Page 2048 - Week 07 - Tuesday, 28 May 1991
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Arguably then, Mr Speaker, there is room to examine the retailing side of petrol distribution in Canberra, but to prescribe either a maximum retail margin or a maximum retail price would ignore other dynamics in this industry, particularly root causes at refinery level. Nevertheless, sudden chain reaction pump price fluctuations in Canberra cast doubt upon the credence of true competition between service station proprietors.
Sudden large price increases also raise the question of social justice - an issue put to the PSA recently. The importance of petrol price falls and rises to ordinary people and ordinary business was illustrated in the March CPI figures, which showed a quarterly rise of 0.5 per cent attributable, on my advice, to falls in petrol and mortgage interest charges.
The ACT Consumer Affairs Bureau is continuing to work with the PSA and the Trade Practices Commission on the question of retail pricing arrangements. The TPC is also addressing the matter of alleged wholesale collusion in Sydney whereby anti-competitive practices are employed for commercial gain.
These alleged practices are described by industry as discounting wars but are arguably aimed at eliminating independent operators from the market. This has a nasty overflow effect on ACT consumers who miss out on the discounting benefits. The way this practice allegedly operates is that company service stations are subsidised and guaranteed a certain margin to undercut independent operators at all costs. This produces massive discounting in Sydney, but not in Canberra.
Not surprisingly, ACT consumers become annoyed at learning of petrol prices in Sydney being 10c per litre cheaper than here and allegations are voiced of ACT consumers subsidising Sydney consumers. This is true, Mr Speaker, in the sense that all companies use their assured profit base in Canberra and in other country areas as the platform for discounting in Sydney. But, Mr Speaker, while I have illustrated the wholesale problems at the Sydney end of our pipeline, so to speak, and highlighted some retailing issues for attention, the fundamental problem of the lack of genuine competitive pressures in Canberra lies in the structure of the ACT petrol retailing industry union.
Structurally, the ACT has no industrial port; it has no refinery; it does not have periodic large surpluses of petrol available for genuine discounting; and it does not have, for better or worse, the conglomeration of independently owned service stations which produce competitive pressures at the pump. As I mentioned previously, site liberalisation has not provided the answer to promote genuine competition in Canberra. Indeed, to varying degrees the need for structural reform applies across Australia.
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