Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Transport) Share this | Link to this | Hansard source

I rise to speak on the Petroleum Retail Legislation Repeal Bill 2006 at a time when Australians are more concerned than ever about record high petrol prices. Reform of the petrol retail industry, including the repeal of the two acts dealt with in this bill, has never been more important. The Petroleum Retail Marketing Sites Act 1980 and the Petroleum Retail Marketing Franchise Act 1980 are outdated and serve no useful purpose in today’s petrol retail industry. Well over 50 per cent of the industry by volume of sales is not covered by these acts, because of the inclusion of the supermarket chains, Coles and Woolworths. The rules for market participants are inconsistent and unfair. That is bad news for the industry and it is certainly bad news for consumers.

The Oilcode, which will be introduced as a mandatory industry code under section 51AE of the Trade Practices Act 1974, will bring the whole industry into a common regulatory regime with better protections for market participants and better protections for consumers. The Oilcode will improve the protections available to commissioned agents and independent operators, who currently do not have the protections available to franchisees. Both franchisees and commissioned agents will also have access to a low-cost dispute resolution scheme for the first time. Labor’s view is that section 46 amendments to the Trade Practices Act are necessary to address outstanding concerns about the potential for abuse of market power, and I call on the government to bring these forward as a matter of urgency.

Nevertheless, the introduction of the Oilcode to cover the entire petrol retail sector will be an improvement over the existing situation where more than 50 per cent of the industry by volume is not regulated at all. Petrol retail reform is a good step forward to give consumers more confidence that the petrol prices they are paying are as fair and competitive as we can make them.

But reform has been a long time coming. Petrol retail reform has been government policy since 1996. In 1998 Labor said it would support petrol retail reform as long as an Oilcode was agreed. But it has taken this government another eight years to get to that point. As in so many other policy areas, reform under the Howard-Costello government has stagnated for 10 long years. This government simply cannot keep up with the changes that are necessary to encourage investment and maintain competitive markets and affordable prices in petrol, in electricity, in transport and in telecommunications.

This Howard-Costello government has failed completely to keep the reform momentum of the Hawke-Keating era going and we are starting to pay the price: in labour shortages, erosion of our skills base, choked infrastructure, inflation pressures, productivity stagnation and higher interest rates. And, most worrying of all, this government’s answer to everything is to spend, spend, spend, and that solution has hit a brick wall. The budget is no longer sustainable. The chickens are coming home to roost. Interest rates are rising. Petrol prices have been going through the roof. It is said that there will be some short-term relief for motorists because of the current reduction in petrol prices but experts are telling us not to expect that to continue. Wages for the already struggling are under pressure because of this government’s extreme industrial relations changes. Tax cuts have been more than swallowed up. Foreign debt is through the roof.

The Prime Minister and Mr Costello will not be able to spin their way out of this one. They tried cutting petrol excise back in 2001. They have used tax cuts, family payments, baby bonuses and any number of other handouts to buy off the electorate since then, but eventually the coffers will run dry. Now they have no options left on petrol prices. Petrol retail reform has taken them 10 long years. Excise cuts are no longer an option because we cannot afford them. And this government still have done nothing to address the real issue: our dependence on foreign oil from unstable parts of the world such as the Middle East.

It is obvious to everyone except this government that, if we do not have home-grown fuel industries, Australia will always be hostage to foreign oil. That is the key, not short-term fixes but a national transport fuel policy that guarantees supplies for the long term and gives Australia options to deal with global fuel supply and price emergencies—because that is what it is really about: supply and demand. When supplies are short or demand is high—or both, as is the case now—prices go up. The absolutely ironclad rule is that prices go up. It is only with home-grown fuel industries that Australia can have policy options available to it to ensure that the wheels continue to turn for Australian consumers and Australian industries to ensure that Australia can afford fuel. That is where this government has been seriously remiss.

Federal Labor has always supported the oil and gas industries and, indeed, the alternative fuel industry. They are strategically important to Australia, and I remind the Senate that Labor supported the proposal to extend the effective excise-free period for biofuels and LPG by three years, until 2011, and supported legislation to introduce mandatory cleaner fuels standards that should benefit environmentally friendly fuels. However, while Labor supported this approach, I must point out that the overwhelming reason for that was to provide some level of certainty for the alternative fuel industry and for the refining industry.

Historically, of course, it was the Keating government which introduced an 18c-a-litre production bounty for ethanol, in the 1993-94 budget, in addition to the zero excise rating for that product. The Howard government 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 nine years. In the last parliament alone, the Howard government changed its mind three times on the excise regime, not only for ethanol but also for LPG. Despite the Treasurer’s May 2002 view that applying an excise to ethanol and LPG was a bad idea, he announced in the 2003 budget that he would do just that. He announced that biofuels and LPG would be subject to an excise from July 2008. In December 2003, he changed his mind again, announcing new excise regimes to apply from July 2011.

Between May and December 2003 the LPG industry was in turmoil, and many of the small business operators involved in LPG conversion and maintenance suffered serious business downturns due to the uncertainty about the excise regime. Now, when the government announces a subsidy, we are seeing that problem play out with massive shortages in the supply of fitting capacity. Of course, the biofuels industry also suffered during this period, with no certainty for new investors in the industry. It has taken some time for both of these industries to recover and it will be some time before the LPG conversion industry has the capacity to meet the rush of demand—which, the industry notes, might have been addressed had it been consulted about the government’s plans for the subsidy that was most recently announced.

We also have to have regard to the problem being exacerbated by record high petrol prices. This means that consumers are more willing to set aside their concerns about fuel tax uncertainty than they would otherwise have been and that biofuels are now more price attractive to refiners and marketers. In fact, let me say at this point that Caltex is to be commended for its announcement about discounting all E10 petrol by 3c a litre.

The history of the Howard government’s double backflips on alternative fuels is in stark contrast to the stability Labor provided throughout its 13 years in office, when it maintained the LPG excise exemption introduced in 1979 for fuel security reasons. The other stark contrast is between just how interested in fuel security the Prime Minister was before he was Prime Minister, in 1979, and his complete lack of interest today as Prime Minister when fuel security has never been so important and petrol prices have historically never been so high.

As Mr Martin Ferguson, our shadow minister for resources, has said before, this government treats tax cuts as ‘go away’ money for motorists worried about petrol prices. Let me remind the house of some other facts I have raised before and indeed that Mr Ferguson has raised before many times in the other place. The fact is that, without developing large-scale alternative fuel industries in Australia, we will increasingly be hostage to supplies from the Middle East, west Africa and Russia. I do not need to spell out the implications of that for energy security. Australians around the kitchen table today want to know that their governments and the companies with stewardship of their resources have a plan to secure their energy supplies for the future at affordable prices. But there is no plan and they are far from ‘relaxed and comfortable’ about that.

Creating the right fiscal and regulatory regime to convert our natural gas and coal to clean diesel, as well as new industry options and a new fuel supply source for Australia, is just not on this Prime Minister’s agenda. He was thinking about energy security in 1979, but it is not on his radar in 2006, when it has never been so important. Frankly, the government’s most recent announcement was poll driven, not national interest driven. Unlike other alternative fuels, the Prime Minister has done nothing to provide any industry framework to encourage the establishment of industries in Australia to convert our vast coal and gas resources to clean diesel. The Labor Party has always been a great supporter of both gas to liquids and coal to liquids, which of course are integral to the commercialisation of clean coal technology for power generation.

I recall that former Prime Minister Paul Keating, as former resources minister, was a great advocate of gas and coal to liquids technologies more than 20 years ago. So were my colleagues, Joel Fitzgibbon, the shadow resources minister in the last parliament, and Martin Ferguson, the shadow resource minister in this parliament. Establishing new nation-building industries is not easy and, more than anything, it requires sustained leadership and focus at the national level to make it happen.

Unfortunately, the Howard government has waxed and waned on both coal to liquids and gas to liquids. Once again, let me remind the Senate that it is now almost five years since Senator Minchin, the then minister for resources, appointed a gas to liquids task force to investigate the feasibility and benefits of establishing a gas to liquids industry in Australia. Five years later, no action has been taken other than the most recent announcement to think about it again. Australia’s reliance on imported oil and fuel is increasing and, while the liquefied natural gas market is booming, it remains a tough job to get new gas projects off the ground.

My colleague the member for Hunter once said that in the Prime Minister’s Australia it is easier to get gas to Shanghai than to Sydney. The Prime Minister is happy to dig it up, ship it out and look after Japan’s, China’s and the United States’ energy security, but this government has no plan for Australia’s security—no domestic gas strategy for our future and no transport fuels strategy either. When the wells run dry, the Prime Minister will still be hoping for a miracle, still hoping that he will be able to spend his way out of trouble with the electorate. Prime Minister, you need an industry policy, a resources policy and an energy policy, and those policies have to give us large-scale options to reduce our reliance on foreign oil if the Strait of Hormuz is closed, the Alaskan pipeline has to be fully shut down, war escalates in the Middle East or civil unrest shuts down west African production.

The Prime Minister knows that gas to liquids is Australia’s best option today. His own gas to liquids task force noted that, while Australia can simply wait for the market to provide an incentive for a gas to liquids industry, once gas supply infrastructure is in place and investment is sunk into countries where taxation and infrastructure incentives are on offer today, those countries will serve as investment hubs for expansion for many years to come—and that is exactly what is happening in Qatar.

The implication of the task force was that Australia’s remote gas fields could be left stranded from markets for even longer because, by and large, it would be cheaper to expand existing projects than build new ones here. I am sure this is a concept Australia’s LNG industry already fully understands. The task force highlighted the potential significance of a gas to liquids industry to Australia’s economy, saying it could underwrite offshore gas supply infrastructure to bring forward the possibility of major new domestic gas pipelines to connect the national market, increase domestic gas competition and energise gas exploration. The task force said:

These benefits would be of national strategic significance to Australia ...

It went on to say:

The cost of any government intervention must be considered against the potential benefits.

The potential benefits go beyond unlocking new resource wealth and creating new industry, more jobs and more exports. They include the opportunity for Australia to address this most pressing of problems: our future transport fuel security.

It is also three years since CSIRO’s report, The Energy and Transport Sector Outlook to 2020, which laid out its proposed strategy for Australia’s transport future—a strategy that identified gas to liquids and coal to liquids as the keys to our future transport fuel security. The tragedy is that we can all see the potential but the reality remains just beyond our grasp. Without sustained and committed national leadership to deliver the right policy settings and right fiscal environment, it will remain beyond our grasp.

The Prime Minister should be seriously reviewing the petroleum resources rent tax regime and considering special treatment of capital investment in gas to liquids fuel projects and associated gas production infrastructure. He should be facing up to some responsibility for resource related infrastructure instead of passing the buck to the states once again. Above all, this government should be sending a clear signal to Australians that it is interested in their future fuel supply security and a clear signal to the industry that it wants gas to liquids and coal to liquids as part of Australia’s national energy strategy.

I will be moving the second reading amendment circulated in my name today, which calls on the government to immediately conduct a feasibility study into a gas to liquids plant in Australia. The Prime Minister needs to dust off his 2001 gas to liquids task force report, bring it up to date and move us closer to making that industry a reality in this country. I also call on the government to review in 2009 the proposal to introduce excise on ethanol and biodiesel and LPG and CNG in 2011, and consider whether there is a case for deferring the introduction of excise depending on industry progress at that time. I think this matter is of such public importance that the government should require the Department of Industry, Tourism and Resources to report to the parliament annually, commencing next year, on the measures taken and the progress made to wean Australia off its foreign oil dependence. Such a report would need to address progress on market uptake of alternative fuels and new investment in alternative fuels industries in this country.

If this government were serious about a plan to lower petrol prices for Australians it would embrace Labor’s fuels blueprint proposals to make alternative fuel vehicles tariff free and grant tax rebates for other measures which will improve the uptake of LPG. It would have to be committed to finding more oil and using more gas in this country by using flow-through shares and re-examining the depreciation regime for gas production infrastructure.

Finally, the government should be criticised for its tardiness in moving on petrol retail reform; bypassing due parliamentary process in introducing a regulation to undeclare companies under the sites act; failing to introduce amendments to the Trade Practices Act to implement the 2003 Dawson and 2004 Senate recommendations for reform; and, above all, failing abjectly to take action to reduce Australia’s dependence on foreign oil and improve its transport fuel security. I move the circulated second reading amendment standing in my name:

At the end of the motion, add “but the Senate:

     (a)   calls on the Government to require the Department of Industry, Tourism and Resources to report to the Parliament annually, commencing in August 2007, on the measures taken and the progress made to:

              (i)    increase market penetration of ethanol and biodiesel, LPG and CNG, including the number and location of service stations and the names of the companies offering these products on their retail sites;

             (ii)    secure new investment in biofuel, LPG and CNG production and supply infrastructure in Australia; and

            (iii)    secure investment in new alternative transport fuel industries in Australia, including gas and coal to liquids.

     (b)   calls on the Government to review, in 2009, the proposal to introduce excise on ethanol and biodiesel, LPG and CNG in 2011, and consider whether or not there is a case for delaying the introduction of excise, depending on the progress made:

              (i)    in increasing market penetration of biofuels, LPG and CNG;

             (ii)    in securing new investment in biofuel, LPG and CNG production and supply infrastructure in Australia; and

            (iii)    towards achieving the 350 million litre biofuels target in 2010.

     (c)   criticises the Government for:

              (i)    its tardiness in moving on petrol retail reform;

             (ii)    bypassing due parliamentary process in introducing a regulation to “undeclare” companies under the Petroleum Retail Marketing Sites Act 1980;

            (iii)    failing to introduce amendments to the Trade Practices Act 1974 to implement the 2003 Dawson and 2004 Senate recommendations for reform; and

            (iv)    failing to act to reduce Australia’s dependence on foreign oil and improve its transport fuel security.

     (d)   calls on the Government to immediately conduct a feasibility study into a gas to liquids fuels plant in Australia, including:

              (i)    consideration of Petroleum Resources Rent tax incentives for developers of gas fields which provide resources for gas to liquid fuels projects;

             (ii)    examining a new infrastructure investment allowance for investment in Australian gas to liquids infrastructure; and

            (iii)    developing a targeted funding scheme for research and development in this area.

     (e)   calls on the Government to immediately embrace Labor’s Fuels Blueprint proposal to:

              (i)    make alternative fuel vehicles tariff free, cutting up to $2000 off the price of current hybrid cars; and

             (ii)    grant tax rebates for converting petrol cars to LPG.

      (f)   calls on the Government to immediately embrace Labor’s Fuels Blueprint to find more oil and use more gas by:

              (i)    re-examining the depreciation regime for gas production infrastructure; and

             (ii)    allowing the selective use of flow-through share schemes for smaller operators”.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

I rise to speak to the Petroleum Retail Legislation Repeal Bill 2006. The petroleum industry in total—exploration, production, manufacturing, wholesaling and retailing—is an industry where there are major barriers to entry and exit. Barriers to entry range from the extraordinary investment and expertise required at the exploration, production and manufacturing end to the planning difficulties surrounding retail siting. Barriers to exit particularly apply at the retail end, where franchise contracts and a shrinking service station sector have often made a profitable exit difficult. It is an industry which has always been characterised by the dominance of the transnational majors, which have always striven to maintain their captaincy of every level of the supply chain to the customer. Consequently, until recently the petroleum industry has not seen the emergence of strong countervailing contenders for captaincy of, for instance, the wholesale channel or the retail channel. The supermarket chains in Australia have now challenged this.

It is the Australian Democrats’ view that the industry still exhibits fatal flaws which materially affect investment, profitability, pricing and competition. These flaws include the oligopolisation of supply, difficulties of access and a heavy concentration of direct and indirect market power in the majors at every level in the chain of supply. Much attention has rightly been paid by concerned groups to pricing, access, supply issues, restrictive practices and market manipulation. Market power, horizontal concentration, vertical integration, ties and so on affect pricing. Those market flaws also affect profitability and the return on capital, because those with power are able to materially influence and affect where profits are made and taken. For all of these reasons market regulation has been and remains essential. That it has only partially succeeded does not mean that it is time to give up on regulation. If we are to envisage an industry with much enhanced pricing and competition and better profitability prospects, we do need to continue to attend to the structures, behaviour and conduct of the industry at every level.

The purpose of the Petroleum Retail Legislation Repeal Bill 2006 is to repeal the Petroleum Retail Marketing Franchise Act 1980 and the Petroleum Retail Marketing Sites Act 1980, and to make a consequential amendment to the Jurisdiction of Courts (Cross-Vesting) Act 1987. The government proposes to replace the two petroleum retail acts with a mandatory industry code, to be known as the Trade Practices (Industry Codes—Oilcode) Regulations under section 51AE of the Trade Practices Act 1974. This particular bill has been floating around since the late 1990s with no success. One reason for this is that the different sectors of the industry could not agree on the content of the proposed Oilcode. For decades the Democrats have argued that a strong small business sector is essential to the economic and social health of Australia and that small business has a value of itself. Our views on the Petroleum Retail Legislation Repeal Bill 2006 are necessarily coloured by that perspective. We strongly support the workings of a free and fair market, as evidenced by our work on corporations, trade practices and tax law, but we have long been concerned that a weak Trade Practices Act does not deliver sufficiently fair competition for small business with sufficiently adequate protections from predatory pricing and the abuse of market power.

In 2004 the government’s intention to proceed with the proposed reform was announced and a bill in almost the same terms as the 1998 bill was introduced. In August 2005 a revised Oilcode was sent to stakeholders. It met with a contrary reaction, similar to past efforts, from interested groups. We agree that the new regulations are likely to offer significant improvements in transparency in the wholesale pricing of fuel and allow access for small businesses to the terminal gate price. However, differential pricing will still apply based on volumes as the market dictates. That is, a large chain such as the Coles Myer controlled Shell franchises can be expected to receive a superior price to an independent since they are likely to purchase a far greater volume. This could lead to an increase in the concentration of industry participants and a commensurate reduction in outlet choice for consumers. We are concerned that the result will be a significant reduction in the number of independent franchisees and small business operators, except perhaps in less economical or uneconomical regional and rural sites.

The Motor Trades Association of Australia, the Service Station Association and others had concerns about the impact of the legislation and the Oilcode on independent retailers. The MTAA argued that it would be important for an effective regulatory framework to be in place to deal with issues relating to the misuse of market power, and that the Trade Practices Act needs to be strengthened.

The Petroleum Retail Marketing Franchise Act 1980 and the Petroleum Retail Marketing Sites Act 1980 were passed to address an imbalance in market power at that time between the oil refiners and marketers—namely, BP, Caltex, Mobil and Shell and their commission agents. It was strongly asserted that the major companies had abused their market power. However, as the petroleum retail market has developed since that time, the consequence of these two acts has been the creation of a two-tier system, as the acts apply to only part of the industry. The acts have not prevented the growth of retailing outside the acts’ ambit—most notably through the entry of supermarket chains and independent importers and marketers into the industry—nor have they prevented the demise of thousands of independents.

The 1980 acts, contrary to their original intention, now restrain competition and limit the ability of the retail arms owned and franchised by major oil companies to compete with supermarket chain retailers operating outside of the ambit of the two acts. That is why there is again an agitation for those acts to be repealed. However, that should not occur without a recognition that this would deliver more big company competition for the four oil majors and the two big supermarket chains but leave independents and other small chains still, and perhaps more, exposed to predatory behaviour. Therefore, repeal of these acts should be accompanied by an Oilcode that supports full competition, not oligopoly, and a strengthened Trade Practices Act that better protects competition by independent small business. The problems are not new. The Australian Democrats pointed this out in their Senate Rural and Regional Affairs and Transport Legislation Committee minority report in 1999. It said:

5.1 The issues for the petroleum industry are vertical and horizontal integration, open access to terminals and protection of the rights of individual operators. The correct mix of regulation of each of these areas should result in increased competition and profitability, and better pricing practices. It would also result in a beneficial end to the market dominance of the oil majors in the wholesale and retail sectors.

The Australian Democrats agree that an appropriate access regime should be implemented and is needed. We agreed with the majority recommendation in the 1999 report that the franchise act should be retained until the completion and tabling of the Oilcode as regulation pursuant to part IVB of the Trade Practices Act. Further, we recommended that there should be a parliamentary review of the access regime after 18 months of operation of the Oilcode. That is plainly going to be necessary with respect to the new Oilcode. The petroleum industry is understandably desperate for there to be resolution of this legislative block so that it can forward plan in what is a very volatile and ever-changing market. The Democrats understand this and sympathise with that position. However, the government does not accept that the petroleum market should be assessed together with general trade practices protection.

The government presents this bill in isolation, as though the petroleum industry were not part of a bigger retailing or national picture and strengthening amendments to the Trade Practices Act were irrelevant to the matter under discussion here today. The Australian Democrats do not agree. As evidenced by the Labor Party’s attempt at amendments in the House of Representatives, they also do not agree. The Trade Practices Act deals with broad competition issues and it needs strengthening to provide a proper safe harbour for all small businesses, not just those occurring within the petroleum industry. Consumers, experts and business see the ACCC as having a pivotal role in the petrol industry regarding pricing, collusion and abuse of market power. Elsewhere I have said that the ACCC should have an enhanced capacity to get behind the corporate veil in that respect. I have been criticised in this chamber for suggesting that they might do well to have some ASIC-like powers with respect to that, but I continue to hold that position.

The Democrats have tried to persuade the government to not deal with petroleum issues in isolation from the whole question of competition law, but they have proven unwilling to listen. The government’s position is incomprehensibly stubborn. Also, when you think of all the changes to regulation that they have made in Corporations Law and with respect to financial services reform, it is extraordinary that the one area in which they have been obdurate, slow, resistant and negative in terms of change has been trade practices law. It is the one area in which they are excessively obeisant to big business.

The government’s position is that they want this bill passed first, unchanged. Separately and later, they want the Dawson bill passed, unchanged. After that, they might deign to pass a weak small business trade practices bill, unchanged. The height of hubris is to believe that all wisdom is yours. This is not macho and it is not even a sign of strong character; it is just silly. All these matters should be sensibly resolved together. Issues of dispute, like the government’s anti-union and anti-choice clause in the Dawson bill that prohibits unions from bargaining for business, should just be laid aside for another day.

Let me remind the Senate about matters relating to this bill which have occurred in the last 12 months. To his great credit as a member of the government coalition and under considerable pressure, Senator Joyce has had the gumption to vote on conscience on these matters. His opposition to schedule 1 of the Trade Practices Legislation Amendment Bill (No. 1) 2005 plus the opposition of all non-government parties to the whole bill on 11 October 2005 have meant that the amended bill has stalled in the House of Representatives. Nothing would have stopped it being passed and dealt with long ago. Senator Joyce’s motion to disallow the Petroleum Retail Marketing Sites Amendment Regulations 2006 (No. l) on 15 June 2006 was supported by the non-government parties but failed on a tied vote.

The Democrats opposed the Trade Practices Legislation Amendment Bill (No. 1) 2005 principally because we wanted this bill to be balanced with trade practices reforms for small business. We opposed the anti-union clause in this bill, the third-line forcing provisions and the changes to the relationship between the tribunal and the commission which would encourage forum shopping. The Democrats opposed the Petroleum Retail Marketing Sites Amendment Regulations 2006 (No. l) because we wanted the regulations to be balanced with trade practices reforms for small business and because the enabling legislation had not even been passed.

The Democrats have a particular interest in the passage of many of the recommendations of the majority—and even the minority, which we support—Senate Economics References Committee report of March 2004 on the effectiveness of the Trade Practices Act 1974 in protecting small business. If the 17 recommendations that cover the misuse of market power, unconscionable conduct, collective bargaining, creeping acquisitions, divestiture and the powers and resources of the Australian Competition and Consumer Commission were implemented, then fair and free competition would be greatly strengthened in Australia. Further, there would be less of a case for industry-specific regulation if the general law were so strengthened. Small business strongly support those recommendations overall.

The Democrats would not oppose the Petroleum Retail Legislation Repeal Bill 2006 or the Petroleum Retail Marketing Sites Amendment Regulations 2006 (No. 1), which of course have passed, if at least those trade practices recommendations popularly described as the Brandis amendments—from Senator Brandis’s minority report of the Senate Economics References Committee on the Trade Practices Act, in March 2004—and those already accepted by the government in its response to the Senate report were passed into law.

The Democrats would not oppose the Trade Practices Legislation Amendment Bill (No. 1) 2005 if at least those recommendations by Senator Brandis’s minority report and those already accepted by the government in its response to the Senate report were passed into law. We would not oppose it if the anti-union clause in the bill were dropped. The third-line forcing provisions have already been dropped, thanks to the good work of The Nationals in pressuring the Treasurer, but we would have to consider our position on the changes to the relationship between the tribunal and the commission which will encourage forum shopping.

The anti-union clause, by the way, was not part of the Dawson recommendations. It is not about creating a more effective Trade Practices Act; it is simply a clause that was inserted to anger and upset the Labor Party. Small business owners should be able to have unions negotiate on their behalf, as should workers. This provision is simply a political stunt to try and curtail what the government believes is union power, as the underlying backbone of the Labor Party. It should be recognised by industry that it is this trade practices intransigence by the government which is stymieing passage of this petroleum legislation, not the lack of cooperation of other parties.

Schedule 1 of the Trade Practices Legislation Amendment Bill (No. 1) 2005, which Senator Joyce voted against last year, contains a voluntary form of merger clearance system that can operate in conjunction with the existing informal ACCC system. Under the current system, an unfavourable decision in the ACCC is reviewed by the Australian Competition Tribunal. The new formal system, which means that merging parties can go directly to the tribunal, could have the effect of reducing the power of the ACCC and result in forum shopping between the ACCC and the Australian Competition Tribunal. It is also relatively unnecessary, because there is no sign that the ACCC has been failing to properly police acquisitions and mergers. The real issue of course is that there are no divestiture provisions. Senator Joyce’s main concern with the schedule was that mergers would be sanctioned under a different reasoning and would impact heavily on small business. His main concern was about what constituted public benefit. If I were the government and had to deal with Senator Joyce, I would make sure I recognised that he was expressing legitimate concerns which were widely shared in both the political community and the industry community.

The Senate Economics Reference Committee report of March 2004, The effectiveness of the Trade Practices Act 1974 in protecting small business, contained 17 recommendations that cover the misuse of market power, unconscionable conduct, collective bargaining, creeping acquisitions, divestiture and the powers and resources of the ACCC. The government did not accept nine recommendations; it accepted five in full and accepted three in part. Those recommendations having been accepted, they have consulted with the states but are just sitting on their hands and not introducing those in conjunction with this bill.

The Senate Economics References Committee unanimously recommended changes to strengthen section 46 on misuse of market power. Those amendments will strengthen the courts’ powers to rule where big business is unfairly using its market power and conducting predatory pricing to eliminate a competitor. These are important issues for small business. They are important issues with respect to this legislative change that is before us. But the government has not presented those amendments to the Trade Practices Act since the committee report was tabled, even though they accepted the recommendations. In that report, the government recognised the importance of small business to the vigour of the Australian economy and the contribution that small business makes to the growth in employment and innovation. If you think that way, match your words with action!

To recap, what is holding up the Trade Practices Legislation Amendment Bill (No. 1) 2005 and the Petroleum Retail Legislation Repeal Bill 2006—and listeners will note that during my remarks I have continually linked these together—is the government implementing those Senate recommendations that are relevant to the Trade Practices Act, recommendations that they accepted in their response and which are part of the Brandis package. It is necessary that the government drop, in its entirety, the outlawing of collective bargaining in the Trade Practices Legislation Amendment Bill (No. 1) 2005. The two bills that I have referred to and the new trade practices bill, with regard to the needs of small business, need to be dealt with cognately or in the same week.

The government also needs to implement the single, unanimous trade practices recommendation in the October 2005 report of the Senate Rural and Regional Affairs and Transport References Committee, Operation of the wine-making industry, which recommended that the government should give priority to amending the Trade Practices Act 1974 to add unilateral variation clauses in contracts to the list of matters which a court may have regard to in deciding whether conduct is unconscionable.

Those are amendments the government will accept. They apply to the wine industry as much as they apply to the petrol industry. But the government simply will not move. They are obdurate and difficult, and their behaviour I think is contrary to the public interest. Just by the way, in view of the current problems, in that Senate Rural and Regional Affairs and Transport References report the committee supported a mandatory code of conduct under the Trade Practices Act to regulate the sale of wine grapes.

The Democrats strongly support the workings of a free and fair market. We have long been concerned that a weak Trade Practices Act does not deliver sufficient fair competition for small business with sufficiently adequate protections from predatory pricing and the abuse of market power. Everyone needs to understand that a weak Trade Practices Act in Australia compares badly with many overseas laws. In that respect, we set great store on recommendations in the Senate Economics References Committee majority report, which we supported. We hope when Labor get into power that will be amongst the first bills they introduce to address competition needs in this country. There would be less of a case if that happened—if the general law was so strengthened—for industry-specific regulation in any industry.

Trish Crossin (NT, Australian Labor Party) Share this | Link to this | Hansard source

Before I begin, I want to take this opportunity to congratulate Senator Parry on his elevation to Deputy Government Whip. I have the chance to do this while Senator Parry is in the chamber and probably in his first hour of duty in the job. I hope it does not become an onerous task and that it is an enjoyable task for him.

My job today is to talk on the Petroleum Retail Legislation Repeal Bill 2006. It forms part of the government’s downstream petroleum reform package. This package is aimed at addressing the regulatory failure resulting from the existing outdated legislation. This bill will repeal the Petroleum Retail Marketing Sites Act 1980, which restricts the number of retail sites that prescribed oil companies such as BP and Caltex can directly own and operate. It also of course repeals the Petroleum Retail Marketing Franchise Act 1980, which sets out the terms and conditions for franchise agreements.

These repeals are much needed since the old acts have failed to take account of or keep pace with changes that have come about in the oil market. The major example of this is that the large supermarket chains such as Woolworths and Coles now have their own outlets. The reforms introduced under this bill will be accompanied by the introduction of a new industry code, which will supposedly introduce greater certainty and protection for all parties, introduce a nationally consistent approach to terminal gate pricing, and improve transparency in wholesale pricing. In short, the government claim that these changes, as a package, will facilitate a more effective regulatory environment in the industry and improve the operating environment for the small operators also in the industry.

I am pretty sure that there is nobody in this chamber, let alone in a family household, who is not concerned about the state of the petrol retail industry and the way that extremely high petrol prices—together with higher mortgage repayments brought about by rising interest rates under the Howard government—are hitting the hip pockets of nearly all Australians and families. This is especially so in my electorate of the Northern Territory. Some southerners speak in hushed voices when petrol prices reach $1.20 or $1.25 a litre. Let me tell you that most of my constituents would welcome the price dropping to $1.20 or $1.25.

I noticed in the paper today a suggestion that petrol prices are coming down, to between $1.25 and $1.28, in most of the eastern seaboard states. However, in the Northern Territory they are still paying $1.39—and that is in Darwin, where we are paying 11c to 14c more a litre than anywhere else in this country. Even at Tennant Creek—which is on the main highway, the Stuart Highway—the petrol price has been over $1.60 for many months now. At more remote places such as Nhulunbuy or Numbaa, it is well above this price—$1.80 a litre is quite common in those communities.

In the Territory we not only pay more for our fuel but also pay more in government tax—in GST. As was stated very clearly by my Territory colleague in the other place, Mr Snowdon—unlike Mr Tollner, who never gets to stand up and talk on these sorts of bills—the GST is nothing but a tax on a tax in relation to petrol. The GST simply gets higher as the price of the taxed product goes up.

The Prime Minister tried to make it sound so great that the excise tax on petrol is frozen, but why should he worry when the GST rises ever upwards with the increasing price at the pump? This government is reaping a huge tax windfall while the people in remote Australia are being ripped off more and more at the bowser by the GST. The increasing price of fuel means that the GST has risen for all motorists but far more so for those living in remote areas, where the petrol price and the price of fuel is way above your average eastern seaboard suburban prices.

I want to make sure that others in this place get the message and realise that remote communities are paying the highest prices in this country—and, therefore, more tax than motorists anywhere else—yet they are getting no more benefit than anyone else. Unfortunately, we cannot tell whether this bill that is now being debated will provide relief to people from the present high prices and GST payments; however, we can hope and trust that the introduction of the Oilcode will even out the playing field with the introduction of consistent national regulatory requirements and a consistent approach to terminal gate pricing. It may have a beneficial effect on the east coast, or other major centres where there are multiple outlets, in providing some competition, but many of the Territorians that I represent have no such choice—there is only one outlet in most communities. Whether this outlet be owned by the store or the council, it is only one small outlet with very limited buying power. They cannot buy in bulk. They have to pay high freight costs before the fuel gets to the community pump. They then pay GST on top of that as it goes into their tanks. It is in these remote communities that we find the highest fuel prices—as I said, up to $1.80 a litre, and more, is common and has been for some time.

The poorest Australians in our country are paying higher fuel prices and higher GST on their fuel than any other Australians. The government then questions whether it is worth keeping smaller communities funded—whether they are viable. These communities are paying their fair share of tax to this government, so why not keep funding them?

Let us also look at another solution that was offered with much ado by the Prime Minister to the unsuspecting public. The government has offered a $2,000 rebate to anyone who converts their car to LPG. How effective a solution is that? LPG derives from oil, so if oil supplies decline LPG will also reduce in supply and rise in cost. The consumption of LPG in a car is relatively higher than petrol. The car’s range is reduced, so you need regular and fairly frequent refuelling points. Quite simply, we do not have those in the Northern Territory. There is no LPG available in Nhulunbuy, a large mining town of 4,000 people, nor anywhere on the 700-kilometre track out of Nhulunbuy. There is no LPG outlet in Borroloola, another isolated mining town. You could not drive an LPG fuelled car into, out of or even around any of these towns, and they are not alone. Along the Stuart Highway LPG outlets are few and far between. Put simply, for most of the Territory the LPG solution is simply not an alternative fuel.

On government estimates, after four years maybe only two per cent of the adult population will take advantage of this rebate; so it will have a very low level of penetration. As written in the Sunday Canberra Times on 20 August, it is a bad idea which has no place in a well-designed energy policy. Last week’s decision to increase the subsidy for LPG is bad news for 98 per cent of the taxpayers, but let me tell you this: it is pretty bad news for almost 100 per cent of the constituents that I represent in the Northern Territory. So, once again, the Prime Minister and his government offer little hope or help to the many regional and remote Australians who remain stuck with paying the highest fuel prices, the highest GST on fuel, the highest food prices in this country as trucking companies are forced to pass on high fuel costs and the higher interest rates coming about under this government.

The Treasurer beams that oh so warm smile of his when reminding Australians of all the recent tax cuts. The problem is that, although the tax cuts started on 1 July, they were all gone—well gone—by 31 July as a result of people’s increasing bills. And, of course, some of the income tax cuts have gone back to the Treasury—courtesy of the higher GST paid every time we fill up the car in the Northern Territory. No wonder the Treasurer keeps smiling. But has he got any real reason for doing so? I think not. The Howard government have run out of steam. They have run out of ideas other than the old-hat ideological wishes of an ageing Prime Minister who wants to crush unions; disadvantage workers; reduce their wages, conditions and job security; and privatise everything as a way of increasing employment and productivity. For 10 long years they have been able to live on the coat-tails of the previous Labor government, which set the economic ball rolling towards success and prosperity and a resources boom, which has nothing to do with their economic management.

But this is a government that has now run out of puff in keeping up with relevant changes to encourage investment and to further drive productivity and prosperity. It has failed to keep up with education investment, leading to a drastic skills shortage. It has failed to invest in infrastructure, leaving our ports and roads in poor shape. It is prepared to sell off Telstra despite obvious disadvantages to rural and remote Australia. Reduced services in the bush will do nothing to help regional businesses. It has bought votes through tax cuts, which have increased spending and led to inflationary pressures and rising interest rates. It has failed to act on looming fuel problems.

While Australia has very abundant supplies of natural gas, the government have done nothing to encourage examination of the use of this as an alternative to oil. They have stuck their heads in the sand, or perhaps the coal heaps, and have done nothing to really encourage research and development in alternatives for fuel. So now the government have put up this bill we are debating. While necessary, it is really too little too late. We have a nation still reliant on oil for our transport sector—oil from the less stable parts of the globe, oil now stuck at higher prices.

The government have done nothing, despite our own resources, to encourage the establishment of a home grown, home based fuel industry. We are stuck with a heavy reliance on imported oil, the demand for which is rising rapidly, as countries such as China and India develop further. Anyone with Basic Economics 101 knows that a rising demand with a more or less fixed or reducing supply can have only one result—the price of the product will rise. That is what is happening to oil and it will continue to happen.

No matter how often the Prime Minister tries to be like King Canute and stop the rise, saying a price of $1.15 per litre or whatever is possible again, the truth is that this is simply pie in the sky; it will not happen. The Prime Minister obviously never got as far as economics 101. He tries to reject that the war in Iraq has anything to do with the price of petrol. He says the trouble is the high world price of crude oil, and indeed so it is. But why is the world price for crude oil so high? It is due in part at least to the instability of one of the major producing areas in the world, with the war in Iraq an absolutely undoubted contributing factor. So at least try and be honest for once, Prime Minister.

The price of oil goes up, the price of fuel goes up, GST paid on fuel goes up, the cost of freight goes up, prices in the shops go up and GST paid on food goes up. The Treasurer keeps smiling reassuringly, inflation starts and the Reserve Bank puts the brakes on by raising interest rates, so mortgage payments go up, leaving the average Australian struggling to keep up or spending on credit cards to dangerously high levels which cannot continue. The good times are over. This is not a sustainable situation.

So we have this bill and an offer to rebate some of the expenses of converting to LPG as this government’s reaction to the situation. In addition, there seems to be some rather shaky government support for some forms of biofuels, such as ethanol. I heard somewhere the other day, on one of those early morning radio shows, of an Aussie investor, I think from the Gold Coast, who is putting millions into several biofuels plants. The shame of it is that they are all in the USA, where he says they are really going for these alternatives, unlike our government here, where it is just not worth investing.

What an indictment of this government. It has flipped and flopped over what to do about fuel alternatives like ethanol and LPG and has kept changing the playing field and goal posts. In the last parliament alone it changed the proposed excise regime on no fewer than three occasions. Labor believe that we must do something real and positive to ensure the future of alternatives like ethanol and other biofuels. Without ensuring the security of these alternatives we will remain captive, or hostage, to oil supplies from the Middle East, Russia and west Africa and to high oil prices. These are all areas with problems of stability and continuity of supply.

We should long ago have been looking at converting our own natural gas to fuel, working on cleaner coal for power stations and converting coal to diesel as more desirable options as fuel sources. Instead, we export as much of our gas as we can sell to look after Japan and China. How can this be in the long-term national interest? Sadly, working on alternative, cleaner and sustainable fuel has not been on the Prime Minister’s radar. He has been far too preoccupied with his extreme workplace relations legislation, ruthless changes to Welfare to Work rules or beating our Indigenous people about the head with major changes to land rights in the Northern Territory without consultation.

The time has come for urgent action, for Australia to actually have a proper energy policy, to work seriously towards developing alternatives with our own resources and to review the decision made to introduce excise on ethanol, biodiesel and LPG in 2011. The time has come to genuinely assist in the development of these alternative fuels and not muddle along like this government has done for far too long. (Quorum formed)

Grant Chapman (SA, Liberal Party) Share this | Link to this | Hansard source

I remind the Senate that we are debating the Petroleum Retail Legislation Repeal Bill 2006, because the chamber might have forgotten that, given the contributions that we have heard so far from the opposition benches. Senator O’Brien briefly referred to the bill and accused the government of stagnating reform in this area but then referred to a whole lot of measures that are quite irrelevant to this legislation. Senator Murray spoke largely about trade practices issues, which might have some peripheral relevance to the legislation, and Senator Crossin talked about high petrol prices and GST revenue. I will deal with those comments in a few moments. At the outset I want to congratulate Senator Stephen Parry on his election as Deputy Government Whip. I hope he enjoys his tenure in that office and I am sure that he will contribute very positively to the way in which this chamber operates. Congratulations to Senator Parry.

The legislation that we are debating this afternoon, the Petroleum Retail Legislation Repeal Bill 2006, opens the way for a new era in petroleum marketing because it paves the way for the introduction of the Oilcode. The introduction of this bill follows extensive consultation with the industry, industry associations and consumer groups, who all agree that the current legislation—the Petroleum Retail Marketing Franchise Act 1980 and Petroleum Retail Marketing Sites Act 1980—has become obsolete.

This 1980 legislation implemented what was known as the ‘Fife package’, after the then Fraser government minister responsible for its implementation, Wal Fife. As a then member of the House of Representatives who had previously worked in oil industry marketing management, I was involved in the consultation process that led to that legislation. It was much needed at the time to ensure a fair go for service station operators. However, to those who argue that this legislation should remain in place I say that it is well past its use-by date.

The retail petroleum market has changed substantially, and not just in recent years. The entry of Coles and Woolworths into the market during the past two decades has allowed substantial circumvention of both the intent and the letter of the 1980 Fife package. What made the Fife package obsolete was the introduction by the oil companies in the early 1990s of multisite franchising and the failure of the then Labor government to stop it—to amend the Fife legislation at that time to prevent multisite franchising, which was circumventing the intent of the Fife package. As an opposition senator at the time, I well recall calling for action on this front, but the Labor government simply sat on its hands. So I say to those who remain advocates for the legislation that we are repealing today—and this is worth repeating—it has been obsolete and ineffectual since the last Labor government allowed the law to be compromised by multisite franchising a decade and a half ago.

Subsequent marketing arrangements, in particular the developments with Coles and Woolworths, have simply built on that. That is why a new approach is required. That is why, after much consultation and negotiation, albeit not to everyone’s satisfaction, the Howard government is legislating the Oilcode through the Trade Practices Act. Labor sat on its hands and did nothing to give service station owners a fair go. The Howard government has acted—with the Oilcode.

I noticed, in his brief reference to the bill, that Senator O’Brien accused the government of stagnating on this matter. Over the years there have been entrenched differing positions between the retailers on the one hand and oil companies on the other on a few aspects of the Oilcode. Quite rightly, the government facilitated negotiations on those issues and allowed time for those negotiations to bear fruit. However, in the face of continuing disagreement, the government has taken the very difficult decisions on these aspects that have been in dispute and determined that it will mandate the Oilcode. That is why it has taken a considerable amount of time for this legislation to come forward—because, quite properly, the government allowed appropriate negotiations to be undertaken.

As I said at the outset, apart from that brief reference to the legislation, Senator O’Brien did not really address this legislation at all. He talked about excise issues and gas and coal to liquids, which he indicated that Labor had supported 20 years ago when they were in government, and then he accused this government of not doing anything about it. What did Labor do when they were in government to bring about some practical results as far as gas and coal to liquids were concerned?

As I said, Senator Murray referred to issues related to the Trade Practices Act, and they are certainly still under consideration. Senator Crossin, in her contribution to this second reading debate, talked about high petrol prices and then went on to talk about the increased GST revenue that was being generated as a result of that and the impact that that was having on people’s ability to cope. I remind Senator Crossin that if she is concerned about the revenue that is being generated by the GST she should talk to the Northern Territory Labor government, because they are the beneficiaries of the GST revenue. If there is some capacity for GST revenue to be used to relieve the effect of high petrol prices, which result directly from the fact that international oil prices are high, then it its within the capacity and the wit of the Northern Territory government to use some of its GST revenue to provide a rebate to petrol consumers and benefit them in that way. So, as I said, I suggest to Senator Crossin that she talk to the Northern Territory government if she is concerned about the amount of GST revenue that is being generated.

The concurrent repeal of the Fife package and the instalment of the Oilcode is undoubtedly essential to ensure greater transparency, accountability and national consistency in this radically altered market, which I referred to a few moments ago. Of course, the petroleum market is one of the most competitive in Australia. For these reasons, I strongly support this legislation. Support for the legislation was also recommended by the Senate Economics Legislation Committee, of which I am a member, in its report on the provisions of this bill that was tabled in the Senate on 11 May this year.

The entry of supermarket chains Woolworths and Coles into the retail petrol market has altered significantly the structure of the industry. Under the current legislation—the two pieces of legislation that this bill repeals—they hold a competitive advantage in the industry, free from the conditions that are currently placed upon the oil majors with regard to franchising. This has affected the industry to such an extent that the supermarkets now account for 50 per cent of all metropolitan sales. This has rendered the retail petrol sites of the major oil companies a dwindling market share, as they find it increasingly difficult to compete in a market in which they are put under exceptional restrictions on their business structures and the contracts they provide to their franchisees. The Senate Economics Legislation Committee concluded that it is difficult to justify the maintenance of one set of restrictions on a retail petrol site that may be operating directly next door to another site that is able to determine the conditions of its contracts under another completely unrelated piece of legislation. Through this legislation the Oilcode will be able to simply and uniformly create laws that are the most conducive to an open market performing at its optimum.

It follows that the legislation currently in place, which was developed, as I said, some 25 years ago, is no longer appropriate. Again, the Senate Economics Legislation Committee, considering changes to the industry’s structure since the introduction of the prevailing legislation, concluded that the different regulatory requirements of different market participants were unjustified. Indeed, we found that the most difficult obstacle to reforming the retail petrol industry was in reconciling the competing interests of the major oil refiners with those of the independent retail franchisees. The Howard government has provided a piece of legislation, which we are debating today, to take the necessary next step in reform of the retail petrol industry. It will provide greater flexibility for those in the market and ensure greater simplicity and efficiency, which will balance the different interests of the two parties by providing an atmosphere of competition that is similar to that experienced in other industries throughout Australia.

The most important potential benefit from the introduction of a bill affecting the sale of petrol is that it will reduce prices for all Australians. In the Oilcode, this is to be achieved through national terminal gate pricing, whereby the wholesale price of petroleum will be transparent whilst still able to be sold below cost. This will be consistent for all petrol retailers. It should put downward pressure on the price of petrol and retain competition through allowing all market participants to negotiate the price they pay for petrol.

Moreover, this legislation will address the continued insecurity that has occurred across Australia in relation to retail petrol sites, which have declined in numbers since the early 1970s. It is believed that the introduction of terminal gate pricing will have the secondary effect of ensuring the number of petrol retailers in Australia is at an optimal level, achieved through their capacity to remain price competitive or through their ability to retain a niche benefit for their customers.

I note some in the opposition have expressed concern that the potential for below-cost sales to those with greater buying power will result in a reduction in competition, as smaller operators may be forced out of the market. However, the introduction of the Oilcode will not undermine competition. Those sites that remain competitive will continue to be economically viable when faced with further industry rationalisation and the increased dominance of the supermarket franchises. Regardless of the introduction of this bill, the retail petrol market will continue to evolve according to market demand with regard to the sites of independent operators in opposition to larger retail franchises or the oil majors.

Indeed, it was the conclusion of the Senate Economics Legislation Committee that we risk seeing a decline in competition within this industry if reform does not occur, as Coles and Woolworths will be able to continue their ascendency within the market if left with their current competitive advantage. It was concluded by the committee that the oil majors, if faced with continued competitive disadvantage, will not have any incentive to stay in Australia. The distinct possibility arises that the majors would be forced to consider withdrawal from the market altogether. This would not only weaken competition within the industry, which would result in higher petrol prices; it would see a discontinuation of their interest in developing more efficient fuels and, through market withdrawal, result in a loss of refining capacity within Australia. This raises serious issues of energy security for the nation, and it is only fair that we ensure the market is free from disadvantage for any of its members by removing this outdated legislation.

The Oilcode contains appropriate safeguards to ensure all market participants are safe from their interests being compromised. Establishing disclosure statements when parties are engaged in fuel-reselling agreements will ensure that all of those in the retail petrol market are accountable. This will protect the interests of all independents and retailers by ensuring that both parties are accountable to the provisions of the agreement as specified within terminal gate pricing. This will level the playing field for petrol retailers, regardless of their relationship to the supplier, and will in turn provide an across-the-board solution to the current problems of inconsistency being experienced by our retail petrol sites, which are under different legal classifications.

Further safeguards have been put in place for all market players through the establishment of the independent, downstream petroleum dispute resolution scheme. This will provide consistency of outcomes for all retail petrol sites through the provision of an acceptable and affordable alternative to court proceedings. The dispute resolution scheme will protect the interests not only of those vulnerable independent retailers but of all retail sites equally.

The introduction of the Oilcode in an extremely competitive environment will provide an efficient mechanism to ensure all reselling agreements are honoured. The repeal of the current legislation and the introduction of the Oilcode will be a long-lasting reform for the retail petrol industry. It will provide a fair platform upon which businesses can compete and will improve competition by actively putting downward pressure on petrol prices. It will also allow the process of market rationalisation so that the industry will be able to perform at its optimal level. On this basis, I oppose the amendment that was moved by Senator O’Brien and commend the bill to the Senate.

Ruth Webber (WA, Australian Labor Party) Share this | Link to this | Hansard source

The Petroleum Retail Legislation Repeal Bill 2006 is yet another piece of economic legislation that has been some time in coming. The bill was first referred to the Senate Economics Legislation Committee on 30 March this year, and a message was conveyed to the committee, of which I am a member, that there was to be a sense of urgency in our inquiry into the bill because the government attached a degree of urgency to the legislation. So it is passing strange, to say the least, that it has taken until now to debate the legislation. The committee had two public hearings, a hearing held in Sydney in early May and a hearing held here in Canberra on 8 May, and the committee reported not long after the second hearing. As far as those of us on the economics committee are concerned, we have been ready to deal with and have had a view on this legislation since May, and we are now in September.

At the committee’s hearing in Sydney we heard from a lot of the players in the petroleum retail industry, which is hardly surprising. In discussing their views on this proposed legislation, a lot of the players referred to the Oilcode, a code that has been referred to by Senator Chapman and others who have contributed earlier to this debate. I mention this because, at the time, those of us on the committee were unaware of the totality of the package. We were unaware that this piece of legislation was to go hand in hand with an oil code and, in fact, had not been provided with a copy of that code. So the hearing where we heard from industry was a little disjointed. We probably did not give them a true sense of where we were at and we did not have the opportunity to pursue the issues with them the way we would have if we had had all the information before us.

In discussing the issue with industry representatives in Sydney, it came out that they were of the view that the Oilcode, as they were discussing it, was available on the department’s website in draft form. It was not until the committee got to have its hearings in Canberra that we were able to have a discussion about what was in the code and to have it before us and get a true understanding of the status of the code and how that was to correlate with the legislation. In fact, when we were talking to departmental people they were able to tell us that as far as they were concerned the code, as it stood on the website, was the final document and not a draft, as some in the industry still seemed to consider it to be. As has been mentioned by others, when the economics committee reported in May, although we agreed to the passage of the legislation, a number of us put in some additional comments on other measures that we thought needed to be taken to insure the petroleum retail industry.

As part of the assistance to committee members in the lead-up to our hearing in Canberra, we were provided with some briefing notes from the Minister for Industry, Tourism and Resources, the Hon. Ian Macfarlane, which I must say—and I remarked about this at the time—were most useful. Perhaps if we had had them a bit earlier it would have stopped some of the pain at the Sydney hearings. One of the things mentioned in that briefing was a discussion about the change in the environment regulating the retail petroleum industry. It said that the proposed legislation would not eliminate the rationalisation of retail sites that had been experienced by the industry over the past two decades. We were provided with the useful information that in 1970 there were over 20,000 retail petroleum sites around Australia but that, following the oil shocks of the 1970s and 1980s, the number had reduced to approximately 12,500 sites and has continued to decline to the current level of 6,500.

The briefing note went on to say—and this is one of the things that causes some concern for those who are worried about the operation of independent retailers and smaller players within the sector:

However, ... rationalisation will eventually plateau as retailers compete on the even playing field facilitated by the Oilcode and the number of retail sites reaches an optimal level in response to the demands of the domestic market.

I presume that, by the note saying it will eventually plateau, we can still expect to see some decline in the number of sites. In a state that is as geographically large as Western Australia, and which has an industry as significant as Western Australia’s but still with a fairly centralised population, the thought of any further decline in the number of retail outlets will be of real concern to the people of that state—the people of my home state. If you are from outside Perth, there are no options of public transport or other methods of getting around, so easy access to petroleum at a reasonable price is a very important part of keeping my state going.

Hand in glove with this piece of legislation, as has been highlighted by Labor members of the economics committee and by Labor in its proposed amendments, is the need to reform the Trade Practices Act. Trade Practices Act reform is something that has been discussed in this chamber. It has been highlighted in this chamber for almost as long as I have been a member; indeed, it has had a quite high profile in that time. It was only last week in question time, in response, I think, to a question from Senator Fielding—even though it is only a week old it is testing my memory—that Senator Minchin said that the government accepted the need to reform the Trade Practices Act but would do it when it had the numbers to secure it. We all know that the government has the numbers in this place, so I can only assume that any government reluctance to reform the Trade Practices Act is due to a level of disharmony or disagreement within its own forces; that should be the only reluctance. As I say, this is an issue that has been highlighted for quite some time.

The need to reform the Trade Practices Act was highlighted quite significantly by a now extinct body, the Senate Economic References Committee, when it reported, back in 2004, on the need to make the act more robust in protecting the rights of small business. Whilst Labor supports the legislation, we feel that hand in glove with that needs to go some further reform to the Trade Practices Act. As those of us from Labor commented in our additional remarks in the economics committee inquiry, it is well known that section 46 of the Trade Practices Act has been rendered inefficient and ineffective because of a number of Federal Court and High Court cases. For example, in the Safeway case the concept of taking fair advantage was brought into question. In the Rural Press case, the concept of abusing market power in another market was brought into question. Then, of course, there is the infamous Boral case, where the very concept of market power was also brought into question. The ACCC has effectively given up pursuing cases under section 46 of the Trade Practices Act because it now knows, in our view anyway, that it has been rendered ineffective.

At the time the Senate Economic References Committee brought down its report, there was unanimous agreement that some sort of reform of the Trade Practices Act needed to take place. The only disagreement within the committee was the full extent of that reform. Some two years later we are still waiting to see some government legislation and government response to that inquiry. It is very difficult to continually come in here to raise real questions about individual pieces of legislation and the effect they will have on small, independent operators in collaboration with a less than effective Trade Practices Act in this day and age when we are yet to see the colour of the government’s proposed reforms. Every time Labor raises these issues, we are told that there is a package coming and that the government fully intends to reform the Trade Practices Act. Some two years on, considering it will be a significant package that will affect those in small and intermediate businesses, I am surprised that a government that claims to be the champion of the small business sector is yet to come forward with a package of reforms to protect the sector in an increasingly combative and robust market.

The report of the Senate inquiry into the effectiveness of the Trade Practices Act on small business was brought down in 2004. It made a number of recommendations to strengthen the Trade Practices Act, some of which the government at the time committed to, yet we are still to see any legislation resulting from that. Particularly as the government, we all know, have the numbers in this place, it is completely unacceptable for them to say, ‘We’ll wait and see when we can get the package through.’ They have the numbers; they need to use the numbers. This is something that those of us on this side of the chamber have been told they have been working on for some two years. Surely, therefore, this is a package that should be ready to go. Labor senators at the economics committee hearing particularly noted the comments of Mr Cassidy from the ACCC when he said:

I would say that, to the extent that there are shortcomings in the current section 46—and that is obviously well-travelled ground—we think the answer to that is to amend the section.

So the ACCC wants the section amended. The Senate economics committee unanimously wanted the section amended. Those from almost every peak small business forum or locally organised forum of small business also want the section amended, yet we are still to see any form of activity from the government.

The reforms are long overdue. For those of us that are very aware of and have a lot of sympathy for the claims that were made by the independents in the petroleum retail sector, it is very difficult to continually take the government’s point of view that this piece of legislation is essential and that the Oilcode will go hand in hand. In a way the government forced our hand by removing all regulation and then said, ‘We have to pass the legislation or the entire industry will be left unregulated.’ It is very difficult for us to continue to deal with these issues industry by industry, sector by sector without having any undertaking or any indication from the government on when we can expect any reform to the Trade Practices Act and what that reform will look like. This is reform that we have been waiting some two years for. Every time the government bring in a piece of legislation like this that seeks to govern the commercial activities of one particular sector of our economy, those of us on this side of the chamber will go out of our way to remind them that they cannot adopt this piecemeal approach. In order for the small business sector of our economy to prosper in the way that it should, they must give us the legislative framework or at least the undertaking of what that legislative framework will look like so that we can see the true operation of a decent trade practices regime in our economy.

Debate interrupted.