Fuel Scheme Gets Accc Backing

Sydney Morning Herald

Friday May 30, 2008

Phillip Coorey Chief Political Correspondent

KEVIN RUDD said solidarity abounded in his rattled Government yesterday as the competition watchdog rushed to his aid by stating the FuelWatch program would benefit motorists.

The Australian Competition and Consumer Commission released the findings of economic modelling it conducted which disputes Opposition claims that motorists would be worse off.

It concludes that after studying the scheme in Western Australia there was no evidence of any price increases "and it appears to have resulted in a small price decrease overall".

The Opposition dismissed the modelling as "wrong" and "garbage". It focused on a cabinet leak in which four separate departments advised that FuelWatch could cost motorists more.

"It is not only the Rudd Government's petrol strategy in tatters, it is the Government itself," the Opposition Leader, Brendan Nelson, said.

The Prime Minister's Department called in Federal Police to investigate the leak, which Mr Rudd said did not come from his ministers. He implied it was the public service.

"I'm absolutely confident, not just the direction in which the Government is proceeding on this, but the solidarity within the Government on delivering the best possible outcome for motorists," he said.

The leaked departmental advice was based on the first round of modelling conducted by the ACCC in December and not the latest round released yesterday, which measured the impact of FuelWatch after stripping away other factors that affected fuel prices.

Mr Rudd said the ACCC was the most accurate and he felt no compunction to always follow departmental advice.

"We welcome fearless and frank advice. They can put it before us, but we reserve the right to accept it, reject it and to take other advice."

The Government introduced the FuelWatch legislation late yesterday.

It will require service stations from December to publish petrol prices each afternoon. Those prices must stay fixed for 24 hours, from 6am the next day. Any change up or down would attract fines ranging from $550 to $110,000 for serious breaches.

Dr Nelson vowed to block the legislation in the Senate, so the Government will need the support of the Greens, Family First and Nick Xenophon after July 1.

FuelWatch has been running in Western Australia since 2001 and that state's motoring body, the RAC, said yesterday that while prices were not necessarily lower, they never increased.

The main benefit was it allowed motorists choice and gave them time to find where the cheapest fuel was. The ACCC chairman, Graeme Samuel, said his modelling found a price reduction of between "just under a cent a litre to somewhere just under two cents a litre", but agreed the main benefit was choice.

Mr Rudd accused the Opposition of being in bed with the oil companies, which have access to secret price information that they use to set prices.

"Either you vote for consumers or you vote for a cosy deal with big oil companies," he said. "Why do you think all the big oil companies are opposed to what we are proposing?"

© 2008 Sydney Morning Herald

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