Wednesday 23 May 2012 - Budget Estimates - Rural and Regional Committee
Department of Infrastructure and Transport - Policy and Research incorporating the BITRE
Senator LUDLAM: Thank you, Chairman. This is going to seem like a bit of a random segue. Can I ask about electric bicycle regulations in here?
Mr Mrdak : I do not think we can assist you on electrical, not in this part.
Senator LUDLAM: Really?
Ms O'Connell : No.
Senator LUDLAM: Electric bicycles. I know it is a little bit random; I am just doing my job here. I might throw it to you, Minister, if I am in the wrong place. Maybe the Chair can help out. There are in fact electric bicycle regulations sitting before government at the moment. Is that something that the officers at the table have had anything to do with?
Mr Mrdak : No, Senator.
Senator LUDLAM: There are baffled stares all around.
Mr Mrdak : I am happy to take on notice and see if I can assist you.
Senator LUDLAM: Even if all you could do, Mr Mrdak, is point me to the right officers to put that to. I understand there are electric bike regulations sitting before government at the moment. These things obviously sit in a bit of an unusual niche in that they will travel very rapidly and are not necessarily suited to either being on-road or off. I am just trying to find out where those regulations are up to, whoever is able to help.
Mr Mrdak : I will certainly make inquiries as to whether they are captured by regulations. As you know, we have a role in terms of Australian design rules for vehicles entering the Australian market. But it would depend on essentially the capability of the motors involved as to whether they have to meet the requirements of an ADR.
Senator LUDLAM: Yes, are we getting warmer? Am I potentially in the right place?
Mr Mrdak : If it relates to vehicle design standards and whether they trigger a requirement like that in terms of entry into the market, then they would fall in ours. But we will find out and come back to you.
Senator Kim Carr: We will find out where they are supposed to be and let you know.
Senator LUDLAM: Thank you, Mr Mrdak. So just briefly then, I suspect this one may be a little bit more squarely in your court. I put this into IA a little bit earlier in the day. May 2012 IMF report The future of oil: geology versus technology, which proposed the price of oil may well double in inflation adjusted terms over the next decade. Did that report cross the desk of any of the folks in here?
Ms O'Connell : I will ask Mr Williamson to answer.
Mr Williamson : Like Mr Deegan, we had not seen the report and so we will have to read it as well.
Senator LUDLAM: I am presuming you were aware of it, or is my bringing it up on an estimates committee the first you had heard of it?
Mr Williamson : Personally, the first I had heard of it was from you putting it up. It is only a few hours ago and we have not had time to canvas Dr Dolman's researchers, who may well have been aware of it.
Senator LUDLAM: That is something that you might want to review.
Mr Williamson : Yes.
Senator LUDLAM: I know that I probably sound like a bit of an obsessive around this stuff. We had an exchange, I think, last time we were here, about the report 117 that got dumped and then emerged on a completely different topic, which was about peak conventional oil production in decline around 2017-I think was when they estimated. Can you just spell out for us whether it is a unit, a particular researcher or whose desk this stuff crosses for calculating or projecting future oil prices and how that might impact on something, even narrowly, like our balance of payments figures in Australia?
Mr Williamson : Senator, I will ask Dr Dolman to talk about what the bureau does in that area. We do not have a direct responsibility for forecasting oil prices, but obviously assumptions about oil and petrol prices feed into our transport projections. But Dr Dolman will take you through what we do.
Senator LUDLAM: Thank you.
Mr Williamson : Can you do that briefly.
Senator LUDLAM: Why 'briefly'? This is important.
Dr Dolman : We do follow the peak oil debate and we do have researchers that produce work. I think I mentioned it at the last senate estimates hearings that here is a paper on our website that looks at fuel price projections, which takes oil prices internationally and converts them to Australian dollars. It looks at a number of different scenarios, including a peak oil scenario but also other scenarios such as that the estimates of oil availability that the International Energy Agency produce.
Senator LUDLAM: Yes, and we did speak of that either the last time or the time before. If you are not directly aware of this IMF thing that I am citing tonight, there is probably not much use pursuing this too much further. Could you take on notice for us whether the projections that you look at would include the scenario that the IMF is warning of there. So by 2022 sustained doubling of spike, a sustained doubling of the world oil price, what that would do to Australia and the infrastructure that we are building today?
Mr Williamson : Certainly, Senator.
Dr Dolman : It is broadly consistent. We do sensitivity analysis around our projections of transport activity across a whole range of areas. The price projections that we use out to 2030 include around $2.50 a litre for petrol.
Senator LUDLAM: We had an exchange earlier that the chair had very strong views about, which was planning for infrastructure expansion. For example, doubling the freight task on Australian roads by 2030 is, I think, within that kind of order of magnitude. Is that assumption of doubling freight volumes on our networks altogether still a safe bet under a $2.50 petrol price? Presumably that is for metro areas. I do not know what that would look like in Kalgoorlie or Port Hedland.
Dr Dolman : I can give you two examples of how that applies. For car traffic, the projection is 165 billion kilometres travelled by cars in 2010. At a price of $1.50 a litre that would rise to 210 billion journeys. If it were $2.50 a litre, instead of 210 billion it would be 200 billion. So there would still be growth but not as rapid growth.
Senator LUDLAM: Makes it sound inelastic, I guess, if you were an economist.
Dr Dolman : Freight activity was my second example and it is an even smaller impact.
Senator LUDLAM: Really?
Dr Dolman : Given that the fuel cost is only a small component of freight rates and even for trucks. In addition, bulk freight is driven more by international demand than the cost of transport in Australia.
Senator LUDLAM: You have offered to take a couple of points on notice. But just to conclude here: if you have time to review the IMF report, is it the view of you folk-and I am not trying to verbal anybody at the table-that we could cop the IMF scenario without substantially changing the way we do business here in Australia?
Dr Dolman : I think we would have to take that on notice and have a look at the report in detail.
Senator LUDLAM: Maybe if I could invite you at the next budget estimate session-I do not know if I am allowed to do this-to bring along some of the researchers who do this specific task for a living, if that is possible?
Senator Kim Carr: You can put it on notice.
Senator LUDLAM: Yes, I have put it on notice, but I am just wondering whether it would be possible to bring some of the relevant expertise to the table.
Mr Mrdak : I think in Dr Dolman you have the best of the expertise.
Senator LUDLAM: All right. I will leave it there. Thank you, Chair.
CHAIR: Thank you, Senator Ludlam. Thank you very much.