We need CarbonWatch to stop price gouging
With the debate raging about the carbon tax and whether the initial carbon price of $23 will lead to any meaningful reductions in greenhouse tax emissions, a new front has opened up in the debate concerning the real possibility that businesses will use the carbon tax as an excuse to price gouge.
Price gouging is already a problem in such areas as petrol, airport parking and even groceries. The petrol rip off is now ongoing in many regional areas and even in the city average petrol prices do not come down as quickly as they should when there are falls in the Singapore benchmark price used to calculate local prices.
Airport parking rates keep going up and visitors to major airports are held hostage to the monopoly power of the airport owners who get nasty with parking infringements if you dare to pick up a loved one from the “wrong” area.
Monopolies don’t hesitate to extract the maximum pain from their victims, better known as consumers.
Then we consistently have some of the highest levels of food inflation in the developed world. Sure we get a few gimmicks from Coles and Woolworths about home brand milk and bread, but what’s happening to price of the 20,000 items or more in a typical Coles and Woolworths supermarket?
Even small price increases across the product range can mean a big rip off that can easily offset the tiny savings on a few highly publicised products.
With the strong Aussie dollar imported products should be cheaper on supermarket shelves. Do we know if we are getting ripped off because Coles and Woolworths are not fully passing on any savings from significantly cheaper imported products?
Of course, we won’t always know because Coles and Woolworths have consistently failed to publish all their prices online for us to track both the price changes and games that they may play across the entire supermarket range.
The ACCC is no help when it comes to consumer rip offs as the standard line from them is they can only act when there is evidence of wrongdoing. Even more troubling is that the ACCC often expects us to provide the evidence for them to review. What about the ACCC actually going out and looking for the evidence themselves?
Wayne Swan likes talking about a tough cop on the beat, but we see very little of the ACCC chasing down and exposing consumer rip offs. We hear very little from the ACCC Petrol Commissioner when local prices should be falling in line with the Singapore benchmark price.
With regional petrol prices in places like Alice Springs up to 25 cents a litre more expensive than the cheapest regional towns in New South Wales you would think that the ACCC Petrol Commissioner would visit Alice Springs.
Perhaps the ACCC would like to keep their carbon footprint to a minimum preferring not to travel too far from their capital city offices.
So who is looking after regional Australia and making sure that those in regional areas are not being ripped off? When is the last time a regional town got a visit from the ACCC Chairman or Commissioner to stamp out a consumer rip off?
Why the question? Well, last week Wayne Swan came out and again used his favourite line about the ACCC being your cop on the beat. This time Swan was telling us that the ACCC had been given additional funding of $12.8 million over four years to watch over claims that may be made by business regarding carbon tax-induced price increases.
There you have it. Carbonwatch!
The ACCC will be watching over carbon tax price increases. More watching from the ACCC. With all that watching you would expect the ACCC to be quite proficient at watching.
Well, if the failed FuelWatch and GroceryChoice debacles are anything to go by we need to be a bit sceptical about the ACCC’s price watching abilities. GroceryChoice in particular was an absolute disaster and the ACCC needs to take much of the blame. That debacle wasted millions of taxpayers’ dollars.
Can the ACCC lift its game under CarbonWatch? Time will tell, but any ACCC watching of carbon tax-induced price changes can only be a gimmick to give the impression that something is being done to try and stop carbon tax-related price gouging.
The point is that the carbon tax is designed to increase prices so as to stop consumers from buying goods and services that generate or are linked to greenhouse gas emissions. Changing consumer behaviour through price increases is the essence of the carbon tax. In short, everything that the carbon tax touches will go up in price.
With prices going up because of the carbon tax it’s clear that consumers will be paying more. At an initial carbon price of $23 the cost of living is expected to go up on average $9.90 in the first year.
That cost of living increase will grow as the carbon price is indexed in the first 3 years and then will skyrocket as we move to an emissions trading scheme where the carbon price will be traded.
Clearly, the price of carbon tax-related goods or services will go up and very likely to go up substantially. That means that Swan will be spending $12.8 million of taxpayers’ money so that the ACCC can watch prices go up.
Of course, the ACCC will say that they will “deal with” any business that misleads consumers about carbon tax-related price increases.
With businesses being able to show that the carbon tax will raise electricity prices, as well as the cost of other business inputs, it’s clear that businesses will not be misleading consumers when they say that goods or services are going up in price because of the introduction of the carbon tax.
At the very least, businesses will be able to say that any price rise is partly carbon tax related.
So while the ACCC will be vigorously watching businesses, the carbon tax-induced price rises will keep coming. That will put family budgets under increasing strain with many families immediately out of pocket.
Even those receiving compensation will be wondering if the Federal Government will keep increasing compensation in line with the sky rocketing carbon price under an emissions trading scheme.
Then there is still the problem of highly concentrated sectors of the economy where the dominant market players can push up prices at will because of their considerable market power and share. These players will continue to rip off consumers. What are Swan and the ACCC going to do about that?
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