SUBJECTS: Fuelwatch; ACCC; Cabinet Leak; Public Service
PRIME MINISTER:
In a few hours time the Government will be introducing the National Fuelwatch Bill into the House of Representatives. The debate is a very basic debate. It's about whether motorists should have the same access to petrol price information as big oil companies. And furthermore whether motorists should have access to that information with confidence for a 24 hour period.
The Government says that motorists should have that consumer power. The Liberal party are saying that they should not and that's the basic difference. As Graham Samuel himself said today and I quote him in an interview.
"The fundamental purpose of Fuelwatch is to swing the balance of power in petrol purchasing away from the sellers to have a sophisticated pricing sharing information. That they share information as to the price between themselves and move that power over to consumers and let consumers know when and were they can buy petrol at the lowest possible price. And importantly to have many hours warning of a petrol price hike where they can potentially suffer a loss of 10 to 15 or maybe even 20 cents a litre."
So says today the chairman of Australia's competition watchdog.
The core arguments in this debate are essentially threefold. The first relates to price, our position is clear on this. Our position is based on three facts. One is the econometric analysis contained within the ACCC report. That's also been referred to on multiple occasions in the parliament, the 1.9 cent per litre difference. The second is in the further econometric analysis undertaken by the ACCC. That is being released today as well and I would draw your attention to its conclusion.
Its conclusion is quite stark on this matter and having gone through modelling questions and why they went back for further analysis to deal with different consumer buying patterns in a given week. And dealing also with other extraneous factors which might need to be removed from the sampling model. They reach this conclusion overall and I quote them in this document which has come out today.
"the purpose of this econometric analysis has been to satisfy the ACCC that the introduction of Fuelwatch scheme nationally would not, based on the experience in Western Australia lead to consumers paying higher prices for petrol . From the econometric analysis on a conservative basis the ACCC can say that there is no evidence that Fuelwatch led to any increase in prices and it appears to have resulted in a small price decrease overall."
That's their statement today and their conclusion. The other fact on which we have based of course our view on the impact of Fuelwatch on pricing is of course the definitive statements by the chairman of the ACCC himself and on that question I would simply again turn to his statement which is again today.
"Fuelwatch will not in our view lead to an increase in prices. It will based on our analysis of the Perth situation lead to a statistically significant reduction in prices but there is a far more important element to Fuelwatch. It's about giving consumers the power to determine when to buy petrol and where to buy it at the lowest possible price."
That's the first element of this debate, that's about price. The second of course goes to the regulatory impact on business. On the question of regulatory impact on business as I said in the Parliament yesterday the business community in particular petrol retailers currently suffer a price impost as a consequence of those service stations already participating in various forms of price information in association with the oil companies usually through price information collection companies, that's already a price which they pay. Now on top of that what the Government did in it's consideration of this matter before Cabinet was to make a clear cut decision that the net establishment cost to participating retailers in the Fuelwatch system would be zero.
That's the decision that Cabinet took and we we're entirely mindful therefore of making sure that small business would not cop any additional costs as a consequence of the introduction of this scheme. So that's the second element of this debate, on the question of the impact on the business community. The third is on the number of independents. And on the number of independents its quite clear where the analysis again from Western Australia comes from and again I go to the documents. The Western Australian experience has been along these lines, essentially that retailers there in the independent sector have benefited enormously from the free publicity which is associated with Fuelwatch.
That is papers and others in the media put the information up and out there about where the best and cheapest petrol is and as a consequence those petrol stations who are not part of major retail chains have access to that free publicity. Then you go page 8 of the WA Governments submission to the ACCC petrol price enquiry indicates that most petrol pump sites closures since 2001 have been company controlled or price supported sites. And furthermore the WA Department of Consumer Employment protection has said that the proportion of sites owned by independent operators and supermarkets has in fact increased. That's the third core argument in this debate.
The first on price and our response to that, the second in terms of the impact or the regulatory cost on business and the third goes to of course the question of the number of independents in the field. I just conclude by saying this, the debate on petrol and oil is a global debate. Every Government in the world is wrestling this debate today as we speak - either in Europe, throughout Asia, right across the world. And these are very difficult questions. You can have a real debate or you can have a bogus debate. The real debate is what you do about global demand factors, global supply factors, what you do in terms of alternative fuel strategy, what you do in terms of public transport, what you do in terms of Fuel efficient vehicles, what you do in terms of the ultimate assistance which can be delivered in the here and now to assist the family budget with delivering with this additional and huge impost which families are now facing.
As the Government said at the time when we introduced the scheme, this will be and has been a contentious debate. We recognised it then, we said it then and we've acknowledged it since. In the parliament earlier this week I made it absolutely clear that there were different and conflicting views within the Government and of course we fully embrace that. That's a normal way in which Governments go about making properly informed decisions. We're not in the business of simply suppressing information because it may not be of a uniform type. We believe in having the debate, resolving it and getting on with the business and I've explained the basis for the decisions on which Cabinets choice was made.
So to conclude and I'll conclude on this. There is therefore a clear choice in this bill going into the parliament, the clear choice is along these lines. Either you vote for consumers or you vote for a cosy deal with big oil companies. That's the choice. Why do you think all the big oil companies are opposed to what we are proposing? Over to you Chris and then we'll take your questions.
BOWEN:
Thanks Prime Minister. This is an important day for Australian motorists. Australian motorists and consumers often say to me that the balance it tipped against them - that they don't feel they have a fair go, that oil companies and petrol stations have all the information and they don't have any and their right. And the ACCC thinks their right, this Government thinks their right. Today we are moving to remedy that situation.
The ACCC's advice to the Government was unanimous from the ACCC commission. It was that we should introduce a national Fuelwatch scheme. I took that advice to Cabinet and argued the case on it's merits and the Cabinet accepted those recommendations. They accepted them because there in the best interests of Australian motorists. The Opposition seems to be arguing that oil companies are against Fuelwatch but it benefits them. I'll leave you to draw your own conclusions as to who is in the motorists corner - Oil companies or the ACCC. Australian motorists know the answer to the question and I think it's about time the Opposition woke up to the answer to that question.
JOURNALIST:
Are you saying that your own four key economic departments are in the pocket of fuel companies and isn't the problem with the ACCC advice that the only people that, economists at your disposal to give you advice who agree with it are the ACCC and that it's only you and the ACCC that buy this argument?
PRIME MINISTER:
Well go back to what the gentlemen who commissioned the ACCC report said at the time, that's Peter Costello - this was the most authoritive body within Government to provide advice on this - that was his view as the former treasurer. Secondly if you look at that body within Government which is responsible for providing us with information and advice on competition policy, it's the ACCC. That's the bottom line. I mean they are there for that function. Of course they have an enforcement arm as well and that's why they provided us with the advice. And furthermore on the debate which has been raised by the Opposition about further analysis. We've gone through that today, the further econometric analysis the conclusions are clear cut.
If you were the Government in possession of this clear cut information, one about empowering motorists to give them the same information that big oil companies have and two, do so on the basis of the evidence from Western Australia that there is up to a 2 cent differential in the price between there and the east coast states, then you would proceed on that basis.
JOURNALIST:
What was your reaction when you first heard about this latest leak?
PRIME MINISTER:
Well it's always a challenging day in politics so you sort of rock and roll with the punches, so it's interesting.
JOURNALIST:
Mr Rudd are you confident that it was none of your Cabinet colleagues?
PRIME MINISTER:
Oh absolutely. I'm absolutely confident, not just the direction in which the Government is proceeding on this but the solidarity within the Government on delivering the best possible outcome for motorists.
On that matter, on that matter the secretary of my own department I think has issued a statement in terms of the investigations which will ensue in terms of public service processes.
JOURNALIST:
Do you now regret not purging the public service?
PRIME MINISTER:
Well, the Government took a view before the election that there would be no 'night of the long knives'. We accept the consequences of that decision. And, we think that it was the right thing to do in order to restore something which resembles the Westminster system in Australia.
Remember this, and this is where it's entirely, I think, interesting to observe the arguments from those opposite. This is the Government who gave us the abuse of public servants through children overboard. This is the Government which failed to even send to the Treasury, for any information or advice, a $10 billion National Water Plan. This is the Government whose use of the public service has been well reflected in the regional rorts program to the cost of hundreds of millions of dollars to the taxpayer. And a Government, when they received contrary advice, in the case of Mick Keelty on the question of Al Qaeda's association with attacks in Spain, simply attacked him publicly by saying that his views represented those of Al Qaeda. That's not our way of doing business. We have a robust debate with the public service.
I understand that there has been some criticism around the edges that some public servants are finding the hours a bit much. Well, I suppose I've simply got news for the public service - there'll be more. This Government was elected with a clear cut mandate. We intend to proceed with that. The work ethic of this Government will not decrease, it will increase.
JOURNALIST:
Which came first, the (inaudible) advice from the ACCC or the advice from the four departments? And secondly, under your legislation, will retailers be fined for reducing their prices in a 24 hour period?
PRIME MINISTER:
I'll turn to Chris on both those questions.
BOWEN:
Sure. The advice from the central agencies was in response to my initial Cabinet submission. In response to those co-ordinating comments, which were provided to me as the submitting minister at the Expenditure Review Committee, I was accompanied by the Chairman of the ACCC, by Professor Dr Stephen King, and by the Petrol Commissioner Pat Walker. And all those elements were addressed. And, the updated econometric modelling (inaudible) was updated, was briefed on the updated econometric modelling at that point. That is the point in which the econometric modelling was further explained to ERC members.
In relation to the second question, Australian motorists deserve certainty. They deserve to know that when they go past a service station in the morning, and they see a price, that will be the same price when they drive past in the afternoon. The days of driving past a service station in the morning and then coming back at night and seeing the price 15 centre a litre higher should go. They will be able to log onto a website and check the price and then, know when they get there it will be the same price.
Now that requires some certainty. Now, that requires service stations locking in their price. That requires no movements, up or down. And that requires a regime to ensure that's the case. Now there are penalties in the legislation, in the legislation, that will be introduced to the house this afternoon. There are a range of penalties available. And, the ACCC has the capacity to take into account the circumstances involved.
In Western Australia the experience is that there are very, very few instances of petrol stations trying to reduce their price and being fined for it. But there is the capacity for it under the legislation to provide that certainty for motorists.
JOURNALIST:
Can I ask, why wasn't FuelWatch part of your election commitments, especially when FuelWatch has been around since, I think, since 2001?
PRIME MINISTER:
Well, going into the election, we looked at a whole range of questions at how to assist working Australians and working families under financial pressure. We, of course, needed to work our way through all of those proposals on tax, on childcare tax rebate, as well as the education tax refund. But on this one in particular, the discussions we had back then was that it would be very important to reflect properly on the conclusions of the ACCC report. And we've done that. Because it is, as the former Treasurer said, the best agency within Government to provide this sort of advice.
JOURNALIST:
You can hardly be filled with confidence, though, when you've got four key departments, including your own department, that not only opposed FuelWatch, but warned it could increase prices?
PRIME MINISTER:
Yeah, but Daniel, there has never been a time in the history of Government when every Minister in every Cabinet has put forward a position to the Cabinet which is entirely consistent with what their department is saying. And there never will be such a time. The nature of Westminster Government is not like that. And I've said consistently, we will take advice from within Government, and beyond Government. And I've got to say, the ACCC falls within the Treasurer's portfolio. It is a significant agency of state. And, therefore, to assume that what the head of Australia's competition watchdog says is not relevant on price, to assume that a full economic modelling exercise by Australia's competition watchdog is not relevant in this debate, I think we'd be accused of having not acted in receipt of that information and not proceeded in the course of action that we have undertaken.
JOURNALIST:
How can you have confidence in your department's advice on other issues if its advice on this matter from the four departments got it so wrong?
PRIME MINISTER:
Well, can I say, it's a question of making sure you've got a contestable policy debate. I mean, I used to work in the public service myself. The best debates you have with your ministers are those where you have a whole range of views put forward. People in government don't go around and assume that public servants are acting from ignorance or malice. They're using their best information, their best advice, to put a point of view forward. We'll engage with that. And as I said, I think, in my address to the public servants SES offices some time ago, some time ago.....(interruption) .... Is that the SAS or what?
As I said some time ago, we are a party with a political culture, which enjoys the business of policy debate. And that means, you're not going to have a system whereby Ministers are just going to walk in and say, 'oh well, here is the departmental advice, this is what I'm going to do' - we believe in a debate. And we'll make multiple sources of advice, and proceed along those lines.
JOURNALIST:
Is Graeme Samuel's reappointment being considered at the moment?
PRIME MINISTER:
I'm not quite sure of the timeline of that to be quite honest. Chris.
JOURNALIST:
Is Graeme Samuel's reappointment being considered at the moment?
BOWEN:
The Government is in the position of considering the appointment which is up on the 31st of July.
JOURNALIST:
Do you blame the public service for this leak? Are you satisfied that none of your colleagues did it?
PRIME MINISTER:
All I'd say is that the Secretary of Prime Minister and Cabinet today has issued a statement concerned about the confidentiality of Cabinet documents as I think would occur in the normal circumstances. And I'll leave it to the Secretary of Prime Minister and Cabinet to take whatever action is appropriate.
JOURNALIST:
Prime Minister, to take the advice of the ACCC, albeit with a caveat which says that other factors could be at play here, and to ignore the economic advice from your four senior economic portfolios, surely that's a vote of no confidence from you, or from the Cabinet, in the economists working in the bureaucracy for the Government?
PRIME MINISTER:
Well, if Peter Costello, the former Treasurer, said the ACCC is the best agency in Government to deliver advice on these matters, and Peter Costello was still the Treasurer today having received the advice from that agency, and that agency said - One, this empowers consumers; two, it gives them the same information as big oil companies; and three, on top of that, in the case of West Australia, on average, an up to two cent a litre price variation in the beneficial direction of consumers, it would be irresponsible not to act. So I go back to what the previous Government said at the time it commissioned this agency for this explicit purpose.
JOURNALIST:
Do you have confidence in the quality of the economic advice you're receiving from the department -
PRIME MINISTER:
In response to your question before. When you're in the business of Government you take advice from all Government agencies. You consider that. But we, as a Cabinet, are elected to govern. Public servants are there to advise. And the way in which Westminster works, is that we take the best advice, we have a debate, and we reach a decision.
ACCC advice, as Australia's competition watchdog, and the only agency to have commissioned such extensive econometric analysis of this - not just in the first instance, but in the second - was the appropriate place to go. And I go to the contrary argument. Were we not to act on this, were we not to act on the information provided, what accusations would then flow in terms of our failure to stand up for the interests of motorists.
JOURNALIST:
(Inaudible)
PRIME MINISTER:
I'd just say this, that the choice at the end of the day, in this whole debate, is about whether you're going to stand up for motorists or stand up for a cosy deal with big oil companies.
The Labor Government is standing up for motorists and consumer choice. The Liberal Opposition is standing up for a cosy deal, a continuing cosy deal, with big oil companies. Thanks very much.