SKY NEWS ON THE HOUR WITH TOM CONNELL
WEDNESDAY, 15 FEBRUARY 2017
SUBJECT/S: Petrol prices; Labor’s competition policies
TOM CONNELL: This won't come as a surprise to motorists. Petrol companies are effectively in cahoots on their price cycles. Hiking prices up on a set day each week. According to the University of Sydney the day of the hike used to be Thursday. But it's shifted to Tuesday. And it's when companies make an extra 50 per cent profit margin and it's costing drivers an average of nearly $5 a tank extra each time they fill up. Of course we know it all adds up. Joining me now on this is the Shadow Assistant Treasurer, Andrew Leigh. Thank you for your time, Andrew.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Pleasure, Tom.
CONNELL: I know Labor has a bit of a plan on this. They talk about more powers for example to the ACCC to police this type of behaviour. We're talking about tacit collusion, not phone-calls, but when everyone – sort of – follows the other. Can you really outlaw that? Would have to be a pretty broad law wouldn't it? And a dangerously broad one?
LEIGH: I think first it's useful just to step back and see what David Byrne and Nicolas de Roos have uncovered on this. This is really the econometric equivalent of an Agatha Christie novel. Whereas back in the old days firms – to collude – had to get together in smoke-filled rooms and have secret conversations, now they do it through big data. What they saw in Perth was that the dominant market player, BP, set the pattern for a price rise which originally used to occur on Thursday and then they shifted it to Tuesday. Prices would go up 15 cents and then every day they would steadily go back down.
CONNELL: That's the key isn't it? It's not illegal. Is it going to be illegal under Labor? Simply copying someone else's price? You're allowed to do that aren't you?
LEIGH: Labor in office criminalised cartels. Chris Bowen was the major driver of that change. I think that's important. We've now said we believe we ought to ramp up the penalties for anti-competitive and anti-consumer conduct. They're too low. They're lower than they are in comparable countries.
CONNELL: But again, the point is not necessarily the penalties but what's illegal here. It's not going to be illegal is it to simply say, BP put it up, and I’m going to put it up to the same or similar price on a similar day?
LEIGH: That then brings me to the third thing Tom, which is a market studies power. Here in Australia our competition watchdog doesn't have the power to go in and look at markets broadly and to use investigative powers to really find out what's going on. If you look at America, the top four petrol retailers control 20 per cent of the market. Here it's 70 per cent of the market. And more than half the markets in Australia are concentrated. So it's not just in petrol. A market studies power gives the ACCC the power to go in, compel witnesses and really find out what's going on in a forensic way. It's great that these academics have brought these findings to the fore, but I'd love to see our competition watchdog be able to do it to.
SAMANTHA MAIDEN: Let's get back to that history under the Rudd government because it’s easy to talk about petrol prices in opposition. It's an easy whipping boy. Everybody hates petrol companies. Everyone thinks they've paid too much, but surely the politics of petrol under the Rudd and Gillard governments was a joke? I mean, you appointed a Petrol Commissioner - they didn't seem to do anything, they didn't seem to have any powers. I mean, what are you actually going to do if you win government that's going to be any different to the last time? It's easy to put press releases out, but the history of the Rudd Government wasn't that great on this. Are you going to have another Petrol Commissioner?
LEIGH: Sam, I've just taken you through a number of things that we'd do – in terms of ramping up the penalties and giving the ACCC a market studies power – but the new world is one of big data. I think it’s important to think about whether big data is advantaging those who are trying to drive up prices, or advantaging consumers.
MAIDEN: Do you think Labor's policies actually put any downward pressure on prices when you were in government?
LEIGH: The findings out of the research is that providing consumers with more information like the Western Australian FuelWatch scheme does seem to have helped somewhat.
MAIDEN: But it's a genuine question – what evidence is there, during the last government, when you were in government, when you talked a lot about petrol prices and you had a Petrol Commissioner – that it had any impact on the petrol prices at all?
LEIGH: Sam, I'm here offering you constructive solutions and I'm talking about some of the important things Labor did in government. I think criminalising cartels was an important measure. I think the Visy-Amcor cartel for example would have received much more substantial penalties if the cartels had been criminalised back then. It is important now, as we look at refreshing the policy suite - people can now download an app like Petrol Spy for example, which has real-time petrol prices. I'd encourage people to download that or the NRMA app in order to do a better job of shopping around. The great thing about that is you're not just helping yourself but you help other consumers as well. The more consumer demand you can take away from the petrol stations that are pricing too high, the more you force them to behave in a more competitive fashion.
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