Louise Pratt (WA, Australian Labor Party) Share this | Hansard source

The incorporated speech read as follows—

I rise to speak on behalf of the National Fuelwatch (Empowering Consumers) Bill 2008 and related bill.

The Rudd Government is determined to do everything it responsibly can to put downward pressure on petrol prices and ease cost of living pressures on working families

There are about 15 million vehicles on our roads and 90% of homes with at least one car in the garage —so petrol is an inescapable cost for many, many Australians

In these difficult economic times, motorists are very keen to find the cheapest petrol in their area.

On any given day there’s roughly a 20 cent difference the cheapest and most expensive petrol in Australia’s capital cities.

A difference of 20 cents per litre is worth $12 on a 60-litre tank of petrol

In the context of a tight family budgets, that is a very significant difference

However, as thing stands, motorists have no sure way of finding the cheapest petrol in their area

They are left scratching their heads on where to find the cheapest fuel and when price hikes are to occur

If Senators support this Bill that will change

No longer will a motorist drive past a petrol station in the morning only to return in the afternoon to find a ten cent per litre jump in the price of petrol

Motorists will be able to find out, with certainty, where petrol is cheapest in their area and when petrol is going to rise the next day, and they will have up to 15 hours to buy before the rise and thus save money

Fuelwatch will ensure that motorists will be able to make an informed decision about where to buy the cheapest petrol, at the cheapest petrol stations, at the cheapest times.

In addition to the introduction of this legislation, the Rudd Government has also undertaken two other significant initiatives aimed at ensuring that working families do not have to pay a cent more than they have to for petrol

Firstly, the Minister has provided the Australian Competition and Consumer Commission (ACCC) with tough new powers to conduct formal monitoring of petrol prices, costs and profits, and to report its findings to the Government every year for the next three years.

This will help improve retail price transparency and understanding of retail price movements

Secondly, in March 2008, the Government established the role of Petrol Commissioner to the ACCC.

The Petrol Commissioner’s responsibilities include the oversight of the ACCC’s formal monitoring of unleaded petrol prices in Australia as well as providing an annual report on its findings.

The Petrol Commissioner is able to scrutinise documents and other information from any participant in the petrol supply chain whenever it is deemed necessary to ensure pricing is consistent with international benchmarks

The Petrol Commissioner is also responsible for advising the Government on whether any further powers for the ACCC in this area are necessary or desirable.

The Petrol Commissioner will also oversee the introduction of the National Fuelwatch Scheme envisaged under this legislation

The Rudd Government is convinced that there is a need to promote competition and transparency in the retail petrol market

The fact is that the ACCC has found that an imbalance in fuel pricing information between petrol retailers and consumers exists at the retail level

Current arrangements allow sellers to react more quickly than consumers to movements in retail fuel prices.

The capacity of consumers to take advantage of the most competitive, lowest prices in their local area is limited by intraday fuel price movements (sometimes as often as three or four times per day) and the amount of effort and search costs motorists are willing to incur

In the current market large petrol retailers purchase information on competitors pricing every fifteen minutes.

This means that many of those selling fuel have access to detailed information that tells them in virtual real time what their competitors are charging

With volatile petrol pricing, retailers can use this information to maximise profits

They can, in effect, swap prices on a secret website that consumers have no access to

Consumers, on the other hand, rely on a range of media and websites—not always accurate or up to date—or the existence of the usual fuel cycle to buy on ‘magic’ Tuesday for the cheapest petrol.

Sellers know that that motorists generally don’t know if they are getting the best price or not, which reduces the incentive to offer the lowest possible price

The Fuelwatch scheme, incorporating the 24 hour rule addresses this issue.

For this reason, the Senate Economics Committee, of which I am a member, believes the 24 hour rule is an integral part of the Fuelwatch scheme

It is this rule that allows consumers to plan and to have certainty that they will get the cheapest price.

It is this rule that allows consumers to vote with their wallets —rewarding those who offer good prices and putting pressure on those who do not

It defies common sense to argue, as the Opposition has done, that there is no need to freeze each petrol stations prices for 24 hours to get the benefits of Fuelwatch

To argue that pricing information on the internet alone is enough

Information without a price freeze in no information at all—because that information can change the second after a consumer looks it up

In short, the current information imbalance results in consumer detriment due to the negative effects on competition and consumers

And the primary aim of Fuelwatch is to address this imbalance between petrol retailers and consumers

Contrary to the rhetoric of those opposite, the objective of the government in introducing this legislation is not, and never has been, to guarantee lower petrol prices

Phillip Coorey noted in the Sydney Morning Herald on the 16th of April, the day after the National Fuelwatch scheme was first announced by the Rudd Government, that the Government had made clear that it was not introducing the scheme in order to guarantee reduced fuel prices

And the Rudd Labor Government’s position on that point has not changed since

Labor acknowledges that the price of petrol in Australia is largely determined by international factors

Rather, the Government’s objective, from the beginning, has been to put consumers on the level playing field with retailers

Our objective is to empower consumers to make informed decisions and purchase fuel at the lowest possible price by:

• increasing the reliability and certainty of fuel price information available to consumers; and
• reducing consumer search costs

Nevertheless, it is a fundamental principle of market economics that competition drives down prices and that an information imbalance between buyers and sellers is detrimental competition

It follows that, if you believe in market economics, reducing the information imbalance between consumers should increase competition and thereby help to keep prices as low as possible

As Malcolm Maiden commented in the Age on the 2nd of August, that’s why players in most modern markets accept that regulation to improve the availability of price information is both necessary and inevitable

To quote Maiden:

• The suggestion that the Government is somehow oppressing supermarket groups or petrol retailers by publishing price information about items as fundamentally important to household budgets as food and petrol is laughable.
• Any market worth its salt allows price discovery.
• It is why the Australian share market, for example, has moved from a system of periodic disclosure to one of continuous disclosure, why those wishing to buy and sell are able to access market depth information that show what shares are being offered and at what price, and why insider trading is banned around the world.

In short, Malcolm Maiden’s argument is that if the fullest practicable price disclosure is good enough for the share market, why is not good enough for the retail petrol market

That is a very good argument

And unless Senators opposite can tell us why petrol consumers are less entitled to price disclosure than those who invest in shares, they should support this bill

There is an old saying that the proof of the pudding is in the eating and seems to me that that saying is particularly apt in this case

The fact is that, in my home State, petrol consumers have been eating Fuelwatch for almost a decade and they find it very much to their taste

Surveys conducted by the Western Australian Government and those conducted by the Royal Automobile Club of Western Australia demonstrate that many, many petrol consumers use Fuelwatch and that they generally appreciate the benefits of the service

The opinion of the RAC in WA on the question of Fuelwatch, as expressed in its submission to the Senate Standing Committee on Economics, is of particular note

The RAC is independent of both the Western Australian Government and the Rudd Labor Government and represents over 680,000 motorists in WA

Its view of Fuelwatch, however, accords very closely to that of the both the Rudd Labor Government and the Western Australian Government

The RAC believes, that the major benefit of Fuelwatch is, and I quote form their submission:

That consumers can ‘take advantage of the lowest prices as:

1.

They can easily find the location of the lowest price

2.

They know that the price will still apply when they get to the site concerned

The RAC is convinced that sufficient consumers take advantage of service as to keep a downward pressure on prices and that the existence of Fuelwatch enables consumers to buy fuel at a favourable price on any day of the fuel cycle.

The Submission of the Department of Consumer and Employment protection in Western Australia points out that data drawn from the Fuelwatch database in Western Australia provides the most comprehensive picture of retail fuel prices available in any retail petrol market place in Australia

And on the basis of this data, the Department has concluded that Fuelwatch puts downward competitive pressure on fuel prices by enabling motorists to make informed decisions about fuel purchases

Not only does the RAC in WA recognise the benefits of Fuelwatch and the validity of the data provided by the Western Australian Fuelwatch scheme, so, do both sides of politics in WA

The scheme was introduced by the Liberal in WA and retained through two terms of Labor Government for one reason only —because it works

The recent change of Government in Western Australia, provided the Liberals in my home state with a ready made opportunity to review the effectiveness of Fuelwatch and to dispense with it if there was evidence that the system was not working

Well the new Minister for Consumer Protection in Western Australia is Troy Buswell

Mr Buswell, prior to the Western Australian election was a self professed sceptic in relation to Fuelwatch

And, not surprisingly given his scepticism, since the election he has sought advice from his department about the effectiveness of Fuelwatch

However, on the third of last month, the Western Australian reported a quote ‘Backflip by Buswell on Fuelwatch’ based on the advice he has received from his department

Mr Buswell was quoted as saying that the advice he had received, ‘proved that Fuelwatch was working effectively’.

Furthermore, again contrary to his previous position, he said that ending the 24 hour rule would ‘undermine the integrity of the system.’

Fuelwatch is here to stay in WA because it works and in these difficult economic times I hope and trust that the Senate will see fit to ensure that the hard pressed working families in rest of country can also enjoy its benefits.