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Fuel Watch debate

Senator MILNE (Tasmania) (10.50 am)-I rise today to comment on the National Fuelwatch (Empowering Consumers) Bill 2008 and the National Fuelwatch (Empowering Consumers) (Consequential Amendments) Bill 2008, which concern the Fuelwatch scheme. I note that the basis on which Fuelwatch was proposed was increased petrol prices in Australia. For the 20 years that I have been in politics, every time fuel prices go up governments rush around and announce yet another inquiry into fuel prices, and that inquiry comes out with a whole range of recommendations and very little ever happens. The main reason for that is that you can run around all you like and have as many investigations as you like into fuel prices-and I have absolutely no doubt that there is manipulation in the market to a certain degree-but the underlying driver of increased fuel prices is the increasing price of oil at a global level and the underlying driver of that is that the world is running out and has already run out of cheap, easily accessible oil.

Global oil, in my view, has peaked. That is not to say that it has run out. It is saying that from now on extracting oil globally is going to become more and more expensive as the explorers have to go into deeper water, more difficult terrain and, of course, have to deal with the extreme weather events of climate change, which we have already seen in terms of reduced field capacity, especially when you have a look at what is happening in the Caribbean as a result of extreme storms, cyclones and the like. The issue is, as the International Energy Agency said recently:

The future of human prosperity depends on how successfully we tackle the two central energy challenges facing us today: securing the supply of reliable and affordable energy; and effecting a rapid transformation to a low-carbon, efficient and environmentally benign system of energy supply.

In my view, Fuelwatch is actually fiddling while Rome burns. We need to deal with the fact that Australia is no longer self-sufficient in oil. We are already importing more than 50 per cent of the oil used in this country and it is to the detriment of motorists and farmers. You only have to look at the increased price of petrochemical fertilisers to see the impact on agriculture and the flow-on to food prices. The whole dependence of the working fleet in Australia-whether it is in agriculture, fisheries or whatever it is-is all based on petroleum based product. We are now in a situation where Australia has lost its independence in terms of energy security and we, just like the Europeans, are reeling from the fact that we are not sustainable or self-sufficient. We are now dependent on what is out there.

We had the oil inquiry, which I initiated when I first came into the Senate in 2005, to look at Australia's future oil supplies and alternative fuels because at that time it was obvious to me that this dependence on foreign oil was a bad thing not only for climate change and our dependence on oil products but for Australia economically to be in that scenario. We had, at the time, ABARE telling us that it did not matter because Australia could always buy oil on the global market and that we could be net energy positive because of our gas supplies. To an extent that is true in terms of the exports but it does not alter the fact that, when you import that much foreign oil and are vulnerable to the machinations of the oil supply globally, you are going to end up in this scenario.

Fiddling around with a scheme that is just to give motorists a more informed choice is really not delivering on the critical issue which is: what are we going to do to get off our dependence on imported foreign oil, which is also driving up our greenhouse gas emissions. That is what we should be doing. That means that the government should have a national energy and transport strategy that gets Australia off its dependence on foreign oil and makes a significant contribution to our targets, which we have already under Kyoto but also under a post 2012 scenario.

The first thing the government should be doing is look at the issue of urban design and how we might redesign and rethink our cities and convert them into urban villages linked by rapid mass transit. Then they should look at our national transport system to get off our dependence on road based transport and get our freight onto the rail networks. To do that we have to spend money through Infrastructure Australia. We need to get our north to south, eastern states freight rail link in place and fix up the bottleneck in Sydney.

We need to consider the fact that aviation fuel is one of the few fuels that, at the moment, is not substitutable with anything else and that we are going to see increased prices of aviation fuel. We saw it in the price spike earlier this year and it is going to come again. That means that we need to start looking in Australia at, particularly between Sydney and Canberra for example, building the kind of fast rail networks that you have in Europe. It is a logical thing to do.

When we look at rescuing the car industry we need to not only go with a strategy of electrifying the car fleet and moving to plug-in hybrids, which I support, but also be looking at building public transport systems. We need to be actually building those systems and rolling them out in Australia as part of a national transport strategy. When the fuel prices went up, people went to get out of their cars and onto public transport, but the public transport was not able to do the job because it has been run down over a long period of time. People will use public transport if it is safe, clean and efficient. At the moment, depending on where you are, there is a variety of combinations of how that might be achieved.

We need to look at having this national strategy which recognises that we need to get off oil and to electrify the transport fleet, to get the freight onto the trains, to get more people out of their cars and onto that public transport. We need to ensure that the cars are plug-ins and that they are from renewable energy sources, which goes to the national strategy on energy security. This means rolling out more renewable energy and enabling consumers to be energy suppliers by putting photovoltaics on their roofs, by having small scale hydro, by having small wind turbines or whatever they are going to have domestically, plus plug into solar, thermal and the like. This is the kind of big picture thinking Australia ought to be engaged in to come up with a really bold national strategy which looks at squarely facing climate challenges and oil challenges.

I will just go through the way the government is responding. You have Fuelwatch, which is a tiny fiddling-around-the-edges program. I agree with Senator Xenophon and others who have spoken in here, particularly Senator Joyce, about the need to actually look at the wholesale market and at the transparency issues with regard to that. We need to look at the import parity issues and the oil code regulation. All those sorts of things need to happen and I do not think there would be anyone in the Senate who would object to those things happening.

That will make a marginal difference, but Fuelwatch and even dealing with those wholesale issues will still only make a marginal difference. If you are serious about acting and acting fast, we need to get on to mitigation strategies and planning strategies for the long term. As the Hirsch report to the US Energy Agency said in 2005:

The obvious conclusion from this analysis is that with adequate, timely mitigation, the costs of peaking can be minimized. If mitigation were to be too little, too late, world supply/demand balance will be achieved through massive demand destruction (shortages), which would translate to significant economic hardship ...

That is what we had recently when the oil price went above $100 a barrel and approached $150 a barrel. Then you start getting chronic dislocation and shortages in places like Western Sydney where there is very little public transport. We know that the way Australian cities have developed the poorest people live furthest from the centre of the city, drive the oldest, least efficient cars and have the least, if any, access to public transport. So they are the people who are disproportionately affected when you get higher oil prices flowing on to high petrol prices. With Fuelwatch you might be able to give them some certainty around one or two cents, but in the longer term we need to be making sure that there are better options for moving those people so that they are protected permanently.

It is actually cruel to keep building cities that do not take into account the need to mitigate greenhouse gases and oil prices. I know there will be some people saying, ‘Oh well, this doesn't really matter so much because the underlying issue is not peak oil, there is plenty out there.' I would draw their attention to the International Energy Agency report which has just come out on 6 November which is pointing out that, whilst there is a global economic slump that has curbed energy demand and pushed oil prices down in recent months, it will only provide a short-lived respite for consumers. The International Energy Agency is saying that supply shortfalls that pushed oil prices into triple-digit territory this year are far from resolved and could lead to a new period of high prices.

In fact, they go on to say that we are going to see oil consumption reaching 106 million barrels a day in 2030, up from 86 million barrels a day this year. If that is the case, where is this oil supply going to come from? There have been several large-scale new developments announced but they have not been taken forward, the investment has not been forthcoming, and we are rapidly going to reach a time when the economic stimulus packages get the economies going again, the demand is going to rise but the supply is not going to be there, for the reasons I mentioned in the beginning, that the cheap, easily accessible oil is gone and now we are into accessing oil from much trickier scenarios: deeper sea, more difficult terrain, extreme weather events, and it is not going to be there.

What I would like to see the government do is actually give a sense to Australians whether they believe in peak oil, whether they think peak oil has occurred, and what we are going to do about it.

How are we going to get rural Australia off its dependence on petrochemical fertilisers, off its dependence on petroleum based products, whether it is in fisheries or farming? How are we actually going to do that? When are we going to say there is a win-win scenario here by getting our rural community back to more sustainable farming practices and by giving them adaptation strategies to farm renewable energy as well as to increase their soil carbon, build more resilience in the face of climate change, and reduce their prices and improve their margins. That is the kind of strategy we should be looking at as a nation rather than what I see as a political exercise to disguise the reality of the situation. Governments are going to wring their hands and say, ‘There is nothing we can do about the international oil price.' That is right; there is nothing we can do about that. What we can do is get ourselves off the dependence on foreign oil and that oil price and at the same time meet our climate objectives.

It is not a sensible policy to spend millions on coal to liquids, which is what the Australian government strategy is at the moment, saying: ‘Yes, we could well be in a situation where we can't run our cars on petrol because we cannot afford it. Therefore we are going to run them on coal.'

That is a terrible strategy. It is a bad climate strategy. You cannot be serious about addressing climate change if you go down that route, and that was one of the conclusions of the oil inquiry we did in the Senate three years ago, that we ought not to be addressing policies to deal with energy security that undermine our climate strategies. So I would like to see that work on liquefying coal finished, over, done with, and instead the effort going into electrifying the car fleet and, as I said, rebuilding the rail network so that we have that freight network along the east coast of Australia and the Sydney bottleneck dealt with and at the same time the rollout of public transport systems, urban metros, a fast train between Sydney and Canberra, for example.

I just think what we have got with Fuelwatch is a political reaction to high fuel prices that disguises the actual problem we are dealing with. Yes, you have got manipulation by the oil companies. I am sure that is the case. As Senator Xenophon said, we can deal with those things, bring it in here and let us deal with the Oil Code, let us deal with import parity, let us deal with transparency in pricing.

But it is not going to change anything when the oil price gets to $150 or even goes north of $150 and higher towards $200 a barrel. That is what I would like the government to exercise its mind on.

There is an opportunity to do it now when there is a respite in the oil price where it has fallen back in the short term because of the global economic downturn and less demand now. The pressure is not on so much now, so now is the time to bring out a national strategy to tell Australians how we are going to get off oil, how we are going to electrify the transport fleet, how we are going to invest in the rail networks, how we are going to roll out renewable energy so we can electrify the fleet. It was exciting news that we had a company here ready to invest in three Australian cities with plug-in stations for the electric cars. That goes hand-in-hand with the investment in what I hope will be plug-in hybrids.

The second thing we can be doing is looking at second generation biofuels. We certainly do not want to go down the track of substituting food growing land for fuel growing land. That has been a bad strategy globally and has had many perverse outcomes, including the loss of tropical forests, which is a disaster. The second generation of biofuels using lignocellulose and actually generating a fuel from a waste product is well worth investing in. Also, ANU have developed algae grown from salt pans which can be put in the centre of a solar collector and the chemical reaction makes a high-grade transport fuel. That is a win-win for rural Australia because it means that people who have salt pans and high levels of salinity on their properties can actually do something with that, and frequently those areas also have very good solar radiation. So it is a win-win scenario, again providing rural Australia with an alternative to the kind of farming they do now. They could be not only farming renewable energy but generating a transport fuel if we get behind that research.

What we need is a national strategy that deals with energy security and climate change that says, upfront, it is an unacceptable scenario for Australia to be left so vulnerable and exposed as to be dependent for more than 50 per cent of its oil on foreign imports. It is an unacceptable scenario for us in a climate change world to go down the route of liquefying coal. Therefore, what do we do that addresses climate change that gives us self-sufficiency in transport fuel and, at the same time, builds competitiveness and new jobs? The competitiveness and new jobs will come from the investment in those technologies and the rollout of the green new deal infrastructure. That is why this Fuelwatch, as I see it, is just fiddling while Rome burns.

The kind of strategy I am talking about is what Australians want to hear from their government-a strategy that says there is a whole-of-government approach that is internally consistent. Infrastructure Australia with its building fund will roll out public transport systems and the freight links that we are talking about. We go to Resources and to Education and say, ‘Let us invest in commercialising those technologies which give us self-sufficiency, keep our best brains in Australia and get the jobs out there in rural Australia.' We go to Agriculture and say: ‘Adaptation to climate change. If you cannot continue to do what you are doing on your land now because of the temperatures and the climate then let us farm renewable energy.' The Greens position is that we will support Fuelwatch because, on average, we think it will not do any harm and it may do some good, but it is fiddling while Rome burns. I implore the government to see that there is a big picture here.

This is a political gesture at a problem which is going to come back as the oil price goes through $150 again before they will have made any decisions about how to address it, and we will have another inquiry at that point and be no further advanced.


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