Wednesday, 13 September 2006
Petroleum Retail Legislation Repeal Bill 2006
Consideration resumed from 12 September.
I move Family First amendment (1) on sheet 5033:
(1) Schedule 2, page 4 (after line 13), at the end of the Schedule, add:
6 At the end of section 51AE
(7) The Oilcode must specify that where a wholesale supplier as part of the supply of the declared petroleum product:
(a) discounts the terminal gate price; or
(b) supplies or offers to supply a declared petroleum product at a price other than the terminal gate price;
the wholesale supplier will make available to the public each day on an Internet website maintained by or for the wholesale supplier:
(c) the price or prices including the amount of any discount and other individual components in relation to each particular price; and
(d) the criteria to qualify for the price or prices including any discount in relation to a particular price or individual component of each particular price.
Note: The terminal gate price is defined in the Oilcode.
Given that yesterday we went through quite a few amendments to this bill to make sure that we had more competition, not less, we need to make sure that independent service stations, predominantly smaller businesses, have the ability to see exactly what price they can buy at and what conditions they need to meet to buy at those prices. So this amendment from Family First is about disclosing product discounts, not about stopping discounting. This amendment is about making sure that all the purchasers, including independent service stations, know exactly what conditions they would need to meet to buy at a particular price. So this amendment is about having full price transparency.
I understand that the government may argue that the Oilcode requires the terminal gate pricing to be disclosed, but this issue is about disclosing discounts and making it quite clear to anyone wanting to buy petrol exactly what conditions or criteria they need to meet to get certain discounts. Rather than allowing discounts to be hidden and not shown, this is about making sure we have an open and level playing field for all service stations, including independents, so that they know what they have to do to get the very best discounts. Knowing the role that independent service stations play within the market in keeping prices low, I think this is extremely important. Family First wants to make sure that a structure is set up such that independents can survive. One of the ways they can survive is by being able to understand what discounts are being given by suppliers of petrol and knowing what conditions they would have to meet in order to achieve the same level of discounts.
In the last week we have heard clearly about how independents are buying at a level that is already higher than what other retailers are selling at, and they do not understand how that can happen. One way of addressing that is to have transparency of pricing, not just the terminal gate price but the discounted price. Independents need to be able to survive—their backs are already against the wall—and they need to understand exactly what criteria they need to meet to purchase petrol at the best possible price.
The amendment that Family First is putting forward would make sure that the wholesale supplier will make available to the public the price or prices, including the amount of any discount or any other individual components in relation to each price and—which is very important—the criteria to qualify for the price or prices, including any discount in relation to a price or individual component of each price. This is a common-sense amendment, as were yesterday’s, but again with this one I appeal to the Senate, I appeal to the government, to think about what is happening to independents and the important role they play in the market in keeping prices low.
I was out talking to someone at an independent service station this morning and they were sharing with me how important it is to have independents out there to make sure that there is more, not less, competition. They have played a very important role in discounting and a particularly important role in allowing alternative fuels, such as ethanol. It would be wrong for Australia and this parliament not to ensure that independents can survive on a level playing field. I notice that the Comcars now have petrol cards for independent service stations. I would have to check whether senators and members also have such access. I have a petrol card for Shell, Caltex and BP, but I do not have one for independents. I am not sure how it would work; I would have to check. It is just that I have noticed that Comcars are able to buy from independents and buy the ethanol blends they have. This amendment is all about ensuring that independents understand the conditions they have to meet to get the very best price. It is fair and reasonable that they are able to do this. I appeal to all senators to support the Family First amendment.
We agree that transparency in the Australian fuel market is critically important. Because we believed the powers of the ACCC were very important we supported Senator Murray’s amendment and moved our own amendment in the same terms to give the ACCC the power that it was seeking to monitor and deal with anticompetitive behaviour in the market. Unfortunately, the government chose not to support that amendment. We believe that Senator Fielding’s amendment will enhance transparency for the purchasers of fuel at the wholesale level. It will do no harm to the market at all; indeed, it will enhance competition by revealing the variety of means by which a retailer can access fuel potentially at a cheaper price. It will also reveal to the general public the nature of the market, the way in which discounts are obtained and limitations on obtaining discounts.
The government might argue that these discount arrangements are commercial-in-confidence. We think that this market is so important to the Australian community, to the structure of business costs and to the arrangements which keep this country moving, that we ought to support the amendment. As I say, we believe it does no harm to the market overall. To the extent that it may interfere with commercial arrangements, we believe that it is in the public interest that those arrangements be made as transparent as possible. We will be supporting this amendment. We urge the government to do likewise. I commend Senator Fielding’s comments to the chamber.
I recall three decades ago having a very close look at the fair trading provisions in law in California and New York state. In both of those sets of legislation, and it may have been the case elsewhere—there was considerable academic and expert commentary surrounding them—I recall that they were very much focused on two fundamental and longstanding principles in competition law. The first is that you should have like terms for like customers. In other words, if you are of a certain volume, size, ability or credit worthiness you are entitled, as a matter of law and as a matter of principle, to have the same terms as someone of equivalent status. It is equivalent, if you like, to talking about antidiscrimination law. What antidiscrimination law says is that you should not discriminate against somebody—for instance, with respect to work—by age, by gender, by religion, by ethnicity; you should evaluate them on their merits. Essentially, the like terms for like customers approach says that you evaluate each customer on their merits; you do not discriminate on unreasonable, immoral or biased grounds.
The second principle which is attached to that is that you should publish your terms and conditions, and your lists of terms of conditions should be freely available. That is a principle that is well established in Australian law, except in a few industries. One of the very worst—and I am absolutely appalled to this day, and I have written and spoken extensively about it for a couple of decades now—is the fact that shopping centre rents are a secret matter. Secret pricing is undertaken and is not publicly available. I have long been concerned about this matter.
There is a publication of mine in the Parliamentary Library, if anybody wants to go and have a look at it, about an issue that was raised in March 2004 during the Senate references committee inquiry into the Trade Practices Act. Just to express the principle: if you walk into a shoe shop as a customer, all the prices of the shoes and the various brands are available and are known to you. This amendment seeks to identify, for the buyers of petroleum products, the terms and conditions to which they are entitled with respect to their particular character—in other words, their volume, or their geographical location. Obviously, if an oil refinery has to deliver fuel for 300 kilometres, it costs them more to get that fuel to that customer than it does to get the fuel to a customer five kilometres away, and they are entitled to add a premium for that distance.
The Americans discovered years ago, in that instance I was outlining, that sellers were biased in terms of how they treated buyers. For instance, some buyers would get a facings allowance, which should have been available to others and was not; some buyers might get 45 days terms of credit, whereas the standard was 30 days, and that was not available to others; and so on and so forth. The Americans required that these principles should be clearly laid out by the seller on a non-discriminatory basis so that people had an appropriate way to be able to determine how to get the best price, whether by volume or by the terms that they were able to make attractive to the seller.
I think that this amendment encapsulates an absolutely critical, vital and—if I might describe it as such—universal principle with respect to the sale of goods under an advanced, fair competition regime. Certainly, you might quarrel with the wording here or there, but it does not alter the real impact of this amendment. For instance, it says, ‘the wholesale supplier will make available to the public each day’. I am not sure the public would need to refer to it each day, because it is more important for the retail buyers to be able to refer to it, but nevertheless it still must be available to the public. It must be a public list of the terms and conditions under which you supply product.
The amendment says ‘on an Internet website’. Not every buyer will have access to a website. Some of the sorts of small businesses that Senator Joyce was talking about earlier might not have website access, they might not have broadband way out in Woop Woop, so you could argue that an internet website is too limiting and the information should simply be available to the public. Nevertheless, as with the other amendment, the saving grace—if there are any inadequacies in this amendment—is that it says ‘the Oilcode must specify’. Of course, the Oilcode is capable of being expansive and descriptive and able to cover off areas which the amendment might not cover off.
The most important aspect of this amendment is that it seeks to address the issue of fundamental public concern—I accept, because I have heard the arguments contrary to this, that it might not always be true—which is the common public and media perception that the market is manipulated by the oil majors and their various organisations. It may not be true but the only way to cure that perception, which is very widespread indeed, is for there to be a published list of terms and conditions in which the regulator, and indeed everybody concerned with these matters, can have confidence.
I have had a close look at and a think about this proposed amendment and I agree with the Labor Party. I believe that not only is the intent correct and not only are the precedents there in terms of long-established competition principles in modern market economies but the wording is sufficiently tight to enable it to pass into law without too many unforeseen consequences. With those remarks, and with a long history of my own and the Democrats’ concern and support for similar approaches in other bills at other times, it is consistent for us to support this amendment.
Once more I agree with the intent of this amendment, but there are things that I would have changed. I do not believe there is a reason that everybody in the public needs to know the commercial-in-confidence agreements. I would suggest—and I will listen to the debate—that it would probably be better if there were an ombudsman who was actually separate in the review of this matter. Part (c), which says, ‘the price or prices including the amount of any discount’, gives away, even within independents, the discount one person is getting over another person. I hope in the future that can be changed. I think it would be better if it said ‘the price or prices including whether there is a discount or other individual components that relate to a particular price’.
People should know whether someone is getting a discount, but whether they should know the exact discount is another issue. I have no problems with an individual ombudsman who could respect commercial-in-confidence agreements. If an ombudsman were to know about the discounts then that would give you another body to oversee this area. However, the intent of what Senator Fielding is trying to do is correct. He is addressing a major problem that everybody has when you call into an independent service station and say, ‘What can I do for you?’ and they say, ‘You can help me buy petrol cheaper than what they are selling it for. If I can buy petrol at what they are selling it for then that would be a great outcome.’
I ask Senator Fielding to give consideration to whether, rather than the public knowing, we could put in place an independent ombudsman to have a view of that. The public should know whether there is a discount and the circumstances of a discount, but to tell everybody on a public internet site the price of a product that everybody is buying could work against them. There could be occasions where even other majors could say, ‘Now I know what the margins are of all my competitors everywhere,’ or one independent in a small town will know what the margin is of the person up the street. I ask Senator Fielding if he could just give consideration to whether we could have an independent ombudsman with that oversight who has the ability to keep some sort of corporate veil in place so that the person down the street from you is not going to have you on toast and know each day what your margin is. I fully support what Senator Fielding is trying to do, I want to support him, but I wonder if he could give some consideration—maybe calling on the assistance of Senator Murray as well—to having a look at what the opinion is on whether we could get some form of screening so that not every detail of what a person is doing is out there for every person in the public to see.
I rise to support this amendment. The Treasurer has said loudly and often that he supports truth and transparency, and that is what this amendment is effectively asking of the companies selling petroleum wholesale in Australia. I think that it is entirely appropriate that they specify the discounts and the supplies on offer and put on the internet each day the price or prices, including the amount of any discount or any other individual components in relation to each particular price and the criteria to qualify for the price or prices.
The community really objects to the fact that, just before a long weekend or holidays, petrol prices go up. They really object to the fact that when the pressure goes on suddenly petrol can be discounted, and discounted differentially around the country. I think it would be a great leap forward if we could at least allow the community to see exactly what the oil companies are doing when they are selling their product into the market—then you would be able to get some transparency in what is going on. I think that this is workable. One of the great things about modern communication and IT is that it is not beyond the wit of companies to do this. I think it would be a valuable contribution to the debate because, whenever there is pressure on petrol prices and when this kind of inexplicable behaviour goes on, parliaments have yet another inquiry into petrol prices. Frankly, the community is getting pretty cynical about the 70 or so inquiries into petrol prices. I think that they think that politicians just have another inquiry looking into it to take the political heat off themselves and that is the end of it. To avoid ongoing inquiries into petrol prices, the obvious things to do to are to strengthen the powers of the ACCC, to improve the Trade Practices Act and to provide better transparency and disclosure so that the community can go to those websites and see exactly what is being proposed. I think it is a worthwhile amendment and I support it.
With great respect to Senator Fielding and the bona fides of his motives, the government do not support this amendment. We think that this is an extraordinarily heavy-handed approach to this issue, but it is an opportunity to remind the Senate that one of the great virtues of this package of legislation is what it does to improve the arrangements with regard to terminal gate prices from what has prevailed for virtually the whole time the old-fashioned and out-of-date sites act and franchise act have operated. We accepted that in the second reading speech, and the explanatory memorandum made it clear that one of the motivations and great virtues of the legislation is to vastly improve arrangements for independents and others with respect to terminal gate pricing. As the second reading speech notes:
The oilcode will also introduce a nationally consistent approach to terminal gate pricing arrangements to improve transparency in wholesale pricing and allow access for all customers, including small businesses, to petroleum products at a published terminal gate price.
It will overcome this problem we currently have of people in Western Australia and Victoria having an advantage over other states with respect to the arrangements that apply to terminal gate pricing.
Let us not forget that what we are doing with this legislation is a vast improvement on the current arrangements. We think we have the balance right. You must pay respect to the proper commercial arrangements that apply in all industries with respect to discounting. I am quite convinced that the very unfortunate and perhaps unintended consequence of this amendment would probably be to, in effect, end discounting at the great expense of consumers. Let us not forget that it is all very well to have a proper and well-placed concern for independents and small retailers, but all trade practices arrangements in any nation like ours must have equal regard for the interests of consumers, and consumers are the beneficiaries of discounting to the extent that it occurs. We are not prepared to embrace heavy-handed red tape amendments which could possibly, and we think probably, result in higher petrol prices than might otherwise apply. This amendment would be, in our view, an undue infringement on proper commercial arrangements. It is one thing for this Oilcode to set out nationally transparent arrangements in relation to terminal gate pricing, but every day in the commercial world private parties come to arrangements on discounting; it is a common practice in lots of industries. Who are the beneficiaries of that? Consumers. We pay less for the product than we otherwise would.
The amendment would bring about extraordinarily heavy-handed arrangements—and I think Senator Joyce was trying to make this point—where the wholesale supplier would make available to the public each day on an internet website maintained by the wholesale supplier the price or prices, including the amount of any discount; other individual components in relation to each particular price; and the criteria to qualify for the price or prices. This is, quite frankly, extraordinary stuff. It is unduly heavy-handed. While we respect the motives, the government’s point of view is that it is unacceptable and blinds the Senate to the point that this Oilcode goes an enormous way to overcoming the current inadequacies with regard to terminal gate pricing. So the government are opposed to this amendment.
I just cannot let that go. Here we are pulling the rug out from underneath independent service stations. They already have their backs to the wall and here is the government hell bent on seeing them disappear. This is a joke. I heard the minister saying that this will hinder discounting—‘stop discounting’ were his words. That is so far from the truth that it is not funny. We are talking about a very serious issue here. Petrol and its supply are essential. Talk to people off the street. I did that this morning and you can see a video blog on my website of me talking to someone off the street.
This is an absolute joke. It is an indictment. This is a commonsense amendment that the government is paying lip service to. I cannot believe that there is only one National Party senator willing to speak on this issue. This is all about independent small businesses. Yesterday, in the committee stage debate on the Petroleum Retail Legislation Repeal Bill 2006, we also heard of amendments which would have protected and made sure that we had real competition.
This issue is starving independents of knowing what they have to do to reach a discounted price. We need to make sure we have a level playing field. We should not be pulling the rug out from underneath independent service stations. Talk to people out there. Talk to families and share with them. They do not know what is happening today. They have no idea what is happening in here today because this government has not shared with the public what we are doing here and what impact it will have down the track. So I appeal again to the government to have commonsense.
This is a fair and reasonable amendment to show that we have open and transparent pricing. It is an essential good. We cannot do without it today and we need to make sure that we are allowing independents to survive in this marketplace. Again, I appeal to the government to support this amendment.
I must just add a brief commentary to this debate. Quite plainly, the amendment does not stop volume discounting. Quite plainly, if you buy a million litres you are going to get a better price than if you buy 100 litres. The amendment does not stop that; it simply requires the supplier—of which there are very few, by the way, in Australia—to make their price list available to the thousands of retailers. So that is what will happen. If you buy a million litres you might get extended credit terms, a certain discount level and faster delivery. Those are the terms and conditions. If you buy 100 litres you will pay a lot more, wait a lot longer and probably have to pay cash. That is how it will be. This amendment is to do with the principle of laying out for customers like terms for like customers. So big people will still get much better terms and conditions than small people. That is the market. That is the world. That is how it operates.
I seldom refer to my own experience but I speak to you with the benefit of several decades of multinational retailing and an understanding of the principles that surround it. That does not prevent hard, capable negotiators from sitting down and bending the arms of the suppliers. It does not stop that at all. There is nothing in this that prohibits that. But this amendment requires that there be a properly available price list. It is required daily because that is the way the market is. The market in petroleum products—which by and large are commodities that are not highly differentiated—is priced on a daily basis. That is why the amendment says that it should be daily.
So I can understand the minister wishing to argue for a world of secret, backroom deals and cosy arrangements, because that is how it works at the present, but it is not a principle I or my party subscribe to. We believe that people who supply suppliers in a modern market economy must put up their price lists and must say what the terms and conditions are for varying types of customers. That is all this amendment is saying.
The weakness in the government’s argument on this matter is demonstrated by evidence that the Senate Standing Committee on Economics has taken from various petrol retailers through its current inquiry, and also from the comments that various retailers have made on the public record about their inability to obtain the same terms as their competitors in the same small market—the same town. Some independents are saying that they are not able to purchase their fuel at the same price as their competitors who are being supplied by the large companies. So Senator Joyce ought to think carefully about the concern that he had because—although I understand that some people might think it is advantageous that on the occasion that they get a slightly better deal they do not want people to know about it—overall in the market place if one business is, for no reason other than the preference of the supplier, getting a better deal and that better deal is not available to the independents, Senator Joyce will be defeating the arguments that he has placed on the record about the need to ensure that independents are not forced out of the market. It is obviously the case that, if these arrangements have to be transparent, the ability to do different deals will not be available. That would be, I think, a better thing for the market.
I agree with Senator Murray that the suggestion that discounting would disappear is just not borne out by the facts. What happens when there is fuel that needs to be sold, when the wholesaler needs to move fuel on because more fuel is coming and tries to encourage retailers to buy at a particular time in the cycle because of these needs? That is going to ensure that there is more urgency about marketing the fuel in stock, and that will have an impact on discounting. There are a variety of reasons why discounting will continue, and blanket suggestions that somehow this regulatory arrangement will mean the abandonment of discounting are demonstrably wrong, I think.
Let’s look at the situation in the Perth retail market, where service stations have to notify the public of their price each morning and may not vary it. Does that end discounting? No. Does it give the public a better knowledge of what is going to be available during the day? Yes. Does it mean that price boards do not vary several times during the day? Yes. Does that mean that buyers have better knowledge in the market? Yes. You can always mount an argument about why secrecy might end a particular advantageous circumstance in the market, but overall the benefits of transparency in this very, very important market outweigh, in our view, the concerns about the lack of transparency in some commercial arrangements. This is a very important commodity to the Australian market and to transport, and to the extent that we can have a clear understanding of what is taking place we will arm the consumer and the retailer.
I acknowledge the arguments of the minister on these issues. What we have today, though, is a clear statement by all that the terminal gate price is really not where it is at because, if we have to disclose the discounts, the discount is where it is at, not the terminal gate price. Everybody is in agreement on that issue. Having open and transparent disclosure of the terminal gate price really does not mean very much at all, because everybody is agreed on that here today—otherwise, they would not be arguing against this.
However, when I drive down the road past the car lots I do not see on a big sign the price that they have purchased every car for. When I go into a supermarket, I do not see the price they have purchased every product for. When I go into any form of retail outlet, I do not have free and unfettered knowledge of the price they purchased their product at. There is a position between the two, between having no knowledge and having unfettered knowledge. I have a concern that this amendment gives you unfettered knowledge of a product. I believe that creating a position for an independent ombudsman, on whom people could rely for commercial-in-confidence protection of their information and whose process for keeping the market fair would be reviewed and assessed by the parliament, is the middle ground that should be looked at.
As Senator O’Brien agrees with this without qualification, he therefore agrees, no doubt, that in any market, anywhere, everybody should have the ability to know exactly what price a person buys a product at. I am not saying I will not support this—I probably will—but I just say that it is clumsy and we could do it a lot better. There is a middle ground, and the middle ground is to have an independent ombudsman so that people could have some confidence that not everything about them is known to the public.
When I go to an independent service station, I need to know it is there, but just think about it. Let’s use another analogy: I can go into a jewellery shop and I can find out on the internet exactly what they purchased all their stock for. I can go into any store around town and I can find out exactly what they purchased their stock for. Is that a step too far? I think it is. I think there is a middle ground here. However, I have not put up the resolution that shows the middle ground. The overwhelming sentiment is that the terminal gate price is used to manipulate and drive independents out of the market. Independents can show you that they do not have the capacity to buy fuel at the price that one of the majors is selling it. That is obviously intrinsically unfair and will throw them out of the market. That is the issue that needs to be dealt with.
So on this issue we have agreement now throughout the room. Everybody has agreed that the terminal gate price is not where it is at. The terminal gate price is going to appear somewhere, but it is the discounts that matter. Everybody has agreed on that point and it is good to have that on the record. What that obviously states is that we have to find some mechanism to deal with the monitoring of the discounting—not get rid of the discounting but make sure that discounting is not used as a predatory pricing factor to force independents out of the market.
My reservations are that I do not believe that everybody has a right to know the exact price that people purchase a product at. Let’s take it to an agricultural analogy—not that I have any cattle, but imagine I do. When I sell cattle, do I have to announce to everybody what price I purchased them at? It does not stand to reason.
I think we have probably heard all we need to hear on this issue, frankly. Quite clearly this is just an attempt to undermine the independents even further. We need transparent pricing. We could go on all day on this topic and obviously not agree that we need transparency, so I think we should take a vote on this issue now. We have heard all the arguments for both cases that we are going to hear. We need transparency in pricing.
I move amendment (2) on sheet 5045:
(2) Schedule 2, page 4 (after line 13), at the end of the Schedule, add:
4 Section 95A (at the end of the definition of goods)
; and (f) petroleum products.
Obviously, the Trade Practices Act has to have the power of review to be able to monitor what is going on in the pricing structure. We have just had Senator Fielding’s amendment. The reason I supported it is that, although it is clumsy, at least it gives us a starting position. I think we can do something better than that—and I think amendment (2) is something better than that. My amendment provides a monitoring ability in the Trade Practices Act. It puts in place some sense of belief in a commercial-in-confidence arrangement to look at fuel pricing. It is an addendum which adds petroleum products to a number of other things that are in section 95A of the Trade Practices Act. Obviously, there is our belief in the ability of the Trade Practices Act to have surveillance over a whole range of products. Why can’t we include petroleum products? We have made the statement in legislation that there are a range of other products that deserve the ability to be monitored, and I think petroleum products should be amongst them. It is a minor amendment.
Although I supported Senator Fielding’s amendment, the problem I have with it is that it shows everybody’s underwear, although at least it gets the ball rolling. If that amendment had been successful, I would certainly have supported a watering down to an independent ombudsman. But it might have been the only chance we had, so I supported it to at least get the ball rolling. This amendment gives a better process to something that is already in place and that the government is happy with. We already have Trade Practices Act monitoring of products in place, and this amendment adds petroleum products to the list of products.
I respect what the minister said about the previous amendment. Although I agree with the sentiment of a vast amount of what he said, we had to start somewhere; we had to get the debate to a point where we acknowledged that the terminal gate price is not transparent. Having everybody know the terminal gate price is of no real assistance, because the discounting mechanism is where the game is at. We have to have in place a mechanism that at least allows some sort of power of review, power of commentary, and the ability to look at what is happening, especially with regard to independents—and we have gone through why independents are so important.
First and foremost, the Trade Practices Act protects the manifest right of the Australian public to go into business at ground level—and that is a strong belief of anybody on the conservative side of government. It protects independents, who lead in price discounting and are absolutely instrumental in getting biorenewables out into the market. We know that. It gives people in small business the latitude to be master of their own ship, to be master of their own thoughts, to follow their own destiny, to properly connect themselves to the wealth of their own nation and to have a higher sense of freedom. When asked what they want out of their work, 95 per cent of people come out with a clear statement that one day they want to be their own boss. A lot of them never get there but they all have that desire. I hope that has been plumbed on this side of the chamber and that we can give people that freedom and that innate sense that one day they will be master of their own ship. We need to protect the mechanism of people going into business, and the addition of petroleum products to section 95A of the Trade Practices Act will allow that to happen. It will be fascinating to listen to the debate. I hope that such a minor amendment can gather some support.
I will preface my comments with a slight proviso. I would like the minister to tell me it is not the case that the ACCC already monitors petrol prices and that this amendment would therefore slightly expand the monitoring role to other commodities that might be described as ‘petroleum products’. That would potentially be the nature of the change, depending on the interpretation of the words ‘petroleum products’. If that is the case, I do not think we will be doing any great harm in passing this amendment. It would have been better if the committee had supported Labor’s amendment, which would have empowered the parliament to authorise a thorough investigation by the ACCC into petroleum products. I am of course disappointed that none of the coalition senators was prepared to support that proposal, and I am disappointed that the Treasurer chose not to exercise his powers to hold such an inquiry in all the time that he has been Treasurer, as he could have done under the legislation. So, on the understanding that the impact would potentially be to extend that monitoring process to a range of products beyond petrol—and I am not sure how widely the term ‘petroleum products’ would be interpreted—we do not think this amendment would do any great harm.
Can I just assure the opposition that, on the basis of the advice that I have, it is the case that the ACCC already does have the requisite powers to monitor the pricing of all petroleum products, not just petrol—diesel and LPG, and all the rest of it, are covered. When Graeme Samuel, in his many statements, makes the point that there is that monitoring going on, he is referring to all petroleum products. On the basis of our satisfaction that section 155 of the Trade Practices Act already gives the ACCC the power to take requisite action to instigate an investigation if it believes that there is any anticompetitive conduct, conduct that has come to its attention as a result of the monitoring that it does, we cannot support this amendment.
We do not think it is an appropriate amendment. We think the powers that are sought by the passage of this amendment already exist. I think it is clear from other statements made by Mr Samuel as the requisite authority that, as he said—and I have read some of his evidence to our current Senate committee of inquiry—the ACCC really do not believe that there is, nor do they have evidence of, any widespread corruption, illegal conduct et cetera.
This is an industry—and we were just discussing this—where it is amazing how everybody knows, almost on a daily basis, the prices being charged for these products. If you asked anybody in the street, they would certainly know the price of a litre of petrol but they would be hard-pressed to know the price of a litre of beer or a litre of milk. So there is an extraordinary focus on this issue but extraordinary transparency in terms of retail pricing.
As I say, we think that the ACCC, really, because of this public interest in it, is exercising properly its current responsibilities with respect to price monitoring. It has the requisite powers to investigate and there have been, already, a couple of actions taken by the ACCC of its own volition. So we think this is an unnecessary amendment and one that we cannot support.
What we will have to do is get a copy of section 95A of the Trade Practices Act. There is a list of products in that section. I can see the minister has now got that list to have a look over it; I am trying to dig it up from my office as well. Obviously, this is a technical amendment. The minister might confirm whether petroleum products are in that list; I believe they are not, and that is the reason this amendment has been sought.
Obviously I do not pretend to be a bard of law but, if there is already the ability to monitor petroleum products, then there should be no problem in supporting this, because all you are really doing is reinforcing the position that is there. And I have here—thank you very much, Senator Murray—a copy of the act and I see that, at section 95A, it says that, for price surveillance:
- ships, aircraft and other vehicles; and
- animals, including fish; and
- minerals, trees and crops, whether on, under or attached to land or not; and
- water; and
- gas and electricity.
So, we see that petroleum products are not there. We want to put petroleum products on that list, to give greater effect to part VIIA—Prices Surveillance. That will give us, over a period of time, greater powers for monitoring petroleum products. That is why this technical amendment has been asked for and, seeing as petroleum products are not listed in 95A, as just described, I ask the committee to consider whether that amendment should be allowed.
For the purposes of properly informing the committee or confirming what Senator Joyce is saying, there is this part VIIA—Prices Surveillance of the Trade Practices Act and that is what this amendment seeks to deal with. It refers to the definition of ‘goods’, and says that that includes:
- ships, aircraft and other vehicles; and
- animals, including fish; and
- minerals, trees and crops, whether on, under or attached to land or not; and
- water; and
- gas and electricity.
That is a rather interesting list of things! And it is Senator Joyce’s proposal that we add, to that rather odd and eclectic list, ‘petroleum products’. As I am—may I say, informally—advised, because I am no expert on the Trade Practices Act, I must confess, these goods are those which the minister may direct the commission formally to investigate with respect to pricing behaviour.
It is a very special and separate section of the act. I think it is about giving the minister certain authority to order investigations, and it is separate and apart from the general role of the commission in general price monitoring. Of course it needs to do that if it is to establish a base on which to exercise powers, under section 155, to initiate an investigation to see if there is any illegal or improper conduct. That is why it does that sort of widespread monitoring.
This is a quite separate exercise. This is an old prices surveillance regime which has been around for a long time. But really it is about the minister having certain authorities. So we do not see the purpose or need to add petroleum products to part VIIA—Prices Surveillance list—a list, as I say, that is a rather eclectic and odd group of goods—because we think the current arrangements are working more than adequately, and I think Graeme Samuel would support that very much.
Minister, I share your amusement. I am sometimes intrigued by the sorts of things that have found their way into legislation. There must be a history of some sort to this: ‘minerals, trees and crops, whether on, under or attached to land or not’. Can you imagine a crop that is under the land? I suppose that means potatoes and things.
Or peanuts, which interestingly are a legume, not a nut. So there we are. I also sympathise with the minister’s advisers, because I suspect the advisers available on this bill are not advisers who commonly deal with the Trade Practices Act either; that falls under a different agency and authority.
This particular amendment goes to the heart of the problem which is being explored by the Senate committee, which perhaps is groping towards a better understanding. The problem, as outlined in Mr Samuel’s evidence, is that the ACCC can presently only go so far in monitoring the conduct of petroleum suppliers and companies. Unless they have evidence of predatory or other behaviour which contravenes the act, they are only able to monitor prices on the basis of what information is publicly available or is supplied voluntarily by the companies. The issue that the Senate committee is grappling with is how to get more detailed, more insightful and more informed knowledge into the hands of the ACCC—effectively, to use the phrase which is commonly used, to get behind the corporate veil. One of the ways in which that can be done is to either assume or adopt ASIC type powers—which is the route down which I have been going—which work very effectively in areas like continuous disclosure reporting requirements and so on. The alternative is to have ministerial discretion. The problem with ministerial direction is that it becomes a political decision—a minister, to take a decision, has to receive evidence and effectively is saying, ‘We think we’ve got enough to nab you and we’re sending the ACCC after you.’ It is much better if the ACCC is in fact pursuing these matters as part of its normal regulatory activity.
When this list was originally compiled, it is my assumption that some of the items were particularly sensitive. I was not there when they were put in, but I suspect that they were areas of the economy which had particular attention applying to them. I can see the hands of The Nationals perhaps in items (b) and (c). Items (d) and (e) are definitely still current. Item (a) has probably fallen off the list a little except with regard to some specific areas. Unlike the shadow minister, whom I think is also operating in a system where trade practices issues are not a common feature of his particular responsibilities, I suspect it is not a question of this amendment not doing much harm but rather a question of the amendment giving greater power to a minister of the Crown to instruct the ACCC to attend to a particular area. Of course it does not mean that they automatically will, because, as I said, it is a political decision and a great deal rests on these sorts of decisions. If you were of the view that ministers should have this sort of direction, then the question is: what industries deserve to be covered?
If we are all in agreement that petroleum products are a crucial strategic as well as consumer good which is a necessity, then probably it does deserve to be on this list along with water, gas and electricity—and perhaps others deserve to be off the list. I would suggest to the minister, through the chair and without any impertinence, that—even though you are bound, I suspect, to reject it by virtue of your brief—it is the sort of issue that the government needs to think about a bit more in terms of what should actually be on this list for ministerial direction and whether petroleum products may in fact qualify. I am grateful to Senator Joyce for drawing this to my attention. I must confess that, despite having trade practices law as one of my portfolio responsibilities, I have never looked at this before and I am absolutely delighted to find that minerals, trees and crops, whether on, under or attached to land or not, are subject to ministerial direction. I guess on balance, given that I am involved in the Senate inquiry and given that I think there is a need for added focus on this area, I would support the amendment because I think there is still that threshold determination: the minister will have to make a decision. It is not as if this implies an automatic function.
There are two key issues here. Obviously I do not have the advantage of having three advisers, so I am doing this from memory—and on a technical amendment you must give me some latitude. Under the TPA, part VIIA monitoring powers as directed by the minister are far greater than those the ACCC has. The powers he has under section 155 are greater. This does not mean that it is going to happen; it means that the minister has the discretion to make it happen if they so choose. I think the minister should trust himself on this one—that if he is required to use them then he will, and if he does not require them then he will not. It would be good for the Senate to pass an amendment to give the minister these powers. If we have a concern that we may have an overcentralisation of the market, that there may be an oligopoly type arrangement, then surely we should have the ability to give the minister the power of review. This is a funny circumstance because it is actually the Senate trying to hand greater powers to the minister: a power of review. The trouble with the ACCC is that it cannot really go on fishing expeditions. It cannot just go wandering off in the vain hope that it might find something. But this amendment would mean that, on the direction of the minister, they would have far greater powers in what they can ascertain and what they can catch in their net.
The purpose of this amendment is to deal with a market that is absolutely vital to the overheads of every Australian and the freedom of every Australian—that is, fuel—and to acknowledge the power that petroleum products have in our market. In acknowledging what a vital component petroleum products are in the running of our economy, we should have a greater power of review in that area and a greater power of monitoring. If the minister of the day at some future time decides not to exercise it, so be it. But they have the discretion; it is there.
I hope we get some support for this amendment. There is a difference in powers to what is there currently. It increases them and puts them at the discretion of the minister. I am not quite sure whether the National Party had their fingers over the other ones—it sounds awfully like they did. It is maybe with a sense of nostalgia that we dig up section 95A again and bring it into the 21st century. I am glad that the committee is now aware of this section. It was brought up in the inquiries—it did not descend on me like a dove—that wanting greater powers under part VIIA was one of the issues. The ministerial direction powers are what a lot of people had been asking for during fuel inquiries. This is the only section of the Trade Practices Act where we could deliver that.
I asked the committee to strongly consider this. I appreciate the motives that have been put up already. I hope that we trust ourselves to have the ability to deal with a minor increase in power under section 95A. I hope that we trust ourselves to use it with responsibility, which I am sure the government will. I am sure the government intends to be responsible in its discretion on the use of this power. I hope it gives itself the responsibility to have that.
To conclude, we are grateful to Senator Joyce for drawing our attention to this section, which I think is a hangover from the old Prices Surveillance Commission and got moved into this act. I think the senator is quite right in saying that I might suggest to the Treasurer that we should have a look at this list. It is an extraordinary list of items and it probably is timely that it be reviewed, but I would draw to the attention of the committee that the object of this part as stated in the act is to have prices surveillance—and that is defined in this act, and it is a very rigorous sort of regime that is different to the price monitoring which the ACCC does in the normal course of events—applied only in those markets where, in the view of the minister, competitive pressures are not sufficient to achieve efficient prices and protect consumers. It is a very particular regime. As I say, it is a rather eclectic list which has gathered over time—and I am not sure that we are necessarily particularly worried about the supply of ships in terms of prices surveillance at the moment!—so I think there is a good case for reviewing this list.
But I would also note that Mr Samuel himself made the point in evidence to the current Senate inquiry that there are 6,500 petrol outlets operating throughout Australia. There would appear to be vigorous competitive activity occurring in the sale of fuel, as reflected by the fairly vigorous price cycles that occur on a weekly basis, if nothing else. In the absence of price competition, you would not see the volatility of those price cycles. He is making it clear that he sees this as one of the most competitive industries we have in Australia. I am not sure that it automatically does fit into the quite strict and particular regime that is provided for in part VIIA of the TPA and, therefore, I am certainly not in the position to say that the government could support adding petroleum products to this list. But I am certainly happy to suggest to the Treasurer that he might want to review this particular list and bring it up to date.
I suppose that is where the quandary is. There is a strong belief that the market is being manipulated. If you just look at the fundamentals of where the price of diesel is—I know this is drawing a long bow, but it is interesting to have it on the record—the price of diesel in Iraq at the moment is 3c a litre. There is a lot of latitude between what we are buying it at and what they are buying it at. I know that there are government taxes, profits and transport, but the person in the street has some serious queries about how it comes about that all these oil companies, from 3c a litre in Iraq, go to $1.20 or $1.30 here and manage to arrive within a couple of cents of each other. That suggests to a lot of people that there might be some manipulation of the market.
This amendment does give greater powers. We are heading towards an oligopoly relationship. The proof of that is there for everyone driving down the street to see: that incredible scenario where, within an hour, they all move up by the same price on the same road—apparently without communicating it to one another. It is remarkable: petrol stations have an innate sense of what their competition is doing and they follow it innately! The argument goes through the public over and over again as to whether we can get more stringent on this. You have to look through the Trade Practices Act to find the section that does it, because the sentiments about price surveillance that the public reflects to us are dealt with in this section. In the Trade Practices Act 1974, it might have been ships. There might have been a problem with peanuts and spuds—I do not know—but the belief of the public now is that there is a problem with fuel. This amendment does not change the world; it just hands the power to the minister to have a greater capacity to look through what is happening in the fuel market. If he believes that there is not a reason to do it, he will not. But if he believes that there is a reason to do it—and hello to the kids up in the gallery!—then he has those powers at his disposal.
I suppose the argument that we need to consider is: why would the minister not want those powers of review and the ability to say: ‘I am the minister, I can go on a fishing expedition. I can monitor this for a period. I can dig up every detail. I have the power. I have been elected by the Australian people. I have a responsibility of office to ensure that the people of our nation are being treated fairly, and I will do that.’ You do not have to worry about the ACCC stumbling across something or something being brought to their attention. He can actually say: ‘I’ve heard what the people have to say. They have a problem with this—bingo, here are the powers. We’ll have surveillance on the petroleum products for the period starting here and ending there, and we can clear the air on this one.’ Then no longer will we have to listen to talkback radio talking about people being touched, because the minister will be able to clearly lay down the law. I think the oil majors and the major retailers will sit up and pay attention, because it will no longer be under the direction of the ACCC. It will be under the direction of the minister. There is greater power under part VIIA and in using section 155 of the TPA. This can actually assist in providing clarity and confidence to the Australian motoring public about the fairness in the marketplace. I know it is an old analogy, but if they do not find anything then isn’t that a better scenario? They monitored it, they found nothing. Then you can go back to the Australian public and say: ‘We looked at it, the minister has looked at it and he found nothing.’ It is a scenario that suggests, ‘We do not want to give ourselves those powers, because we might find something,’ and that is the issue that is dealt with in this amendment.
That the amendment (Senator Joyce’s) be agreed to.
The opposition support this legislation, and we agree that it is time to move on from the previous regime of regulation in this area. We are, however, extremely concerned that the competition model that underpins the new environment ought to be the best we can achieve. We are concerned that the Dawson reforms have not yet been given passage and that the Trade Practices Legislation Amendment Act (No. 2) has not yet been given passage. We would prefer that those things had happened before this new regime came into effect.
With that intent we understand that the government will be using its best endeavours to achieve that end by the time of our proposed operation of this legislation, which is 1 March 2007. We are caught in the dilemma of wanting three things to occur, but we are not prepared to stand in the way of the implementation of this legislation awaiting that. We think it is appropriate to set an operative date that gives the best possibility of the achievement of those three objectives.
I move opposition amendment (1) appearing on sheet 5055, which will have the effect of causing this bill, if passed at the third reading and going through the appropriate processes, to come into effect from 1 March 2007:
(1) Clause 2, page 2 (cell at table item 2, column 2), omit the cell, substitute:
1 March 2007.
On behalf of the government I thank Senator O’Brien for indicating the opposition’s fundamental support for this bill and their acknowledgement that it will result in improved arrangements for the petroleum retail industry. These are timely. We also agree that the so-called Dawson amendments and our proposed amendments to section 46 of the Trade Practices Act are important and that they need to be put in place. We hope that we can pass them through this parliament as soon as practicable; certainly, there is much endeavour to bring that about.
Again, in that spirit, we are happy to accept the opposition amendment with respect to the start date and that the start date be 1 March 2007. We will not oppose the amendment. We accept the spirit in which the opposition has participated in this debate and acknowledge the importance of the Dawson reforms and the form of section 46.
If I were to sum up my and the Democrats view on this bill in one sentence it is that we would support the legislation that is before the chamber if it were accompanied by the trade practices strengthening amendments that are required. We are not opposed to the bill; what we are opposed to is that it has arrived on its own.
I think I made it clear in the second reading debate, but I will restate it for the purposes of this amendment, that what we have argued for is that the Dawson trade practices bill, the trade practices bill which is designed to strengthen the Trade Practices Act with respect to section 46 and the Petroleum Retail Legislation Repeal Bill 2006 should all have been dealt with cognately—or, if not cognately, at least sequentially, in the same week. We could then have dealt with this more easily.
Of course, we have particular views on the Dawson bill; we are strongly opposed to elements of it. We are delighted that, as a result of the effort of The Nationals, as I understand it, the Treasurer withdrew the alterations to third-line forcing, which were detrimental to a better competition regime. But we remain strongly opposed to the antichoice, antiunion provision in the Dawson bill—which is not part of the Dawson committee’s recommendations anyway—and we remain deeply concerned about the changes to the merger decisions capacity of the ACCC commissioner and the ACCC tribunal. We think that could lead to forum shopping and to a less rigorous approach than is currently adopted. Of course, the Dawson bill itself may occasion quite a bit of debate when it comes forward.
With respect to the trade practices bill, which covers off small business amendments that strengthen the Trade Practices Act, we are likely to support the amendments. We just do not think they go far enough. We are not being bloody-minded about this. We would accept the will of the Senate, but what we want is the opportunity for the will of the Senate to be expressed so that with this bill, which deregulates the petroleum market and provides more competition among the oil majors, you would have an accompanying set of changes to the Trade Practices Act which introduce a stronger competition regime.
Restating our position in short, as I have just done—I have done it at great length elsewhere, particularly in my speech at the second reading stage—it is obvious that we would support the opposition’s amendment because it gives the government time to bring forward what it should. But of course it does not provide a guarantee that that will happen. That is my difficulty. As I have said previously in this debate, I have been both frustrated and upset by what I have seen as a spiteful approach whereby, because there has been disagreement within the coalition regarding these matters, the Treasurer and the cabinet have refused to bring forward a trade practices bill which should have accompanied this bill and should have allowed us all the comfort of knowing that, while independents were likely to face even stronger big company competition than they have to date, they would be better protected by a strengthened Trade Practices Act.
In conclusion, I support, on behalf of the Democrats, the amendment, but I do hope that the minister—because I am sure he has support for that view—will be prevailed upon to give a guarantee, a commitment, that these bills will be brought before the chamber prior to this date. If the minister could give us that guarantee and commitment on the floor of the chamber I would be much comforted. He can do that. He is the Leader of the Government in the Senate. He does have the numbers. The legislative program is in his hands. If he gives me that commitment and guarantee here and now, our attitude to the overall bill will change and we will be much more comforted than we have been to date.
As Senator Murray has just indicated, the main concern the Greens have had with the repeal bill before us is precisely that it does not deal with the Dawson reforms and the strengthening of section 46 of the Trade Practices Act. We do not know when the government intends to deal with those matters. We are just being asked to take on good faith the fact that they will be dealt with in a timely manner. If you were a cynic you could suggest that this amendment has been brought forward so that the government and the opposition can shelve this issue because they do not want to be forced to a division on the third reading. I am described at times as being cynical, but one could assume that.
Just this week we were reminded again of the government’s promise that within 100 days of a coalition government being elected a mandatory code of conduct would be introduced for the retail grocery trade. What has happened? We are two years into the government’s term and the 100-day promise seems to have been forgotten. The Prime Minister has done a triple backflip with pike on this issue. We simply do not know what they are going to do on the matter. I am disinclined to support a proposition that says: ‘Let’s get together as the opposition and the government and shelve this until March next year, until the heat goes out of it. Let’s just leave it until we get into an election year and see how the cookie crumbles and what people are saying about it. Let’s see how the oil companies and the independents have reacted to it and then decide how far we’ll go with the trade practices reform.’
We do not know what is contained in the bills and what is being proposed. I am not inclined to take the government at its word on this. For that reason—unless the Leader of the Government in the Senate, Senator Minchin, can stand up and give us a watertight guarantee that this matter will be dealt with and will come before this chamber before the said date, which is 1 March 2007—I am not prepared to support the amendment. It could be seen as a cynical ploy to quieten down this issue until the government repositions and decides what to do and how far to go on section 46 in an election year. On that basis I will be very interested to hear exactly what the government is proposing and to hear an undertaking that it will definitely come before the chamber before 1 March next year. Otherwise, I am disinclined to support the amendment.
There is a requirement for greater protections for small business and however they come about is part of the process of parliament. It is a case of whether things happen now or later and whether, if the protection is put in place, it should be supported. I would happily see the heat go out of the debate. It is not about scoring political points; it is about getting a protection mechanism in place for small business. That is the driving issue. If we can achieve that it would be a good outcome. Obviously, I would support amendments that seek protection for the independents. I know there is a difference of opinion. Some people believe there is protection in the legislation and I believe there is not. I take my belief that that is the case from Senate inquiries and from the presentations of the peak body groups that have visited my office. What is the option? A delay is better than failure because in the period of delay there is a chance of other pieces of legislation coming together in such a form as to provide that protection. I would be inclined to support a delay if it meant that we had a better outcome for other protection mechanisms for small business.
I am not in the practice of giving guarantees in this place that I cannot honour—that is certainly not the way I behave. I am not the lead minister on the Dawson bill or the section 46 amendments; they are a matter for the Treasurer. I am not involved in the detailed negotiation behind the timing of the debate on those bills, so I am simply not in a position here and now to give any such guarantee. But I have undertaken, in the words of Senator O’Brien, to ensure that the government’s best endeavours will be directed towards ensuring the passage of those two pieces of legislation prior to the commencement of this provision on 1 March 2007 and the ALP amendment which we have accepted.
I will give my word to the Senate that I will certainly be active within the government to ensure that we do seek to achieve that objective, but I am simply not in a position to give guarantees that I cannot be sure can be delivered. I do undertake to use best endeavours to ensure that comes about. That is the government’s objective. Our detailed proposition with respect to the Dawson package is on the table. The details of our proposals with respect to section 46 are on the table. The Senate, the parliament and the community are well aware of what the government has in mind. I certainly, for my own sake, very much hope that they will be in place by 1 March 2007 and, within the government, I will seek to ensure that occurs, but I am not able to respond to the request to give absolute, unconditional guarantees.
Let us try and get to the nub of the issue here. Family First believes that this bill will pull the rug out from independents. This amendment just delays that fact. I will support the delaying of it. It is better than actually having it happen earlier. But really, we have had no assurances at all in this chamber, so senators will have to think very carefully about how they vote on the third reading, given that we have had no assurances. In actual fact, if you went on form on the reform of the Trade Practices Act just recently, you would find that the government has been very mischievous in trying to tie helping small businesses to stopping collective bargaining from proceeding. It takes one minute to pass a bill in the lower house. The Senate has made it quite clear on collective bargaining that it should go ahead but the government stubbornly refuses to go down that track because it wants to make it easier for big business to merge. The Senate would not have a bar of it and the lower house should pass that immediately. So that is the form on trade practices reform. Here we are talking about delaying it on the pretence that there may be some amendments to the Trade Practices Act arising from the Dawson review. The form so far is that it is not fair dinkum; it is not reasonable. Family First will support the delaying of it, but I certainly at this stage will not be supporting the third reading.