SUBJECTS: FuelWatch
CHRIS BOWEN:
I'd like to welcome the NRMA's release of its survey findings of its business members, which show two thirds believe that the appointment of Pat Walker as petrol commissioner will help their business and the vast majority of their members support the appointment of a petrol commissioner.
This underlines the fact that the issue of petrol prices affects not only working families, but affects business; and putting downward pressure on petrol prices is important for helping Australian business, and important to help Australia's economic efficiency.
That's one of the reasons the Government feels so strongly about this issue.
Of course, FuelWatch, which we announced earlier this week, will be of major assistance to Australian businesses. Businesses with large fleets who can save even small amounts by accessing real time information about the cheapest place to buy their fuel and can have 100 per cent certainty that when they get to their service station, when their fleet cars get to that service station, that will be the price that petrol is for sale for, will be able to make substantial savings over the course of the year.
So I do welcome this NRMA report. It does show that petrol prices are important across the board for businesses as well as for families.
I would also like to say that I note that Dr Nelson is yet to confirm that he will reverse his opposition to FuelWatch. This is very disappointing. We need the support of the opposition to guarantee that this can pass the upper house. In 48 hours, Dr Nelson has criticised FuelWatch.
Now, I expected oil companies, and I expected people with a vested interest to oppose FuelWatch. But Dr Nelson should be on the side of working families. Dr Nelson should be getting out of the way and supporting this plan.
I notice that he is still promoting the straw man argument that we need to be protecting the cheap Tuesday price of fuel. Now, Dr Nelson clearly hasn't read the ACCC petrol report which was commissioned by the Government of which he was a member. And I draw Dr Nelson's attention to page 247 of the report. A very detailed econometric analysis of the experience in Western Australia showed that even taking into account people who only buy petrol on cheaper days, there is still cheaper petrol under FuelWatch.
There is still downward pressure on petrol prices under FuelWatch, even for those people who are currently only buying on the cheapest days.
Now, this analysis does not take into account the benefits that flow to people from having much better information and being able to find the cheapest petrol stations under this FuelWatch plan. So there is two points to make. Firstly, all the evidence is that FuelWatch puts downward pressure on petrol prices even for those people who only buy on the cheapest days of the week; and there is much better information.
Now at the moment, in many places, Tuesday is the cheapest day of the week. In other places, it is Wednesday. In some weeks, it is Tuesday night. On other weeks, it's Wednesday morning.
People just don't know.
They need the information that FuelWatch will give them to let them know the cheapest place to buy petrol, and the cheapest place to get the best value for money as they go about their weekly petrol purchases.
Now Dr Nelson is going around with Peter Dutton saying we would do a better job of reducing petrol and grocery prices.
Now he has had 48 hours to back our plan, and he has no plan of his own.
Either he needs to back our plan and protect working families, or he needs to come up with his own plan. He has a choice.
Now I again call on Dr Nelson to reverse his opposition to FuelWatch.
Yesterday, I wrote to Dr Nelson outlining in a substantial letter the very real reasons why he should support fuel watch, and also, offer him - offering him a briefing from the ACCC. And I would encourage him to take that up. I will even send him a copy of the report if he doesn't have one. Read the report. It was commissioned by his Government. It recommends serious consideration of FuelWatch, and runs through all the arguments.
Dr Nelson and the Liberal Party really need to get onboard and support this reform which puts downward pressure on petrol prices for working families, and gives motorists much more information and gives them a fair go; rebalances the equation. Gives motorists a better fair go when dealing with service stations and petrol retailers.
I'd be happy to take questions.
JOURNALIST:
Minister, how could you explain the fact that motorists who go to work yesterday morning and pay $1.35 for their petrol, and then go home and pay a dollar fifty-two point nine a litre.
CHRIS BOWEN:
That is exactly the point. That is exactly why we need FuelWatch. Once this system is in place, the days of driving past a service station in the morning and seeing a petrol price, and then driving home at night and seeing a price 10 or 15 cents a litre higher, will be gone. That is why this reform is so necessary, and until this reform is in, we will continue to see those sorts of fluctuations. We see the fluctuations across the board within days, and across days. And that system needs to stop. Motorists need much more certainty. That is why we are introducing FuelWatch. Now, you asked me to explain why that is the case.
Now, at the moment, nobody knows. Nobody can explain. The oil companies can't explain it. They say it is world oil prices. Well, world oil prices are certainly the biggest impact on Australian petrol prices, nobody disagrees with that. But the world oil prices didn't go up just today. And why those big increases? It's because we have this weekly fuel price cycle, and motorists deserve to have much better information; to be able to plan their purchases, and be able to know that when they drive past a petrol station in the morning, the price will be the same when they drive past that afternoon.
JOURNALIST:
But are you going to give the commissioner tougher powers that the BusinessWise survey recommended?
CHRIS BOWEN:
I have always said if the petrol commissioner asks for more powers, he will receive more powers. Now this survey was conducted before we announced FuelWatch, and I think that needs to be taken into account. I think business members would have welcomed the FuelWatch announcement. But this survey was done before FuelWatch, so that wasn't taken into account when they made those findings. Now FuelWatch is a pro-market reform. It means that the market will work better for consumers, for business consumers, and for individual consumers. We haven't gone down the road of those extra powers. If the petrol commissioner asks for more powers, he will certainly get them.
JOURNALIST:
The ACCC has been under the pump on this for years, to say why hasn't the ACCC received more powers. And this is above and beyond FuelWatch. What the survey is saying here, that you order petrol companies to adjust their prices have been found to be inflating their pocket margins. That is, for instance, in December last year, the ACCC said look, these petrol stations are charging six or seven cents over the top.
Would you like to see the petrol commissioner have the power to say to oil companies if you're charging too much drop the price.
CHRIS BOWEN:
Of course, what we have done is beefed up the powers of the ACCC so far. So Graeme Samuel and the ACCC have used those powers in that instance that you referred to, where the difference between the price of oil in Singapore and the price of petrol in Australia expanded from what it would normally be. And he used those powers you gave him. He wrote to the oil companies and asked them for an explanation. And we saw the divergence immediately fall back to more normal levels.
I don't support the ACCC or anybody else having the power to fix petrol prices, because when you fix petrol prices, you find shortages. You will find that the market won't work properly. What I do support is making the market work properly. And that is what FuelWatch is all about.
But as I say, if the petrol commissioner comes up with a proposal which he thinks will work, and he thinks gives him the powers to put more downward pressure on petrol prices, the Government will respond accordingly.
JOURNALIST:
But you're opposed to the idea of a penalty, but they also said that if petrol companies were found to be overcharging one week, the next week the Commissioner should be then instructed to reduce the cost of petrol by the equivalent amount…
CHRIS BOWEN:
Well, as I say, I am certainly opposed to anybody other than the market determining petrol prices. What we need to do is ensure that the market is working properly, that's what FuelWatch is all about, ensure that the market is working for the benefit of motorists. That motorists are benefiting from the market and can see the transparency of the market, that's what I support.
Now, I'll just reiterate the point; if the ACCC and the Petrol Commissioner come to me and ask for more powers, they'll get it, but we've gone down the road of a market-based reform and the NRMA indicates there's strong support for FuelWatch and I think we all agree that we need to let FuelWatch be implemented and see how it works and let it work for the benefit of motorists.
JOURNALIST:
It's fair to say though, the pain is being felt now, one fifty-two point nine is obviously over the mark so in the ensuing eight months before FuelWatch, as you say, is implemented what can the Government do to give some sort of well, lessen the pain, as it were.
CHRIS BOWEN:
Well, FuelWatch is one of the measures we've taken. We've appointed the Petrol Commissioner, we've increased the powers of the ACCC, those will continue of course. We need to make sure we'll get FuelWatch right, we don't want to implement it and get it wrong, it's a big and complex task and it requires legislation and the sooner Dr Nelson gives it his support, the sooner the legislation can pass through the Senate.
But we'll continue to do whatever we can in terms of putting downward pressure on prices, but we have made a series of reforms and they will continue. The events of this week, as I say, underline the importance of FuelWatch, and underline why the Parliament needs to pass it as soon as possible.
JOURNALIST:
Why don't you put the gun to the oil industry's head, basically, and say look, you've done - we're going to introduce a law, I am sure the Opposition will support you, that we will fine oil companies caught overcharging. Why don't you just throw it out there and see what happens?
CHRIS BOWEN:
Mmm. Well, of course at the moment, if there's any collusion or anti-competitive behaviour…
JOURNALIST:
I don't mean collusion, no I don't mean collusion, I mean, if an oil company normally charge that rate, is it possible to say that there is collusion because you can't discover that apparently.
CHRIS BOWEN:
Well if there is any collusion or anti-completive behaviour there are penalties in place. Now FuelWatch is the way forward to put downward pressure on prices. Now if the ACCC or the Petrol Commissioner come to me and say we believe these extra powers, any extra powers, would help us do our job, the Government would look at that very favourably indeed. But the Petrol Commissioner is the one who's been tasked with the job, standing up for Australian motorists, now if he needs more powers, he'll get them.
JOURNALIST:
With Fuel track [sic], basically…
CHRIS BOWEN:
FuelWatch, you mean?
JOURNALIST:
FuelWatch, sorry - really what it is doing is just telegraphing the fact that okay, instead of the surprise, you're going to know you're going to be paying. It's not going to stop petrol companies charging, $1.50.
CHRIS BOWEN:
Well, it makes the market work better and what it does is two thing; firstly it forces service stations to pick their cheapest possible price the day before, because if you put in a price, which is a couple of cents higher than the service station down the road, you know that everybody is going to be looking up the website and getting their emails and getting there text messages and you're going to lose a lot of business.
So you're going to have to keep your pencil very sharp and put in your best, possible cheapest price. So that's how it puts downward pressure on prices. The other thing it does is, as you say, makes the market work much better, so you're in your office, you're at work, you're in the factory and you think, I need to drive home tonight, will I buy tonight or will I buy tomorrow, petrol's going up by 10 cents overnight, I am going to fill up tonight. Or petrol's coming down tomorrow, I'll hold off.
So it empowers consumers and gives consumers and motorists the ability to say, I am in charge, I am in charge of my purchasing decisions. Now there will still be, of course, changes in petrol prices from day to day, that is how the market works, but we need to make sure that motorists are on a level-playing field. At the moment service stations all share the information, they all know exactly what each other's charging and they follow each other.
JOURNALIST:
Is that good?
CHRIS BOWEN:
Well, no, because they don't need to collude. They follow each other. They see on their website the price of petrol going up down the road so they follow. Now all that will go under FuelWatch.
JOURNALIST:
[inaudible question]
CHRIS BOWEN:
Well certainly the ACCC and the Petrol Commissioner will be closely examining the price of Singapore oil as it applies to Australian petrol and if there is a divergence, I have no doubt that petrol Commissioner will be exercising the increased powers that we gave him and he'll be doing that as soon as any evidence arises of a divergence then he'll be holding the oil companies to account.
JOURNALIST:
What can he do?
CHRIS BOWEN:
Well, what he can do is seek any document, subpoena any witness to say why you have increased these prices? And if there is any indication that it is not the market operating, that there has been some other force pushing up these prices, then all the powers of the Trade Practices Act are then available to him.
But what it does is let him get to the bottom of the petrol pricing issue and takes the doubt of it. And the ACCC by using these powers, has already put downward pressure on prices where these divergences have emerged.
JOURNALIST:
Do you think the oil companies were just - did what they did yesterday just to give you a [indistinct] because it was 24 hours after you came out and said what you said.
CHRIS BOWEN:
Oh, no, I think we see these types of variations. I come back to the point, this underlines the need for FuelWatch. If we saw a big increase like this under FuelWatch, then people would be able to go out and buy people immediately and beat this increase. At the moment, the first people knew of the increase was when they arrived at the petrol station. No wonder they don't feel they're in charge. So we need FuelWatch to undercut this sort of question.
JOURNALIST:
Is the Government planning to increase taxes on diesel and if so, how's that? How do you fell - how's that contributing to downward pressure…Is that right?
CHRIS BOWEN:
Well, I haven't seen those particular reports but there's certainly no plan to increase taxes on fuel.
JOURNALIST:
On diesel?
CHRIS BOWEN:
On fuel, including diesel.
JOURNALIST:
Just quickly, FuelWatch, the Government believes it's being proactive in implementing it…is it fair to say in the next eight months before FuelWatch comes in, to be proactive the Government should actually go to the Petrol Commissioner and ask, do you need more teeth to be able to implement a few of these powers of the business survey…
CHRIS BOWEN:
I regularly do.
JOURNALIST:
You do?
CHRIS BOWEN:
I regularly ask the Petrol Commissioner, do you need anymore powers, he tells me that the new powers we've given him are keeping him plenty busy, and he's getting on with the job.
JOURNALIST:
Just - you know, they're pretty straight forward these proposals, from your view, personally, do you think there's merit in some of them and what they've - are you… I know you'll say well, let's wait and see what happens…
CHRIS BOWEN:
Yeah.
JOURNALIST:
..do you think there's merit in what they've come up with?
CHRIS BOWEN:
Well, as I say, you need to make sure that the market is working properly. Now let's give FuelWatch a go. Let's get it implemented, let's give it a go and let's put the motorists back in charge. And then if we need more powers well the Petrol Commissioner will certainly come and ask for it, he's not backwards in coming forwards, that's why we hired him.
Thanks very much.