SUBJECTS: Petrol Prices, Petrol Commissioner.
GARTH RUSSELL:
Well Chris Bowen is the Assistant Treasurer and Minister for Competition Policy and Consumer Affairs and he joins me this morning on the program.
Chris Bowen, good morning to you.
CHRIS BOWEN:
Good morning Garth, good to talk to you.
RUSSELL:
Associate Professor Frank Zumbo - is he right, could more be done? Have you been a bit quiet on this given the fact that we have seen oil prices drop amazingly and maybe not so much at the bowser, even though the Australian dollar of course as we know has dropped.
BOWEN:
Oil companies aren't angels, and they don't always pass on reductions, and when they don't the ACCC and the government hold them to account.
We need to be very careful here when we do make that accusation we deal with the facts, because otherwise it undermines our credibility when we go to the oil companies and say 'hang on you are not being fair dinkum to the Australian people', unless you are very clear on your facts then accusations like those made by Mr Zumbo undermine those of us which are trying to keep the oil companies to account.
Now let's have a look at the facts. Over the last couple of months, as you say, the price of oil has come down substantially. And what we look at is the comparison between a Australia and Singapore, because that is where the Australian companies get most of their petrol from, is from Singapore.
Now there have been big reductions in the Singapore price, and there have been reductions in the Australian price. But unfortunately the Australian dollar has declined very substantially in the meantime as well.
So if you look at the peak in Singapore prices, that was on the 13th of July this year. Since then the price of Singapore petrol has reduced by $102. Now if the exchange rate had remained the same that would mean that petrol in Australia would have fallen by about $.68 per litre, but the exchange rate hasn't remained the same, it has fallen by about $.30 a litre, which means the price of Singapore petrol in Australian dollars has decreased by $.54 per litre.
Now that is pretty close to the reductions we have seen in the price of Australian petrol. So the reductions at the moment are being passed on. As I say, I am not here to defend oil companies, they aren't angels, and they don't always pass reductions on. We have given the ACCC increased powers to deal with that. But when we are making those accusations we need to be very careful because if I go out and make an accusation that the oil companies are not passing their reductions on, I need to be very clear on the facts and unfortunately Mr Zumbo is just plain wrong at the moment.
RUSSELL:
Do the oil companies have any answers? Do they have to answer to us, or to you, or to the ACCC if they decide to make more money for their petrol? If their wholesale prices have dropped, and they don't necessarily pass it all on?
Realistically, do they have to be accountable?
BOWEN:
We work in a market economy, and I know Mr Zumbo's answer is for the government to set the petrol price - I don't agree with that, which would go back to the 1970s. But what we have done is increase the powers of the ACCC, to say 'listen we want to see your books, we want to go through all the answers, if you say you are passing on the reductions, we want to see it'.
And we have given the ACCC those powers, and they use those powers, and they hold the oil companies to account.
When the oil companies aren't passing on the reductions the Petrol Commissioner is very active - I talk to him almost every day - he is checking the oil companies' figures every day. Then when we say to them, 'hang on a second, we don't believe you, this isn't fair dinkum, you have got to pass this on'.
We have found in the past with the Petrol Commissioner or the chairman of ACCC has done that, we have seen the reductions flow through.
RUSSELL:
Is there an argument that is to be more common knowledge as to what is going on behind the scenes, hearing more from the Petrol Commissioner which was something else Frank Zumbo suggested you could do more of?
BOWEN:
We have had two Petrol Commissioners, the first one unfortunately had some family issues which caused his resignation, the second one is now formally in the job, so he continues to be very active, and he will be very active over the Christmas and New Year period, letting people know what's going on. He has only just started and he will continue to do the job.
RUSSELL:
I'm wondering how the Federal government feels, in the economic climate that we are in, with a number of handouts billions and billions of dollars that are being handed out - how frustrating it could be if the oil companies aren't playing the right game, and relieving some of the pressure that has been felt on the average Australian economically.
BOWEN:
Look certainly that was the case, I'd be very angry. And the Petrol Commissioner would be dealing with.
I can only stress Garth that we need to deal with facts here, it is very tempting to me to go out and to condemn all companies every day, I have condemned oil companies when they haven't passed on reductions in my view, and in the view of the ACCC.
But where it is not happening I'm not going to go out and say that it is and I stress that we all need to be very careful that we deal with the facts. Mr Zumbo is very keen to become a player in the political field, he is becoming more and more a political commentator, that's fine but we can't let phoney facts get in the way what we are trying to do.
RUSSELL:
Okay, so no argument for the ACCC to have more powers?
BOWEN:
Look if the Petrol Commissioner came to me and said I need more powers to do my job, I would give them to him.
If the Petrol Commissioner says I have all powers I need at the moment, we can't go back to the days where politicians sit around setting the prices of things. That is just a recipe for disaster in my view. The market determines these things, what we need to do is make sure that the market is working, and make sure there is enough competition in the market.
That's what we spend a lot of time doing, and will continue, there is a lot more to do, but we have made a lot of progress in the first twelve months at the same time.
RUSSELL:
Chris Bowen I appreciate your time this morning
BOWEN:
Thanks for your time.