Cut reliance on oil or face escalating inflation
Greens Senator Christine Milne, 26th October 2005
Oil prices will continue to push up inflation and put pressure on interest rates until the Howard government takes immediate steps to reduce the nation's reliance on oil, Australian Greens energy spokesperson Senator Christine Milne said today.
"Today's Consumer Price Index (CPI) figures show an annual inflation rate
of 3.0 %, with a rise of 0.9% in the September quarter 2005. The price of automotive
fuel, which rose 11.6 per cent, accounted for almost half of the quarterly
rate rise," Senator Milne said in Hobart.
"Oil prices have risen from $US20 per barrel in 2000 to above $US60 per barrel today and ongoing rising global demand, coupled with the failure to find major new oil wells around the world, will ensure prices keep rising.
"As well as increasing inflation, higher oil prices have been cited as the reason for recent milk prices, a 20% increase in the fuel allowance for truck drivers, and the 8.1% increase in the cost of manufacturing inputs in the September quarter.
"Deputy Reserve Bank Governor Glenn Stevens recently said the Reserve Bank could tolerate one-off oil-induced CPI increases but could not tolerate ongoing oil-induced increases. That is exactly what Australia is facing, a situation that will be exacerbated as Australia's oil self-sufficiency falls from 75% today to about 22% in five years time.
"To avoid significant economic and social dislocation from high oil prices we need to take serious steps to reduce Australia's reliance on oil, through measures such as:
- Increasing investment in public transport infrastructure;
- Improving vehicle fuel-efficiency standards;
- Government subsidies for development of alternative transport fuels such as bio-fuels and hydrogen fuel cells;
- Tying motor vehicle registration costs to vehicle fuel efficiency;
- Removing the GST from public transport fares;
- Re-writing the Auslink transport agreement; and
- Introducing mandatory renewable fuel targets for the transport sector.
"The government and Labor should also support the Greens' proposal for an inquiry into Australia's future oil supply, which I will be moving when the Senate resumes next month.
"The sooner we develop a transition plan, the sooner we place Australia's economic future on a more secure and sustainable footing," Senator Milne said.