Thursday, 5 June 2008
National Fuelwatch (Empowering Consumers) Bill 2008; National Fuelwatch (Empowering Consumers) (Consequential Amendments) Bill 2008
I rise to support the Rudd government’s National Fuelwatch (Empowering Consumers) Bill 2008 and the National Fuelwatch (Empowering Consumers) (Consequential Amendments) Bill 2008. As this is a complex issue, it is appropriate that we have a brief look at some recent history around the problems of fuel pricing in Australia. In its first term of office, the Howard government abolished the Prices Surveillance Authority, whose role was to monitor excessive price increases and prosecute individuals and organisations that indulged in price-fixing activities. Then, after ignoring the results of this disastrous decision and under extreme pressure, the Howard government commissioned yet another investigation into petrol prices. The Howard government then told us that the ACCC would be the appropriate body to ensure we paid a fair price for our fuel, but what they did not do was provide the ACCC with the powers it needed to monitor, investigate and prosecute any instances of collusion or any other anticompetitive behaviour by oil companies, distributors and retailers.
It was the election of the Rudd Labor government that provided the ACCC with these powers through the establishment of the petrol pricing commissioner within the ACCC’s framework. This delivered on Labor’s election commitment to ensure that Australian motorists would not pay one cent more for fuel than they needed to. It is a simple proposition but one that the opposition chooses to ignore by constantly verballing the Labor government by stating incorrectly that Labor promised to reduce the price of fuel. Labor made no such promise. Verballing is a constant habit of those opposite, probably because of the influence of failed copper and member for Dickson, who is the opposition’s spokesman for finance, competition policy and deregulation.
There has been evidence to suggest that anticompetitive behaviour had flourished under the almost 12 years of the Howard government, which artificially inflated the already high costs of fuelling our vehicles. Labor’s policy initiative will achieve precisely what we intended it to achieve, which is to place downward pressure on fuel prices. At no stage during our time in opposition did we ever promise to reduce the price of fuel. In fact, to say so would be to continue to perpetrate blatant untruths.
Motorists throughout Australia, and particularly in regional Australia, do not need the opposition to tell them that they are being hammered in the prices they pay for fuel—that is, petrol, LPG and diesel. As I outlined in a submission to the inquiry by the Senate Standing Committee on Economics into petrol pricing in Australia in August 2006, the average retail price for petrol in my electorate of Bendigo rose from 89c per litre in September 2003 to $1.45 per litre in June 2006. That was a massive rise of 62.9 per cent. On the June 2007 Queen’s Birthday long weekend the price was around $1.39 per litre. These dramatic increases happened on John Howard’s watch.
Finally, after a decade as Treasurer, the member for Higgins for the first time apparently instructed the Australian Competition and Consumer Commission, the ACCC, to look at anomalies between the price of benchmark Singapore oil and the price motorists were paying to fill their vehicles—in other words: look but don’t touch, in line with existing coalition policy of doing nothing to relieve the pressure on Australian motorists. The then Treasurer was stung into appearing to take action, because Labor, as always, had set the agenda on the important policy areas that affect most Australians. As I said before, it was the election of the Labor government that finally gave the ACCC the powers to effectively monitor, investigate and prosecute any instances of collusion or other anticompetitive behaviour.
The Rudd Labor government has done more to introduce transparency into the petrol market in Australia in our first six months than the previous coalition government managed to do in 12 years. Labor promised to have a full-time cop on the beat, with full monitoring powers, and we have delivered. The government appointed Mr Pat Walker as the nation’s first Petrol Commissioner and he began work on the 31 March this year. We have given the Petrol Commissioner full powers under the Trade Practices Act to formally monitor unleaded petrol prices to keep petrol companies in check. The government has asked the new Petrol Commissioner to particularly focus on LPG and diesel prices and, if the Petrol Commissioner asks for further powers, the government will look sympathetically at any such request.
Debate interrupted; adjournment proposed and negatived.
The National Fuelwatch Scheme will help motorists buy the cheapest petrol at the cheapest petrol stations at the cheapest times. I concede that motorists in smaller rural communities with only a small number of fuel retailers will not benefit anywhere near the extent that their city cousins will under the government’s proposal. I have long argued for a review of the dreaded tax on a tax that resulted from the former Howard government’s introduction of levying the GST on the pump price of petrol, which means that motorists are paying the GST on top of and included in the excise tax of 38c per litre. This means paying a tax on a tax, something that the previous government said would not happen. I welcome the announcement of a major review of our tax system announced by the Prime Minister that will include reviewing the current tax regime on fuel prices throughout Australia, including the current tax on a tax calculated at the fuel pump.
Under the Fuelwatch scheme, petrol stations in metropolitan and major regional centres will be required to: notify the ACCC of their next day’s prices by 2 pm the day before; maintain this advised price for a 24-hour period; and apply the scheme to unleaded petrol, premium unleaded petrol, LPG, diesel, 98 octane fuel and biodiesel blends. The petrol price information collected from these petrol stations will be made available to consumers through: an email and SMS alert service informing subscribed consumers of details of the cheapest fuel in their area; a national toll-free number where motorists can locate the cheapest petrol in the area as they look to purchase fuel; and a national Fuelwatch website with station-by-station, day-by-day and suburb-by-suburb petrol price information.
Analysis undertaken by the ACCC last year concluded that under the Western Australian FuelWatch scheme the ‘relevant weekly average price margin was around 1.9 cpl less on average’. However, significant savings can be made when consumers choose to buy from the cheapest petrol station in their area, which could be 15 or 20 cents less per litre than the most expensive petrol on sale.
The Fuelwatch proposal seems to have everyone’s support except the current Liberal-National federal opposition, who are only interested in a cheap and very dubious political fix by wiping out completely the $22 billion dollar surplus provided in the May budget. Of the surplus, $8 billion will be eroded completely by the reduction in excise promised by the opposition and the rest will be eroded by their opposition to a number of other budget initiatives announced by Labor. So much for their dubious reputation of being, ‘fiscal geniuses’!
Some experts have indicated that the days of fuel prices at around $1 per litre may well have gone forever. The Australian editor of EnergyBulletin, Mr Adam Grubb, and former oil, coal and gas industry executive Mr Ian Dunlop were recently asked:
Have we entered a new energy era of high-priced oil?
Are the days of $1/litre petrol gone for good?
Mr Grubb responded by saying:
that is, Australia—
appear to have reached the peak in oil production. Global conventional oil production peaked in May 2005. Australia as a net importing nation is particularly vulnerable. Our internal oil production peaked in 2000,
Mr Ian Dunlop answered:
There is little doubt we are now in a new high-price energy era. On the demand side, the rapid growth of world population, all understandably aspiring to higher standards of living and consumption, is putting enormous strain on the global environment, to the point that we are probably reaching the ‘Limits to Growth’ forecast long ago.
They were also asked:
... as a policy response, how useful is lowering the fuel excise in combating the rising price of oil, both in the short and long term?
Mr Dunlop responded by saying:
It is completely futile. Prices are determined by the international market and there is nothing our government can do about that. Five cents per litre is irrelevant to a market where prices may fluctuate by several dollars.
Mr Grubb said:
Of course there may be some short term relief for struggling families. However we need to face the reality that oil is never going to be as cheap again as it was in the late eighties and nineties. As global oil exports continue to fall, prices will continue to rise in real terms. So we would merely be delaying the inevitable, while reducing government revenue which might be better spent helping those in need with more long term strategies and preparing the country for a leaner, and greener, future.
He went on to say:
Peak oil and climate change present us with an unprecedented challenge: how to begin consuming radically less fossil fuels while maintaining dignified lifestyles and essential services.
Clearly we need to look further than the current arrangements to secure an appropriate source of energy for our needs in the future. There are several options that would assist in this process but none are likely to provide any assistance over the short term.
Ethanol blended fuels are already available and considerable research is being done on growing oilseed crops that could be converted into fuel to drive our transport systems. Australia has estimated reserves of 150 trillion cubic feet of natural gas. If converted to transport fuel, it is enough to power all of Australia’s cars, buses and trucks for 50 years. Our natural gas is easily converted to liquid diesel that can be used without modification to existing engines. Australia currently exports up to 12 million tonnes of liquefied natural gas annually, with a 25-year supply contract recently signed with China—a couple of years ago now—and 15-year-plus supply contracts for 5 million to 8 million tonnes annually which have currently been negotiated or are under consideration with other potential export customers. While these exports are significant in terms of export revenue, they may not be in Australia’s long-term strategic best interests. We need to thoroughly examine the potential of converting some of our vast liquid natural gas resources into usable motor fuels, thereby reducing our dependency on oil from overseas. I commend the bill to the House.
I rise to oppose the National Fuelwatch (Empowering Consumers) Bill 2008 and consequential amendments bill. Before the 2007 election the Prime Minister campaigned on a fresh approach. He offered something called ‘new leadership’ and the ‘hope’ for working families that petrol would be cheaper if there was a change of government. There was an expectation created. Of course, since the election we know that the Prime Minister and members of the government have learnt that there is a range of complex factors in oil prices, and indeed it is very difficult for them to make an impact on petrol prices.
I rise today representing my electorate of Mitchell, which has the highest rate of car ownership per dwelling in Australia. My electorate of Mitchell has 70.2 per cent of households with more than two cars; car ownership in my electorate is the highest of anywhere in this country. People pay exorbitant tolls to get to work in the city from the outer suburbs. That is why this bill needs to be closely scrutinised. Anything that may increase the price of petrol, or its complexity, needs to be closely monitored.
As established before the election, there was an expectation created that Mr Rudd would provide cheaper petrol for motorists. Like everything else at the time, blame was sheeted home to the Howard government. People in Australia were led to believe that, if the government changed, prices would be lower. An expectation was created. Every member in this chamber knows there was an expectation created in relation to the prices of a range of commodities around Australia. One of the reasons I oppose this bill is that any attempt by the government to fix commodity prices invariably ends up in failure. This bill fixes prices.
Fuelwatch seems to represent the peak of Rudd government policy. It is a well-worn adage that this government prefers spin over substance. It is commonly accepted as their method of dealing with issues. It may have worked in opposition, but in government it does represent a major blockage to designing and implementing effective policy. First we were going to monitor fuel prices and watch them. Now we are, in one sense, proposing legislation that could raise prices and penalise operators for lowering prices. Maximum penalties proposed in this legislation include $22,000 for a petrol retailer and $110,000 for a body corporate, all for lowering price. The explanatory memorandum of this bill tells us everything we need to know about this government’s approach to cost of living pressures in this country. Let me read it for the benefit of the House: ‘Failure to notify or maintain the notified prices by petrol retailers is a civil penalty.’ That is, you cannot put prices up; but let us be very clear: you cannot lower your prices either. Under this Labor government, if you lower your price on fuel you are guilty of some sort of offence. Putting down your price will see you punished.
This is in direct contrast to the stated objectives of a national Fuelwatch scheme, one of which is to empower consumers to make informed decisions and purchase fuel at the lowest possible price. We now know that this will not be the lowest possible price because if an operator wanted to lower their price they could not under the terms and provisions of this bill. In its very construction this bill is prevented from achieving its objectives, and attempts to fix the prices of commodities have invariably led to failure and higher prices.
Further, there is contradictory evidence on the effect this scheme will have on prices. In fact, there is much to suggest that it may raise the price. There has been much made of the ACCC and its attitude to any proposed scheme and the operation of the WA scheme that is already in existence. The government has contended many times now that the ACCC is in favour of a national Fuelwatch scheme. But ACCC chairman Graeme Samuel has said many conflicting things about the Fuelwatch scheme. He said that it is not about saving motorists money; he said it is, ‘not a process whereby consumers might be able to shave 0.5c per litre off their fuel costs’. He is saying that Fuelwatch is not about price. Once again this whole expectation created prior to the election that there would be relief on the price of petrol is an expectation that is not going to be met by this proposed legislation.
The ACCC has also been reluctant to attribute any downward pressure on WA prices over time to FuelWatch, pointing out that other forces were at work in the market. What could those forces be? Listen to this: the Institute of Public Affairs says that the petrol saving sometimes mentioned in relation to WA and the FuelWatch system can be attributed to the entry of Coles into the market in 2004 and not the introduction of the Fuelwatch system in 2001. Further and more alarmingly the IPA conclude in their report:
The ACCC analysis does not consider this possibility at all and is, at least, fundamentally incomplete and flawed as a consequence.
If the ACCC modelling did not include the entry of Coles as a major competitor into the fuel market in WA in its consideration of the effectiveness of FuelWatch, how can we rely on the evidence that they have provided? Hastily they backtracked and said that they had considered the Coles entry into the market, but the Institute of Public Affairs had caught them out. The whole premise of the government’s advice may well be based on a major flaw if it failed to consider the entry of a major competitor into that fuel market. Coles could be responsible for price variation.
The ACCC data and econometric modelling have not been released to the public. We are supposed to simply believe their so-called comprehensive analysis of the system. Calls in this House to see that modelling tabled have been ignored. No wonder four government departments warned this government about the introduction of a national Fuelwatch scheme. But, of course, in this regard when the government receives advice that it does not like it responds with the ad hominem attack that public servants are lazy and do not work or that they are not independent. As we know, ad hominem attacks are the weakest and most fallacious forms of attack.
The Rudd government itself warned of the negative impact a nationwide Fuelwatch scheme could have on motorists. A regulation impact statement was tabled by the Assistant Treasurer which highlighted anticompetitive concerns and that it would not meet consumer expectations of lower prices. The regulation impact statement clearly states that independent service stations are at a competitive disadvantage, as is the case in WA. The report notes:
The provision of this taxpayer funded service creates greater opportunities for price co-ordination amongst retailers, especially in more concentrated markets.
My electorate is also home to the national headquarters of the major corporation Woolworths. The Chief Executive Officer of Woolworths has told us that, far from improving the competitive environment, the scheme in WA has created an environment where Woolworths make their biggest margins—in a state where FuelWatch is in operation. We know that when a chief executive officer of a major company like Woolworths makes a public statement he is under all kinds of legal imperatives to tell the truth and to be very honest about his appraisal. That is a very serious statement from one of Australia’s major corporations headquartered in my electorate.
We also know that it was the view of the Minister for Energy and Resources that Fuelwatch would be bad for Western Sydney motorists. I support the Minister for Energy and Resources in his brave bid to communicate what everyone can see. He said in this House the other day that his heart was in Western Sydney. As someone who grew up in Western Sydney, I want to say thank you to the Minister for Energy and Resources for his honesty, clear sight and bravery. He is one of the last champions for the families and the workers in Western Sydney inside the Rudd government.
We know that Treasury’s advice that Fuelwatch would cost small business $4,000 per year to implement could be conservative. The Assistant Treasurer today refused to give a guarantee as to whether there would be ongoing costs for small business in implementing this scheme. The fact that it may cost small business $4,000 a year to implement ought to be disincentive enough for this House to consider this proposal. It ought to support small retailers and independent retailers against big business. But we also now know that the department of small business did not even consult with small business about the proposal. Not only will Fuelwatch be bad for consumers but it will also bad for small business.
The final point I would make is that the various automobile associations around Australia are concerned that this will not give motorists access to cheaper petrol—and that is what this is supposed to be about. We know that the predictive nature of the fuel cycle gives consumers a greater ability to purchase fuel at cheap times each week. Indeed, one statistic was that 71 per cent of South Australian motorists are aware that Tuesday is the cheapest day of the week to buy fuel. The end of the weekly cycle could be to the great disadvantage of the most empowered consumers, as this proposal exists. Again, to be guilty of an offence by lowering prices does not seem to be a path that we should be taking in the pursuit of cheaper petrol.
Fuelwatch is a political program, not something to benefit motorists. It will not empower consumers to have cheaper petrol. It will not empower small businesses and independent retailers to compete. But it will empower the Prime Minister and the Assistant Treasurer to claim that they have done all they can do. With petrol prices hitting a record in Western Sydney, the working families of Western Sydney deserve better from this government. A scheme that may increase price and reduce choice and that has already delivered big margins to the major companies should be rejected by this House.
I stand to give a Queensland perspective on fuel prices, which is not necessarily one that we have had before. My attention was drawn to an article in the Courier-Mail in January this year headlined ‘$70m petrol price rip-off’ which pointed out that, according to the estimation of people involved in the industry, Queenslanders over the month from mid-December to mid-January were ripped off by $70 million by the fuel companies. I was then most interested to read later on in the article that the Shell petrol company hit back at claims it was profiteering and it released its profit margins for Brisbane, Sydney and Melbourne. Shell claimed that in Brisbane it made 7.9c a litre profit; in Sydney and Adelaide, 4.3c; and in Melbourne, 3.6c. What occurred to me was if 4.3c profit is okay in Sydney, why isn’t 4.3c profit okay in Brisbane? What really was happening, at that time at least, was that the Shell company and other fuel companies in Queensland were eating into the Queensland state government’s subsidy to Queensland residents on fuel.
I have got no time for corporations who behave that way, unlike the members opposite who seem to be in here, not only today but for the past fortnight, fighting a rearguard action on their behalf. A lot of what has been said over the past fortnight has been about the fact that there are fines for lowering the prices, and the member for Mitchell repeated that matter just a moment ago. The ACCC tells us that there have been 46 infringement notices issued since 2001. There has been one prosecution for somebody selling at a price lower than the notified price.
I had an email come to my office from somebody who quoted to me that a small independent fuel station in Western Australia had been fined $800,000, so I thought I had better have a look at that. I found the information on the Western Australian FuelWatch website and I would like to read a bit from that website into the Hansard:
FuelWatch has fined a Mount Lawley petrol station owner Paul Stinton for acting in breach of the 24-hour rule when he decreased his petrol prices in the middle of the day.
… … …
Mr Stinton is the first retailer to be fined for breaching the 24-hour price rule by lowering his prices in the middle of the day. Since FuelWatch’s inception 10 metropolitan petrol stations have faced a total of 17 fines worth $6400 for failing to lock-in their prices for 24 hours, and selling fuel at a price higher than the FuelWatch notified price.
… … …
On four previous occasions Mr Stinton had received warnings from FuelWatch for being in breach of the 24-hour rule. On the most recent occasion in May—
that is, May 2005—
Mr Stinton was contacted by FuelWatch staff and was advised that he was in breach of the 24-hour rule when he lowered his fuel price in the middle of the day. Mr Stinton had ample opportunity to notify FuelWatch of his intended prices for the follow day, but failed to do so. He continued to sell fuel at a price lower than the price he had notified to FuelWatch for two more days. Mr Stinton continued to sell four fuel products at lower than notified prices for two days, and was fined $200 for each offence bringing the fine to $1600—
not the nearly $5,000 that we heard from members opposite last week and certainly not the $800,000 mentioned in the email that came to my office. The website news item went on to say that in February 2004, the previous year:
... Mr Stinton was fined $200 when he breached the 24-hour rule and increased his price by 10 cents per litre in the middle of the day. In that instance also, Mr Stinton was fined only after receiving a formal warning about such actions being in breach of the legislation.
It is important to understand why the 24-hour rule is in place. Certainly it is important in the context of a fuel market where the supermarkets have 65 per cent of the market that we understand how they operate. They use a thing called ‘price flexing’. That is a tactic that large retailers use to crush small businesses. Woolworths and Coles are particularly good at it.
Those of us from Queensland would be aware of a gentleman by the name of Joe Natoli, who was, until the amalgamation of councils recently, the Mayor of Maroochydore. Mr Natoli’s 71-year-old family fruit business was put out of business by Big Fresh, which previously had been Franklins, not Coles or Woolies. There are some members still in this chamber who were on the House of Representatives Standing Committee on Industry, Science and Technology who reported in May 1997. This is taken from that report, and is Mr Natoli talking:
On one particular occasion, Big Fresh advertised sultana grapes at $1.99 a kilo. By chance, we had advertised sultana grapes at $1.79 a kilo. They dropped their price ... we dropped ours. Within two hours, Big Fresh dropped their price to 49 cents a kilo. We reduced our price to 99 cents a kilo, but raised it to $1.29 per kilo, our cost price. They later raised their price to 69 cents and kept it there for two days. Their manager told us they kept the price low to punish us and teach us a lesson for taking them on.
The committee, when it reported to this parliament said that it ‘does not consider it acceptable to use small businesses as cannon fodder’ for large businesses. And that is precisely what would happen if these major corporations were allowed to bring price flexing into the fuel market.
When I was a state MP I had a quite remarkable woman who worked for me as my electorate officer. Her name was Lorraine McColl. When Lorraine started working for me she was already a great-grandmother, although quite young. She had the most wonderful turn of phrases, and one of those could be applied to the repeated assertions from members opposite that Labor guaranteed lower petrol prices. She would have called that ‘simply frog droppings’. Well, she would not have called it frog droppings, but you get the picture.
For the past week, speaker after speaker from the other side has repeated the claim that Labor promised cheap fuel. This is on the basis that if you repeat an untruth often enough it will become the truth. The shadow Deputy Treasurer, the member for Dickson, made two references to an alleged Labor promise in the first 10 minutes of his presentation and made five such references in the second 10 minutes. In a 20-minute speech, he made the claim that Labor had promised lower fuel prices seven times. But he did not provide us with any evidence—not a transcript, not a media release, not a media report. In fact, as the member for Bendigo said, he was verballing. Queensland police were discovered in 1988 to be the world’s champion verballers. I guess that the member for Dickson may have learnt something from his former profession.
Let me read a couple of pieces for you—
Mr Speaker, on a point of order: I take offence at the inference in that, which questions the integrity of the member for Dickson, the shadow finance minister. That is way out of order and I ask you to ask the relatively new member for Longman to correct himself.
In the interest of not delaying the debate, I will withdraw. I do not think that it is very wise for somebody to continue to make those assertions without presenting any evidence. If the member wishes to take offence on behalf of other members, that is up to him. Let me talk about some real evidence. On the Sunday program on 15 July 2007, Laurie Oakes, a respected journalist and a respected political commentator, asked Wayne Swan this question:
Can you guarantee if you win government petrol prices will fall?
Wayne Swan said:
No, I can’t guarantee that. But I can guarantee that we will do the maximum amount possible to make sure that people aren’t being ripped off.
What did Peter Costello say? He certainly understood that we were not saying that petrol prices would drop. He rushed out to give a doorstop interview at Petrie Square in Kew, where most of the major doorstop interviews have happened, and he said this:
Here is the Labor stunt machine at work. They want to pretend they are doing something on petrol—you ask them does it mean petrol prices will fall, no.
Peter Costello understood that Labor was not promising cheaper fuel. On the ABC AM program on 8 August a couple of weeks later, Kevin Rudd was being interviewed. Kevin was asked this question:
Will any of this lower the cost of petrol by one cent?
Kevin Rudd said:
What we can only agree is that we would have on the beat an effective competition policy watchdog. Again, I’m not in the business of predicting future global oil prices.
There is a whole range of things that I would like to talk about today. Unfortunately, we are being defeated by time. Among those things are: the rapid increase in the price of Malaysian oil; the misuse of market power by the major corporations with their shopper docket schemes, which the Service Station Association predict will put 3,000 independent service stations out of business; and the price benefits that will come from Fuelwatch, as predicted by a price analysis done by a non-captured analyst. However, in the interest of making sure that this debate concludes on time, that is about where I will leave it. Thank you.
I am always delighted to speak in the House of Representatives chamber of the Australian parliament and to very strongly speak for the constituents of Ryan, who I have the great honour of representing here in the parliament, and to ensure that their voices are loud and clear in this place. The National Fuelwatch (Empowering Consumers) Bill 2008 and the National Fuelwatch (Empowering Consumers) (Consequential Amendments) Bill 2008 are very important, because they impose a certain scheme upon the Australian motorist. In the time that I have available to me, I want to talk on that and related points. Before I do, I want to make the observation that I regret very much the inference that the previous member speaking to these bills made on the character of the member for Dickson, the shadow finance minister. He referred to 1989 and the Queensland police force and its activities. In the same breath, he said ‘The member for Dickson might be able to learn something from his former colleagues.’ It is most regrettable that that sort of inference can be cast upon other members of this parliament. We are here to debate ideas and to debate policies. We are here to debate each other in the spirit of democracy and goodwill and to question the policies of each other and each others parties, not to cast aspersions on individual members.
If the member for Longman wants to talk about evidence, let me draw his attention to a piece of evidence, which the Hansard will very clearly highlight. In this place last week the Minister for Resources and Energy talked about petrol prices being ‘a little problem’. If he cares to challenge that, he might take the time to look at the Hansard from parliament last week where the minister talked about a little problem for the motorists of Australia and, of course, that includes the motorists of Ryan that I represent here. Let me say to the parliament, to the government and to the Prime Minister that increasing petrol prices is no little problem for the people of Ryan. Increasing petrol prices affects students, pensioners, standards of living, businesses and those families that depend very much on petrol prices being stable and maintained at an affordable level. It is no little problem, Minister; it is no little problem, Prime Minister. I will ensure that the people I represent will be constantly reminded that increasing petrol prices is no little problem, which under the watch of this government has increased 13c since the last election.
I think that time has caught up with the Labor government because there is absolutely no doubt at all that at the last election the Prime Minister and his colleagues in the Labor Party gave the very, very clear impression to the people of Australia that only they had the solutions to the petrol issues, only they had the solutions to the problems of the country and only they would do something about it; Mr Howard’s government was incapable of it. Of course, as I said, Labor’s true colours are really showing through now, because since 24 November last year petrol prices have gone up and we have a Labor Prime Minister and a Labor government.
I am sure that the Deputy Speaker will be interested in this because his seat of Brisbane is adjacent to the seat of Ryan which I, very proudly in my third term, represent. At the Matilda station on Waterworks Road in The Gap, petrol prices today were 153.5c. At the BP service station on the corner of Moggill Road and Stamford Road, Indooroopilly, petrol prices were 155.99c. They are quite substantial prices, of course. Let us not get away from the fact that here in Canberra there is a federal Labor government and prices have gone up. The people of Ryan are going to be paying $1.53 if they go to the Matilda station on Waterworks Road and 155.99c if they happen to fill up at the BP bowser on the corner of Moggill Road and Stamford Road, Indooroopilly.
This bill, as I said, imposes a national Fuelwatch scheme on Australian motorists. The scheme requires specified petrol retailers to notify the ACCC of their next day’s fuel prices by 2 pm each day. Petrol retailers must sell at their notified prices from 6 am the next day and maintain these prices for a 24-hour period. Failure to notify or maintain the notified prices by the petrol retailers will constitute a civil penalty. What this means is that, if a service station owner wants to reduce his prices, he is going to be fined. This is just absolutely absurd! In our country and in our system we believe in competition and in the market. We believe that, if a service station wants to reduce their prices, they should be able to do it. To penalise them for reducing their prices is just completely absurd. It is a slap in the face to enterprise. It is a slap in the face to small business owners and operators. I think that the people of Ryan will find this laughable—and that is to put it generously.
The Prime Minister has constantly told the Australian people that he has relied on the ACCC. In fact he has relied on them exclusively. This is, of course, from a Prime Minister who wants to put his Treasury front and centre in the policy debate. This is from a Prime Minister who preaches to the public of Australia and to the people of Ryan that he thinks the Public Service should be giving fearless and frank advice and that he will take that on board. Of course, we know in this case that they certainly gave him fearless and frank advice but he completely ignored them and he only relied on the ACCC to give him the best course of action.
Let me inform the people of Ryan, whom I proudly represent here, of some interesting observations of Mr Samuel of the ACCC. I want to put this on the record before I end my remarks, because it is important for the people of Ryan. On 3 August 2006, Mr Samuel, the ACCC chairman, said to the Senate Economics Legislation Committee here in the parliament:
Transparency is always a welcome issue, but there is another element of the FuelWatch arrangement in Western Australia that has a potential for having some negative impacts on competition—that is, the 24-hour notification. There was—this is anecdotal, of course—an individual retailer in WA that just a little while ago objected to the 24-hour notification and, as I recall, posted on the site that he intended to charge $100,000 a litre the next day for petrol because he frankly was going to work on the basis of discounting over a more regular period than 24-hour notification. The sorts of movements that we were talking about earlier today in discounting have tended, particularly where there is vigorous discounting in the price cycle occurring, to occur on a half-hourly or hourly basis. Of course, that cannot occur in Western Australia, where 24-hour notification is required before the price can be posted. To that extent, we have concern that that 24-hour notification can have a negative impact on competition. I think we expressed a view on this back in 2002.
Mr Samuel, the chairman of the ACCC, on whom this Labor government relies for its policy on the run, is saying that the Fuelwatch legislation is in fact going to be anticompetitive. It has consequences for competition. Let me quote a colleague of Mr Samuels on the ACCC. In that same series of comments to the economics committee, Mr Cassidy said:
As the chair has indicated, we did have some concern that the 24-hour notification may well have acted to impede the ability of the independent chains to decide to discount, which they often do at fairly short notice, depending on where the market is, because they are required to actually give the 24 hours’ notice before they change their price. Indeed, we have had some of the independents in Western Australia basically indicate the same thing to us.
There you have it: Mr Samuels and Mr Cassidy, who are members of the ACCC, expressing their observations and their anxiety that FuelWatch is effectively anticompetitive. We are about competition.
I want to take the opportunity in the parliament of Australia as the member for Ryan to make it very clear to the parliament and certainly to advise the people of Ryan that this is really policy on the run. The Fuelwatch scheme is not going to work; it is very disappointing that this is the only thing that Mr Rudd can come up with after six months in office. I certainly commend the federal opposition’s position of reducing the petrol excise by 5c, because that is going to make a meaningful difference to the working families of Ryan, who I have the great honour to represent here in the parliament of Australia.
I rise today to speak on the National Fuelwatch (Empowering Consumers) Bill 2008 and the National Fuelwatch (Empowering Consumers) (Consequential Amendments) Bill 2008 bills. I will make my comments brief as I recognise that the House is time constrained. I want to raise the issues that I am sure many of my rural colleagues in this House would have liked to have raised had we had more time for debate on the issue of Fuelwatch. I know that the member for Calare, John Cobb, and the member for Parkes, Mark Coulton, and others would have sincerely liked to have put the issues of their constituents on the record. They would also have like to put the issues of country people and discuss the way in which the cost of fuel and all of these decisions, particularly the decision to implement Fuelwatch, will impact adversely upon them.
I come from the Riverina centre of Wagga Wagga, where I have a Fuelwatch committee that have been working for many years to try to understand the cost and pricing of petrol. They have spent a lot of time and effort trying to bring the oil companies to account for the differential that we have experienced over many years between city and country prices, particularly Wagga Wagga, Griffith, Leeton, Narrandera and those areas.
I was speaking just two evenings ago to one of the members of the Fuelwatch committee, Dr Edwin Brookes. He stated that he was perplexed about the role of the new Petrol Commissioner, which he had great hopes for. He said he had read some articles recently that had made him confused about how the Petrol Commissioner would act. He also raised with me some of the issues that were in the Daily Advertiser, a Wagga Wagga paper, on 2 June. Minister Tanner was quoted as saying that there were hundreds of pages in the ACCC report and recommendations on Fuelwatch. In fact, there were not hundreds of pages on Fuelwatch; there were just a few short pages that raised more questions than they answered, particularly for rural and regional Australians. This was under a topic dealing with country and regional Australia.
The ACCC provided no recommendations for Fuelwatch. In fact, there was a very low level of analysis within the ACCC report. Comments on the final page and the two last sentences concluded that the purpose of the analysis had been to satisfy the ACCC that Fuelwatch would not cause increases in the price of petrol. But we were not talking about increases in the price of petrol at the last election. We were clearly talking about the lowering of petrol prices and the fact that there was a view that the last government did nothing to lower those prices. I know that the Labor candidate who opposed me in the last election will be very disappointed because he is a decent man who has the interests of the people at heart. It was clear that he believed that the election of a Labor government would bring petrol prices down because the Howard government was inactive in this area. I know that he would be terribly disappointed with the outcomes since the election.
I made a personal submission to the ACCC inquiry because I have been fighting on the issue of fuel costs and the lack of transparency of pricing of fuel for so long in my electorate, which has been hindered and literally held to ransom by the high cost of fuel. Out of all the other country areas, it has experienced a higher cost for fuel. There was always a view that there may have been cartel behaviour behind this.
When the ACCC visited Wagga Wagga, I appeared before the ACCC and provided a submission and additional information. At the time there was an absolute lack of understanding of the difference between the TGP—the terminal gate pricing—the Singapore mogas price and other prices at the bowser. At the time, we had major oil companies that were selling at 3c a litre less than my independent could purchase for at the terminal gate price. We had a price war happening with Coles in Albury. They had a very low price in the Albury-Wodonga area to subsidise against independent competition. The independent had chosen to drop his prices down. But up the road in the Riverina the petrol price was sky high in order to aggregate and spread the risk of Coles putting fuel prices down to defeat the independents in and around the Albury area. We were left to suffer higher prices. This is exactly what will take place with the fixing by Fuelwatch of prices in country areas. The Fuelwatch scheme will actually support this activity. You will have our major oil companies going out there setting the prices high in some areas, low in other areas, aggregating their losses and costs over a number of outlets, and forcing independents out of their livelihoods. This is a major problem.
We have limited time here today. I had five minutes—I have taken six—but I did want to raise with the House that it is a major issue that we are not able to come to the House and debate this with the clarity and intensity that it requires. I for one am absolutely distressed that we will have it imposed upon us—or upon local government now, I am told. Local governments have now been identified as the operators of this process, if we take notice of what the Prime Minister is saying in the media—that it will be up to local governments to decide whether they will implement it. This is not an issue for local governments to implement; this is a leadership issue and something that has been ill thought out. I appeal to the Prime Minister to reconsider and rethink this because of the impact it will have on all country seats and obviously outer metropolitan seats as well. I am certainly in opposition to this process of price fixing by the new Labor government.
In speaking to the National Fuelwatch (Empowering Consumers) Bill 2008 I told the troops back home that we spent last week in the parliament arguing over whether we should watch the fuel bowser prices or whether we should not. They regarded it as a joke; they thought it was extremely funny. I had meant it as a joke, but in actual fact it is exactly what we have been doing. Someone leaked something; someone didn’t leak something. The average person is really worried about fuel prices.
Sunrise did a program three days ago where David Koch said, ‘Can the politicians do anything about it?’ and Mr ‘Cleverness’—one of these blokes they drag out of Sydney, one of the slithering Sydney suits; that might be unfair to him but they know everything about everything—said, ‘Basically they can’t.’ I sent an email to the program saying: ‘Yes, they can. You just said the Americans are on $1.09 and Australians are on $1.55, so it would be a good idea to see what the Americans are doing.’ Of course, what they have is ethanol. The President, in the last State of the Union message he gave, said that 75 per cent of imported oil would be replaced by electric cars, hydrogen and, of course, biofuels—ethanol. He specifically mentioned ethanol.
For those of us who know something about what we are talking about here, hydrogen is a long way off. You can only get it two ways. You can do it chemically. You have to take it from CH3 or CH4—I forget which it is. You do that by burning it, which puts carbon dioxide into the atmosphere. For every molecule of hydrogen you get, you put one or two molecules of CO2 into the atmosphere. So I don’t think we will be going down that road. If you want to do it by electrolysis it is enormously expensive. So while everyone would like to think about hydrogen, I would like somebody to tell me how it could be done. He mentioned electricity. Electricity is terrific in the inner-city and it should be done now, but once you get to the outer suburbs, no way Jose—it is an entirely different ball game.
Brazilians are filling up their cars for 74c a litre. I must simply have lost all my communication skills, because I come into this place constantly and say this. I said to my son, ‘You only get bashed up once, because you figure out how he did it to you and you do it back to him.’ It is similar here: if somebody else has got a huge margin on you, simply find out what they are doing. What they are doing in America, of course, is ethanol, unlike our governments. Governments over the last 20 years, including this government, have preached to us about free trade and free markets. What have free markets delivered to us? When the Fraser government fell, there were only 420 sites controlled by the oil companies. There are probably only about 420 of the 20,000 sites in Australia that are controlled by the independents now. Woolworths and Coles and their partners, Caltex and Shell, are claiming already that they have 75 per cent of the market, and I think that they do. That is not including the other two oil companies.
There are no bowsers which we can get our ethanol into. We know we can produce it for the same price as the Brazilians, at around 66c a litre—a bit more than the Brazilians, but really the same as the Brazilians. They will claim 46c but I think 60c is apples with apples. But why do we keep coming into this place, saying, ‘We’re gonna watch fuel.’ We have spent two weeks in this place talking about watching bowser prices. For what it is worth, it is probably a good idea. The member for New England and I will probably vote for it. We see some merit in it and it might make a difference of one or two cents, but most people cannot afford the petrol to drive across the city to fill up at the bowser that is 2c a litre cheaper. That is why this is not going to make any difference to anything. If the Brazilians were filling up for 74c a litre, and the Americans—this is apples with apples—were filling up for 81c a litre and at the same time Australians were filling up for a $1.15 a litre, you have got to say, ‘Let’s just find out what they’re doing.’ It is very simple: they produce ethanol. The arguments about food I would put in exactly the same category.
The parliament debated—and I think we actually passed some legislation—whether ethanol is going to break your motor and break your car. All the cars are breaking down in Brazil, are they? I went to Sao Paulo the first time I went overseas in my life; I went there on the ethanol thing. I did not notice any cars in Brazil breaking down at all. In Los Angeles I did not notice any cars breaking down. We went through there on our way to Brazil. I did not notice any breaking down in Minnesota, where they have been on 10 per cent for 20 years. I did not notice any cars breaking down. But we took seriously the absolutely ludicrous proposition being put forward by the oil companies, of course! We were told we could not have it because it would not mix. Mr Truss told us it would not mix. That was laughed to ridicule. The next one was that it was going to cause cancer. Larry Johnson happened to be here at the time. He said, ‘Pour petrol in the river and fish die; pour ethanol in the river and fish smile.’ It is pure alcohol. That was laughed to ridicule. The next one was that it was going to make your cars break down. There were a few people in Australia who thought, ‘The cars are not breaking down in Brazil or California or New York or in any of the mid-west states,’ which have all been on 10 per cent for ages now. How ridiculous.
The latest proposition is that the world is going to starve. The price of food in the United States as a result of ethanol has gone down very significantly. Instead of using grain, which is now around $300 a tonne, they use distillers grain, which is only $170 a tonne. All the moo-cows and little chicks and chooks that are running around are congealed grain. All your dairy products are congealed grain. The grain is $174 a tonne versus $300 a tonne.
The minister is gesticulating. I am sorry for the minister, as he has to catch an aeroplane. I have to catch an aeroplane too. But we are entitled to speak on these matters, which are of great importance to the nation. The latest one is that the world is going to starve. I will tell you that the only people who might starve are some of the rich beggars in Australia who happen to be associated with the oil companies—which are making $23,000 million more profit than they were making three years ago. Shell and Caltex own the oil wells. The cost of production is the same today as it was three years ago. They are making 300 per cent more profit than they were making three years ago and are kidding us that that is not an incentive to go out there and tell a pack of lies—the latest one being that we are all going to starve to death. I am not going to speak any further on this, except to say that the Brazilians have an intelligent government. Their intelligent government delivers to them carbon dioxide reducing ethanol petrol at 74c a litre. The Americans have carbon dioxide reducing ethanol at 81c a litre. Poor muggins Australians are filling up our cars at $1.50 a litre. We may have a number of things, but we do not have clever governments in this country.
in reply—I do not propose to detain the House for long. I thank all members who have made a contribution to the very important debate on the National Fuelwatch (Empowering Consumers) Bill 2008 and the related bill. It has been a wide-ranging one. There were three reasons for the government to do this: firstly, to increase price information for consumers; secondly, as the ACCC has expressed, we have grave concerns about the competitiveness and the competition in the retail sector of petrol and the anticompetitive nature of the exchange of information between petrol stations; and, thirdly, the econometric modelling conducted by the ACCC, and which the Australian Treasury have indicated to the Senate estimates committee they are comfortable with and support, showed a modest downward pressure on prices. The first two reasons are by far the more important for doing this. If you had econometric modelling which showed no increase in the price of petrol, you would still do it. If it simply showed that there was no adverse impact, you would still do this because of the power it gives consumers. This levels the playing field. At the moment, the cards are stacked against Australian motorists. They do not know the movements in the price of fuel or when they are about to go up. They do not know where the cheapest fuel is. But the service stations swap information.
Today—and as I far as I know it is still going—for over eight hours the ACCC has been before a Senate estimates committee. Senators from the other side have done their best to blow holes in the ACCC’s case. They have not laid a glove on it. They did not lay a glove on it last night in the four hours of Treasury testimony. The testimony stands for itself. The proposition put by honourable members opposite is: we have an ACCC and we have a Petrol Commissioner, who we should duly ignore; we should not give them the powers that they say they need to ensure competition in the Australian retail petrol market; we should not give them the capacity to give consumers more information; and we should not empower consumers to find out where the cheapest petrol they have available to them is. This is a modest measure which will help. As is always the case, other people have expressed this better than I can. We have been deluged with messages over the last week or so about Fuelwatch. Some have been in favour and some have been against. The vast majority have been in favour. I will share two with the House. These two explain better than I can why the government has embraced Fuelwatch. The first reads:
Dear Mr Rudd
I am an age pensioner and have used FuelWatch via my email address for several years. There’s no doubt that I have saved hundreds of dollars in this period. Sometimes the savings can be up to 10c. The argument put up by Dr Nelson is rubbish.
Dear Mr Rudd
I have recently subscribed to FuelWatch here in Western Australia and have been watching the news about the possible introduction of Fuelwatch to other states. Having fuel prices available the day before allows for consumers to find the most convenient, lowest prices to them and to save money. I wholeheartedly support this.
Fuel prices vary by up to 13c a litre for petrol and 12c a litre for LPG, which I use, which for LPG is about 40 per cent price difference on the same day. I am so grateful for the FuelWatch scheme, as often the most expensive fuel is near me and the cheap one is far away. But I know, if I am going somewhere further from home the day before, all I do is check it out and go there, sometimes saving 14c a litre. Today I paid 58.2c in Highgate but in Fremantle it was 71.9c. That seems ludicrous to me that they’re even allowed to be that far apart, but thankfully I can support the lower priced stations.
The Australian people are not silly. They know the cards are stacked against them. They know that they do not have the information they need. They know that service stations swap information. If I had a dollar for every time somebody in a taxi or somebody in my electorate has said to me, ‘Surely there is collusion in the petrol market,’ I would not have any problems because I would have plenty of money. As the Chairman of the ACCC said today before Senate estimates in sworn testimony, ‘What we have at the moment is as close to collusion as you can get without it being illegal.’ When the Chairman of the ACCC, who is appointed to represent consumers and promote competition, has that view it is incumbent on the Australian government to seriously consider his recommendations. That is what we have done. This is one of several things that we are doing. I will not detain the House. We are criminalising cartel operations, strengthening section 46 and doing all sorts of things to promote competition. But this is an important step.
In conclusion, it is a matter of public record that Treasury staff have worked very hard on this matter. The Treasury staff who have assisted me in this have been the most dedicated and professional I have ever had the honour to be associated with. I put on record my thanks to all of them—and they know who they are. They have helped the government in implementing this very important policy over recent weeks and have been feeling the pressure in particular over recent days. I put on record my personal thanks to them for their sterling work. They are the most dedicated I could ever be associated with. I commend the bill to the House.
That the words proposed to be omitted (Mr Dutton’s amendment) stand part of the question.
Original question put:
That this bill be now read a second time.
Bill read a second time.