Page 3612 - Week 12 - Thursday, 13 October 1994
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Madam Speaker, New South Wales will be indexing petrol franchise fees by 2.3 per cent, effective from the licensing period commencing on 1 November 1994. That is in line with the expected increase in the Sydney CPI for the coming year. It is absolute nonsense to suggest, as Mr Humphries has done, that you index the price of a product by the product's price. The announced policy, Mr Humphries, has been that indexation would be based on the CPI, not on petrol prices.
Mr Humphries: Why?
MADAM SPEAKER: Order, Mr Humphries! You will get an opportunity to speak again later.
MS FOLLETT: Mr Humphries's argument there has been absolutely nonsensical. The policy to align the ACT indexation with New South Wales will prevent cross-border distortions. There will be occasions when the expected CPI in Sydney will be either lower or higher than that for Canberra; but I believe that the benefits of harmonising the tax rates outweigh the extra costs of imposing marginally different indices on this particular franchise.
The effect of the determination is that rates will increase from 7.04c per litre to 7.2c per litre for petrol and from 7.08c per litre to 7.24c per litre for diesel. The increase was notified to the Prices Surveillance Authority and the petrol companies on 29 September; so, it gives them a month's notice of the impending changes. That notice period is consistent with past practice. It will not, therefore, place either the wholesalers or the retailers at a disadvantage. The increase of the franchise fee by this indexation amounts to just 0.16c per litre. It will have very little effect on the ordinary motorist. Indeed, it is simply maintaining the real value of our tax rate. Not to index the rate would see the effective tax rate decline. If there is a successful motion to disallow this determination, I suggest that the only winners out of it will be the petrol companies, who will get a windfall gain.
Madam Speaker, the introduction of the indexation regime on 1 November 1993 followed three years in which the ACT rate had remained frozen. I would like to remind members of the history of this particular franchise fee. It was doubled by the Alliance Government in 1990. Following our return to office and the unlamented demise of the Alliance, we froze that rate. The rate remained frozen for three years. What effect did that have on petrol prices? It had absolutely none. They continued to rise. I am afraid that, unlike members opposite, we have learnt by experience that the petrol franchise fee appears to have little, if anything, to do with the retail price of petrol in the ACT. For that long period when the rate was frozen, petrol prices continued to rise. I think that even the most casual observer would have to agree that that three-year freeze on the rate resulted in absolutely no reduction in the ACT's petrol prices compared to New South Wales. That is a fact.
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