201412.17

Transcript – Interview with Chris Coleman, ABC Mornings, Riverina

Wednesday, 17 December 2014

Subjects: ACCC Fuel Monitoring Report

CHRIS COLEMAN:

From today the ACCC will have increased powers, both to monitor and to investigate fuel prices, but does this mean you as a motorist might be able to help bring prices down for yourself and for everyone?

Let’s find out with Bruce Billson, the Federal Minister for Small Business, Competition and Consumer Affairs.

Good morning Minister.

MINISTER BILLSON:

Good morning to you Chris and Riverina listeners.

CHRIS COLEMAN:

Great to have you on and thank you very much for hanging on through some technical difficulties this morning.

MINISTER BILLSON:

Happy to, I was just thinking about your world famous Christmas dinners, cooked on the barbeque so that got me through but good luck with that.

CHRIS COLEMAN:

Thanks very much! Now, let’s talk about these new powers for the ACCC. What exactly do these mean?

MINISTER BILLSON:

It’s a change of approach. Previously the ACCC used to publish an annual retrospective examination of what has happened in the fuel markets. We didn’t think that was enough.

What we have got now are new powers, building on the assessment that market powers alone are not enough to ensure that motorists are getting efficient pricing and having their interests looked after.

This new power says to the Commission: examine what is happening in the fuel market at a quarterly basis to see where there are irregularities or peculiarities that require closer examination, and a new power to do a deep dive into particular markets or regions or particular concerns.

Whether it be around a fuel type or something that is going on, so we can unpeel the onion about what is actually happening with the great mystery of fuel prices.

CHRIS COLEMAN:

It is a great mystery and in this day and age where technology can actually be the motorist’s friend. I’ve got an app on my phone for example which details petrol prices through one company in my local area.

This morning I had a bit of a look around and found some dramatic variations between towns that aren’t, on the surface anyway, all that different. Is that the kind of stuff you’re looking at?

MINISTER BILLSON:

That is exactly the kind of stuff. Because what we are finding is that, let’s say regional centres with much the same population and therefore the same volume of fuel going through their service stations, similar distance from terminals, so that you’re not expecting a big change in transport costs and things of that kind.

We are then seeing quite spectacularly different pricing and this is causing concern for motorists. Often it might be because there is no competition in the marketplace.

We have also seen in capital cities, as the oil prices come down, the price at the bowser has come down more quickly where there is vigorous, independent competition in those markets.

What we are aiming to do is put a bright light onto these irregularities, see if there is some explanation and then see whether there is a case for the ACCC to use its additional powers.

CHRIS COLEMAN:

Let me fire this to you then, this is what I found this morning, this is not across the board, this is at one company: E10 Unleaded Temora 125.9 cents per litre, Cootamundra 137.9 cents per litre, Young 139.9, Tume at 142.9 cents.

MINISTER BILLSON:

Then if you track around Shoalhaven and places like that, you will find an even higher price. That is the kind of examination that we are empowering the Commission to carry out. I met with the Commission yesterday about what will be the work program.

We are getting input from motorists and from local members of parliament. Michael McCormack, your local member is keen to let me know what is happening with fuel prices and we have asked the Commission to bring forward a recommendation of the work program that takes account of where there are these extraordinary curiosities that are unexplained by the usual justifications that we are given by the fuel companies.

CHRIS COLEMAN:

Unleaded 91 Wagga Wagga 143.9 cents, 140.9 in Lavington and Albury 128.9 cents.

Sure the Hume Highway goes through there so that explains a bit of it…

MINISTER BILLSON:

Look you keep coming further south and go to Wangaratta, you are then finding a different picture again, it starts looking a little bit more Riverina-esque. That is a hard one to pick up and I’m not sure whether me being born in Albury has any influence on that either.

CHRIS COLEMAN:

In all seriousness, are you hoping that this time motorists basically wind down their windows at the servos and say “I’m as mad as hell and I’m not going to take this anymore” and actually do something?

MINISTER BILLSON:

Yeah that might be part of it, but what motoring organisations have been doing on behalf of motorists is pointing to these irregularities and curiosities and saying why is it so?

In some areas we have found there might be a monopoly wholesale supplier that is making rather healthy margins.

Our spotlight might say to other businesses: hey there is a market here that you might be able to make some money in, get amongst it, build the competition.

It is also something we have seen with vigorous independent fuel retailers.

You might recall the ACCC took some action regarding shopper dockets, where they were starting to get of Herculean value and people were thinking they were getting a great discount but in effect at that time we were seeing margins increase and prices going up for everyone else who was not using a shopper docket.

That now has been changed so that those discounts are within a reasonable profit margin and that everyone can compete. Now there is a billion litres more of fuel going through independent retailers.

We are wanting to understand these dynamics, work with consumers, put a spotlight on what is going on and make sure that motorists are getting value for money and are not being ripped off.

CHRIS COLEMAN:

Minister, I know you have got a fairly heavy media schedule for this morning but I do want to ask one other thing.

Am I naïve in thinking that if I buy a bar of chocolate from a supermarket in Sydney or Broken Hill or Dubbo or Wagga or Coffs Harbour, it will cost me about $2.50 plus or minus a couple of cents. If I buy a packet of biscuits it will cost me a couple of bucks, minus a couple of cents.

If I buy a litre of petrol I can pay a $1.14 in Sydney, I can pay a $1.70 in Broken Hill. Am I naïve to think that there’s something wrong with that whole system?

MINISTER BILLSON:

There is something going on that is not always in your interest and that is why we have boosted the powers for the ACCC to have a look at it.

A similar question was asked of me in Tasmania, very same point Chris. I hope you haven’t been work shopping with your colleagues down south. But they were making that same point. For other types of consumer goods the price differential isn’t anywhere near where it is in fuel.

One of the things that we have found in markets where there isn’t strong competition people charge more because they can. And this is why we are keen to put a spotlight on those competitive pressures and frankly encourage others to get in and get amongst it.

Even in capital cities, as the price of oil has come down in Melbourne for instance the bowser price has come down much more quickly than it has say in Brisbane, because you have got a much stronger vigorous independent fuel retailing market. These are the factors at play.

It is a dark mystery, it’s right up there with clairvoyance, but we are going to try and make sure we can get a better handle on it by a deep dive into particular markets where there seems to be something odd at play.

CHRIS COLEMAN:

Will this be the last Christmas where we will see these insane variations in petrol prices?

MINISTER BILLSON:

Where there is an insane variation we are going to try make sure everyone knows why and if they are not happy they can wind down their window and shout they are as mad as hell.

The consumers are empowered with their purchasing dollar to bring about change and then next year we can talk about your Christmas dinners on the barbeque.

CHRIS COLEMAN:

Terrific stuff, we look forward to it, we’ll pencil it in to have a chat next December then.

MINISTER BILLSON:

Good chat, take care.