Luke Hartsuyker (Cowper, National Party, Deputy Leader of Opposition Business in the House) Share this | Hansard source

The government bases its entire case for Fuelwatch on advice given by the ACCC. We know the government decided to take the advice of the ACCC over the advice of four of its own departments. We know that motoring groups such as the RACV and the RAA of South Australia oppose such a scheme. We know that there are question marks as to the constitutionality of the Fuelwatch proposal. But let us take a close look at the ACCC’s advice. The ACCC produced its report into unleaded petrol in December 2007. It recommended:

... the arrangements for terminal gate price publication should be reviewed as part of the scheduled review of the Oilcode by the ACCC and the Department of Resources, Energy and Tourism.

It recommended:

... a more detailed examination and on-going monitoring of buy-sell agreements to fully assess whether they are exclusionary in nature, or have the purpose or effect of substantially lessening competition ...

It recommended:

... Commonwealth and state governments endeavour to align Australian fuel standards with appropriate fuel standards overseas.

It recommended:

... a comprehensive audit of terminals suitable for importing refined petrol in Australia.

It also recommended:

... following the audit, there be on-going monitoring of the use, leasing and sharing of terminals ...

But it did not recommend Fuelwatch. Why was that? The report said about Fuelwatch that there were a number of issues that needed to be resolved before such a scheme went national. These issues were

• limitations in the analysis already undertaken that might influence the direction of a recommendation
• the effect of a price commitment arrangement on independents
• whether regional and country markets are sufficiently competitive to benefit from increased price transparency
• the effect of FuelWatch on price cycles and therefore some consumers’ ability to predict the days of the week when prices are likely to be relatively low
• the dependence on the media to realise the full benefits of a FuelWatch scheme
• administrative and compliance costs associated with a national scheme.

At that point, it was clear that the ACCC did not support the introduction of a national scheme. The Prime Minister’s current position is that the ACCC supports the scheme and that it will save 1.9c per litre based on the experience in Western Australia.

Let us look at the regulation impact statement, tabled last week by the Assistant Treasurer. I refer to the impact analysis of option 1, which was to introduce price transparency and price commitment rules—essentially, the Fuelwatch scheme. Paragraph 59 says:

It is possible that the introduction of this option may have anti-competitive effects. Whilst consumers may benefit from potentially greater levels of competition and reduced search costs these benefits may be offset by potentially adverse anti-competitive effects. Most importantly, the provision of this taxpayer funded service creates greater opportunities for price coordination amongst retailers, especially in more concentrated markets.

Paragraph 60 says:

Independent petrol retailers provide some evidence that FuelWatch has not enhanced competition in Western Australia and has, in fact, harmed the competitive position of independents as it allows large operators to adopt a strategy of rolling price leaders.

Paragraph 61 says:

The absence of significant levels of competition in regional and rural petrol retail markets means that consumers in these areas are less likely to benefit from increased price transparency.

Paragraph 62 says:

This option presents some risk of higher prices in rural and regional areas resulting from the creation of greater opportunities for price coordination …

It comes as some relief to read in paragraph 63 that for that reason the national scheme would cover only some 72 per cent of retailers. It will not cover most of rural and regional Australia. Since then we have learnt that the Prime Minister has said that local councils will have the option of taking part.

‘Here’s where we stand,’ according to the statement tabled by the Assistant Treasurer. It is not a national scheme at all. There is no mention of price reductions. It will not cover most of rural and regional Australia, where people are more dependent on their own transport. At the time the impact statement was written, it seemed clear that some of the ACCC’s reservations had been found to be valid as to why a national scheme should not be introduced.

Let us turn to the analysis on which all this rests: the analysis which the Treasurer says is so much better than that provided by four government departments. Last week we were given what the Assistant Treasurer described as the comprehensive econometric analysis more recently conducted by the ACCC. But it was not comprehensive at all. What was released by the ACCC and tabled by the Assistant Treasurer was a summary of further analysis—a glorified press release, if you like. No-one can tell from what was released whether it is a convincing analysis or not, but one or two flaws are evident. The ACCC’s numbers are based on unweighted averages, not averages based on the volume of fuel sold at a particular price. It is one thing to know the price but it is an entirely different thing to know how many motorists are buying at that price.

If FuelWatch in Western Australia is working then more people should be buying at a lower price, but are they? That is a very good question. Let me again quote from the government’s own document—the regulation impact statement, tabled by our good friend the Assistant Treasurer. In turn that statement quotes an independent survey of urban consumer perceptions and purchasing practices undertaken in November 2007 by ANOP Research Services. It says:

• 72 per cent of consumers in cities other than Perth always or usually try to purchase unleaded petrol when its cheapest whilst 59 per cent of consumers in Perth always or usually try to buy petrol when it is cheapest …

So in Perth, where FuelWatch has allegedly been such a roaring success and motorists are logging onto the website and speeding off to make an empowered choice, more people are buying expensive petrol. I find that quite confusing. In other cities where motorists have to struggle on without Fuelwatch and, according to the Prime Minister, are at the total mercy of big oil, more motorists are buying cheaper petrol. When you drill down into this phenomenon it becomes a whole lot more interesting.

The reasonable man or woman—or the man on the Mount Druitt omnibus—would expect that Perth motorists would be purchasing fuel at the low point of the cycle. They know where the cheap fuel is—they have looked it up on the website. They know a day in advance what the price will be and they know that that price has been locked in for 24 hours. So, according to the Prime Minister and according to the Assistant Treasurer, with all of this immense power and weaponry that FuelWatch has provided, or allegedly has provided, they should be buying cheaper petrol. But, in fact, the rhetoric is not matched by the reality.

Let us look at this a little closer. According to figures from August 2007, for example, some 34.5 per cent of motorists in Sydney buy in the lowest percentile band in the fuel cycle. The comparable figure for Perth is only 18.1 per cent. So it is 34.5 per cent in Sydney versus 18.1 per cent in Perth. Let us look at the next percentile band, between 10 and 20 per cent: some 14.9 per cent of motorists in Sydney and only 8.5 per cent in Perth buy in that band. In the third percentile band, between 20 and 30 per cent: in Sydney some 15.9 per cent of motorists purchase in that band and in Perth only 9.8 per cent do so. So, to summarise those figures, in the lowest 30 per cent of the fuel cycle we have motorists purchasing some 65.3 per cent of their petrol in Sydney as compared to 36.4 per cent in Perth. This is a curious outcome. People in Perth, despite all those factors that we talked about previously—despite being notified a day in advance what the price would be, despite knowing where to get the cheap petrol and despite knowing that that price is locked in—are paying, relatively, a higher price within the fuel cycle.

If you do not believe me or the government’s own regulatory impact statement that the ACCC’s work is unreliable then let us turn to the Institute of Public Affairs and one of its senior fellows, Professor Sinclair Davidson. He has looked at the ACCC analysis published as part of its report into unleaded petrol in December last year and the additional analysis published on 29 May. He said—and this is quite enlightening:

The ACCC data has not been released to the public, nor have they been very clear as to what analysis has been done. The ACCC has been vague in reporting their econometric techniques and have simply published tables, expecting the public to accept their analysis on face value …

Let us be clear what he is talking about. He is talking about what the Assistant Treasurer described as a ‘comprehensive econometric analysis’ by the ACCC when he tabled its report. As I said earlier, it is nothing more than a glorified press release. Professor Davidson also said:

• The ACCC analysis is not convincing.
• The ACCC analysis remains unconvincing after 29 May—the new analysis is even vaguer than the original analysis released in December 2007.
• The ACCC did not test for a “Coles effect” in their December 2007 analysis.
• The Coles effect totally dominates the FuelWatch effect.
• The ACCC claim to now test for a Coles effect, but do not say what test they have actually performed.

His own conclusion is:

... it appears that FuelWatch has had no effect on the average monthly price differential in WA relative to the eastern states.

What we had in the 2007 report was the unvarnished professional view of the ACCC, which was guarded about the value of Fuelwatch. Only last month, its chairman, Graeme Samuel, told the ABC that Fuelwatch was not about saving motorists money. He said it was a process ‘whereby consumers might be able to shave 1c or 1.5c off their fuel costs’. Then in the words of Professor Davidson we get an even vaguer analysis from the ACCC which purports to support the Prime Minister’s claim that it will save 1.9c per litre but, of course, not in rural and regional Australia.

What we are now getting from the ACCC is a view that seems to be in a state of evolution. Could it be due to pressure from the Prime Minister, desperately casting round to find evidence to justify his elaborate hoax on the Australian people? His own department does not support it. The Department of Finance and Deregulation does not support it. The Department of Energy, Resources and Tourism does not support it, nor does the department of industry. Here you have the ACCC as the sole defender of the PM’s position. As we watch the evolution of this, it is interesting to note my correspondence with Mr Brian Cassidy of the ACCC. It was quite informative. I wrote to Mr Cassidy on 22 April and asked him a very good question. I said:

Could the ACCC provide me with the latest data and ACCC analysis regarding Fuelwatch’s effectiveness in providing cheaper fuel for motorists and greater transparency in fuel markets?

Did Mr Cassidy provide volumes of research, meticulously done, peer reviewed, beyond reasonable doubt? No. When I asked him for the latest report, what did Mr Cassidy send me? He gave me a copy of this—the ACCC’s report back in 2007. I asked for the latest data and he sent me what he had last year, the very same report, which was quite surprising. The ACCC is giving the Prime Minister what he wants to hear. Despite advice from four government departments, the ACCC is telling the Prime Minister exactly what he wants to hear. In a telephone conversation as late as the first week of May, I asked Mr Cassidy:

Were the results of testing since the report of December 2007 more compelling, less compelling or consistent with the results reflected in the report?

That was a very good question. He advised me that the results were consistent with the work done in the report. Given these comments and given that the work they have done since they put out the report—a report which did not recommend Fuelwatch—is consistent with the contents of the original report, the way in which the rhetoric of the ACCC is evolving seems curious. It begs the question: in a 380-page report with lots of graphs, tables and thousands of words, why in all of that was there not a recommendation to implement a national Fuelwatch scheme? In the whole of that report, you will find no such recommendation to implement a Fuelwatch scheme, the very centrepiece of the government’s attack on petrol prices.

It is also interesting to note comments today in the Australian Financial Review which I found most enlightening:

The ACCC chairman acknowledged that he and other commission members had criticised the West Australian FuelWatch plan but said the new position—

their new post-Rudd position, I suspect—

was a response to last year’s inquiry into petrol prices ...

How could that be? They had their opportunity to comment on Fuelwatch in that report and the report did not recommend Fuelwatch. Mr Cassidy has informed me that since that report the data that has been received and developed is consistent with what is in that report. So upon what grounds would they be changing their position? The article goes on:

... which included the first detailed ACCC analysis of petrol prices since the WA scheme was introduced ... ‘Yes, our position changed on a whole range of issues’—

there is no doubt about that—

he told The Australian Financial Review , adding that it would have been a ‘complete and utter waste of time’ if the ACCC had gone into the petrol price inquiry with an unmoveable position.

We are not so much concerned about what their position was going into the petrol inquiry; what is of more interest is their position coming out of it. The report did not recommend that there be a Fuelwatch scheme, but somehow the ACCC seem to be shifting their position. And the ACCC is yet to answer that good question: if Fuelwatch is so compelling, if the ACCC’s findings are as compelling as the Treasurer says they are, why was a proposal or recommendation to incorporate a national Fuelwatch scheme not up in lights as recommendation 1? You would think, as Fuelwatch has been adopted as the centrepiece of the government’s proposal to attack fuel prices, that a proposal for a national Fuelwatch scheme would have been recommendation No. 1. The ACCC have not answered that question and the reason is that Fuelwatch is nothing but a fraud. It is nothing but a hoax, nothing but a confidence trick on the Australian people. It is a policy advocated by a Prime Minister, who wants to take pressure off himself rather than taking pressure off families, pensioners, self-funded retirees and carers. It is all about pressure on the Prime Minister; it is not about pressure on average Australians. It is a scheme that will push up the cost of motoring for motorists in regional areas.

I speak in particular to the new members opposite. To this point in your parliamentary careers you have been bit players in a carnival of symbolism, but I can tell you that the rubber is going to hit the road now. The people who sent you to Canberra expect better than a scheme that is a fraud and a hoax. The people who sent you to Canberra expect you to fight on their behalf. The people who sent you to Canberra are looking for relief on petrol prices. They are looking for a 5c a litre reduction in the fuel excise. They are not looking for a scheme that is nothing more than a fraud or a hoax.

The members opposite will be judged. If the new members talk to the old hands they will be told, ‘You don’t have to win every fight. Politics isn’t like that: you win some, you lose some. Your electors can certainly be understanding about the fights that you do not win. But sure as hell, they will want you to try on their behalf.’ And falling in behind the Prime Minister’s hoax on Fuelwatch, toeing the party line when motorists are hurting so badly out there, and supporting a scheme to take pressure off the Prime Minister rather than taking the pressure off families is certainly going to win those opposite no credit within their electorates.

No doubt if you walk down the main street of any town that you represent there will be few people, if any, who will say to you in all conscience that the Prime Minister is taking real and meaningful action on fuel prices. Fuelwatch is a scheme that will push up the cost of motoring. It is a scheme contrived by the Prime Minister to his benefit, not the benefit of Australians. Why else would he fail to guarantee that motorists would not be worse off? This is nothing but a fraud.

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