DATA produced by the Federal Government’s chief economist which petrol retailers and the ACCC have used to argue pump prices are reasonable has been exposed as bogus.

News Corp Australia can reveal the chief economist’s monthly Australian Petroleum Statistics report has been comparing the cost of premium fuel in other countries against Australian regular unleaded, which is 11 cents a litre cheaper than premium.

This apples-with-oranges analysis sees Australia’s pre-tax petrol price rank fourth-cheapest among 27 of the world’s developed economies. When the chief economist’s error is corrected, Australia soars to seventh-dearest.

The office of the chief economist bills itself as the source of “objective, robust and high-quality economic analysis”. When confronted with the lack of robustness in its research, the man himself, chief economist Mark Cully, did not respond. Likewise his employer, the Department of Industry, declined to comment saying responsibility had been transferred to Environment and Energy.

Its spokesman said “we recently changed … to compare premium 95 unleaded petrol prices in Australia with mainly 95 prices in other OECD economies where available.

“Previously regular 91 prices in Australia were compared with mainly 95 prices in other OECD economies, as this represented the majority of petrol sold in Australia,” the Environment and Energy spokesman said. “Upon review, we decided to move to a more consistent basis for comparison.”

Australia’s regular 91 price has been used to produce the false comparison since at least March 2010.

The Environment and Energy spokesman noted that on a tax-inclusive basis, the move had “minimal effect on Australia’s ranking”.

But that is only because the level of tax imposed around the world varies so much that it effectively sets the rankings.

The pre-tax rankings have been used as a defence to claims motorists are being ripped off at the bowser.

Lobby group ACAPMA — which represents fuel sellers such as Caltex, Woolworths, 7-Eleven and Liberty — recently relied on the chief economist’s false comparison to claim “when the influence of government taxes is removed, Australia remains the fourth-lowest for petrol prices”.

ACAPMA has elsewhere cited the “authoritative Australian Government body” to attack the nation’s motoring organisations for questioning why petrol prices were so high.

ACAPMA said: “How much more evidence do these bodies need before they are satisfied that the current operation of Australia’s openly competitive and transparent retail fuels market is actually delivering great outcomes for motorists and businesses?”

When News Corp Australia told ACAPMA about the fatal flaw in the chief economist’s data, its spokesman said: “We rely on information coming out of government to be correct. It poses a question: ‘why it isn’t?’.”

In November last year, the Australian Competition and Consumer Commission used the chief economist’s false comparison to calculate pre-tax petrol costs were lower in Australia than the OECD average, when an apples-with-apples comparison would have shown they were higher.

ACCC chairman Rod Sims said it “acknowledges the complexity in making fuel comparisons between countries”.

Extracted from the Daily Telegraph.

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