House debates

Tuesday, 3 June 2008

National Fuelwatch (Empowering Consumers) Bill 2008; National Fuelwatch (Empowering Consumers) (Consequential Amendments) Bill 2008

Second Reading

12:02 pm

Photo of Peter DuttonPeter Dutton (Dickson, Liberal Party, Shadow Minister for Finance, Competition Policy and Deregulation) Share this | Hansard source

This is one of the most important debates going on in our country at the moment, because families at the last election were led to believe that this government was going to deliver lower petrol prices and people today are paying more for petrol than they ever have at the bowsers. I want to go to a couple of points which are very relevant to this particular debate. I think the Australian people are starting to see through this government. They are realising that this policy certainly is phoney.

The coalition supports consumers having information about petrol prices, as I said in the first part of this debate, but the coalition does not support the price-fixing elements of the Fuelwatch scheme. The ACCC has had an interesting position, as I said, in relation to this. I want to go through some of that history very quickly. The ACCC has previously been opposed to this scheme. Again, as I said in my first contribution to this speech, in their report released in 2003 on terminal gate pricing arrangements in Australia and other fuel-pricing arrangements in Western Australia, they found a number of things. That is a particularly important part of this debate. It needs to be said that there has to have been some political pressure exerted by a desperate minister on government departments to arrive at the outcomes that have been achieved now. The ACCC analysis, most importantly in my view, does not weight the average price. So a service station selling no fuel at, say, $1.80 per litre is included in the analysis alongside a service station with a low price of $1.50 per litre selling large volumes of petrol.

An area of particular concern to all of us should be the impact of Fuelwatch on independent retailers of petrol. Independent petrol retailers, with no ties to the big oil companies, are worried about Fuelwatch. They think Fuelwatch is a stunt. It has not worked in Western Australia. They will be delivering a very strong message to members of this government at the next election when it turns out that their consumers are paying more for petrol and the independent retailers have higher compliance costs.

Independent petrol retailers are very concerned. Cono Santoro, the owner of an independent petrol retailer with no ties to the big oil companies, Santoro Petroleum, said in the West Australian newspaper on 28 May 2008:

... while FuelWatch had helped smooth the peaks and troughs of the price cycle, it had taken away independents’ ability to compete as they could not alter their price during the day.

This demonstrates why the scheme is anticompetitive. Petrol retailers will be prosecuted if they drop their prices. The Australian public would be horrified to know that a key element of Fuelwatch is that petrol stations, throughout a 24-hour period, or some say throughout a 48-hour period, will not be able to drop the price of petrol. How can that be competitive? How can that be to the advantage of consumers? That is exactly why the independents will suffer under this scheme.

Major retailers, of course, will be able to adopt sophisticated pricing strategies. They can spread their pricing risks across their many stores. If independents get their pricing wrong, they will be left out in the cold, unable to reduce their price to compete with the majors. I ask again: how can that element of this legislation be competitive? The regulation impact statement is particularly interesting as part of this debate. It notes that the effect on independents is quite severe. In fact it specifically says that Fuelwatch ‘harmed the competitive position of independents as it allows large operators to adopt a strategy of rolling price leaders’. And it goes on:

... under such pricing strategies, media reporting of retail stations with the lowest prices provides an opportunity for large competitors with bigger retail networks to have rolling price leaders in the market, with different stations under the same banner being publicised as the cheapest for a region or suburb at a different time. Operators with small networks are less able to employ this pricing strategy and are therefore placed at a competitive disadvantage in the market.

Let me explain that simply to consumers. Motorists in the west watch the television news of a night-time, which quite often broadcasts the prices at a particular station for the next 24-hour period. They will have a particular oil company, brand X, which is a major player in the market, and which might have 15 different sites in Perth, but they will only list the three or four most competitive. People watching the news of a night-time say, ‘Okay, brand X has the cheapest petrol in the market tomorrow.’ But some of the experience has been that, while at the three or four sites they do have the cheaper amount of petrol at their sites, people in their mind conjure up a view, wrongly as it turns out, that all of the petrol stations within that brand have a cheaper price over the next 24-hour period.

So those people whom this government is supposed to be helping most—those people who are on pensions and those people who are socially disadvantaged otherwise—go to another service station within that brand and discover that in actual fact, at their local X branded service station, the petrol price is quite high, if not the highest in that particular marketplace. That is why this government has got its policy on Fuelwatch so wrong not just for people who most deserve help at the moment in filling up their petrol tanks but also for the people who run these petrol stations—the independents, who provide competition, who are essential to keeping downward pressure on petrol prices. They are also the people who will suffer as a result of Labor’s political stunt otherwise known as Fuelwatch.

The government, of course, is not going into Fuelwatch blind. It has received advice recommending against Fuelwatch from people no less than the key economic departments and even key ministers who have written to each other advising strongly against the implementation of Fuelwatch. They have examined the impact of regulation on the industry and there is no guarantee that petrol prices will not rise under this scheme as a result of its fixing. Therefore, it is simply bad policy. Why would a government introduce a scheme to the eastern states of this country that potentially results in an increase in the price of petrol to consumers? Why, when they went to the last election promising that they would bring petrol prices down, would they implement a scheme which has the potential of forcing prices up? That is a very important question that needs to be asked as part of this debate. Why, at the last election, when Kevin Rudd promised lower petrol prices, would he deliver a scheme that introduced higher petrol prices to consumers?

We have taken a decision as an opposition that it is important for consumers to be given as much information as possible to allow them to have informed choices when they go to the bowser to buy petrol wherever possible at the cheapest price. We are fully supportive of an informed market—of providing consumers with as much information as possible so that we can allow increased competition in the fuel market. We need to make sure that that information is distributed not just to people with access to the internet but, importantly, to older Australians who may not have access to a computer and to families who cannot afford to have internet access at home. We need to make sure that they are properly armed with information to allow them to buy petrol at the cheapest possible price. That is why I move:

That all words after “That” be omitted with a view to substituting the following words: “the House declines to give the bill a second reading and rejects in particular the obligation that fuel prices be fixed for 24 hours.”

It is why we are opposing the price-fixing component to Fuelwatch. It is why we are saying to the Australian motorist: ‘You believed at the election that Kevin Rudd would reduce petrol prices, that he would reduce grocery prices. Over the last six months it is the case that petrol prices have increased, that grocery prices have increased.’ It is only now that the Australian public are starting to see a very different Prime Minister to the person they saw as opposition leader in the last election campaign.

This is a person about whom the Australian people, in my view, know very little. They know that he is a person who has been able to master the 24-hour media cycle. They know that he is a person who has been able to pull off political stunts, probably in a similar way to the way in which Peter Beattie, Bob Carr and Steve Bracks did. All of those hollow promises that people have seen at a state level over the last several years, and in some cases over the past decade or more, they are now starting to see at a federal level. I think the Australian people did not believe that that was the product they were investing in at the last election, and they are very suspicious about the man who now occupies the most important position in Australian public life in this country. We need to make sure that we continue to scratch below the surface in relation to this Prime Minister. We need to make sure that the Australian public are fully informed that this is a government which dictates style over substance.

There is no better demonstration of that policy of style over substance than Fuelwatch. This was a government who realised that they had a real political problem on their hands. Knowing that petrol was influenced by international factors before the election, Mr Rudd, having full knowledge of that, still went to the Australian people making a promise that petrol prices would be lower. He said to the Australian people, ‘Vote for me and petrol prices will be lower.’ The difficulty, of course, is that when they got into government they realised how difficult that could be and they have come up with his quick fix, which is going to ultimately potentially result in higher petrol prices, to get them out of a political bind. That is why they should be condemned for Fuelwatch. It is bad public policy. It is bad for families who have been relying on cheaper petrol prices. It is why we have moved the amendment and why we are very serious about continuing the debate in relation to petrol prices in this country.

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