ADVOCACY EVENTSEMPLOYMENT TRA IN INGNEWS

ACAPMAMonthly Member Update

March 2017

Proposed fuel transparency laws in the Northern Territory follow the introduction of identical laws in NSW in August last year under the umbrella of the Fuel Check initiative.

On the one hand, it is hard to argue against the introduction of such laws. Our industry must accept that a consequence of being allowed to operate in an open and competitive market - free from government regulation of fuel prices - is a requirement for good levels of fuel price transparency in the marketplace.

It becomes a problem when politicians advance these laws believing that they will somehow result in lower average fuel prices.

Such a belief is not only simplistic, but also ignores the substantial risk that increased compliance costs associated with such laws could actually raise prices for motorists.

The ACCC has previously noted that fuel prices go up and down in Australia as a result of the interplay of four principal factors:

» Changes in international benchmark prices for oil and finished products

» Movements in the value of the Australian dollar relative to the US dollar

» The nature of competition in different areas » Pricing decisions by fuel wholesalers and

retailers.

Mandatory fuel price reporting schemes operated by state and territory governments cannot reasonably be expected to have any effect on the first three of these factors.

Any objective examination of the operation of the NSW Fuel Check initative in the past six months leads to the conslusion that the new laws do not appear to have had any effect - upward or downward - on average fuel prices in Sydney.

Further, any such examination would need to isolate the market impact of recent growth in the use of industry-based price transparency initatives, such as GasBuddy, the 7-Eleven fuel app and the revamped Informed Sources product.

Within this context, it is curious that some governments have seen fit to spend taxpayer funds on developing fuel price initiatives - duplicating what is already provided to the public, by the industry, for free.

In the case of NSW, the state government is understood to have spent more than $1 million of taxpayer funds on the establishment of the new laws. This is before any consideration of the ongoing annual expenditure of taxpayer funds that is required for the management of the scheme and ongoing enforcement activity.

Put simply, there is currently no evidence to suggest that mandated fuel price transparency delivers lower fuel prices. There is, however, a significant risk that poorly designed laws will result in increased fuel prices for motorists.

Fuel price transparency is a good thing, but should never come at such a high cost.

Fuel Price Transparency in Australia - at what cost?

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