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Legislative Assembly for the ACT: 2001 Week 3 Hansard (7 March) . . Page.. 818 ..

MR STEFANIAK (continuing):

My colleague Mr Humphries successfully argued for a national investigation into petrol prices by the ACCC. That investigation was undertaken from January to August of 1999. It revealed that rampant profiteering has not occurred, and in fact prices in Australia have not increased at the same rate as the international refined petrol price. We could see that when we saw astronomical increases in the price per barrel in recent times. Whilst there were significant increases in Australia of 8c, 9c and 10c a litre, there were the huge increases in the price of crude oil. The price of crude oil doubled, or more than double in certain instances.

Figures on the retail price of unleaded fuel in the ACT compared to metropolitan Sydney over the month of January this year indicate that the average price differential between Canberra and Sydney is around 5.6c per litre. The average price in Sydney in January was 87.5c for unleaded; here it was 93.1c.

The ACT government, however, can do only so much in relation to the price of fuel, as the pricing problems for us largely result from a lack of competition at the wholesale and refinery level right across Australia. Any action that can be taken to address the problems at this level are outside the ambit of our government and would be beyond the reach of the ICRC.

I note that Mr Rugendyke's motion asks the inquiry to assess what is occurring in Western Australia, which has a FuelWatch scheme. My department has discussed that scheme with the Prices Commissioner of Western Australia. The scheme there costs about $1.5 million per year to operate. While the costs of operating a similar scheme in the ACT most likely would be much less than that, they would be significant and might outweigh the benefits that might flow to consumers.

Anecdotal information about the Western Australian scheme also indicates that there was a price reduction of up to 7c per litre for unleaded fuel over the initial weeks of the scheme. Having regard to the short time the Western Australian scheme has been operating, it is probably too early to say whether it will result in a permanent reduction in the price of fuel. No doubt that is something the ICRC will be looking at.

The reduction, however, did not come without a cost to petrol retailers The requirement that service stations notify the Prices Commissioner of the next day's petrol prices 24 hours in advance has become somewhat akin to a tender for the sale of fuel for the next business day. Those service stations that do not at least match or get very close to the low price for the day can expect a significant downturn in trade for the day.

This, of course, could result in serious implications for retailers who for whatever reason are unable to be price competitive for that day. It is an industry where any price differentials, no matter how fine, can have a significant impact because of the very small difference between how much the petrol costs the retailer and how much it is sold for at the pump. Of concern also is the fact that the Prices Commissioner believed that market distortions that were already appearing in the first couple of weeks would inevitably result in the use of price fixing powers contained in the West Australian act.

The setting of the maximum retail price for fuel may well be a very retrograde step. It is something that would require constant market monitoring, public notifications and new determinations as the very volatile world price of crude oil impacts on the marketplace.

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