Thursday, 5 June 2008
National Fuelwatch (Empowering Consumers) Bill 2008; National Fuelwatch (Empowering Consumers) (Consequential Amendments) Bill 2008
I rise to oppose the National Fuelwatch (Empowering Consumers) Bill 2008 and consequential amendments bill. Before the 2007 election the Prime Minister campaigned on a fresh approach. He offered something called ‘new leadership’ and the ‘hope’ for working families that petrol would be cheaper if there was a change of government. There was an expectation created. Of course, since the election we know that the Prime Minister and members of the government have learnt that there is a range of complex factors in oil prices, and indeed it is very difficult for them to make an impact on petrol prices.
I rise today representing my electorate of Mitchell, which has the highest rate of car ownership per dwelling in Australia. My electorate of Mitchell has 70.2 per cent of households with more than two cars; car ownership in my electorate is the highest of anywhere in this country. People pay exorbitant tolls to get to work in the city from the outer suburbs. That is why this bill needs to be closely scrutinised. Anything that may increase the price of petrol, or its complexity, needs to be closely monitored.
As established before the election, there was an expectation created that Mr Rudd would provide cheaper petrol for motorists. Like everything else at the time, blame was sheeted home to the Howard government. People in Australia were led to believe that, if the government changed, prices would be lower. An expectation was created. Every member in this chamber knows there was an expectation created in relation to the prices of a range of commodities around Australia. One of the reasons I oppose this bill is that any attempt by the government to fix commodity prices invariably ends up in failure. This bill fixes prices.
Fuelwatch seems to represent the peak of Rudd government policy. It is a well-worn adage that this government prefers spin over substance. It is commonly accepted as their method of dealing with issues. It may have worked in opposition, but in government it does represent a major blockage to designing and implementing effective policy. First we were going to monitor fuel prices and watch them. Now we are, in one sense, proposing legislation that could raise prices and penalise operators for lowering prices. Maximum penalties proposed in this legislation include $22,000 for a petrol retailer and $110,000 for a body corporate, all for lowering price. The explanatory memorandum of this bill tells us everything we need to know about this government’s approach to cost of living pressures in this country. Let me read it for the benefit of the House: ‘Failure to notify or maintain the notified prices by petrol retailers is a civil penalty.’ That is, you cannot put prices up; but let us be very clear: you cannot lower your prices either. Under this Labor government, if you lower your price on fuel you are guilty of some sort of offence. Putting down your price will see you punished.
This is in direct contrast to the stated objectives of a national Fuelwatch scheme, one of which is to empower consumers to make informed decisions and purchase fuel at the lowest possible price. We now know that this will not be the lowest possible price because if an operator wanted to lower their price they could not under the terms and provisions of this bill. In its very construction this bill is prevented from achieving its objectives, and attempts to fix the prices of commodities have invariably led to failure and higher prices.
Further, there is contradictory evidence on the effect this scheme will have on prices. In fact, there is much to suggest that it may raise the price. There has been much made of the ACCC and its attitude to any proposed scheme and the operation of the WA scheme that is already in existence. The government has contended many times now that the ACCC is in favour of a national Fuelwatch scheme. But ACCC chairman Graeme Samuel has said many conflicting things about the Fuelwatch scheme. He said that it is not about saving motorists money; he said it is, ‘not a process whereby consumers might be able to shave 0.5c per litre off their fuel costs’. He is saying that Fuelwatch is not about price. Once again this whole expectation created prior to the election that there would be relief on the price of petrol is an expectation that is not going to be met by this proposed legislation.
The ACCC has also been reluctant to attribute any downward pressure on WA prices over time to FuelWatch, pointing out that other forces were at work in the market. What could those forces be? Listen to this: the Institute of Public Affairs says that the petrol saving sometimes mentioned in relation to WA and the FuelWatch system can be attributed to the entry of Coles into the market in 2004 and not the introduction of the Fuelwatch system in 2001. Further and more alarmingly the IPA conclude in their report:
The ACCC analysis does not consider this possibility at all and is, at least, fundamentally incomplete and flawed as a consequence.
If the ACCC modelling did not include the entry of Coles as a major competitor into the fuel market in WA in its consideration of the effectiveness of FuelWatch, how can we rely on the evidence that they have provided? Hastily they backtracked and said that they had considered the Coles entry into the market, but the Institute of Public Affairs had caught them out. The whole premise of the government’s advice may well be based on a major flaw if it failed to consider the entry of a major competitor into that fuel market. Coles could be responsible for price variation.
The ACCC data and econometric modelling have not been released to the public. We are supposed to simply believe their so-called comprehensive analysis of the system. Calls in this House to see that modelling tabled have been ignored. No wonder four government departments warned this government about the introduction of a national Fuelwatch scheme. But, of course, in this regard when the government receives advice that it does not like it responds with the ad hominem attack that public servants are lazy and do not work or that they are not independent. As we know, ad hominem attacks are the weakest and most fallacious forms of attack.
The Rudd government itself warned of the negative impact a nationwide Fuelwatch scheme could have on motorists. A regulation impact statement was tabled by the Assistant Treasurer which highlighted anticompetitive concerns and that it would not meet consumer expectations of lower prices. The regulation impact statement clearly states that independent service stations are at a competitive disadvantage, as is the case in WA. The report notes:
The provision of this taxpayer funded service creates greater opportunities for price co-ordination amongst retailers, especially in more concentrated markets.
My electorate is also home to the national headquarters of the major corporation Woolworths. The Chief Executive Officer of Woolworths has told us that, far from improving the competitive environment, the scheme in WA has created an environment where Woolworths make their biggest margins—in a state where FuelWatch is in operation. We know that when a chief executive officer of a major company like Woolworths makes a public statement he is under all kinds of legal imperatives to tell the truth and to be very honest about his appraisal. That is a very serious statement from one of Australia’s major corporations headquartered in my electorate.
We also know that it was the view of the Minister for Energy and Resources that Fuelwatch would be bad for Western Sydney motorists. I support the Minister for Energy and Resources in his brave bid to communicate what everyone can see. He said in this House the other day that his heart was in Western Sydney. As someone who grew up in Western Sydney, I want to say thank you to the Minister for Energy and Resources for his honesty, clear sight and bravery. He is one of the last champions for the families and the workers in Western Sydney inside the Rudd government.
We know that Treasury’s advice that Fuelwatch would cost small business $4,000 per year to implement could be conservative. The Assistant Treasurer today refused to give a guarantee as to whether there would be ongoing costs for small business in implementing this scheme. The fact that it may cost small business $4,000 a year to implement ought to be disincentive enough for this House to consider this proposal. It ought to support small retailers and independent retailers against big business. But we also now know that the department of small business did not even consult with small business about the proposal. Not only will Fuelwatch be bad for consumers but it will also bad for small business.
The final point I would make is that the various automobile associations around Australia are concerned that this will not give motorists access to cheaper petrol—and that is what this is supposed to be about. We know that the predictive nature of the fuel cycle gives consumers a greater ability to purchase fuel at cheap times each week. Indeed, one statistic was that 71 per cent of South Australian motorists are aware that Tuesday is the cheapest day of the week to buy fuel. The end of the weekly cycle could be to the great disadvantage of the most empowered consumers, as this proposal exists. Again, to be guilty of an offence by lowering prices does not seem to be a path that we should be taking in the pursuit of cheaper petrol.
Fuelwatch is a political program, not something to benefit motorists. It will not empower consumers to have cheaper petrol. It will not empower small businesses and independent retailers to compete. But it will empower the Prime Minister and the Assistant Treasurer to claim that they have done all they can do. With petrol prices hitting a record in Western Sydney, the working families of Western Sydney deserve better from this government. A scheme that may increase price and reduce choice and that has already delivered big margins to the major companies should be rejected by this House.