14 January 2015
Transcript - #2015004, 2015

Interview with Cameron Stallard, 4HI Breakfast Show

SUBJECTS: Fuel prices, ACCC Fuel Monitoring Report

CAMERON STALLARD:

To discuss more this morning on fuel prices and what we can do as motorists to force a change is the Federal Minister for Small Business, Bruce Billson, he joins us on the line this morning.

Minister, good morning.

MINISTER BILLSON:

Cameron, how are you in the sparkling Emerald, I hope you and your listeners are all well.

CAMERON STALLARD:

We certainly are for this Wednesday.  First of all I think we have all experienced high fuel prices for quite some time over the last couple of years, it had kind of become a normality, but why has fuel prices taken a dive in the recent weeks?

MINISTER BILLSON:

It’s pretty simple at a superficial level if I can put it that way.  What is happening now is the Americans are largely not only meeting their own domestic oil requirements, they are now exporting.  Therefore having gone from a big consumer of OPEC oil they are now exporting. 

So the OPEC countries are saying, well, we are the kings of oil, we would rather you buy it from us.  So the OPEC nations are flooding the market with oil, trying to basically price out some of the oil production activities in North America that are a little more expensive and OPEC thinks if the price is kept low then some of those competitor sources of oil might hit the wall. 

That is basically the game at play at the moment and that has seen fuel prices generally being the lowest they have been for four years, but that is a reaction in the market by OPEC to the North Americans finding more of their own oil requirements.

CAMERON STALLARD:

In Sydney I think the prices are around the $1.06 or $1.07.  However for Central Queensland, we are paying an extra 30 cents on top of that.  Drove past this morning in one of the local fuel stations: $1.32 and in some parts of Queensland $1.50 and it was up at $1.50 just before Christmas time. 

Why are we having to pay extra to get fuel in Central Queensland?

MINISTER BILLSON:

There is some obvious reasons around freight, but that is nothing like the amount that you are talking about. This is why I have tasked the ACCC with a new power. Rather than annual monitoring of petrol prices in the sense of what the retail prices are, what is published at the terminal gates as wholesale prices, what is happening with international benchmarks and the exchange rate and price cycles and gross margins that are operating within the supply.  

That work I have tasked the ACCC to do on a quarterly basis.

Where we start seeing some irregularities emerge we can have a much closer look, which leads me into the second part. 

A new tasking for the ACCC to do deep dives into particular markets where there seem to be some irregularities.  You have touched on some examples of why is it that when the oil price internationally goes up, you almost see the price at the bowser go up within a nanosecond but when it comes down the price reduction seems to be glacial. 

Why is the difference between one regional centre a similar distance away from a terminal compared to another regional centre so large? 

And then your opening comment, why in regional centres are prices higher than in the capital cities, even for substantial regional centres where the volume of fuel is significant and you can’t really put that price difference down to a fuel station being a boutique operation with a small amount of fuel and high costs to meet against those volumes.

This is why we have tasked the ACCC with this new power.  It has been good that your listeners and others have come to me saying cop this for some experience we have got; surely this should be one of those early deep dives.  And that is what we are working through now, where to prioritise that really close, bright spotlight, on what is actually going on in particular markets and frankly in some capital cities as well. 

It seems to be if you have got really strong, vigorous, competitive, independent retailers they keep the big guys honest and they really drive savings for motorists. Where you don’t have those independents that are strong and competitive, you often see the motorists disadvantaged in terms of the price they are paying at the bowser. 

CAMERON STALLARD:

I think it’s wrong that we are kind of being taken advantage of here.  I think we are all happy to pay an extra couple of cents for the transport up, but 30 cents per litre is not really justified. 

MINISTER BILLSON:

I know last night even in Tamworth, not within your listening audience, but just as an example, I think they were up about 35 cents on what we have been paying in Sydney. 

And in Queensland some of those differentials, particularly the further north and west you head seem to be really significant.  Someone seems to be making handsome margins somewhere in that supply chain.

CAMERON STALLARD:

Now, with the scheme you were mentioning with the ACCC, with the Rudd Government they brought out the Fuel Watch scheme, wasn’t this to ensure that this didn’t happen?

MINISTER BILLSON:

That was a spectacular failure and I think everybody realised that what the Rudd Government did was a costly, expensive side show. 

What this is about is going to the heart of what is actually influencing the fuel prices, the competition in the market place, whether it is adequate, whether consumers are being looked after with efficient pricing and where there might be irregularities that we need to take a closer look at. 

And where there is in some instances anti-competitive or unconscionable conduct there is the broader ACCC toolkit available to keep everyone on the straight and narrow, to make sure people are doing the right thing.

This is an entirely different approach which reflects the fact that having an expensive, unsuccessful scheme like the Rudd Government talked about which didn’t actually tell you much at all but sounded awfully good, isn’t really the answer. 

The answer is understanding the forces at play in the supply chain and where price pressures are being brought to bear and where margins are the largest. 

You see some motoring organisations are even using newer technology where they are looking at the fuel card transaction information to lift off what the specific price is for a particular type of fuel at a particular place at a particular point in time, feeding that into apps and the like so that motorists are empowered with more information to go to where they can get the best price. 

I suppose our work in the ACCC is publishing advice to motorists on where we are in the price cycle so that if you have got a major fuel needed for your car, getting some good advice on when that price cycle might best be in your favour.

CAMERON STALLARD:

Certainly, and what do you suggest motorists to do in order to avoid the high prices in Central Queensland?

MINISTER BILLSON:

I would check out that information that is available on the ACCC’s website. 

Secondly, I would do what other motorists are doing and recognise the most powerful influence on all of this is the hard earned dollar of the motorist.  And to support those retailers that are giving them best value for money. 

It might involve switching your retailer or in some regions it might be looking to invite in an independent and see whether a new competitor might shake up the show if there is only one or two suppliers in a centre that seem to be making handsome margins at the expense of motorists. 

Use that hard earned dollar.  The consumer is empowered to place their purchasing where it best services their needs and we will do work to make sure that the influences on pricing are understood. 

That deep dive looking at particular markets, that work will continue, we are looking at about four particular and specific markets any given year, that will help put a bright spotlight on what is going on and make sure that motorists are getting efficient pricing and getting their interests protected.

CAMERON STALLARD:

It is certainly good to see that something is being done because at the moment I feel like we’re being taken advantage of by probably more so the fuel companies who are charging us that much.

MINISTER BILLSON:

There seem to be other things going on too.  I have noticed in some areas the fuel companies are now controlling the diesel so that even where it is being retailed at a particular service station, and these are often on your major highways where you get those big truck and freight stops, in some instances the retailer there does not even own the diesel. 

They are paid a fee for pumping the diesel and the oil companies keep control of the stock. 

These are the things that are happening which give rise to me providing these new tasking’s for the ACCC because there is moving parts at play, and I just want to make sure that motorists’ interests are being protected and they get efficient pricing and good value.

CAMERON STALLARD:

Now, finally just briefly, small businesses, as you being the Small Business Minister. 

Small business in the Central Highlands at the moment has not faired too well the last 18 to 24 months due to the mining down turn. 

How do you see the future in small business minister?

MINISTER BILLSON:

There is some optimism around and some green shoots that I am encouraged by.  I know in some of the mining areas the down turn in mining activity is actually seeing some of the mining services companies getting involved in related markets. 

I was over in Kalgoorlie a few weeks back and some of the engineering companies there are now exporting capability to mining centres in Africa, because they are world class. 

We know what has happened with the price of key commodities and that has had an impact.  So you are seeing that capability in the mining sector being deployed in different ways and in different markets. 

But more broadly we are seeing job ads are up, they are at the highest level in two years according to the ANZ survey.  We just talked about petrol prices providing some relief. 

Even the interest rate arrangements are quite supportive of enterprise.  I am optimistic retail trade figures are up for the sixth consecutive month.  Seeing a few green shoots in strong building approvals and even in the formation of businesses, it is the highest it has been for many years. 

That enterprising spirit, it is so much a part of your listenership and our economic prospects for the future, there are some encouraging signs. 

I’m optimistic, realistic, but optimistic.  Again in this area we run a bit of a campaign around shopping small and shopping local, those consumer dollars going back into the local economy, that is the oxygen of enterprise in our regions and it is a contribution that consumers can make as well.

CAMERON STALLARD:

It certainly is and it is really good to hear that things are looking up for small business.  Minister thank you very much for your time this morning.

MINISTER BILLSON:

Cam good to talk to your and your listeners, and have a super day.