John Murphy (Lowe, Australian Labor Party, Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

Mr Deputy Speaker, I also express my appreciation to John Craig and wish him a long and happy retirement.

The Prime Minister evidently believes that he has hit on a guaranteed vote-buying policy with his $2,000 LPG subsidy to some car owners. On the face of it, this seems like a reasonably attractive idea wherein vehicle owners are encouraged to switch to a slightly less polluting fuel that is produced locally and which currently costs significantly less than petrol. However, there are a number of issues that the Prime Minister, in his haste, may have neglected to mention to the people queuing up to accept his handout. Firstly, the apparent price advantage of LPG over petrol is not fixed and the price of LPG has in fact experienced several steep price increases in recent times. The world price for LPG is set according to the Saudi Aramco contract price—otherwise known as the Saudi CP—and this is the benchmark price used around the world.

Over an 18-month period ending in November 2000, the Saudi contract price for LPG rose by a factor of three from 10c per litre to 30c per litre. Then, between March 2004 and March 2006, the Saudi contract price for LPG increased by a factor of nearly two, from 25c per litre to 45c per litre. At the current rate of increase, which has been stable at about half a cent a month for the last three years, the international price of LPG will have doubled again within three years. What will then happen to the LPG price advantage at the pump? Rather than weaning our pump prices off any sort of Middle Eastern directive, we are entrenching this ludicrous situation.

The second issue is the effect of rapidly-increasing demand for LPG on local consumption and export sales. At present Australia produces 3.6 million tonnes of LPG per annum. Of this, two million tonnes is consumed locally and 1.6 million tonnes is exported. If the Prime Minister’s scheme succeeds in installing LPG tanks in 10 per cent of our fleet then all of the locally produced LPG and more will be consumed at the expense of the $600 million in export revenue from LPG sales.

Was this loss of export earnings a concern when this scheme was drawn up? I doubt it. Nowhere in this LPG scheme is there any consideration of the larger strategic issue of fuel supply security and vehicle fuel efficiency. The answer to this complex problem resides not so much in a short-term patch-up to fuel supplies such as the Prime Minister’s LPG handout but in ensuring that the present and future Australian vehicle fleet uses the least amount of fuel as efficiently as possible.

When the OECD reports, as it has, that the Australian vehicle fleet has the lowest fuel economy in the developed world, it means that the Australian motorist is putting more money per kilometre into the family car’s fuel tank than in any other advanced country. I ask: why? The fact that the engines in locally built cars waste more than 80 per cent of the energy in the fuel appears to be beyond the ken of the government. The latest Holden Commodore, which apparently has a poorer fuel economy than the previous model, is a glaring example of the failure of the government’s policies to improve the fuel efficiency of locally built vehicles.

The rational alternative to the obsolescent gas-guzzlers being pushed by the local industry are the fuel efficient hybrids now entering the market. With double the fuel economy of conventional vehicles and with the capacity to recharge their batteries from the mains, hybrids will come to dominate the new car market in the near term as they lead the way to all-electric vehicles in the long term. I ask: why not put an amount of money equal to that which the Prime Minister is handing out for LPG conversions into building hybrids in Australia instead of encouraging car owners to hang on to their fuel-guzzling vehicles?

In relation to this matter, I am reminded of Abraham Lincoln’s famous words: you can fool some of the people some of the time and some of the people all of the time, but you can’t fool all of the people all of the time.