TREASURER:
The Government will be introducing legislation as early as tomorrow, which will set up a scheme under which grants can be paid to petrol retail stations in regional and remote areas, which will allow a tiered grant, one cent a litre, and two cent a litre. If necessary there could be a requirement for a three cent a litre tier. But one cent a litre in regional, and two cent a litre in remote, which will ensure that for consumers, as a result of tax reform, petrol prices need not rise. Now, for consumers, particularly in regional and remote areas of Australia, that’s a benefit of some $500 million over four years. And for consumers it means, whether you live in remote Australia or regional Australia, you’ll have the benefits of tax reform, and petrol prices as a result of tax reform need not rise. Of course, if you happen to be in business, wherever you are in Australia, and if you’ve got a car in the business, and it’s used for the business, then the costs will fall by about 10 per cent, because business gets all of its GST back. And if you happen to be in rural or regional Australia, transport costs will also be reduced because we’re reducing the excise on diesel used by trucks from 44 cents a litre to 24 cents a litre. So, that’s a $1.9 billion reduction in petrol and diesel excise, plus $500 million benefit of grants to retail petrol stations in regional and remote Australia, which will deliver in full the Government’s commitment to ensure that petrol prices need not rise as a result of tax reform.
JOURNALIST:
What will be the reduction in the petrol excise Treasurer?
TREASURER:
The reduction in the petrol excise will be set for metropolitan area, so that the reduction in the petrol excise will, with the introduction of the GST, will equalise the price back to the price at the time we strike it. And with the grants in the regional and remote area, equalise the price back on the same excise reduction.
JOURNALIST:
Mr Costello, what (inaudible) that this will work when there’s been criticisms made, say, in the South Australian scheme?
TREASURER:
Oh, this will work because it’s a simple, straightforward scheme. In metropolitan areas what you do is, you reduce the excise and add back the GST, so that prices need not rise as a result of tax changes. In regional and remote areas, the price effect could be one or two cents or less. And if you’re paying one or two cents per litre by way of a grant, it equalises it back, and in some cases, could actually, when it is passed on in full, be better for the consumer. But we want to make sure that you’re no worse off. Some people will be better off, and that’s a bonus.
JOURNALIST:
What’s your mechanism for ensuring it is passed on, because the criticism about South Australia, and David Cumming from the RACV said, it isn’t passed on, grants like these go into the hands of the operators?
TREASURER:
Oh, you’ve got to make sure that the retailers pass the benefit on . . .
JOURNALIST:
How do you do that?
TREASURER:
. . . and we have set up a scheme with the Australian Competition and Consumer Commission where people will be able to report on a hotline, where the Commission has powers to prevent misleading deceptive conduct, and where there are $10 million fines available. I think, the Minister for Financial Services and Regulation announced today some of the actions that are being taken by the Australian Competition and Consumer Commission. In relation to that, that’s a very active body with wide powers and heavy fines at its disposal.
JOURNALIST:
Mr Costello, on what basis have you determined that $125 million a year, $500 million over four, will be sufficient to cut out the differential between the city and the country?
TREASURER:
On the basis of the prices in all of the areas where it’s currently collected at the moment. The price of petrol is collected through hundreds of sites in Australia, and I think it’s actually published, I’ve certainly seen those prices that are collected. And if you look at those prices, we’re able to tell you quite precisely in a particular location what the average price has been over a month, and so we are able to quite precisely target to those petrol stations, a grant of either one cent a litre or two cents a litre, which will ensure that in the regional and the remote, the price will be equalised so that no one need be worse off after the grant has passed through in full.
JOURNALIST:
How would you decide who’s regional and who’s remote?
TREASURER:
We have a mechanism which we’ll be putting into the regulations which will define this quite precisely, but the essential rule is, in regional, that is outside the suburbs of the major metropolitan areas, it’s one cent a litre. In the remoter areas, where the price is accordingly high, at two cents.
JOURNALIST:
Treasurer, what does it do to the current differential between metropolitan and rural? Will this formula maintain it with that same differential . . .
TREASURER:
Should make sure that the current differential gets no worse. We’ve been putting in place measures to reduce the current differential. And let me just remind you some of the things that we’ve done. We accepted an ACCC recommendation that price should be opened up to all comers by the oil companies. We got the oil companies to agree to that. We also accepted the ACCC’s recommendation that you needed to get economies of scale at the retail end, so that you’ve got more competition in retail areas in country zones. And our proposal to allow that to occur was defeated in the Senate. The Labor Party, as you recall, defeated that in the Senate, which as a consequence meant that our proposals, which would have reduced the margins, were defeated. Politically defeated by Labor in the Senate. So, we’ve had some partial success in implementing our policy, but this is a policy which will ensure that the differential doesn’t widen.
JOURNALIST:
How much is the whole scheme going to cost the Government?
TREASURER:
$500 million over four years.
JOURNALIST:
The whole three-pronged?
TREASURER:
Well, if by the "three-pronged" you mean, the reduction in costs on diesel transport and the reduction to business, the cuts which were featured in ANTS, the diesel and excise cuts are $1.9 billion per annum. $1.9 billion in cuts in diesel and petrol. And the grants scheme costs $500 million over four years.
JOURNALIST:
What about costing the excise if the excise, in the election you talked about a seven cent excise, it’s going to be struck at the time of this legislation, if it goes higher than that there will be a cost.
TREASURER:
It will be struck at the metropolitan rate at the strike date.
JOURNALIST:
Which will be when?
TREASURER:
Well, the Government’s going to retain flexibility to set the strike date. It’s going to be before 1 July, I can assure you of that. But, we don’t want to telegraph our punches, just in case anybody decides to try and drive up the price on a particular strike date. I wouldn’t like to actually telegraph to producers or retailers which day they could choose to drive the price up. So, I’m going to be announcing it, which will be a price at a particular time, but it’ll be before the 30th of June. And I don’t recommend that people try and drive it up between now and the 30th of June, on every day between now and then, there’ll be a particular day.
Thanks.