Mark Arbib (NSW, Australian Labor Party) Share this | Hansard source

The incorporated speech read as follows—

I rise today to support the National Fuelwatch (Empowering Consumers) Bill 2008 and the National Fuelwatch (Empowering Consumers) (Consequential Amendments) Bill 2008.

As the titles states, this Bill is designed to empower consumers.

It is important to consider this aim in context, because the Rudd Government has kept this motivation at the forefront of our efforts … That is to empower Australian motorists.

Despite the recent and long awaited fall in global oil prices, over the last few years petrol prices have skyrocketed in Australia and this rise has placed massive pressure on household budgets.

A large part of household weekly expenditure is paid at the pump. Children need to get to school or sport; parents need to get to work and all need to get home again.

… Australians are now acutely aware of the cost of petrol when deciding where they need to travel … be it the local shopping centre or a trip to town.

The price of petrol is so intertwined with the daily lives of Australians that few are completely immune, it is difficult to think of life without the weekly trip to the pump.

This need however fuels another reaction at the petrol bowsers from consumers. What Australians can’t stand … what they resent more than anything… is being taken advantage of … and, unfortunately, for all they face this reality weekly.

Australians still and will always believe in the fair go. They feel that everyone should have an equal chance to deal with things as they find them … but what we see in the petrol market is one group of Australians with that chance and another group… a much bigger group … without the same opportunity.

No one is suggesting that if a petrol retailer’s costs go up they cannot raise the price of fuel. Similarly, if the demand rises it is their choice to take the risk of raising prices and the others prerogative to follow or not. This is the essence of market driven competition…

But there is another aspect of competition  it’s the ability of those at the pump to make their choices effectively and in their own best interest. Unfortunately this choice has up until now, been extremely limited.

It is this diminished opportunity that the bill before us today addresses.

Current situation - market inadequacy

Currently, many petrol retailers in Australia subscribe to a service provided by the company “Informed Sources”. This company provides a mechanism where by subscribers can access information about petrol prices… around the country… accurate to 15 minutes.

Such information allows petrol retailers to stay on top of price shifts by competitors and react to them. Understandably this information is invaluable to them… …and they pay for it accordingly.

If a retailer raises their price they can know within a quarter of an hour whether their competitors are following. If they don’t, they can drop the price back and not risk losing market share… so far so good for consumers.

However, the reciprocal situation also applies. If a retailer sees within 15 minutes that one of their competitors has raised their price, they can do so as well. In this way as the information is passed so too does the price increase.

This leads to less competition… less transparency… and little or no benefit for consumers.

Without the same immediate information the consumer’s choice is considerably weakened. The consumer cannot be expected to travel between service stations to compare prices… even if they did it may have change by the time they return.

What this situation amounts to is a disparity of information between retailers and consumers on a daily… in fact quarter hour basis…

This is a market inadequacy.

In any case where a market does not have full information or where such information is available only to a portion of those taking part … vulnerability to manipulation becomes a serious concern, the market will tend towards lower competition, and consumers will ultimately suffer.

If petrol retailers were meeting face to face… or even calling one another… and discussing where they would set their prices this would be collusion and illegal.

That a third party is involved in the form of a website is the only thing that currently saves petrol retailers from this dire conclusion.

The competition watchdog, the ACCC, calls this industry practice ‘as close to collusion as you can get’ warning bells should be ringing for all of us.

This is a straight forward proposition. Retailers currently have a clear, comprehensive and up-to-date view of the market and consumers do not. Retailers have the ability to play their part prudently and consumers cannot.

For competition to flourish both of these groups must have full and reliable information.

Fuelwatch:

The Rudd Government has a plan and is committed to ending these inequalities, that’s why we have already established the position of Petrol Commissioner with effective monitoring powers. But Fuelwatch goes even further….

Fuelwatch will help end the discrepancies that exist in the market and the scheme achieves this goal in the simplest and most efficient way… by giving consumers the information they need to make informed choices.

The legislation places an obligation on petrol stations to publish petrol price information on the Fuelwatch website… giving consumers the information they need well ahead of the time they need by 4pm, the day before the prices will be seen at the pump.

The information is readily available to the public as well as the retailers. For the first time in this industry there will be a level playing field for consumers to flex their purchasing power properly.

People want to buy petrol where it is cheapest. The chaos created by consumers in Wester Sydney last month… when 99c fuel was on offer speaks volumes about the desire that exists in the community to make choices about where and when they buy their petrol.

If possible the majority will hunt out the cheapest price for fuel. They will plan ahead… structure their travel times and routes around the purchase of fuel.

The Fuelwatch website will help with this too, allowing consumers access to maps which will allow a quick and easy formulation of a travel plan… that includes a trip past the cheapest pump.

The need for reliability is of central importance to this debate- consumers require full and reliable information on petrol prices. If the reliability of information is not fit for purpose then that information is diminished.

There has been extensive discussion in the other place about the commitment rules which underpin the Fuelwatch scheme.

There is no need to throw our hands up in the air in alarm. It is much ado about nothing…

In a situation where retailers are informed about changes in price by competitors within 15 minutes of the change there is frequent and large intra-day volatility of prices.

… And inevitably leads to frustration and anxiety for consumers who have planned their day around a certain price at a certain location … only to find the price has change dramatically on very short notice.

As I said previously, there is nothing more enraging to consumers than the feeling that they are not being given a fair go… not being given an opportunity to exercise their purchasing power.

Fuelwatch will give consumers a fair go. It allows certainty of petrol price information. It is no good to report prices to consumers at 4pm the day before with no more than a guarantee that those prices will be available at exactly 6am the next morning.

Similarly, a continuous update system like that of “Informed Sources” does not advantage consumers who have to plan ahead. Unlike petrol retailers consumers cannot adjust quickly to a change in price and therefore would draw no benefit from simply having greater knowledge of the volatility.

The fact is that a reporting system without the committal rules would be of little benefit to consumers while providing retailers with a similar anti-competitive arrangement that they now enjoy under “Informed Sources”.

These provisions are a logical good policy response to a serious imbalance in the petrol market.

Good policy also means assessing, where possible, how the policy has operated in the past.

Western Australian Fuelwatch:

The Fuelwatch model is not untested. It has been effectively operating in Western Australia since 2001.

The ACCC examined Fuelwatch WA as a benchmark for recommending a broader national application.

The first thing to note about the Western Australian example is that 83% of motorists surveyed were attracted to the idea of no intra-day fluctuation.

In other areas there has been clear support for the scheme overall. The NRMA a motorist advocacy group has lent their voice to Fuelwatch stating that NRMA research has shown that motorists using services such as Fuel Watch can save approximately $200 per year on their fuel costs.

I also note that during the recent Western Australian election, not one Liberal or National party member was opposed to the scheme.

So it appears to me that Western Australian motorists are happy with Fuelwatch… which is important… it is important because it proves the policy works-, therefore giving consumers the peace of mind and confidence that the playing field is level… like it should be.

There has also been some discussion and debate especially from those on the other side of the Chamber about whether a Fuelwatch scheme will lower prices.

It is important to reinforce that the purpose of the scheme is to level the playing field through dissemination of reliable information designed to encourage competition.

That being said, the Western Australian example once again provides important hints as to Fuelwatch’s effectiveness in this area.

The ACCC found that on average petrol prices in Western Australia were 1.9 cents lower following the introduction of Fuelwatch.

Listening to the Assistant Treasurer explain how Fuelwatch will benefit motorists, he makes a sound case.

The pricing spread—that is, the difference between the lowest and highest petrol price—can be around 20 cents a litre in the same areas of a city on the same day. For instance …

• In Perth this September, the average difference between the highest and the lowest price for unleaded petrol was 18.1 cents per litre.
• Perth motorists, on a 60 litre tank, who used Fuelwatch, could therefore have saved on average up to $10.80.
• In Sydney, where there was an average pricing spread of 19.7 cents a litre—if we had a Fuelwatch scheme, motorists could have saved up to $11.40 for a 60-litre tank.

For the Liberals and the member for Wentworth who we know is out of touch this saving is no big deal. But to motorists in city areas an average saving of around $10 or $11 a tank is worth shopping around for.

Liberals and the Big End of Town:

So what then is the opposition trying to achieve with their bid to block this bill? And more importantly what is their solution to the problem.

Time and time again in this Chamber we have seen the Liberals and Nationals side with multinational corporations and the ultra- rich over working families and those doing it tough.

We saw it in the Luxury Car debate where the Liberals tried to block the revenue measure in favour of Porsche drivers who would save around $22,000 when purchasing a vehicle.

Not bad if you can fork out the capital for a car like that, but not particularly helpful if you are buying an average family vehicle.

They teamed up with the mixed drinks industry on the Government’s Alcopops measures and to this day still oppose the policy in an attempt to try and help the large distillers.

And true to form we saw them siding with large multinationals on the condensate tax exemption.

The Liberals were content, it seems, to let a company boasting massive profits continue to benefit… from a tax concession designed in 1977… to help the regions in the North West Shelf project get established.

If the Liberals vote against the bill before us they will be voting for market inadequacy, a power imbalance and no relief for consumers. We all will know whose side they are on.

And what is their great plan to get more competition into the petrol market? Who would know? The Member for Wentworth has been Opposition Leader for almost two months and has not announced one single policy or plan.

On the issue of petrol all we have is confusion …

One minute the Member for Wentworth is like his predecessor supporting a cut in petrol excise, and then the next as recently as this weekend says he will discard it. The member for Wentworth has no ideas and no solutions on petrol, all he has is rhetoric and bloody minded opposition.

The Rudd Government refuses to go down that path and will stand up for motorists.

Conclusion:

Fuelwatch has proved successful in Western Australia. There is no “Informed Sources” type arrangement in WA because none is needed. The information for retailers is there… the information for consumers is there… and the market operates effectively with increased competition and benefit for consumers.

This bill is designed to broaden that benefit to the rest of the country.

All of us want an even chance to act in our own interest. It is reasonable to expect that information so necessary to consumer choice be readily available.

Fuelwatch is a clear and efficient way of disseminating pricing information. It is working in Western Australia. It will work on the national stage.

For these reasons I add my support to this bill and urge members opposite and around this chamber to accept the severity of the problem, acknowledge the fairness of the solution, and act decisively to support consumers in these tough times.