Canberra can do more to cut petrol prices
As we enter an election year it’s opportune to reflect on the Federal Government’s track record on petrol issues. In doing so, it will become very obvious that the Federal Government, like the previous government, has been fumbling the ball very badly on petrol issues and motorists are paying the price.
Let’s start when the Labor party was in opposition.
Grand promises were made and expectations raised amongst the voters that Labor was different to the then Coalition Government. Kevin Rudd, Wayne Swan and Chris Bowen promised us a “tough petrol cop on the beat.” Great, you may have thought! The only thing is that we already supposedly had a “competition cop” on the beat. It’s called the ACCC.
So, why did we need a “petrol cop?” Well, either Labor thought that the existing cop was not “tough” enough or Labor needed a gimmick on petrol to take to the election. Now if Labor felt that the ACCC was not tough or strong enough then obviously the new petrol cop would need new powers or perhaps a new website to tell the world how vigorously the cop was watching petrol prices.
That was all before the election. With Labor now installed in Government it was crunch time for Chris Bowen, the new competition Minister in the Rudd Government. A search for a Petrol Commissioner was promptly started. The search ended with the appointment of Pat Walker, one of the architects of the WA Fuelwatch website. So Chris Bowen was hoping to find himself both a petrol cop and a website at the same time.
All seemed to be going well for Chris Bowen until things started to unravel. First, Pat Walker resigned for personal reasons within months and Bowen’s Federal Fuelwatch scheme was in trouble in the Senate. Now the game had changed for the Federal Government and Bowen was left holding the hot potato.
A new search was started for an even “newer” Petrol Commissioner and the “old” competition cop was heard telling us how “good” the Fuelwatch scheme was going to be for motorists. The only problem was that the same ACCC had, under the previous Government, told us that Fuelwatch was not the way forward. So now we had the ACCC apparently contradicting itself, but conveniently that fitted in with the Federal Government’s need to “sell” Fuelwatch.
Now, of course, the ACCC is entitled to change its views following, for example, “new” evidence, but that unfortunately calls into question other positions taken by the ACCC at one point in time, only to be changed at a later point. Did the ACCC get it wrong in the first place? Did the ACCC miss vital evidence at first instance? Was the initial ACCC analysis not as rigorous as it could have been?
Anyway, the point is that the ACCC needs to get it right the first time and any “changes” of ACCC views need to be extremely rare lest confidence in the ACCC or its independence is shaken.
With increasingly belligerent attempts by Federal Government to sell Fuelwatch failing and ultimately doomed, the Government turned to Joe Dimasi, a long serving ACCC economist, as the next Petrol Commissioner. Was Mr Dimasi to be given new powers? Yes and no, and not really.
Yes; the ACCC was given the power to “formally” monitor unleaded petrol prices. Wow, the power to “formally monitor.” Sounds impressive doesn’t it. But given that the ACCC tells us that it has always “informally” monitored petrol prices, all we are getting with formal monitoring is, at best, more “watching” and, at worse, just a new name for the watching and an attempt to make us feel that “something” is being done.
Yes; the ACCC was given the power to put those participating in a cartel in jail, but we have heard nothing from the ACCC about it using that power in the petrol industry. We are just told by the ACCC that they are “not at liberty to discuss cartel prosecutions.” Fine, we don’t want to jeopardise prosecutions by inappropriate disclosure, but we need more than a “trust us” approach from the ACCC.
No; the Federal Government has not yet made changes to our competition laws to deal with anti-competitive “price coordination” behaviour, changes that the ACCC itself recommended in its 2007 Petrol Report. The ACCC even went so far as to provide a draft of the necessary statutory changes. Chris Bowen issued a consultation paper early last year, but the current Competition Minister, Craig Emerson, is yet to follow up despite being in his new role for over six months. Delay by the Federal Government in implementing the ACCC recommended changes means that by necessary implication the ACCC’s legislative power currently falls short of what’s needed to effectively deal with the corporate crooks ripping off motorists.
No; the Federal Government and the ACCC have failed to break up the oil company cosy club at the wholesale level. The oil companies have a stranglehold at the wholesale level and their commercial arrangements at that level raise competition concerns, concerns that the ACCC itself identified in its 2007 Petrol Report.
No; the Federal Government and the ACCC have failed to ensure complete transparency on wholesale pricing by the oil companies. The wholesale price at which petrol retailers, especially independents, buy their petrol from the oil companies is critical in determining how competitive the retail prices are to motorists. It’s simple really, inflated wholesale prices lead to inflated retail prices.
So in this election year the Federal Government can do so much more to keep petrol prices down. Minister Emerson has all the ACCC’s recommendations and legislative proposals to implement so the sooner he does that the better off motorists will be!
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