Don Farrell (SA, Australian Labor Party) Share this | Hansard source

The incorporated speech read as follows—

Fuelwatch will revolutionise the way in which Australian motorists go about purchasing fuel for their vehicles.

It’s an ingenious scheme originally introduced by the West Australian Liberal Government in 2001 to provide consumers with the information they need to get the best deal at the petrol pump.

I find it ironic that the Liberal party is now so very keen to abandon its association with one of the few truly successful schemes it had introduced while in Government.

If only the Liberal party could be as critical of their experiments that actually failed, such as the Workchoices fiasco and the Iraq war misadventure, as they are with the Fuelwatch scheme then they might one day finally hit the target. As it is, they are spraying their shots very well wide of it at the moment.

Under Fuelwatch, specified petrol retailers will need to notify the Australian Competition and Consumer Commission of their price for fuel for the next day by 2pm each day.

These retailers will be required to sell fuel at their notified price by 6am the next day and maintain that price for a 24 hour period.

Failure to notify the Australian Competition and Consumer Commission of their notified price or to change the price of fuel once it has been set will incur a civil penalty.

The Australian Competition and Consumer Commission will then publish the results, usually in time for the evening television news as is the case in Western Australia, and this will allow consumers the opportunity to determine where to buy the cheapest fuel in their area

They will also be published on the internet.

Fuelwatch gets rid the guesswork for motorists looking to fill up the tank. It’s the best way for motorists to get the best-priced fuel. Like many people, I reckon that car-sickness is something that a motorist gets when he or she has to fill up the petrol tank. Fuelwatch may not be the perfect cure-all for this malady, but it will certainly go a long way towards easing the pain of prices for fuel.

As I have mentioned before, the Fuelwatch scheme is already well-established in Western Australia. It successfully provides consumers with a website, email and phone updates, and television stations display the retailers with the cheapest fuel in the area in a similar way the location of speed cameras for the next day.

After two years of operation the West Australian Government expanded Fuelwatch to include an additional 24 towns and five local government districts on top of the Metropolitan and regional areas already covered. This has been greatly appreciated by the Western Australian electorate.

The WA Fuelwatch website proudly boasts that today it covers all petrol retailers in the metropolitan area and approximately 80% of rural areas.

West Australians have had the opportunity to assess the impact of Fuelwatch and have clearly decided that it is a good scheme for motorists and that it provides real value to consumers.

If the scheme is as bad as the Liberals say it is then why has it not brought doom and gloom upon West Australia?

Why has the new Liberal Premier, Colin Barnett, not moved to shut Fuelwatch down within the first few weeks of being elected?

The answer is because the Fuelwatch scheme actually works! And you can bet your bippy that there would be an outcry amongst West Australian motorists if there were any move to take it away. Mr. Barnett knows Fuelwatch is a winner. Why don’t his Federal counterparts?

What we have is the farcical situation where the Federal Liberal party and State Liberal parties are at odds with one another as to whether the Fuelwatch is good or bad.

But rather than discuss the contradictions of the Liberal party I’ll return to the reasons why Fuelwatch will provide Australia motorists with a better deal at the petrol pump.

Motorists are fed up to the back teeth with being forced to pay high prices. About the only thing they can be assured of is that the skyrocketing profits of oil companies always appear to rise faster than the cost of the fuel they put in their cars.

However, the main strength of Fuelwatch is that it will empower consumers to make informed decisions about where to purchase fuel at the lowest possible price. Consumers will have a choice based on facts.

It does this by levelling the playing field between petrol retailers and consumers by providing both parties the same information on the retail price of petrol.

The Senate Economics Committee report on Fuelwatch made the observation that under the current system there are significant information asymmetries between petrol retailers and consumers that benefits the former at the expense of the latter.

Petrol is a household staple. We can’t do without it. Petrol is essential for millions of Australians to go about their normal lives.

However, unlike any other household staples, petrol prices are extremely volatile. Imagine the confusion and consumer anxiety if the price of bread, milk, eggs, vegetables and meat jumped around as much as the price of petrol currently does.

Petrol retailers are able to exploit the current confusion and lack of information that consumers have —so they can raise and lower prices at a moment’s notice. Motorists see on the TV news services each night, and read in the newspapers each morning, about the plummeting price of oil per barrel. Yet rarely do they see corresponding falls at their local service station.

Petrol retailers pay substantial fees to companies like Informed Sources to provide them with up-to-date pricing information, and this puts them one step ahead of the poor old consumer.

Fuelwatch eliminates this advantage! Fuelwatch puts consumers and retailers alike on an equal footing.

This scheme will also benefit retailers because they will no longer need to pay hefty fees to obtain up-to-date pricing information - and they will be able to spend less managerial time trying to respond to many different prices during the day.

Instead, petrol retailers will need only make one decision—how much they will charge for tomorrow’s fuel—and then they can go on to focus on other duties.

Under the present system, the only way consumers have to compare fuel prices is to drive around noting down the price as they go along.

Even then if they realise that the cheapest petrol was at the first station they passed down the road then by the time they’ve gone back the price may have changed anyway.

Fuelwatch therefore substantially reduces the search costs for consumers. Rather than driving around inefficiently to determine the fuel prices —and wasting precious fuel in the process - they can just look up the best deal in their area and immediately know where to go.

While the Fuelwatch scheme will improve the information available to consumers letting them find the best deals in their area, the scheme also has the advantage of reducing the wild intra-day price fluctuations that frustrate so many motorists.

At a recent street corner meeting I attended with the South Australian Attorney General, Michael Atkinson, I met a number of people concerned about the price of fuel.

One of the most frustrating things about the price of fuel one gentleman told me, was how he would drive past petrol stations on the way to work but when he tried to fill up on his return trip the price had jumped by 10 cents a litre. This is outrageous, and there’s no way this could happen under Fuelwatch during a single 24-hour period.

Prices will be locked in for 24 hours.

Michel Atkinson, incidentally, believes a bicycle is the most efficient machine ever created, for he rides everywhere - and obviously understands that by converting calories into petrol, a bicycle gets the equivalent of about two thousand kilometres per litre!

Under Fuelwatch, motorists will even have the opportunity to go home, watch the evening news, and work out whether they should fill the car that evening or wait until the next day.

With the extra information that consumers will have under Fuelwatch, there will ultimately be more competition in the market.

More competition in the market means a better deal for consumers and will help make the Australian economy more efficient.

On any day of the fuel cycle, whether on the more expensive days or the cheaper days, motorists will be able to determine the best price via the internet, the newspapers, or television news services.

The National Fuelwatch scheme is estimated to cost $20.9 million over four years from 2008-09 to the end of the 2011-12 financial year.

It is expected to have annual running costs of $4.6 million.

But one of the very good things about this service is that it is not only going to be of great help to motorists, but is going to save petrol retailers significant amounts of money also.

It costs the retailers next to nothing to participate in the scheme, except the costs of a local phone call to the Australian Competition and Consumer Commission to let them know the nominated price for the next day.

This is in stark contrast to the present system whereby petrol retailers have only two options to find out the price of their competitors petrol.

They can either pay substantial fees to companies like Informed Sources, who pay their staff to drive around recording petrol prices in capital cities, or they can drive around their local neighbourhoods themselves to determine the prices of fuel.

Eliminating the need for both options will free up significant resources for petrol retailers. They will be able to focus on other more important aspects of their business, including service.

There have been some concerns raised about the role of independent petrol retailers under the Fuelwatch Scheme.

In particular there have been concerns about the potential for predatory prices and anti-competitive behaviour that may —and I stress may - be exacerbated under Fuelwatch.

As the majority report noted, large petrol retailers could adopt a ‘rolling price leaders’ strategy, whereby large retailers have different outlets having the cheapest fuel for different areas at different times.

That particular chain would then consistently make the top 10 list of cheapest sites and then unfairly create the impression that that particular retailer had the cheapest fuel.

This would put smaller operators at a disadvantage because they would be less able to employ such a strategy.

However under Fuelwatch such a strategy could be less effective.

Consumers will be able to check which outlets of the large petrol chain is offering the cheapest fuel and not go to the more expensive ones.

So the large retailers would no longer be able to rely on information asymmetry about which outlet was offering the cheaper fuel and would also be unable to quickly raise the price of fuel if they start making a loss.

So if such a strategy was taken by the supermarket chains it could prove very costly indeed.

This is one reason why the Standing Committee on Economics majority report recommended that

“The Government undertake close liaison with independent fuel retailers to monitor the operation of Fuelwatch. The impact on the competitiveness and market share of independent fuel retailers should be an important part of the one-year review of Fuelwatch which the Government has already promised.”

The majority report notes the strong difficulties facing independent retailers - such as competition from the large supermarket chains that have entered the market in the past few years and the economies of scale that these larger fuel retailers currently enjoy.

It is not the intention of this bill to make doing business more difficult for independent retailers. It is to make life easier for them—and for the motorists who buy their fuel.

In summary, I would say this:

The vast majority of Australians, apart from those very lucky ones in Western Australia who benefit through Fuelwatch, are sick and tired of playing what has become Australia’s latest and most expensive game—“Find the cheapest fuel”.

They want direction. They want help. They want to save money—irrespective of what the holier-than-thou Liberals may think.

They are tired of scouring their local neighbourhood checking prices. Tired of driving around in circles examining prices and then making their decision —only to discover that the cheapest service station has hiked the price and it’s now 3 or 4 cents per litre higher than it was when they first saw it 30 or more minutes earlier.

A national Fuelwatch will provide them with the guidance they need.

The Liberals, with their backward thinking, would have us go back to the horse and buggy days. Labor, with its progressive thinking, believes Fuelwatch is currently the best way forward,

I commend the Bill to the Senate, and believe that—through Fuelwatch, pedestrians will no longer include those people who thought they had a couple of gallons left in the tank, but who—sadly didn’t—because they failed to have sufficient money to fill their car.