3 August 2015
Transcript - #2015093, 2015

Interview with Chris Coleman, ABC Riverina, NSW

SUBJECTS: Petrol prices

CHRIS COLEMAN:

Bruce Billson is the Federal Minister for Small Business, competition and consumer affairs. We’ve spoken to him a few times over the past 12 months or so about petrol prices. Bruce Billson, good morning.

MINISTER BILLSON:

Good morning to you Chris and to your listeners.

CHRIS COLEMAN:

I will ask you straight up, this is possibly going to be interpreted as one of the biggest free kicks I have ever given on the morning program. Are these drops in the petrol prices anything to do with the enquiry into fuel prices and the additional ACCC powers into fuel prices and the additional ACCC powers you announced last year?

MINISTER BILLSON:

Well, it sounds like a free kick but I think it actually is probably a part of the story.

As we look right across the 180 separate regions where we monitor prices for petrol day-in-day-out, since the announcement that I made of a new approach with the ACCC doing quarterly, economy wide examinations but then giving us a new power to do deep dives into particular petrol markets, where, let’s just say irregularities and curiosities run amok.

We have seen a real change in behaviour. And even in the Riverina, Wagga’s petrol prices seem to have certainly come back, here where the capital city averages have been for some time after being 23 cents or so different.

There has also been an independent retailer move into town in Wagga and I have said all along, Chris, when you have a strong independent retailer in the fuel business, it keeps the big guys honest.

CHRIS COLEMAN:

Now this is the servo that I was referring to in Wagga that was at 124.9. It is an old servo, it has been taken over by a new independent chain and literally last week, I did not go past it this morning, but late last week it was 124.9 there.

I saw prices in Sydney 20 plus cents a litre higher than that. This is stuff that just doesn’t happen down here.

MINISTER BILLSON:

No, that is right and I guess it is a really strong message I would like to leave with all of your listeners. We have got to, as motorists, get behind these independent retailers. They are the best force for change.

We have seen it in some capital cities, Chris. Some people wonder why Brisbane fuel tends to be a little bit higher than Sydney and Melbourne. Really when you go through all the factors, the thing that is different is the lack of strong, independent fuel retailers.

You are seeing that in town and we still see in some areas like Armidale, where I have announced today, that we will be having one of those deep dives into the Armidale fuel market.

It always seems to be, you know, 10.5 cents per litre higher than what is going on in the largest capital cities. And when you look at the fuel volumes going through a community like Armidale, its distance from terminals, there is really no coherent explanation for that.

And that is part of the new tool kit that we have given the ACCC.

CHRIS COLEMAN:

Now Bruce Billson, we spoke – I think it was December last year. 

MINISTER BILLSON:

I think it was about your BBQ skills if I remember correctly…

CHRIS COLEMAN:

It could well have been!

MINISTER BILLSON:

…we had the spot the fuel price on the number plate game. That is a good one, I will have to remember that one with my kids. 

CHRIS COLEMAN:

We spoke; I think it was December, about these new powers for the ACCC and the deep dive. Where have you done those deep dives, or had those deep dive investigations happen now?

MINISTER BILLSON:

We have activated two, Chris. One has been in Darwin where their fuel prices have been really, really high for reasons that no one can quite work out. I have got to say again, a real dramatic change in the situation in Darwin.

That has really put the spotlight on. And I must say in some cases, Chris, the prices are high because the people in the supply chain think that they can do that. There might be a lack of competition, there might be a monopoly on the wholesale fuel supplier and the margins are a bit fatter than they need to be.

That is why we have got this new tasking for the ACCC to look at these markets where, competitive forces alone are not enough to ensure efficient pricing for motorists. So we have cast that in Darwin.

We have also done it in Launceston and now the third one that I am announcing today is in Armidale. It is a really useful tool but it is not the only thing going on. You know, of course, we have dealt with the shopper docket issue where there has been herculean discounts offered under the guise of shopper dockets.

But, we have known under that sort of arrangement that the margins had actually increased while the shopper dockets were being waved around and now the shopper dockets have to be within the profit margin of an efficient petrol retailer- the new direction to the ACCC.

There is also an enforcement action going on as we speak, Chris, involving a business that used to hoover up all petrol price information from around the country and then share it with the major fuel retailers.

We think that has added to what I call the crab walk of fuel prices: If someone up the street bumps them up by 0.5%, guess what, all the others follow in lock step. That is something we think it anti-competitive and we have alleged that that is a breach of the law.

These are matters before the court on that, and the final piece is the Harper Review. Just to make sure tool kits fit the purpose to deal with these highly concentrated areas of our economy.

CHRIS COLEMAN:

We, again – when we were talking back in December, there was a message encouraging motorists to get in touch with your office…

MINISTER BILLSON:

Yep.

CHRIS COLEMAN:

Did you get a lot of people getting in touch with your office?

MINISTER BILLSON:

Yeah we did. We got a range of calls. It was really quite useful. Because, what it highlighted was where consumers were ready to take action and it has been good to harness that and get behind the independent retailers.

Some interesting things too, came up around LPG and how when the benchmark price for LPG goes up, almost a nano-second later the retail price goes up - but when the benchmark price goes down, it is a glacial pass through for motorists.

That is something we have on our radar screen. Also, a lot of interest around marine fuels as well.

So, lots of good feedback, we have fed all that in and I can imagine every listener that feels that they are paying too much thinks that maybe one of these deep dives might be just what is needed and we are targeting those areas where the hard data shows a persistent problem that seems to have no clear justification or rationale for it.

CHRIS COLEMAN:

In 2012, we were talking about, not with you, but we were talking on this program, with the Service Station Association about petrol prices being stubbornly around $1.50 a litre going back to an old script from there.

Are we doing a bit better than that, bearing in mind, that in the moment, in large parts of New South Wales, the petrol price is below that $1.50 mark and in some cases considerably lower.

MINISTER BILLSON:

We are doing better. It is not consistent across the economy, but we are doing better. We monitor what the average is across the five major capital cities. There has been a few things at play, Chris. I mean, there has been an increase that has come out of stronger demand from the United States and India in particular.

There has been a slight decrease in international refined petrol prices and that is important because some of the competitors coming into the market place are bringing refined fuel in rather than bringing oil in to have it refined here.

So that has had a bit of an impact, and so has the Aussie dollar had a bit on an impact. I mean, at the moment the five city averages are around 137.3 cents a litre. That is up a bit from April, about where it was in May, but down a bit from June where we saw a bit of a lift around June.

CHRIS COLEMAN:

Bruce Billson, always good to speak to you. Have a good day.

MINISTER BILLSON:

Take care and I am standing here waiting for more BBQ recipe advice from you.

CHRIS COLEMAN:

Cheers, Bruce Billson is the Federal Minister for Small Business, Competition and Consumer Affairs and by the sound of things a BBQ aficionado.