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

Interview with
Kerry O'Brien

7.30 Report

28 May 2008

SUBJECT: FuelWatch

O’BRIEN:

Wayne Swan, we now know that four government departments, at least four government departments have raised serious concerns about whether FuelWatch will work in the way you say it will.  So, why are you going ahead with it?

TREASURER:

Well, we strongly backed it because particularly the ACCC, the competition watchdog, recommended it to us.  They made a very significant presentation to our ERC.  We also had the Petrol Price Commissioner there and Ministers were convinced that this would deliver the best deal for Australian families at the petrol browser.  I am strongly supportive of any moves such as this which can give information and knowledge to consumers so that they can get the best price on any given day.

O’BRIEN:

But PM&C, the Prime Minister's own department, says econometric modelling undertaken by the ACCC is somewhat inconclusive with respect to the overall pump price but indicates that a small overall price increase cannot be ruled out.

TREASURER:

I don’t believe that is an accurate reflection of the ACCC modelling.  The ACCC modelling shows a number of things.  In Western Australia over a period of time it has delivered a 2 cents a litre advantage, but what it really delivers is knowledge and power to consumers.  Because at the moment all the power lies with the petrol retailers who get to set and change their price when they want and most consumers can’t take advantage of that.  What we have in this scheme is the ability of any consumer, particularly a price-sensitive consumer, to know where the best price is and to access that price on any given day.  I just don't think some of the advice that came from some of the departments was all that practical or realistic or really rooted in the real world.

O’BRIEN:

The Department of Resources expresses concern that the scheme will reduce competition and market flexibility, increase compliance costs and has more potential to increase prices. I mean, this is an expression of no confidence, in a sense, in the clear advice of four government departments, including the Prime Minister's own department.  

TREASURER:

Kerry, it is no such thing.  Departments are free in coordination comments to make any comments they like.  The job of the Cabinet is to engage in rigorous evaluation.  We did that, to test the views of Ministers at the Cabinet table and to test them with the experts. In this case, the expert is Graeme Samuel from the ACCC.  They are the body that did the modelling.  They are the body that has extensively studied what's gone on in Western Australia, and in addition to that we have the Petrol Price Commissioner from that State as well.  All of the practical, realistic advice the Cabinet received was to go for this scheme and I believe the Cabinet took a correct decision, and frankly, I can't understand why the Federal Opposition is playing politics with this scheme in this way.  Because when people from WA get the opportunity to have their say, they think it's a pretty good scheme.

O’BRIEN:

Mr Swan, if you were in Opposition, if this had happened six months ago when you were in Opposition and there were leaks from four government departments expressing objections to government policy, you'd have absolutely gone to town on it.

TREASURER:

Well, I may well have talked about it extensively, because I did during the election campaign.  I was interviewed by Laurie Oakes on the Sunday program and he put this question to me, Kerry.  He said: “Can you guarantee, if you win government, petrol prices will fall?”  And my reply was this: "No, I can't guarantee that but I can guarantee that we will do the maximum amount possible to make sure that people aren't being ripped off."  And let me tell you, Kerry, FuelWatch does that – it makes sure that motorists aren't being ripped off.

O’BRIEN:

But what the Prime Minister's department is arguing is that you could have this scrutiny at the petrol bowser without, potentially, the problems.  The PM's department suggested another option.  Simply providing increased price information to consumers, possibly on an hourly basis, would be preferable to the scheme you've actually adopted.  It would be more likely to enhance competition and lower the overall pump price without a significant increase in the compliance burden.  I mean, you just seem to have gone against various departments’ advice on a whole range of fronts.

TREASURER:

Because it's wrong, Kerry.  Cabinet made the assessment that FuelWatch provides the best opportunity to give the fullest range of information to consumers to access the best price at any one time.  Frankly, that recommendation won't work.  We had the interests of Australian motorists foremost in our mind when we took this decision.  We took this decision because we do understand that the price of petrol is hurting people.  We understand that people are stretched when it comes to living costs and so on.  If they can save a cent or two cents or three cents or up to 10 or more through FuelWatch, well that's a great thing.

O’BRIEN:

But you’ve got government departments, Mr Swan, arguing that it might have the opposite effect, that the price might actually go up.  Are you sure you haven't stubbornly gone down this road simply because you made the promise before the last election and you want to be seen to be honouring that promise come hell or high water?

TREASURER:

No, what we want to honour is our commitment to the Australian people to get some competition back into retail in petrol.  That was the commitment we made and that's what we have done through our commitment to FuelWatch.  It's practical, it's realistic, it's based in the real world and we believe it will work.  And that is also the evidence of the ACCC.

O’BRIEN:

Well, you've got two serious leaks within 24 hours, Mr Swan, including this latest leak which covers advice from four different departments.  What are you going to do about that?

TREASURER:

Well, that does indicate there are some problems out there with the integrity of the Cabinet process so those matters will be investigated.  Because what is most important here, Kerry, is that we have strong and vigorous debate in the Cabinet.  We had that on this proposal.  That's no secret and we've made the decision that’s in the best interests of the nation.

O’BRIEN:

Are we going to see a witch hunt here?

TREASURER:

You won’t see a witch hunt.

O’BRIEN:

You're not going to be able to afford to see too many more of these.  This is incredibly embarrassing.

TREASURER:

Well, I'm not going to buy into that, Kerry.  The law has been broken. Procedures will kick in.  It will be investigated.

O’BRIEN:

Wayne Swan, thanks for talking with us.

TREASURER:  

Thank you.