There are few issues in Australia that promote more intense public debate more than discussions about petrol prices in Australia.
In fact, periodic public and political bashings of the service station industry in Australia appear to be part of the fabric of Australian society – much like ‘football, meat pies, kangaroos and Holden cars’.
“As one federal politician put it to me 18 months ago, no politician ever lost votes by attacking the Australian fuel industry”, said ACAPMA CEO Mark McKenzie.
“We are not likely to be able to change this longstanding public perception of our industry any time soon”, continued Mark.
To use the Star Wars analogy, most Australians perceive that politicians and media commentators must use ‘the force’ to counter the apparently unbridled power of the ‘Dark Side’ – the Australian fuel industry.
This perception continues to exist despite more than ten years of authoritative research completed by the Australian Competition and Consumer Commission (ACCC) that has consistently provided our industry with a positive report card.
“The problem is that none of the politicians or public policy makers appear to be reading the ACCC’s comprehensive reports”, said Mark.
In recent years, however, a disturbing trend has emerged with respect to government policy making relating to retail fuel operations in Australia’s State and Territories.
This trend involves State and Territory Government’s introducing new laws that are effectively increasing the costs of retailing fuel in most Australian jurisdictions – costs that, in the end, must be passed onto motorists in the form of higher fuel prices.
These new laws have come in quick succession in recent years and, when considered in aggregate, are putting significant upward pressure on fuel prices and provide at least a part explanation for the variance that often occurs between capital city fuel prices.
In the last 2 years alone, the following laws have come into effect (or will soon come into effect) for fuel retailers operating in Australia’s States and Territories:
- Stage 2 vapour recovery laws for fuel retailers in NSW
- Expanded biofuels laws for fuel retailers in NSW
- UPSS Monitoring laws in NSW
- New biofuels laws in Queensland
- New compulsory fuel price reporting laws in NSW and the Northern Territory
- New price board regulations in Victoria, Tasmania, Queensland and the Northern Territory
Regardless of their merits, the clear majority of these laws not only involve a capital hit for fuel retailers but also impose increased recurrent costs in the form of compliance management and maintenance costs.
When it comes to introducing laws that increase the costs of fuel retailing – costs that must ultimately be passed onto motorists in the form of higher fuel prices – NSW is the clear leader.
“In fact, a recent ACCC investigation estimated that the NSW biofuels mandate was costing NSW motorists an extra $83M per year in fuel costs”, said Mark.
“We, as an industry, accept that fuel price transparency is necessary to provide the Australian community with some comfort that competition is alive and well in our market”, said Mark.
But when it comes to government’s being transparent about the cumulative impact of increasing regulation on fuel prices, there appears to be a distinct lack of transparency and public reporting.
But the government hypocrisy doesn’t stop there.
There are two principal areas where Australian governments have long had an opportunity to advance initiatives that could simultaneously lower the costs of retailing fuel in Australia – but have consistently chosen to ignore them.
The first relates to the growing problem of fuel theft (i.e. drive-offs) where there is an urgent need for more effective laws to deter people from deliberately driving away without paying for the fuel.
“This problem has become very significant in Victoria and WA where the annual costs of fuel theft vary between $5k and $11k per year – losses that come straight off the bottom line”, said Mark.
To add insult to injury, there is currently no mechanism for fuel retailers to recover federal fuel taxes (i.e. excise) from fuel that is stolen – so government taxes are protected and the loss is compounded for fuel retailers.
The other area relates to the increased cost and complexity of constructing new retail sites and refurbishing existing sites.
State/Territory governments have progressively tinkered with relevant planning laws that have significantly increased the cost of service station works in Australia.
“To make it worse, local governments do not interpret these laws consistently which increases the cost of securing necessary approvals for service station works”, said Mark.
Perhaps it is time for Australian Governments to stop and consider whether the policy approach being pursued in respect of our industry makes sense because at the moment, the dramatic increase in costs associated with ever increasing State/Territory legislation is working contrary to their stated aims of keeping fuel prices as low as possible for all Australians.
In the meantime, ACAPMA is lobbying hard for changes to be made that provide a more effective deterrent to fuel theft (including new mechanisms to secure refunds of associated excise) and to streamline authority approvals for service station works.