether for fuel or other uses. I personally believe that we always ought to encourage the use of solar power. Solar power is, in many respects, an inexhaustible resource in a country with the hours of sunshine that we regularly have, and sometimes I get concerned that it is so expensive for people to get the benefits of putting a solar hot water system on the roofs of their houses.

But, having said that, the Prime Minister’s announcement on 14 August 2006 has been warmly welcomed throughout the electorate of Fisher and warmly welcomed more generally in the Australian community. It is not a panacea for high fuel prices, but it is a very clear and absolute indication that the government is aware of the pain being inflicted by high international fuel prices on Australian motorists and other users of fuel. It is also a recognition that the government is not able with the stroke of a pen to reduce fuel prices overnight.

Some people have actually contacted me and suggested that the government should subsidise fuel, that maybe it should either abolish fuel excise altogether or pay some subsidy to artificially reduce the cost of fuel to the Australian motorist. I think that would be counterproductive because the government uses fuel excise to achieve positive community outcomes. Fuel excise goes into the general revenue of the nation. If the government has less revenue, then it either has to cut services or raise other taxes. When you ask people what other taxes they would like to see raised, they are really unable to answer that.

So I think the Prime Minister’s statement is a very balanced approach. I consider that the government will continue to monitor very closely the fuel situation, to try to make sure that from time to time the government’s response is appropriate. I welcome in particular the initiatives with respect to alternative fuel, I welcome the subsidies to convert existing vehicles to become LPG ready and I also welcome the fact that a $1,000 subsidy will be given to those people who want to buy a new vehicle which is LPG ready. These are important incremental benefits with respect to a systemic problem—that is, high fuel prices—which is confronting Australia and confronting motorists and fuel users in Australia.

The government would love to be able to just wave a magic wand and solve the problem of high fuel prices, but the Australian community does respect the fact that the government is honest with it. The government has pointed out that high fuel prices are not the responsibility of Australia, the Australian government or the Australian people but are a problem worldwide. While the Australian community appreciates the fact that the government is not responsible for high fuel prices, the Australian people did want the government to do something, and the Prime Minister’s statement on 14 August will go a long way towards indicating to the Australian people that we are taking this problem very seriously, that we are doing what we can as a government to improve the situation and to improve outcomes.

I imagine that the government will continue to have a watching brief in relation to fuel. The government must constantly be prepared to make changes, make improvements and make reforms, particularly in the area of encouraging alternative fuels and renewable fuels. This government does have the runs on the board, and the Prime Minister’s statement of 14 August 2006 was another indication that we do in fact appropriately respond to community concerns and we do bring about good government policy that will benefit the Australian people.

Chris Hayes (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

You only need to pick up a newspaper these days, listen to a local radio, watch the nightly news perhaps or, quite frankly, have a conversation with anyone in an electorate—as you would no doubt appreciate yourself, Mr Deputy Speaker—to find that the first thing people want to talk about is petrol prices. Conversations on petrol pricing have replaced those about the weather or property prices. Whether you are sitting around at the football match, at the club after the game or doing anything else petrol prices are not far from people’s minds. Certainly that has been the experience in my electorate, and I think if everyone were being factual around the chamber that would be their experience as well. I first raised the issue of petrol prices in this country in August last year. Given the fact that I was sworn in as a member of parliament only in late May, it did not take long for people in my area, throughout Liverpool and Campbelltown, to make it known to me that the issues that concerned them were the uncertainties associated with rising petrol prices.

As a representative of an outer metropolitan electorate, I appreciate that thousands of people who get in their cars each day and head off to work face the rapid increase in petrol prices. Hence the reason it is of concern to most people. For instance, within the electorate of Werriwa, which consists largely of working families, people are using their vehicles to get to and from work and to get kids to and from school, as well as the many associated school activities that would follow.

To give you some understanding from my perspective as it impacts on my electorate, you only need to have a cursory look at the actual figures involved. The fact is that half the households in the electorate of Werriwa have two or more vehicles, while two-thirds of the people in my electorate use their vehicles to travel to work. That being the case, you will appreciate the enormous impact of rising petrol prices on the family budget. It is no wonder even a small rise in petrol prices constitutes a serious issue for people in my electorate, where they have to reassess their family budgets and start to think about what they are going to have to cut back—perhaps it is to cut back on out-of-school activities for kids; there may be issues about sports et cetera—and also how they are going to manage the family budget to do everything else, including paying their mortgage. As you would appreciate, outer metropolitan Sydney is the mortgage belt of Sydney.

Given the circumstances of so many of my constituents, it was with considerable interest that I listened to the content of the Prime Minister’s statement on Monday, which is the subject of our discussion here today. I listened with great interest, and I have to say I was disappointed. I was disappointed because I thought it was only designed to address short-term issues. It was not designed to actually give this country energy security for the future and protect against the long-term ravages of a dependency on foreign crude oil supply.

As you would no doubt appreciate, it did take less than a three-hour meeting of the Prime Minister’s backbench to hear just how the skyrocketing petrol prices were hurting people—Australian families and small businesses. So, when the Prime Minister got proudly to his feet on Monday and delivered one of his very few ministerial statements, I have to say it was somewhat disappointing in terms of the content. It was disappointing because it was another effort as a political quick fix. It did not deal with the issue of what is looming large on the horizon of the economies throughout the world or the impact that rising petrol or fuel prices will have on the Australian economy while we are dependent on foreign oil supply, and, quite frankly, it did little to show that we had a plan to protect Australian consumers from having to compete with the emerging and energy-hungry economies of China and India—steps that would have allowed Australia to develop a diversified and home-grown fuel industry. To put in place the steps, we on our side have actually looked at those and, as you would recall, Mr Deputy Speaker Scott, because I think most government members do—they read the Labor Party’s blueprints—in October last year we released our blueprint on fuel.

Relief at the petrol pump is one aspect of the issues associated with transport fuels and the energy debate. This is a matter that I spoke about on a number of occasions. As a matter of fact, I sought to have a reference to the ACCC so that that body could examine domestic petrol pricing, a measure that this government opposed, even to the point of gagging the motion that I was moving at that stage. There is no doubt that in the immediate term the most pressing issue for most motorists and small businesses is petrol pricing and that is why the Labor Party sought a reference to the ACCC whereby it could examine in detail all aspects of domestic petrol pricing to ensure, at least for the purpose of Australian motorists, that there was some transparency in the pricing at the petrol pump.

However, the second and probably most important aspect associated with the transport fuels and energy debate is long-term energy security. If this government continues to thumb its nose at putting in place steps to address the longer term implications of increased demand for oil and the limited growth of supply, that cry of pain from the populace will only grow louder and the impact will be felt more acutely on the household budgets of families and small businesses.

I have raised the issue of petrol prices and the need for forward planning for Australia’s long-term energy security in the parliament on at least a dozen occasions. I might add that on the last occasion on which I sought to do that I was gagged by the government in trying to have a reference to the ACCC. Can you believe that? The government does not want to hear about the experience of the people of south-western Sydney, and I imagine that that is the case for people from working families in all outer metropolitan areas. In contrast, we have been listening.

I certainly did take this on board when I listened intently to what the Prime Minister had to say the other day. Labor was looking in the Prime Minister’s statement for a sign that the government had a plan for the future, but all we heard in this marquee announcement was that subsidies would be introduced to convert motor vehicles to LPG and that petrol stations could access subsidies to install ethanol tanks, but this government still has not been able to tell us how many people will be able to take advantage of these subsidies. It cannot tell us how many motorists will be able to benefit from the LPG subsidies. I know that the member for Hunter estimates in his calculations that approximately only three per cent of motorists will be able to take up the advantages of that scheme. If that is right, that means that 97 per cent of people will be left disappointed with this marquee initiative announced by the Prime Minister.

I mentioned earlier that the Prime Minister’s statement contained very little vision for meeting Australia’s future energy demand—be they transport fuels or any other energy form in that regard. There was too little in the measures to uncouple from our dependency on overseas oil supply. By contrast, Labor has already developed and released its plans for the future. While the government concentrates on energies and propping up the nuclear power debate, Labor has called for a full examination of all options available to us, including wind, solar, biofuels, clean burning coal and others. It is not enough to simply concentrate on one aspect of energy for securing Australia’s energy future.

I found it particularly interesting that on the day that the Prime Minister delivered his much awaited statement, the Australian newspaper ran an editorial that showed that at least some people are concerned about Australia’s long-term energy interests. In its editorial on Monday, the Australian newspaper said this:

... Australia has the capacity to break its dependence on imported crude oil. But this will not be done by political posturing and bandaid solutions.

In other words, this will not be done by this government. The Australian went on to say:

Australia must seize the opportunity of a high world oil price to finally get serious about its long-term energy future.

It went on to say:

Opposition resources spokesman Martin Ferguson has raised the issue of gas or coal to liquids as the best long-term answer to the current oil price shock, and he is correct.

That is a telling comment coming from the Australian newspaper, that has taken it upon itself to look at what is motivating its readers and, in turn, protect them from the oil shock and acknowledge that the development of technologies in gas and coal to liquids is in Australia’s best long-term interest.

Unlike the government’s attempt at the short-term political fix, Labor plans for the future. Labor’s fuels blueprint sets the goal of reducing our reliance on foreign oil and outlining a need to diversify Australian fuel industries. Labor has identified that it will pursue self-sufficiency to make this nation stronger, to insulate it from the ravages of the market, to protect it from the economic forces of supply and demand on the world stage, which interact to drive up oil prices. Labor is looking after the strategic interests of Australian fuel security.

In contrast to the government’s marquee announcement about LPG conversions, subsidies will not be available to all motorists. We saw Mr Nairn acknowledge the other day that we will not be moving to convert Commonwealth vehicles to LPG because of the limitations that the gas fuel provides presently. And bear in mind that he made his statement in July this year and then tried to tell us all that much has changed since July. The only thing that has changed since July is that the Prime Minister got up on Monday and made a statement about it. The Prime Minister’s announcement is likely to do little more than drive up the price of LPG conversions and LPG fuel by increasing demand. Labor’s plan, quite frankly, is to provide incentives for Australians to be able to buy and run their vehicles on alternative fuels.

In addition to making a serious effort in diversifying Australia’s fuel industry and reducing the reliance on imported crude oil, Labor is committed to making alternative fuel vehicles tariff free, cutting up to $2,000 off the price of the current hybrid vehicles, and working with state and local governments to give city traffic and parking advantages to hybrid vehicles. A Labor government would also conduct feasibility studies into gas-to-liquid plans as well as coal-to-liquid plans, offer petroleum resource rent tax incentives for the developers of gas fuels which provide resources for gas to liquids within their project, examine the infrastructure investment allowance for investment in Australian gas-to-liquid infrastructure, develop a targeted fund scheme for research and development in these areas, work with industry to improve engine design and fuel quality standards, ease the regulation on biofuel products on farms, and encourage a sustainable ethanol industry. (Time expired)

Greg Hunt (Flinders, Liberal Party, Parliamentary Secretary to the Minister for the Environment and Heritage) Share this | Link to this | Hansard source

In responding to the Prime Minister’s energy statement and energy initiatives of this week, I want to proceed on two fronts. Firstly, I want to try to put the statement into a global context and, secondly, I want to deal with some of the specific initiatives contained within the Prime Minister’s package.

Within the global context are two critical trends that we have to examine. Firstly, we have to examine the trend in relation to transportation fuel, primarily oil and petroleum products, and secondly, we have to look at static energy or electricity and the generation of our power sources. The underlying theme in relation to both is that we have a transforming world environment. In a sense, historians talk about the long century being 1789 to 1914—the Congress of Vienna settled the boundaries of Europe in a relatively stable environment—and we have been through that in terms of energy. In energy terms, you might draw the analogy that this is 1913 and that we are going through the process of reconstructing the next great phase of human energy consumption over the coming century, and we need to look at it in terms of a radically different set of the structures.

What is the cause of that? The cause is a combination of both supply and demand at the global level. We have the emergence of China and India as two giants, and they are only just going through the early stages of the demand that they will require both in automotive and liquid fuels and in static energy or electricity requirements. Those changes are profound and dramatic. They are profound on the demand side and, as many have noted, our oil supply base is limited: it is a source with limited capacity. Our discoveries do not equal our new requirements, so over the next 50 years we will face diminishing supply relative to the increasing demand. The impact historically is absolutely clear. It will result in a price change. It will result in more than just a price change; it will result in the rationing of supply relative to demand, which will have quite a significant impact on prices and quite a profound impact on the way in which we use liquid energy resources over the coming half century. That means there has to be adaptation on a profound and global level. These changes have to occur—there is no doubt about it. That is one of the great responsibilities that members on both sides of this chamber have in our preparation for the coming half century and beyond. So that is one of the issues, along with water, that I focus on deeply as a major, personal responsibility.

I mentioned also that the second of the global trends beyond transportation fuel relates to static energy. Here there are a broader range of resources. On that front, however, it is twinned with both the supply and the environmental consequences of CO production. The global equation is about 40 billion tonnes of CO per annum, of which Australia accounts for 560 million tonnes or about 1.4 per cent of output. As somebody who has responsibility, along with the Minister for the Environment and Heritage, Senator Ian Campbell, for Australia’s environmental work, there is no question that climate change resulting from this 40 billion tonnes is a real and significant threat. We have seen an increase in global temperatures over the last century—and I rely here on my advice from the Bureau of Meteorology, for which I have responsibility—of about 0.7 to 0.8 degrees. It is predicted that there is likely to be an increase in temperature of somewhere between 1.2 and 5.8 degrees over the coming century, depending on the emissions scenarios and the effects scenarios, but they will be real and tangible. That in itself is likely to see a sea level impact of somewhere between eight or nine centimetres and 88 centimetres. Again, the effects will be real and tangible, not catastrophic but absolutely significant. Because what we put into the atmosphere in CO stays there for hundreds of years, over the longer run there will be an exponential effect, not only during this century but beyond, so I am very aware of our responsibilities not just to future generations within this century but to future generations in coming centuries.

Against all of that background we have to look at low emissions technologies. I am source neutral as to whether those low emissions technologies are clean coal, which I think is fundamentally important, nuclear technology, which accounts for about 16 per cent of the world’s static energy—and Australia is one of the suppliers of 30 per cent of the world’s current uranium products, with 40 per cent of the world’s uranium reserves, so it has a critical role and, I would argue, a moral role in helping to ensure that we provide this energy; I think it is a very important source—or whether they are other forms of renewable energy, whether through solar, hydro, thermal energy, wind or tidal. All of those have a role along with hydrogen. But none of these technologies—clean coal, nuclear, those different sources, demand reduction, fuel switching—will solve the problem alone.

The global equation that Ian Campbell has presented is that, while there will be a doubling of energy requirements over the course of this century, there needs to be a 50 per cent decrease in our emissions. Against that package, what we have is a first stage energy initiative at this point. That first stage energy initiative, which I welcome, sets out five basic areas of responsibility and immediate action.

The first deals with the question of high petrol prices, which have risen in part because of specific events in the global environment but more particularly because of the underlying trend of increased demand caused by China and India. That has manifested itself in the LPG vehicle support scheme, which provides $670 million over eight years to encourage the uptake and use of liquid petroleum gases and alternative fuel. It is a very important initiative. It is not going to solve everything for everybody, but it is an important step in providing alternatives for as many people as possible and in decreasing pressure on demand for liquid petroleum. That scheme provides a $2,000 grant for approved and fitted LPG conversion of a motor vehicle for non-business use, and a $1,000 grant for new LPG dedicated or dual fuel petrol-LPG vehicles for non-business use—in other words, factory produced vehicles. It is important for Australia’s own producers.

One initiative on which I have been working behind the scenes with some of the finance providers is to see whether concessional loans could be made available to people to fill the gap that they have to pay—which may be between $500 and $1,500—for this LPG conversion. That would give them the ability to make that payment over time rather than up front. I am hopeful that we may be able to achieve something on that front.

Secondly, the ethanol infrastructure scheme is a very important development. It is not a total solution—and anybody who presents it as that is misrepresenting the situation—but I have no doubt that it is an important contribution both in terms of the provision of cleaner fuel and of biofuels. It is not the total solution, but it is an important part both of our clean energy mix and of our use of additional biofuels as a means of taking pressure off the price. There is $17 million there to enable service station operators to upgrade their equipment and to increase the sale of ethanol blended fuel. Essentially, that is in the form of a $10,000 payment once any conversion to allow the sale of LPG is complete, and a $10,000 bounty after an ethanol blend sales target is reached. It is a nice combination.

The third area is in relation to the renewable remote power generation program. Here there is just over $120 million over a period of four years to extend and expand that program, which encourages the replacement of diesel generators with renewable energy sources for power generation and water pumping, whether that is wind or solar—which are the two most likely options for those renewable areas—twinned with solar cells and other forms of battery storage. Battery storage on a grand scale is one of the great technology challenges we face. This is an important area.

In terms of the deeper structural changes over the coming years, the assistance for Geoscience Australia of $134 million in total for exploration promotion and development is extremely important. We need to look for major new oil sources. Secondly, looking at geothermal energy is an option. The early work that we have seen coming out of the Cooper Basin is of high importance. We have a generation capacity in Australia of 45 gigawatts—45 billion watts. That is the Australian equation at the moment. The figures that we hear about from the Cooper Basin and other geothermal energy sources are quite significant—anything from one gigawatt to 10 gigawatts of new capacity. That is profoundly important, on the scale of the Snowy Mountains scheme. We will see whether that tests up to what is promoted, but it does offer enormous potential.

Finally there is the future transport fuels options package. That is work that Minister Macfarlane has commissioned. From the presentation on the other side of this chamber, it was as if the Labor Party is the only set of people thinking about gas to liquids and coal to liquids. That is false. There is important work being done there and it is extremely important to Australia’s energy security that we master this clean coal technology and we master the coal-to-liquids conversion and gas-to-liquids conversion.

The Bass Strait depleted wells offer an extraordinary capacity to make a huge inroad into Australia’s CO emissions through geosequestration. Coal-fired power stations adjacent to depleted wells gives us an almost unique chance to reduce the 60 million tonnes of CO emissions that come out of the Latrobe Valley to 10 million tonnes. Those are the figures which Monash Energy, a subsidiary of Anglo Coal, which is itself a subsidiary of Anglo American, have given to me as being distinctly possible. So in one hit, in one area and in one sector we would be able to reduce Australia’s CO emissions by about 10 per cent—and that is not on the never-never; we are looking at a time frame there of about eight to 10 years.

So that is the package. I believe that it helps deal with the deeper structural challenges which Australia faces in terms of our transport oil, our static energy and our CO emissions. I think it is an important step. It is not the end of the process but I commend it to the House with my full support.

Bob McMullan (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

It is interesting to follow the Parliamentary Secretary to the Minister for the Environment and Heritage. I thought the first half of his speech was a very interesting definition of the comprehensive nature of the problem. I do not agree with everything he said but it was broadly and in sweeping terms an outline of the fundamental international characteristics of the problem. But what it inevitably meant was that the second half of his speech showed how inadequate the response is to the problem he defined.

I want to spend most of my time dealing with a specific aspect of the way in which the Prime Minister presented the material, which created a misleading impression—and a misleading impression that refers back to some activity of mine some years ago—and I want to deal with that primarily. I welcome in general the opportunity to respond to this statement. The statement is welcome but disappointing. It is one of those Clayton’s statements that you make when you want to be seen to be responding to the petrol price crisis but are not actually doing anything about it.

I was amused to see this morning in the newspaper a critique saying ‘Oil giants will win in fuel package’ and the claim that 87 per cent of the money that the Prime Minister has committed to programs to help motorists will benefit the oil industry.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

Order! The member for Canning cannot leave. We need a quorum.

Bob McMullan (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

My speech was not that bad that you had to cut it short, I am sure! Thank you, Mr Deputy Speaker.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

I just want someone to listen to you! I am listening intently.

Bob McMullan (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

That of course was your colleague, Mr Deputy Speaker, Senator Boswell, the National Party Senate leader, who said 87 per cent of the money would benefit the oil giants. That is just part of the analysis that shows the inadequacy of the response. Nevertheless, there are some elements of it that I welcome: some elements will assist some citizens to do things like LPG conversions. In terms of the challenge the parliamentary secretary defined, particularly as it relates to climate change, what the Leader of the Opposition has correctly described is one of the four great challenges facing the international community—poverty, terrorism, weapons of mass destruction and climate change. As a response to that or even as a response to the problem of petrol prices, which is the immediate political problem facing the government, it was very inadequate but any positive aspect of it is welcome.

I make one brief reference to which all such statements—and not just by this government but by previous governments, including state governments—are reported in Australia. I think there is a serious inadequacy and manipulation, which is reflected in this statement but not unique to it, which has been going on for years. There is an elastic time period over which expenditure announced with regard to packages of reform is included. For example, in this proposal it is blithely reported that it is a $1.5 billion package when, in fact, it is a $1.5 billion package over eight years. I think we have to move towards some sort of standardisation when the forward estimates impact of measures is reported. The rest is entirely notional. There is no certainty that any of those things are going to happen and they would not be included in the budget papers.

I want to take the balance of my time to deal specifically with a misleading implication in the Prime Minister’s statement. It is one that has been recurrent with regard to the Labor Party’s attitude, and my attitude in particular, to ethanol. It arises because of my campaign, for which I make no apology and of which I am very proud, to expose the rorts and special deals on ethanol in the period from late 2002 to the early part of 2003.

Every statement I made in that period and every statement I have made since has been consistent with the longstanding position I and the Labor Party have held—that is, there is a significant future for ethanol, going back to the introduction of the ethanol subsidy by the Keating government, which of course was abolished by the Howard government. What we were against then and what I spoke out against then were rorts and special deals for mates. We always made it clear that we were opposed to rorts, we were opposed to special deals for mates, we were opposed to consumers not being informed and we were opposed to the failure of the government to set a 10 per cent cap on ethanol in spite of all the scientific advice that it should do so. We said then that this failure to act would adversely affect those who were selling legitimate E10 ethanol products. There were some then and we never criticised them then. There are some now and I support them now. E10 has always been a valid option. It is the special deal for Manildra, the big supporter of the Liberal Party, that was our objection and concern.

Let us look at the facts: in November 2000, Environment Australia advised the government that it should have a limit of 10 per cent on the ethanol level in petrol, consistent with international standards. In December 2001, the Australian Competition and Consumer Commission wrote to the Minister for the Environment and Heritage calling for a 10 per cent limit and urging that consumers be advised when they were sold high ethanol blends. But even as late as September 2002, the first time I raised it—which was almost two years after the first advice and almost a year after the ACCC recommendation—the government was refusing to act and we had the head of the Australian Institute of Petroleum making it clear that the then Minister for Agriculture, Fisheries and Forestry had said to him that the Prime Minister would not agree to a 10 per cent ethanol limit if it affected the operations of Manildra. That is the basis upon which we said that consumers were not being advised as they should be, that the limit was not being set as it should be— because of special deals for mates.

Every policy statement that we put out, every piece of information that we put out, made that clear. We said there seemed to be no risk of damage up to 10 per cent in ethanol but that every producer—every major Australian motor vehicle producer and the people in the boating industry as well—was saying that warranties on engines would be voided if you put in more than 10 per cent ethanol, and yet customers could not know whether or not they were doing it because the government refused to advise them. Was this a scandalous policy we were proposing, that there should be a 10 per cent cap and that consumers should be advised? It is so scandalous the government adopted it. It is so scandalous it is now the government’s policy. But when we advocated it the government twisted and turned and did everything it could to avoid having to implement it.

It was not a lack of information. In 2001 the then consumer affairs minister, the Minister for Financial Services and Regulation, Mr Hockey, said that consumers have a right to know if their engines are at risk, but the government would not act to require people to disclose. The head of the Australian Competition and Consumer Commission, Allan Fels, recommended to the government that they should put a limit and they should require disclosure. He said:

This silence may mislead consumers.

But would the government act? No. They set up a task force and everybody on the task force except two said they should put a limit and they should have disclosure—and the two dissentients were both from the ethanol industry, representing the manufacturer, who did not want the limit. The government said, ‘Well, this committee can’t get a unanimous decision, so we’ll put off making a decision even longer.’

Everybody knew what the decision was going to be—what it had to be, what the international standard is, what the ACCC had requested, what the minister for consumer affairs had requested, what the Department of the Environment and Heritage had requested and what the Labor Party advocated as a policy—and the government attacked us and said we were terrible people who were opposed to ethanol, and then eventually they adopted our policy. Eventually they implemented exactly what we had advocated, and they knew they were always going to have to. They knew that the position they were adopting, which was to have no limit and no advice to consumers, was untenable, but they continued to do it. Why? As the head of the Australian Institute of Petroleum made clear, it was because the Prime Minister would not agree to a 10 per cent limit if it would affect the operations of Manildra.

When you do special deals, it has consequences and it often has unintended consequences. One of the consequences of those special deals and rorts was that the reputation of ethical sellers of ethanol, under the E10 brand, suffered. We said that is what would happen and it did, and it is going to take a lot to fix it, but that is not because there is anything wrong with the product. I go back to the history. When I was parliamentary secretary to the then Treasurer, Paul Keating, we negotiated, principally with Manildra, a subsidy on the production of ethanol. The then Liberal-National Party opposition said they would keep it, but of course when they came to office they abolished it.

Even at the height of this controversy, the Howard government introduced a program of capital grants for people to establish ethanol manufacturing plants, and we supported it. I certainly supported it personally. To the best of my recollection, the opposition as a whole supported it—but I did. I thought it was good public policy. I think some aspects of some of the subsidies were very dubious, but the question of capital grants is absolutely a good, valid bit of public policy and I supported it and I was content for it to be continued. But we opposed the rorts then and I oppose them now. Events have in fact vindicated everything that we did.

So let us come back to the broader statement that we have before us with the government’s energy policy statement. You can never say that a statement that introduces some modest assistance for people doing LPG conversions, for example, is not welcome. It has been exaggerated in its benefit. It is a very small fig leaf to cover what is a rather large political embarrassment for the government, but it is better than nothing. I do not say it should not have been made. I suspect that, if there had been more research earlier, we would have got a more comprehensive statement. If it had gone to the whole range of policy issues more comprehensively, which were included in the Leader of the Opposition’s alternative fuels blueprint, it would have been a much more effective response to the substantial international problem, which was reasonably well outlined by the Parliamentary Secretary to the Minister for the Environment and Heritage, who spoke before me. While I did not agree with everything he said, he did indicate the comprehensive nature of the issue, the underlying forces that are driving changes in resource allocation and environmental threats as a consequence of changes in the global economic environment and the global climatic environment.

As an effective response to either of those things, this is a pitifully small response, but I welcome elements of it. It is better late than never; better too little than nothing at all. We have this modest response. Insofar as it is of assistance to people that I represent, I welcome it. I wanted to take the chance to correct the record over the rorts that were undertaken in 2002, and I am pleased that the government finally did adopt our policy with regard to those matters. It is the correct policy. It was overdue. It should have been done much earlier, but it is better late than never.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

I am happy to make a short contribution now in the debate to take note of the Prime Minister’s statement on energy initiatives and to continue my remarks when parliament resumes in a fortnight’s time. I thought I would take the opportunity to make a short contribution now to reinforce an important point I was making in the House yesterday and to again extend an invitation to the Prime Minister or the Minister for Industry, Tourism and Resources to answer a very simple question, and one which I have been asking for days, and that is: what is the government’s estimate on the number of motor vehicles which will have access to the government’s LPG grants program?

We have done considerable work on this, using Australian Bureau of Statistics numbers on the number of vehicles in this country, and the level of funding that has been given to the grant over the next eight years. My calculation—and I am very confident my calculation is correct—is that less than three per cent of motor vehicles in this country will have access to this grants scheme. The obvious second question which flows from that is: what is the Prime Minister’s message to the remaining 97-plus per cent of consumers who will not have access to that grants scheme? What was in the Prime Minister’s statement on Monday which is going to bring fuel price relief for them tomorrow, next week, next month or even next year?

These are the simple questions the Prime Minister or his minister must answer. We know they have the number of likely uptakes on LPG; otherwise, they could not have possibly costed this scheme. So I call upon them again to come forward with that number. It is simple. They have it in their drawer; they have it on their computer. Be honest with the Australian people and share that information with them.

This is an energy statement that will somewhat disappoint the Australian people. What we needed from the government in the first instance was a decision to refer to the ACCC the power it requires to properly investigate petrol prices in this country. It is very, very simple. The stroke of a pen would have achieved that. Second, we wanted the government to strengthen the Trade Practices Act to enhance the ACCC’s power to successfully prosecute any retailer or wholesaler of fuel doing the wrong thing by motorists. Third, we needed a proper approach to diversifying fuel consumption in this country and further reducing our reliance on imported oil and, in particular, Middle Eastern oil. We got none of that in this package. We got some hope—some very long term, minor hope—on import dependency. The government picked up some of our proposals on bringing forward investment in exploration of more oil and gas, and we saw a very slight hint that it might be beginning to agree with us on the question of the development of a gas-to-diesel industry in this country, but it was not enough.

So I invite the Prime Minister, now the community has come to a conclusion that there is not anything in this package that is going to bring them any short- to medium-term relief on petrol prices, to come back to the parliament and admit that this was a hurriedly and recklessly cobbled together package that will do nothing in the short to medium term on petrol prices. We invite him to do so. He stole our LPG policy, and we are delighted to say that a LPG policy as a small part of a broader policy would have made a difference. But, by focusing entirely on LPG, he is distorting the market. You are going to have demand outstripping supply on conversions. Conversion prices will go up. You are going to have demand outstripping supply on gas itself and the price of gas is going to go up. That is no way to run a policy. I seek leave to continue my remarks later.

Leave granted; debate adjourned.