Transcript No. 2000/96

Good morning Treasurer. How are you going?

Good morning Howard. I’m very well thanks.

Will you be there to meet the truckies?

When, in Canberra?

Yep.

I don’t know when it is Howard. But can I just correct one of the things you said

in your introduction. The fall in tax was not 4 cents a litre, it was 24 cents a litre.

I said it went down from 24 to 20, that was a report in the papers . . .

Yes, that’s the way the Sydney Morning Herald reported it this morning, but it was

a misreport. It went down from 44 cents to 20 cents, so the fall was actually 24 cents a

litre, not 4 cents a litre. The tax reduction was 24 cents a litre . . .

Alright, now . . .

. . . on 1 July . . .

. . . how come then diesel costs more than unleaded petrol when a truckie this morning

has told me that diesel is a by-product of unleaded petrol. That’s what he’s

told me.

Well, that illustrates the point. The price of diesel is not related to tax,

that’s the point I made yesterday. And if people are concerned about the price of

petrol and diesel . . .

Well they are, I can tell you that.

. . . and that principally is a consequence of the world oil price and refining, but

it’s not related to tax. And that’s the point that I made yesterday. People are

running together, I think, what’s happening in Europe with what’s happening

here. In Europe truck drivers have been seeking a reduction in European tax rates on

petrol and diesel, but in Australia the reduction has occurred. It occurred on 1 July and

the reduction for tanker drivers, heavy transport vehicles, who use diesel, by the way,

not petrol, was 24 cents a litre on 1 July. Now . . .

Okay, but why then is diesel still so expensive?

Well, diesel price relates mainly to world oil prices and refining costs. World oil

prices have tripled in the last 18 months, they’ve tripled . . .

Yes, but it’s come down to $31 a barrel today, which is well below about $36 or

$37 that it was a week or go, a week ago rather, but the diesel prices have still not come

down . . .

Yes . . .

. . . commensurate with that. Now, are these people being ripped off by the oil

companies, are they?

Well just to put it in context, 18 months ago, when you say it’s come down to $32

a barrel . . .

$32 (inaudible) . . .

. . . 18 months ago it was $12 a barrel . . .

Yes.

. . . so, you know, it’s come down from what, a 300 per cent increase to, you

know, a 250 per cent increase.

But it comes down very slowly compared with how quickly it goes up . . .

No, and then what happens is, I mean, that is the price at which you can buy oil on the

world market today, but the oil which is coming into the bowsers and the tanks wasn’t

bought today, it was bought some time ago . . .

Yes, look I know that . . .

. . . it has to be (inaudible) . . .

. . . but when it goes up it seems to go up immediately, this is their beef.

Well I just, it was the oil which would’ve been bought some time ago, it has to be

shipped, it has to be refined, it has to be transported, and what the world oil price is

on a particular day, isn’t the diesel that’s in the bowser, there is obviously a

lead time in relation to that. Now people are legitimately concerned, and so am I, at the

world oil price. And I can assure you of this, we are putting representations in every

forum where there are oil producing nations . . .

Well, you need to . . .

. . . to get further supplies.

. . . because it’s going to affect you electorally, I don’t think

there’s any doubt about that. I think you would agree at the moment that the public

largely blames the Government, because the Government is running this country, for the

high petrol prices.

Well, can I just go back over that. The petrol price principally relates to the world

oil price, and the Government doesn’t set the world oil price . . .

Yes, we know all that, but they blame whoever’s in office for the high cost, they

think you should be doing something about it.

Well, I’m just going through the facts, because I think it is important that

people understand the facts.

But you haven’t convinced the Premiers of most of the States, because they’re

also ganging up against you.

Well, we’ll come to them in a moment. But the world oil price governs the

principle determinant of petrol and diesel prices. And the only thing you can do to get

those prices down substantially is to get the world oil price down. How are you going to

get the world oil price down? Well, the best way is to lift supply. It was a positive

announcement when the United States announced that it was releasing some of its strategic

reserve. We are putting pressure in all international fora for increased supply, and if

you can start moving that price down then you can do something about petrol and diesel

prices . . .

Yes, but we’re only a minnow in this game, you know that.

Well, that’s the point Howard. Don’t think in Australia you can bring petrol

prices down whilst they’re high in Europe and America, because what’s driving

them high in Europe and America is the same thing that’s driving them high in

Australia, namely the world oil price. Now, we have to join with the Americans, and the

Japanese, and the Koreans, and the G7 countries, there was a positive announcement on the

weekend to put pressure on the oil producers principally in the Middle East, to lift

supply which would bring the world price down.

Okay, let’s get back to the owner drivers. One thing they do want you to do is to

try and guarantee the minimum rates. They say there’s no, they don’t have

contracts, they say they just want the Federal Government to step in and guarantee them

minimum rates. Can you do that?

Well, when you say they don’t have contracts . . .

Well, that’s what the truckies have told me.

. . . well, you know, I don’t know what’s been said, but if a truck driver

goes to a freight forwarder, and he’s self employed, he’s an owner driver, or

goes to a transporter, he agrees to transport for a particular rate, I mean, that’s

the contractual rate.

Yes, but it’s a dog eat dog world out there at the moment, and these people, lots

of them, are being forced out of business. Now when you get to that point you’re

going to do something pretty drastic, aren’t you?

Look, as I said yesterday, a lot of these guys have got genuine grievances that the

rates that are being offered at the moment are very low. They are genuine contractual

grievances which as between them and the freight forwarders or the transporters will have

to be worked out. But the point I was making yesterday . . .

So, there’s nothing the Federal Government can do about that, is that what

you’re saying?

Well, the Federal Government, you know, doesn’t set contractual rates. The Federal

Government doesn’t say, you know, in other areas of contract the rate is going to be

such and such. I mean, we don’t set contractual rates. The point I was making

yesterday Howard, and I think it’s an important point in a public debate is, the

argument is about those contractual rates, it’s not about the tax on diesel because

the tax on diesel was cut from 44 cents a litre . . .

You said that . . .

. . . to 20 cents a litre. It was cut by 24 cents a litre three months ago.

Alright, well there’s nothing you can do about the rates. That’s what

you’re saying to me, is it?

Well as I said earlier, the rate, if an owner driver goes to a freight forwarder and

they agree on the rate, that is between the owner drivers . . .

Alright.

. . . and the freight forwarders . . .

Okay, now do you . . .

. . . the Commonwealth Government doesn’t set contractual rates . . .

I got that message.

. . . in the economy.

Now, the wider issue of the petrol prices and whether the Government should cut the

excise, now if you think it will cost you office next year and prices are still high, are

you likely to cut rates or are you just going to hang in there until all the way through?

No, because the price of petrol is moving up as a consequence of the world oil price

and. . .

I know, but if this could cost you office, would you cut the excise?

Well, you know, if people think that voting for the Labor Party is going to bring down

the world oil price, I think that’s mistaken.

But there not in office, you are.

Well, that’s my whole point. The vote that you cast between Liberal and Labor

doesn’t determine the world oil price. I mean, the important thing on getting petrol

and diesel prices down is to boost supply on the world oil price. That’s what’s

governing prices at the moment . . .

Right.

. . . and the important thing is to ensure that we exercise such influence as we can,

together with the Americans, the Japanese, the Koreans, the G7. The release of the

strategic reserve was a positive move . . .

Yes.

. . . to bring world oil prices down.

Alright. Thank you for your valuable time today.

Thanks very much Howard.