The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

28 May 2008

Joint Press Conference
with
The Hon Chris Bowen MP
Assistant Treasurer
Minister for Competition Policy and Consumer Affairs

Parliament House
Canberra

28 May 2008

SUBJECT: FuelWatch

TREASURER:

There’s been some reports in the media tonight, I think, on Channel 9 about FuelWatch. As the Treasurer, and with the Assistant Treasurer, I want to make it very clear that the Cabinet strongly backed FuelWatch. We backed it very strongly because it will deliver the best deal for Australian families at the petrol bowser. We backed it because there was strong advice from the ACCC - the consumer watchdog - a body of great expertise in this area. It provided very strong advice to the Cabinet to support FuelWatch.

Now it’s no secret there are a range of views about FuelWatch. But I can say, as someone with considerable experience in the area of consumer affairs over many years, FuelWatch is a very practical, day-to-day way to empower consumers. Something like this has been wanting for a very long period of time. FuelWatch has worked in Western Australia. It is true, there was some bureaucratic advice against FuelWatch. I don’t believe that was well-grounded and I believe it was overwhelmed by the advice from the ACCC. And for those reasons, the Cabinet strongly backed FuelWatch. Strongly backed it because it is the means by which a better deal can be delivered to motorists at the bowser.

ASST TREASURER:

Thanks very much Treasurer. The ACCC is a very well respected body. In fact, a former Treasurer once said: ‘The ACCC is an independent regulator that has more expertise in the area of access and pricing than any other Federal Government instrumentality or agency, and that is why it is very important that it is engaged in all these pricing issues.’

That’s not this Treasurer’s view or my view, that’s the view of the Member for Higgins.

Now, the Cabinet considered FuelWatch very closely. It considered all the advice before it. The Expenditure Review Committee, the Cabinet was personally briefed by the chairman of the ACCC and the Petrol Commissioner about the ACCC’s strong views in favour of FuelWatch, and also on the further work the ACCC had done on econometric modelling after the ACCC’s petrol price inquiry report.

The ACCC’s submission to the Cabinet and to the Expenditure Review Committee dealt with the matters raised by various government departments and responded to those matters raised by various departments. ERC and the Cabinet weighed up those views, weighed up the response of the ACCC to those views and made its decision accordingly.

We also, of course, listened to the Australian people - the Australian people who have spoken to us in the streets and in the community who have said ‘Can you do anything about giving us more information about petrol price volatility? Can you do anything about stopping these big hikes without us knowing about it?’ We actually were elected to govern and we have listened not only to the consumer watchdog and the people who are paid to stand up for consumers, but to Australian consumers themselves.

JOURNALIST:

Are you saying that you gave more weight to the ACCC than to the Government’s five key departments?

TREASURER:

We certainly did give more weight to the ACCC because it was practical, realistic advice based on modelling. We also gave a great deal of weight to a common-sense, practical point of view out there in the real world. Some of the advice, and this happens from time to time, is a little academic.

Our job is to govern. Our job is to meet the commitment that we gave to the Australian people and the commitment we gave to the Australian people was to get the best deal at the petrol bowser and if we could save them a cent at the bowser we would. And we believe FuelWatch will deliver that sort of advantage to Australian consumers.

JOURNALIST:

Given the weight of high power advice against this proposal, aren’t people out in the community entitled to think this is just a symbol or a stunt that will actually have no real effect, other than giving the Government the ability to stand up and say they’re doing something about something they can’t actually control?

TREASURER:

There is nobody more high powered in this area than the ACCC - the consumer watchdog. No modelling was done by those departments that provided advice. No modelling was done. The modelling has been done by the ACCC, but more importantly than modelling, there is a real life world example. It’s been going on in Western Australia for some time.

What you have to understand is that at the moment, it’s the petrol companies that run the price cycle and they run it to the disadvantage of the motorist. What FuelWatch does is empower the motorist to get the best price in any given day - information they can’t get at the moment, but is just held exclusively by those that are retailing the petrol.

JOURNALIST:

The departments, Mr Swan, that opposed it, we know one Minister has confessed and it looks as though a couple of others did too. Surely you’re not writing off their input as just academic.

TREASURER:

No, I’m talking about the advice, the bureaucratic advice, that has been academic. We have a variety of views around Cabinet. They are strongly expressed. There’s nothing new about that. I’m not going into the detail of Cabinet discussions, Michelle, but on any given number of topics, a healthy Cabinet, a robust Cabinet has a robust debate. There’s nothing surprising about that. In fact, we should have nothing less.

JOURNALIST:

(inaudible)

TREASURER:

The modelling was provided by the ACCC.

JOURNALIST:

Laurie Oakes’ report does say the Prime Minister’s department refers to econometric modelling that did indicate a small overall price increase cannot be ruled out. Wasn’t their modelling…

TREASURER:

The only econometric modelling that is available was that from the ACCC.

JOURNALIST:

All we’ve got is the modelling that came out at the end of the year. The Assistant Treasurer has just said that the ACCC has refined that econometric modelling. Will you release that?

TREASURER:

Well that’s entirely a matter, I think, for Mr Samuel and the ACCC.

JOURNALIST:

The advice they gave to you, the modelling they did for you, they presented to you in Cabinet. Can we see it?

ASST TREASURER:

Well I’m sure Mr Samuel will be more than happy to make himself available to you.

JOURNALIST:

(inaudible)

ASST TREASURER:

No, I’m sure you’ll find Mr Samuel will make … (inaudible).

JOURNALIST:

Mr Bowen what did that further econometric modelling show?

ASST TREASURER:

What the ACCC did in its further analysis of the modelling is go through the modelling and assure itself there was nothing else possible to be held accountable for the reduction in prices in Western Australia.

So it put the modelling through further assessment and said ‘ok, we’ve found that fuel prices have come down in Western Australia since FuelWatch. Is there anything else that could be responsible for that?’ Put is through that assessment. It also further analysed whether there were any other possible distortions and they came back to the Government and reported that the modelling was particularly rigorous and that the modelling held up and gave further evidence to that effect.

JOURNALIST:

(inaudible)

ASST TREASURER:

What I’m saying to you is I’m confident Mr Samuel will make himself available to you … (inaudible).

JOURNALIST:

Did that modelling say that a small overall price increase cannot be ruled out?

ASST TREASURER:

The ACCC’s advice to the Government was, even on a conservative basis, there was absolutely no evidence to reach the conclusion that there was a possibility of a price increase.

JOURNALIST:

(inaudible)

ASST TREASURER:

What we’re saying is that we took the advice of the ACCC.

JOURNALIST:

Are you saying that you said Cabinet is completely committed to this on the basis of ACCC advice - against the advice of at least four departments and one senior Minister? Do you have faith in the departments named and others to provide you with evidence…

TREASURER:

There are coordination comments that come to Cabinet all the time and as a Cabinet we always take those into account. Departments are free to make whatever comments they like. They are not necessarily directed to do so by Ministers. It is not unusual for there to be coordination comments of this nature in a healthy robust Cabinet debate. They are welcome, but at the end of the day Ministers take the decisions and they take the decisions in the national interest and that’s what senior Ministers did in this case.

JOURNALIST:

(inaudible)

TREASURER:

We take it into account and we decided that we would follow the advice of the ACCC. But it wasn’t just the ACCC - it’s our own common sense view of the world. That’s what people elect us to do. I personally strongly believe that this will be beneficial to Australian motorists. We followed the advice of the ACCC but at the end of the day, at the Cabinet we took a decision in the interests of the Australian people and in the interests of motorists.

JOURNALIST:

What would you say to people who are looking at you now six months in, two major leak, is this a big damage (inaudible)?

TREASURER:

What we said we will do during the election was this, and I will just refer you an interview with Laurie Oakes on Channel 9. He said: “Can you guarantee if you win government that petrol prices will fall?” Answer: Wayne Swan: “No, I can’t guarantee that, but what I can guarantee is that we will do the maximum amount possible to make sure that people aren’t being ripped off,” and that’s what FuelWatch does.

JOURNALIST:

(inaudible)

ASST TREASURER:

We actually took that advice into account and that was discussed around the Cabinet table. The ACCC’s costings took into account the ACCC bearing the cost of any increase in compliance cost. That wasn’t clear to the government departments who’ve made that advice and the Cabinet made an explicit decision that if there were any costs to small business they would be absorbed in the ACCC costing. This was discussed as part of the arrangement as it is in Western Australia so …

JOURNALIST:

What is the estimated cost of that?

ASST TREASURER:

Well the estimated cost is $20 million over four years as that’s been on the public record since Budget night.

JOURNALIST:

(inaudible)

TREASURER:

The consumers of Western Australia are a good start. Laurie?

JOURNALIST:

In a section of this document I’ve got at Ninemsn, three of these departments endorse option 3 in the Ministers submission. Now option 3 is exactly, basically what would be left of your proposal if the opposition succeeded in blocking the central (inaudible).

Why didn’t you do that? Why was it so important that you had to go ahead with the business of fining…

TREASURER:

Because informing consumers requires there to be a stable price for 24 hours, that’s why, and moving away from that principle basically neuters FuelWatch.

Thank you