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FuelWatch Launched By Kevin Rudd And Chris Bowen

The Rudd government today launched FuelWatch, a national scheme to promote competition and transparency in the petrol market.

The scheme was announced by Prime Minister Kevin Rudd and Assistant Treasurer Chris Bowen at the Penrith Council Chambers in western Sydney.

Petrol stations in metropolitan and major regional centres will now be required to notify the Australian Competition and Consumer Commission (ACCC) of their next day’s prices by 2.00pm the day before. They will be required to maintain this price for 24 hours.

During the press conference, Rudd responded to questions about his non-attendance at the funeral of former Hawke minister John Button.

  • Listen to Rudd and Bowen’s FuelWatch press conference (19m)

Statement from Prime Minister Kevin Rudd.

A National Fuelwatch Scheme

Federal Cabinet today approved the establishment of a National FuelWatch Scheme to promote competition and transparency in the petrol market.

The establishment of Australia’s first National FuelWatch Scheme will help ensure motorists are not paying a cent more than they have to at the bowser.

The National FuelWatch Scheme will help motorists buy the cheapest petrol, at the cheapest petrol stations, at the cheapest times.

Under the National FuelWatch Scheme, petrol stations in metropolitan and major regional centres will be required to:

* Notify the ACCC of their next day’s prices by 2pm the day before;

* Maintain this advised price for a 24 hour period; and

* Apply the scheme to unleaded petrol, premium unleaded petrol, LPG, diesel, 98 RON and biodiesel blends.

The petrol price information collected from these petrol stations will be made available to consumers through:

* An email and SMS alert service informing subscribed consumers details of the cheapest fuel in their area;

* A national toll free number where motorists can locate the cheapest petrol in the area they are looking to purchase fuel: and

* A National FuelWatch website with station by station, day by day and suburb by suburb petrol price information.

By giving motorists highly detailed and up to date information about local petrol prices, FuelWatch will help motorists avoid being ripped off.

No longer will a motorist drive past a petrol station in the morning only to return in the afternoon to find a 10 cent per litre jump in the price of petrol.

Importantly, FuelWatch will also see an end to Mums and Dads driving around on a Tuesday or Wednesday searching for the cheapest petrol.

Rather than guessing the best time and the best place to buy petrol consumers will know where and when to buy the cheapest petrol in town.

The restrictions included in the FuelWatch Scheme mean there is less flexibility for temporary upward and downward movements in prices. However according to the ACCC the effect of the scheme is that it forces retailers to post their most competitive price all day, everyday.

Petrol prices will always be linked to fluctuations in international oil markets. If the global price of crude oil goes up Australian retail prices will be affected.

The National FuelWatch Scheme is not a silver bullet that breaks this nexus; no government policy can guarantee that petrol prices will always go down.

But FuelWatch will ensure that drivers don’t pay one cent more than they have to when filling up at the bowser.

FuelWatch was introduced with bipartisan support in Western Australia in 2001 and has been a welcome tool for WA motorists looking to save money.

Econometric analysis undertaken by the ACCC last year concluded that under the WA FuelWatch scheme the “relevant weekly average price margin was around 1.9 cpl [cents per litre] less on average”.

The National FuelWatch Scheme is a key part of the Rudd Government’s response to the ACCC report into the price of unleaded petrol. The Scheme will cost $20.9 million over four years and commence on 15 December 2008.

The extension of this scheme outside of metropolitan areas and major regional centres will be subject to negotiation between the ACCC and local Government authorities in rural areas. Rural local authorities will be able to opt in to the National FuelWatch Scheme – as they can under the WA FuelWatch model.

The Government will review the effectiveness of the national FuelWatch Scheme twelve months after it operations commences.

The ACCC will now begin working with petrol retailers to ensure a smooth transition to FuelWatch, and construct the supporting IT and communications infrastructure.

The National Fuel Watch Scheme will build on the Government’s previous moves to give the ACCC formal monitoring powers and to appoint the nation’s first Petrol Commissioner.

Transcript of joint press conference with Prime Minister Kevin Rudd and Assistant Treasurer Chris Bowen.

RUDD: It’s good to be out here in Penrith in Western Sydney and one of the things we’ve been talking about in Cabinet today in Western Sydney with Chris Bowen the Assistant Treasurer is the cost of living pressures on working families, not just here but right across Australia. Working families are under financial pressure right now, whether it’s through mortgages, whether it’s through rents, petrol prices, grocery prices, child care costs. And the practical question for Government is what can we do about it.

One of the things that’s driving up cost of living pressures for working families is of course the price of fuel. And that’s why Cabinet today has agreed to embrace a National Fuelwatch scheme which aims to bring maximum competition policy pressure onto petrol retailers across Australia, to get the best deal possible for working families.

What we want to do is to ensure that motorists are not paying one cent more than they have to at the bowser. What we want to do is to ensure that motorists are able to buy the cheapest petrol at the cheapest prices at the cheapest petrol stations and at the cheapest times.

How will the scheme work. I’ll turn to Chris for the detail of this in a minute but broadly it’s got these three elements. The ACCC will be notified each day at around 2pm by retailers across the country as to their proposed price for the following 24 hour period, that is for the next day.

Secondly, petrol retailers will be required to adhere to that price for that period of time and thirdly the ACCC will then place that information in a manner which is available to the public, to the consumer’s right across the country. By email, by toll free telephone number and or by other mechanisms as well.

What’s the objective here, to maximise transparency across the system to make sure that working families when they take the car to the bowser to fill up are getting the best possible deal available. Now this isn’t foolproof this will be difficult to implement. We’re proposing to have this scheme up and running by years end and we will be reviewing it 12 months later to see what the flow through impact is for working families.

Of course this scheme has been trialled extensively elsewhere in Australia. It’s been operating in Western Australia for some years. And we have been drawing extensively on the experience on that scheme which was introduced by Premier Richard Court back in the year 2000.

We think this is a step forward to help working families under financial pressure, by helping them get the best possible prices for petrol when they go to fill up. We can’t promise the world, we can’t promise the impossible but we think this extends a helping hand to working families trying to balance the family budget.

I’ll turn to Chris now to outline more details of the scheme and then take your questions.

BOWEN: Thank you Prime Minister. Today represents the Governments next step in our efforts to put downward pressure on petrol prices and introduce more competition and transparency into the petrol market.

Today’s announcement means that the days of driving past a petrol station in the morning and noticing a price and driving past that same petrol station in the evening and noticing a price 10 to 15 cents higher will soon be gone. This is a pro market, pro-competitive reform, it’s a reform to make the petrol market work better for consumers. To give consumers more information, to give consumers certainty, to give consumers and motorists the right to know where they can find the cheapest possible petrol. Where they can get that petrol and where they can get it at best value.

As the Prime Minister said the ACCC will be launching a website, which will have the price of petrol which is locked in for 24 hours. That price will be available to consumers by text message, by an email service and consumers will be able to log onto the website and download there route home and their route to work everyday and get the price of petrol at every service station along that route for the next 24 hours.

This is a very important reform in ensuring that consumers have as much information as possible in order to make their decisions. There is some evidence that by making service stations put their best possible price in the night before there is downward pressure on prices. The ACCC estimates that at about 2 cents a litre, but it is more important than that. There are reasons to do this to give consumers the best possible information to find the cheapest possible petrol wherever they may be.

As the Prime Minister said each service station will be obliged at 2 o’clock to notify the ACCC of their price for the next 24 hours from 6 am the next day. From about 3 o’clock that information will then be available on the ACCC’s website and available through all those mechanisms that the Prime Minister and I have outlined.

This is a measure which gives consumers the information they need and puts consumers on a level playing field with retailers. It rebalances the equation between consumers and retailers and makes the market work better for consumers.

Also the stations in metropolitan and large rural areas will automatically be covered. For those smaller and more isolated areas there will be a process in which the ACCC can negotiate with the local council authority as to whether that area wishes to be included in the scheme or not. And those details will be worked through in coming months.

This scheme will be up and running by the 15th December. We want to get this right. We want to make sure we do it properly. We want to ensure that all the I’s have been dotted and the T’s have been crossed before this system is implemented because this is very important for Australia’s consumers.

This is a bold step today it is not a step without controversy, it is not a step which won’t be criticised. But on balance after much consideration we believe it is an important step to give consumers and motorists the information they need to make the decisions, the purchasing decisions, they need to make to get the best value for their motoring dollar.

RUDD: Over to you for questions.

JOURNALIST: (Inaudible) you talked about the ACCC getting up to 2 cents a litre off. Is that what the Government believes, there could be a discount of 2 cents a litre? And if that doesn’t happen after 12 months will the scheme be axed?

BOWEN: No as I said the ACCC’s econometric analysis of the Perth situation found a 2 cent a litre discount. But the much more important reason for doing this is to give consumers more information. The difference between the cheapest petrol station and the most expensive petrol in every capital city across the country is very significant. If you can give consumers the best information to find that cheapest petrol, that’s the reason to do this.

The ACCC have certainly found there was no basis for any conclusion that this will put upward pressure on petrol prices. They think there is some basis for reaching the conclusion it puts downward pressure on petrol prices. But the bigger impact is the pro-competitive pro-information reform that consumers receive.

JOURNALIST: Is a lot of this scheme taking advantage of or a reaction to Oil companies taking advantage of consumers? Oil companies are likely to feel as thought they’ve been pulled into line over this.

BOWEN: Well certainly there’s a lot of frustration in the community about petrol prices there’s no doubt about that. But this has been based on evidence, this has been based on the research and the experience in Western Australia and that’s the only reason for doing it. Because all the evidence is that this can work.

JOURNALIST: (Inaudible) how do you expect retailers to react (inaudible) how have they reacted so far?

BOWEN: Well as I say this will be a controversial scheme and retailers may feel that this is not appropriate for them. But the Government has to weigh up the equation between retailers and consumers, and the Government has to determine what the best mechanism is to make this market work for everybody, for consumers primarily.

JOURNALIST: Inaudible

BOWEN: It’s true that this is controversial, it’s true that differing motoring groups have different views, for example the RACWA, the West Australian group, initially was very sceptical when it was introduced in Western Australia. They are now strong supporters and have called for it to be rolled out. The NRMA the biggest motoring group in the country is a strong supporter. So yes there will be scepticism, this will be controversial but we wouldn’t have taken this step if we wanted to go down the easy road.

But we’ve gone down this road because on balance after much consideration we think it will work.

JOURNALIST: Inaudible

RUDD: No what we will do first of all, our implementation date is proposed to be 15 December this year. That gives us extensive time for set up, this is really complicated. It currently exists in Western Australia but as you roll out across the other states it takes time. And to get the details right and particularly in terms of the possible opt in for rural local government authorities around the country.

Secondly the 12 month review point occurs 12 months after that and that is to assess the totality of the scheme, its impact on consumers and that of course will include price considerations, its impact on retailers as well and we’ll have a wholesale review of its effectiveness then.

We’ve looked carefully at the WA experience, it seems to be a positive experience, but we will be very mindful of the overall flow through.

You can either sit around and do nothing about this and just say wow is me petrol prices are going up globally there you go. Or you can do something and based in the WA experience this seems to be a step in the right direction but it’s no silver bullet to global prices on oil, that’s compounded by global supply and demand pressures particularly the increased global demand for oil coming out of China and India.

JOURNALIST: Prime Minister on household costs the Reserve Bank Governor Glenn Stevens in his speech today acknowledged that there had been a big rise in household debt. He said for the most part the bulk of households appear to be managing to carry that, that is the debt, pretty well. Does this contradict what you have been saying about suffering families?

RUDD: No, I haven’t read fully the Governor’s statement today, I’ve got a summary of it. I believe that all people observing the pressures on working families whether it’s through the increased cost borrowing, either for houses or for such shall we say consumer credit card debt, Plus the cost of rent, plus the costs of petrol, costs of groceries as well as the costs of child care are all heading north not south.

That means the family budget is hurting. Therefore what we can do at the level of Government is not to solve all those problems, we can do certain things in terms of tax cuts, we can do certain things in terms of implementing our additional pre election commitments on education tax rebates and increasing the child care benefits which come from the Government as well.

But when it comes to prices like petrol this helps. Overall our strong view is that working families are under real financial pressure. Let me tell you based on discussions with our local member out here in Lindsay in western Sydney, it’s absolutely clear cut, you talk to people but they are doing it tough. Let’s not pretend otherwise. We don’t that’s why we are doing what we are doing today.

JOURNALIST: Mr Rudd can I ask about this idea of competition. You’ve chosen the petrol industry, I presume it could go out to Diesel but why not bread, milk and eggs? Why shouldn’t the price of those be locked for 24 hours?

RUDD: Well firstly on the scope of this scheme itself it applies to unleaded petrol, premium unleaded petrol, LPG, Diesel, 98 Ron and bio Diesel blends. So let’s be clear about the scope.

We believe that we’ve got to get this right because let’s face it the cost of petrol underpins most things that families do. This is one area where we think we can apply further competition policy and pressure. We think this is a step in the right direction. Obviously as Chris can elaborate in his further response to your question we’ve already got underway a National Grocery price inquiry.

BOWEN: We do have a National Grocery price inquiry underway. The important point to make in relation to petrol is that petrol is the only commodity where there’s such volatility. You don’t see that volatility in groceries, you don’t find a weekly price cycle at the supermarket. You find prices going up and down and people not being sure whether they if they go shopping that evening whether the price of margarine will be the same as it was that morning.

You do find that in petrol, that’s why this is an important step in petrol. It’s a specific targeted industry response to the particular issues in the petrol industry. And whatever issues come out of the Grocery Price inquiry the Government will examine very closely.

RUDD: We don’t pretend on either of these questions that either petrol or groceries to have any silver bullet. But can I say we’re always concerned to be responsible in what we undertake to do.

And I contrast that with a statement today by Peter Dutton. Who says, and I quote “I think Brendan Nelson would have a greater capacity to deliver lower petrol prices for families and lower grocery prices” quote unquote.

I’d like to hear a concrete list of the policy measures from the alternative Government on how they would bring that about. Remember this party when it was in Government said that when it came to interest rates that interest rates would be kept at record lows. Apparently we know have the same commitment when it comes to petrol prices and grocery prices.

JOURNALIST: Prime Minister on alcohol, there’s a group calling itself the Alcohol Alliance, will contribute to the 2020 meetings today there were some quite emotional (inaudible) by parents of young people who been caught up in alcohol related violence, wanting you to go further than you have so far on this issue. Is there room to do that?

RUDD: I saw some of the reporting today on that including some of the real life stories and tragedies involving people who have not just been physically injured but lost their lives through alcohol related violence.

That’s why the Government has decided first of all to place this on the National political agenda and on the National policy agenda. To take action already in terms of the $53 million worth of programs we’ve committed on this and place it on the proposed 2020 Summit agenda for this coming weekend.

At this stage we don’t rule anything out, this is a major national contagion and we need to act as decisively as we can. Again with this there’s no silver bullet but I think it’s time as a Nation and as a community we decided to turn the corner on this. Because I think in many parts of the country most parents would agree it’s getting out of hand

JOURNALIST: If I could ask you specifically Prime Minister on the alliance proposing a change on the tax system to encourage manufacturers to create more low alcohol products and there also asking for a review of competition policy to lessen outlets. What’s your reaction to each of those?

RUDD: Well I won’t go through an individual shopping list of possibilities now. And I haven’t read their detailed submission, I saw the reporting of it today. The reason we’re having this matter discussed at the 2020 Summit is that in terms of basic family wellbeing, community wellbeing, safety, this is a big question. You know, it’s out there, it’s across the breakfast tables, it’s across the dinner table, in homes in Penrith and right the way around the country at the moment. Our responsibility it to debate properly all options which conceivably will work in turning this around.

I’m not interested in symbolic gestures of any description, I want to embrace measures which work. That’s why we to have a seasoned debate through the 2020 Summit involving some experts in this field. Then we will distil the wisdom which comes from that and come out with a further range of policy responses. But we’ve got $53 million in programs already.

JOURNALIST: PM you couldn’t make the John Button Funeral, was that because of the Cabinet meeting. Wasn’t there some way you could have gotten out of it?

RUDD: I had the Deputy Prime Minster represented me at that funeral as did many of the other colleagues from Cabinet. I had some other things to attend to here in Sydney today. I’ve got to say John Button’s contribution to national political life was remarkable. Particularly the people close to the future of Australian manufacturing, particularly those associated with industry policy and particularly those who are concerned about the future of the Australian automobile industry.

A great Australian, a great contribution and our Government was well represented. I spoke to the Deputy Prime Minister just after she joined us in Cabinet then and she said that the eloquence of the testimonials to John Button’s contribution to Australian national life were remarkable and her observation to me almost without parallel.

This is a well loved man, with a great contribution to Australia.

JOURNALIST: Prime Minister just about the Olympic Torch, you said before that the Chinese officials, track suited officials who have been monitoring the torches movements wont be in Australia and wont have a roll there. Kevin Gospers come out to say today that they will be here. Monitoring the torches movement from inside a van nearby. Which ones right?

RUDD: Just coming in here today I was handed a statement from ACT policing on the comments which you have just referred to. It says the Chinese Torch attendants have a practical responsibility in relation to servicing the flame but they have no responsibility in terms of security. This has been made clear to the Chinese authorities under no circumstances no matter what occurs will they be called upon to perform security functions.

Thus says the ACT Police and we’ve got to get back to Cabinet

Thanks very much.

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