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Petrol Pricing—Review

Tuesday 17 June 2008 Hansard source (external site)

Hereora8. DAVE HEREORA (Labour) Link to this
to the Minister of Commerce

What initiatives has the Government announced to investigate competition in petrol pricing?

DalzielHon LIANNE DALZIEL (Minister of Commerce) Link to this

The Ministry of Economic Development has engaged independent consultants to review and analyse petrol pricing in New Zealand in line with the Australian Competition and Consumer Commission report. As I have said, the commission found that prices are largely driven off crude oil prices, the US exchange rate, and the international market for the refining of petrol. There will be no difference from that here in New Zealand. However, the commission did consider that consumers were entitled to know more about how petrol prices are set, and believed there were some marginal gains to be made by improving the competitive dynamic of the market. That is what the New Zealand review will assess in the New Zealand context.

HereoraDave Hereora Link to this

What does the Government hope to achieve from its inquiry into petrol prices?

DalzielHon LIANNE DALZIEL Link to this

Of course, we are not conducting an inquiry, as the National Party spokesperson has suggested. However, I believe it is important that there is total transparency around petrol prices and that any myths around petrol price-setting are identified and dispelled, as occurred with the Australian Competition and Consumer Commission report. It is also in the interests of New Zealand consumers that we consider whether there is potential here, as there is in Australia, to improve the competitive dynamic of the market, because even though the difference may be marginal it is worth it to consumers, who are feeling the pain at the pump.

BrownleeGerry Brownlee Link to this

Can the Minister explain how establishing a FuelWatch bureaucracy will lower motor fuel prices for consumers; if she can, can she tell us whether any price decrease she might anticipate will compensate for the additions to the petrol price that are coming from regional fuel tax, the biofuels obligation, and emissions trading scheme costs?

DalzielHon LIANNE DALZIEL Link to this

The member is heading into the pathway of making a determination as to the outcome of the review of the Australian Competition and Consumer Commission report. That report found that the FuelWatch system that has been operating in Western Australia should be rolled out across the rest of Australia in areas with large populations—not in rural areas but in the cities. The Australians have discovered that that would transfer the power of information to the consumer and away from the petrol companies. The petrol companies are able to monitor their competitors’ prices on an instantaneous basis through informed sources. FuelWatch gets the information to the consumers rather than to the petrol companies, so consumers can make an informed choice as to whether they buy before 6 a.m. or after 6 a.m.

BrownleeGerry Brownlee Link to this

I raise a point of order, Madam Speaker. That was a very interesting elucidation of the Minister’s thinking, but the question asked whether she thinks a FuelWatch bureaucracy will lead to lower prices for consumers.

WilsonMadam SPEAKER Link to this

Does the Minister wish to add anything to her answer?

DalzielHon LIANNE DALZIEL Link to this

I will say that the commission’s report, which has recommended rolling out FuelWatch to all of Australia, not just Western Australia where it operates, has determined that indeed there is benefit to consumers in having the information that is currently now available only to the petrol companies. The differences between New Zealand and Australia are that Australia has seven oil refineries and we have one, and that Australia has a significantly larger population than we do. I think it is sensible to see whether the model would work in New Zealand, and that is what the review will do.

BrownleeGerry Brownlee Link to this

I raise a point of order, Madam Speaker. That was virtually the same answer, with a little more added to it. The question asked whether a FuelWatch bureaucracy will lower prices.

WilsonMadam SPEAKER Link to this

I think if the member had listened carefully he would have found the Minister did actually address the question,.

BrownPeter Brown Link to this

Will the Minister answer specifically, could this inquiry lead to the establishment of a FuelWatch ombudsman or some such person, as in Australia; if so, who will pay for it—will it be similar to the Electricity Commission and fall as a charge against users?

DalzielHon LIANNE DALZIEL Link to this

It was a recommendation of the Australian Competition and Consumer Commission to appoint a fuel commissioner to the commission, and that has been in place for a relatively short period of time. I would expect the independent contractors to look at how that has panned out in Australia and to make appropriate recommendations. I think it is too early to say how it would be funded if the decision was made to go down that track, but I think the jury is still out on that recommendation.

FitzsimonsJeanette Fitzsimons Link to this

When will the Government address the underlying reality that petrol prices are rising because demand for oil is exceeding the available supply, and when will it pull New Zealanders together to develop a long-overdue plan to reduce New Zealand’s dependence on oil?

DalzielHon LIANNE DALZIEL Link to this

This Government has taken many initiatives to ensure that we are addressing the reality of peak oil when we get to that, and also to ensure that New Zealanders take appropriate steps to reduce their dependence on fossil fuels.

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