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Petrol, Beer, Train, Meter Maids
August 22, 2000
Australia and New Zealand to Examine Trans Tasman Tax Issues
August 29, 2000
Petrol, Beer, Train, Meter Maids
August 22, 2000
Australia and New Zealand to Examine Trans Tasman Tax Issues
August 29, 2000

Petrol Prices

Transcript No. 2000/90





Interview with Steve Liebmann

Today Show

Wednesday, 23 August 2000


SUBJECTS: Petrol Prices


Well the Federal Government’s been under attack this week over the skyrocketing

petrol prices and yet despite calls for a national inquiry and relief for motorists,

Treasurer Peter Costello is standing firm today, maintaining nothing needs to change just

yet. Well Mr Costello joins us now in the studio. Morning Treasurer, thanks for joining



Good morning Steve.


Are the oil companies lying to the public?


Well we have the Australian Competition Consumer Commission which looks very carefully

at these pricing issues. It’s had the oil companies under notice for quite some time.

They announced last night that they were investigating a particular complaint about Shell.


And Caltex I understand.


Well I don’t think they actually named the other company. They said they were

looking at another company as well. And I can assure you of this, Professor Fels is

somebody who’ll chase this to the ground and if there’s evidence he’ll find

it. But ‘til the evidence appears I can’t say anymore.


So why not ask the ACCC to conduct a full open inquiry into the whole petrol pricing



We’ve had in the last 20 years in Australia I think forty inquiries into the

petrol industry. There’s been no shortage of inquiries. And I’m sure if you did

another one, you’d probably get the same sorts of findings. The problem in the

industry, the main driver of the cost in the industry is the international oil price.

Which in Australian dollar terms over the last 18 months has gone up from about $18 to

about $54. So that’s the main driver. But it will also find that where you’ve

got bigger competition you’ve got lower prices. And you get this interplay in the

industry between the companies and the retailers and nobody’s quite sure at any one

particular time who’s passing on the full amounts of all of the discounts.


Do you know? Do you know how petrol is priced?


Ah, look, the general theory is this. It’s priced by the world oil price, the

refiners then have their refining costs, there is then a tax contribution, it is then

distributed and then there’s a retail margin. But there are several variables and at

any one particular time there can be subsidies going on or if there is no competition in a

particular location people will actually try and get a higher price.


You and the Prime Minister said yesterday the consumer is being hurt by rising petrol

prices and you don’t like it.


Too right.


Well why not do something about it?


Well, what you have to do about it is get the world oil price down. That’s…


It’s not all you’ve got to do though is it?


Oh, Ross, the increase in petrol and about in June, late June, early July in the

capital cities the petrol price was in the 80s. Now as you know it’s in the high 90s,

around a dollar. What’s happened in the interim is that the world oil prices stayed

high and that the costs are being passed back into Australia. Now if I could get that

world oil price down, if we could make sure that the consumer was protected against those

costs, I would do everything we can. In fact the Foreign Minister has been very active in

making representations on the international scene. We’re not alone in this. Obviously

every country in the world is now facing these rising petrol prices because of high oil

prices. It’s affecting the Americans, I know the Americans have been making

representations to OPEC and the most important thing that we could have at the moment is a

lift in the world oil production.


Yesterday BP said, quote “There never has, never was, never will be that 1.5 cents

saving the Government suggested there was”. Last night Mobil said “The GST has

added between 2.5 and 3 cents a litre to the pump price”. Are they trying to kid the



The GST didn’t add anything to the pump price.


Well, why are they saying…


Well, here is the evidence. On the 30 June under the old tax system, all of the

previous taxation arrangements applied and on 1 July the New Tax System applied. The only

thing that changed between the 30 June and 1 July was the New Tax System. And petrol

prices were either stable or overall fell.


So are they profiteering, the oil companies, and making the Government and the GST the



If there is profiteering, it will be fully investigated. And I can assure you that we

are doing that now. But there is one reason why petrol prices are going up. And

that’s oil prices. Now I can’t say to the oil refiners and the oil retailers,

the big oil companies in Australia, you can’t recover the price that you have to pay.

Of course they do. And the prices have gone up because those prices have gone up. But if

they’ve gone up more than those prices have gone up as they’re passed back into

Australia, then we’ll have the Australian Competition Consumer Commission looking at



Members of your own backbench and indeed the Deputy Premier and National Party Leader

of Western Australia are saying the Federal Government is to blame, well Cowan is saying,

the Federal Government’s to blame for price rises, your take is too high, the excise

should be removed.


Well let me go through the excise point, because there was an excise indexation on 1

August. Indexation by the way Steve has been in place since 1983. It was introduced by the

Hawke Government some 17 years ago and twice a year the excise is indexed as prices move,

as the CPI moves. And the last time that happened, under the Labor Party legislation,

which we haven’t changed, which we haven’t changed, was on 1 August. And the

rise was 0.6 of a cent a litre. Now nobody likes 0.6 of a cent of a litre. But what people

are complaining about at the moment is they’ve watched the price go from mid 80s to

high 90s, maybe even over a dollar.


And sometimes 10 cents in a day.


And sometimes 10 cents in a day. And that was not caused by 0.6 of a cent of a litre of

indexation. And if you didn’t have 0.6 of a cent a litre of indexation you could

argue that maybe the price would be 98.1 instead of 98.7. But it wouldn’t be 84 or

85. The movement that people are complaining about from the mid 80s up to the high 90s and

over a dollar, is not related to excise indexation. And the motoring organisations know

that and the Labor Party knows that. And when the Labor Party was asked about indexation,

what did they say, well they’re going to keep it. Not only going to keep, they

actually introduced it.


Well look talking of the Labor Party, Peter Beattie was on our program yesterday and I

asked him how much his State would get as a result of the GST. Here’s what he had to

say. I would like to get your reaction to this. “As you know in the first three

years, in the transitional period, we don’t get anything out of the GST. The

Queensland Government, because we’re a low tax state, we do badly out of the GST,

because other States have higher taxes. But there’s a furphy. Meg Lees ran this line

too. It just isn’t true. The States are not going to get any increased return from

fuel increases. We don’t. I mean as part of the GST deal there’s a package being

done. Any increases go to the Federal Government. They do not go the States”. What do

you say to that?


I just don’t think the argument is helped by that kind of statement which is

plainly wrong.


He doesn’t know what he is talking about?


Well, you know, it is just not helped by that kind of statement which is plainly wrong.

Every last dollar of GST goes to the States. Every single last dollar. And if GST raises

more, the States get more. It doesn’t come to Canberra. In fact we’ve already

sent the first load of cheques off to the States. So unless Peter Beattie has got a plan

to send it back without cashing it, I don’t know how he can say that the States

don’t get anything out of the GST.


Okay, thanks for your time.


Thanks Steve.