Queensland Premier Steven Miles’ un-modelled election pledge to open government-owned petrol stations was slammed by economists and the industry as an intervention that would do the opposite of his stated intention and push up the cost of driving.

The Labor leader’s latest cost-of-living pitch to voters for the October 26 election includes a cap on fuel prices by legislating a ban on petrol stations raising them more than once a day and flagging any price change a day in advance. It would work with transport lobby RACQ to trial a daily limit on increases in petrol prices to no more than 5¢ a litre.

Seeking to reverse a sustained slump in the polls, Mr Miles used his pre-election budget to slash public transport fares to 50¢, provide $1000 electricity rebates to every household, and cut car registration by 20 per cent.

Announcing the petrol price plan on Tuesday, he said Queensland’s public ownership of energy assets was the motivation behind it, and that the creation of 12 state-owned petrol stations would encourage greater competition.

“They will sell petrol and diesel alongside electric vehicle fast chargers at 12 initial sites to be determined by government, in partnership with industry stakeholders,” he said.

“Currently when you fuel up your car with petrol you’re sending money offshore to big multinationals.”

The premier admitted in a press conference the market intervention policy was not based on modelling or research.

“This is an election commitment, so it hasn’t been produced by the public service,” Mr Miles said. “This is a commitment that we are making that if elected in October, we will implement this package of initiatives.”

‘Push up average price’

The RACQ had called on the government to introduce a cap on prices in response to Brisbane consistently having the most expensive fuel of all capital cities. Public ownership of petrol stations was not part of the group’s policy request.

Mark McKenzie, head of the petroleum marketing peak industry association ACAPMA, described the proposal as “a wildly bizarre intervention” that would not serve consumers well.

Labor said the “anticipated” cost of the petrol stations would be about $36 million. But Mr McKenzie said costs involved in one metro petrol station were about $8 million of investment, so the government proposal would cost almost $100 million with no costs to be recovered through operations.

“That’s an interesting way to play around with taxpayer funds,” he said.

Mr McKenzie acknowledged average fuel prices in Brisbane are typically 1.8c-2c a litre higher than other state capitals.

He said Labor’s proposed measures might remove the volatility of petrol prices but would push up the average price because there would be less discounting at the bottom of the price cycle as retailers sought to protect their margins.

“The government’s being a little cute here in talking about the upside, but they’re not talking about the fact that this will also impact discounting,” he said. “It risks increasing the average petrol price.”

EQ Economics managing director Warren Hogan said government intervention to lower the price of fuel would reduce supply, which he warned would ultimately increase prices.

“This is a policy approach in the spirit of the Greens wanting to freeze rents on investment properties that will have a seemingly positive short-term impact that is not only a waste of public money, but also will have detrimental effects on the industry and will only result in higher prices in the future,” he said.

“All you’re going to end up getting is state-subsidised fuel for the people who are lucky enough to turn up to those particular service stations, and you’ll end up getting massive queues at those service stations.”

Commercial risk

Adept Economics director Gene Tunny questioned why a state government would be interfering in markets and competition.

He said market regulations of this nature were a responsibility of the Australian Competition and Consumer Commission and raised concerns about the commercial risk with taxpayer funds.

“It’s almost going back to the colonial socialist past, where we had governments involved in all sorts of businesses – this is a state where we had state-owned butcher shops back in the 1920s,” Mr Tunny said.

Deputy Opposition Leader Jarrod Bleijie described the policy as “economic vandalism”.

The state’s Liberal-National Party said it would not support public ownership of stations but refused to rule out a fuel price cap policy if it wins the election, which polls say it is heavily favoured to do.

“What’s next?” Mr Bleijie asked of Labor’s pitch for public ownership. “The butcher, the baker, the candlestick maker? Where is it going to end with this Labor state government in their desperate attempt to hold office in Queensland?”

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Extracted in full from: https://www.afr.com/policy/economy/qld-premier-promises-state-owned-petrol-stations-fuel-price-controls-20240806-p5jzvi

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