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Prices Justification Act - Prices Justification Tribunal - Report - Price increases - Period - 1 July to 31 December 1977


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The Parliament of the Commonwealth of Australia

PRICES JUSTIFICATION TRIBUNAL

Half-yearly Report for period ending 31 December 1977

Presented pursuant to Statute 11 May 1978 Ordered to be printed 9 June 1978

Parliamentary Paper No. 127/1978

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Prices Justification Tribunal Report in respect of the six months ended

31 December 1977

Prices Justification Tribunal

Report in respect of the six months ended 31 December 1977

Australian Government Publishing Service Canberra 1978

Printed by Watson Ferguson & Co., Brisbane

Prices Justification Tribunal 10 Queens Road Melbourne, Victoria 3004

28 April 1978

Dear Minister,

In accordance with section 35a of the Prices Justification Act 1973 I have the honour to submit to you, for presen­ tation to the Parliament, the Report of the Prices Justifi­ cation Tribunal in respect of the six months ended 31 December 1977.

Yours sincerely,

F . C . P r y o r

Acting Chairman

The Honourable Wal Fife, M.P. Minister for Business and Consumer Affairs Parliament House Canberra, A.C.T. 2600

PRICES JUSTIFICATION TRIBUNAL

Membership of the Tribunal as at 31 December 1977

Acting Chairman Mr Frank Commons Pryor, O.B.E.

Full-time Members Mr Michael John Long Mr Percival Charles Rodda Mr George Nelson Fisher

Part-time Member M r Robert Newton Reed Johnston

Associate Member Dr Allan Herbert Miller Pels

C O N T E N T S

Page

I n t r o d u c t i o n ...................................................... 1

The price notification sy ste m ............................... 2

Selection of significant price increases . . 4

Price trends during the period . . . . 5

Attachments

A. Price notifications processed by the Tribunal 8

B. Major indicators of price and wage changes in A u s t r a l i a ....................................................... 10

C. Particulars of significant price increases processed by the Tribunal during the six months ended 31 December 1977 . . . 11

D. Summaries of Public Inquiry Reports issued by the Tribunal during the six months ended 31 December 1977 ....................................... 42

INTRODUCTION

This report is concerned with the more significant price increases processed by the Prices Justification Tribunal in the six months ended 31 December 1977. It is the third report submitted by the Tribunal in compliance with section 35a of the Prices Justification Act 1973. Under that section, which was incorporated in the legislation in December 1976, the Tribunal is required, as soon as practicable after

each 30 June and 31 December, to furnish the Minister with a report setting out in relation to each industry: (a) particulars of the most significant increases in prices that occurred during the period of 6 months that ended on that 30 June or 31 December, as the case may be, being increases in

relation to which notices were given to the Tribunal, or the Tribunal held inquiries, under this Act, and (b) the principal matters that in the opinion of the Tribunal justified those increases.

The main facts and figures pertaining to this report are set out in four Attachments: □ Attachment A provides statistics, on an industry by industry basis, of the total number of price notifications processed by the Tribunal during the latter half of 1977. The main purpose of this Attachment is to provide essential background

information concerning the operation of the Tribunal’s price notification system during this period. □ Attachment B provides details of price trends in the period to 31 December 1977 as shown by the major statistical indicators of price and wage changes in Australia.

This material, which is derived from publications of the Australian Bureau of Statistics, provides a considerably wider coverage of price movements in the economy than the data available from the Tribunal’s more limited field of opera­ tions. □ Attachment C represents the main body of the report. In accordance with the

requirements of section 35 a , particulars are given in this Attachment of the more significant price increases processed by the Tribunal during the period in respect of each industry. Particulars of over eighty cases are provided. □ Some of the more significant price increases (and price decreases) emerged from

the Tribunal’s public inquiries and summaries of the public inquiry reports issued during the six months ended 31 December 1977 are therefore given in Attachment D.

Further observations concerning the material contained in these Attachments are made below.

1

THE PRICE NOTIFICATION SYSTEM

Perhaps the first point to note is that this Report is in no sense a report on the Tri­ bunal’s activities as a whole during the period in question. As required by section 35a of the Act, the Report is limited to giving particulars of certain price increases which have been selected from those which were the subject of prior notification to the Tribunal or which were examined at the six public inquiries held during this period. For the most part, this Report is therefore confined to the more significant price increases which came to the Tribunal’s notice through its price notification system. For various reasons, including the limited coverage of this system, the price increases referred to in this Report are not necessarily representative of price trends in the economy as a whole.

The limited coverage of the price notification system is illustrated in Table 1 of Attachment A which contains an analysis of the price notices processed by the Tri­ bunal during the latter half of 1977. This table indicates that, of the price notices totalling 1332 in that period, about 1170 or nearly 90 per cent related to industries in the manufacturing sector. Virtually no notifications were received from companies

in other sectors of production (mining and agriculture) and the notification system covered only small areas of the retail and service industries. It is hardly necessary to add that one of the most important elements in the cost-price situation in Australia— namely, the price of labour—falls within the area of responsibility of the Conciliation and Arbitration Commission. .

In considering the data contained in this Report it should also be borne in mind that a substantial reduction has been taking place in the number and coverage of price notices submitted to the Tribunal. This point is illustrated in Table 2 of Attach­ ment A which shows {inter alia) that the number of price notices processed by the Tribunal in the latter half of 1977 (namely 1332) was less than half the number pro­ cessed in the corresponding six months of 1976. The figures for the full calendar years in the period since the establishment of the Tribunal are as follows:

Number o f Price Notices

1974 6878

1975 7640

1976 6421

1977 3157

The decline in the volume of price notices in the second half of 1977 was due to various factors, including the economic climate, which caused many firms to defer plans for price increases. The main factor accounting for the decline, however, would have been the legislative amendments of December 1976 which relieved many firms of the obligation to furnish notices of their proposed prices. These measures included raising the threshold of annual receipts for ‘prescribed’ companies from $20 000 000 to $30 000 000 and excluding from the notification obligation all subsidiary companies with annual receipts not exceeding $5 000 000. The amendments also resulted in the exemption of retail companies.

The legislative amendments placed greater emphasis on price surveillance (rather than prices control) as the Tribunal’s primary role. Accordingly, some of the amend­ ments were designed to encourage the Tribunal to exempt companies from the noti­ fication process in circumstances where such companies were not in a position to control the markets for their goods or where the companies had been pursuing fair and reasonable pricing policies for a substantial period.

2

Except during the period of the ‘wage-prices freeze’ in the earlier part of the year, exemption action along these lines was taken by the Tribunal during the course of 1977. In December 1977 the Acting Chairman advised the Minister that the Tribunal had instituted a systematic review of exemptions, on a sector by sector basis, with a view to accelerating the transition to a situation where the Tribunal would concen­ trate on pricing problems in the less competitive areas of the economy. (It is, perhaps, pertinent to add that the number of price notices processed in the early months of

1978 has fallen to an annual rate of about 1500). Of the price notices totalling 1332 in the six months to 31 December 1977 some 1044 were processed without amendment thus leaving 288 notices (or 22 per cent) which were either amended downwards or withdrawn. (Details are given in Attach­

ment A). These figures should be interpreted with care; the figures do not reflect, for example, cases where companies may have discussed their pricing proposals informally with Members of the Tribunal and revised their proposals prior to the lodgment of formal notices.

3

SELECTION OF SIGNIFICANT PRICE INCREASES

As already mentioned, particulars of over eighty price increases are given in Attach­ ment C. In deciding which price increases were of sufficient significance to merit inclusion in this report the Tribunal was influenced in each case by one or more of the following criteria: (a) In general it was considered that price increases should not be classed as signifi­

cant unless they produced additional revenue of at least $2 million per annum; (b) Price increases were considered significant in cases where they were higher than the price increases occurring generally in an industry or in a section of industry; (c) The Tribunal also considered whether the price increases had a significant impact

on the community; (d) A similar consideration was whether the price increases were likely to have marked flow-on effects on other costs and prices; (e) Some relatively small price increases were included in cases where their cumulative

effect was significant.

Reference has already been made to the limited (and changing) coverage of the price notification system and the consequent difficulty of deriving comparable data which would support meaningful conclusions concerning the nature and causes of price trends in the economy as a whole. For various other reasons, care also needs to be exercised in drawing conclusions from this data concerning price movements in particular industries. In this connection it might be noted that: □ There is no a priori reason why the price increases notified to the Tribunal by

those firms which happen to be ‘prescribed’ companies at a particular point in time should be representative of the price increases generally in the industry or industries concerned; □ Although the price increases described in this report have been processed by the

Tribunal—which means in most cases that the Tribunal has informed the Company that it does not propose to put the proposed price increase to public inquiry— the Company is allowed a period of 90 days in which to implement the higher price or prices. In some cases it may not be possible for the company to implement the price increase in the market place. Apart from that aspect, the time-lag involved in the implementation of many price increases means that the prices actually implemented during the six months covered by this report are not likely to corre­ spond with the decisions made by the Tribunal during this period; □ The prices shown in this report are, for the most part, maximum wholesale prices.

The actual prices may differ from these in some cases because of discounting and other such factors.

PRICE TRENDS DURING THE PERIOD In considering the reasons for the price increases detailed in Attachments C and D it is useful—at least in some cases—to view the increases against the background of the more general factors affecting price levels in the economy.

It would be beyond the scope of this report to venture into detailed discussion of the basic economic forces which determine the state of the economy and the rate of inflation. In assessing the impact of recent variations in cost-price pressure and demand conditions in the economy, however, it is useful to take into account certain statistical indicators of wage and price movements which are already available from the Aus- trailian Bureau of Statistics. The key indicators are brought together in Attachment B which gives details of quarterly movements in the period up to the end of December

1977. For purposes of assessing the general price trends in the second half of 1977 the most useful indicators in Attachment B are those which cover a wide range of goods and services. These are the three implicit price deflators derived from the national accounts together with the consumer price index. Each of these indicators suggest that there was some further slowing down in inflationary trends in the second half of 1977 and that the annual rate of increase in prices generally had fallen to a figure somewhat below 10 per cent per annum. In general, the price notices processed by the Tribunal during this period appear to have been consistent with the general trend towards a lower rate of price increase in the second half of the year. As always, how­ ever, there were some significant exceptions. For ease of reference the general in­ dicators are reproduced below.

General Price Indicators

Average Percentage change from

quarterly preceding quarter

increase during -------------------------------------------

1976 1977

ITEM 1974 1975 1976 Sept. Dec. Mar. June Sept. Dec.

Implicit deflators Private final consumption 3.9 3.5 2.6 1.9 2.0 3.8 2.4 1.9 1.5

Major components of ONE 4.8 3.7 2.6 2.4 1.3 4.0 2.5 1.7 1.4

Gross non-farm product 5.4 4.0 2.6 1.8 2.0 3.8 0.7 2.2 2.0

Consumer price index All groups 3.9 2.4 3.4 2.2 6.0 2.3 2.4 2.0 2.3

Excluding foods 4.4 3.8 3.5 1.9 6.6 2.4 2.2 1-4 2.5

Excl. hospital & medical services 3.8 4.0 2.6 2.2 2.8 2.4 2.4 2.1 2.5

Most of the proposed price increases submitted to the Tribunal were designed primarily to offset increases in the costs of providing the goods and services con­ cerned. These higher costs invariably reflected higher wage and salary costs and, in many cases, higher costs of materials.

The trend in labour costs during the period in question is best illustrated in the Statistician’s index of average weekly earnings. As most of the price notices received by the Tribunal relate to companies engaged in manufacturing industry the most useful indicator of trends in the costs of materials is the Statistician’s index of mater­

ials used in manufacturing. These two indices—together with an index of the prices

5

of articles produced by manufacturing industry—are included in Attachment B and, for ease of reference, are reproduced below.

Wage and Price Indicators

Percentage change from

Average preceding quarter

quarterly -----------------------------------------

increase during 1976 1977

ITEM 1974 1975 1976 Sept. Dec. Mar. June Sept. Dec.

Average Weekly Earnings 6.4 3.1 3.0 3.4 1.4 2.5 3.3 3.1 Nil

Manufacturing: Materials used in 2.4 2.3 2.7 5.4 1.1 6.9 3.3 1.0 —0.5

Articles produced by 4.4 3.0 2.4 2.1 2.1 3.6 2.1 1.7 1.8

The seasonally adjusted index of average weekly earnings per employed male unit illustrates the falling-off which occurred in the second half of 1977 in the upward movement of wages and salaries. The Tribunal’s own experience confirms that this was a significant development in helping to moderate price increases in that period.

The index of costs of materials used in manufacturing industry gives a useful indication of cost increases entering the sector. These cost increases originate from other sectors of the economy (such as mining and agriculture) and from imported goods and materials. In the second half of 1977 prices of home-produced materials entering manufacturing were 9.2% higher than in the corresponding period of 1976. This figure was much less than in the case of imported materials the prices of which increased by 17.6%, reflecting the impact of currency variations and fuel price in­

creases. The largest individual rise came from the category known as ‘electricity, gas and fuels’, including imported and home produced inputs, which rose by 18.23%. It is not surprising that some of the more significant price increases detailed in Attach­ ment C were due primarily to higher import prices.

It is important to note, however, that there was very little net movement in aggre­ gate input manufacturing prices during the last two quarters of 1977. This was in marked contrast with the substantial upward movement experienced in the first half of the year; that upward movement continued to have some effect on manufacturers’ costs in the second half of the year.

The index of price movements for articles produced by manufacturing showed a rise of 9.6% in the second half of 1977 as compared with the same period in 1976. The price increases of individual subdivisions of this index were comparable to the overall average, with the highest price rises occurring in ‘food, beverages, and to­ bacco’ (11.6%) and ‘industrial machinery and equipment’ (12.3%). The index showed a decline in the rate of price increase in all quarters of 1977.

The movement in the price index of articles produced by manufacturing, viewed in conjunction with the movements in average weekly earnings and the price of materials used in manufacturing, implies that some of the cost increases in this period were not fully reflected in prices and were absorbed to some extent in lower gross profit margins.

The Tribunal frequently encountered cases of this kind. Many of the companies which came within the purview of the Tribunal during the second half of 1977 ex­ perienced difficulties in recovering increased input costs through higher prices for

6

their commodities. Largely because of the depressed level of demand in some sectors of the economy, many producers found it necessary to absorb portion of their cost increases and this affected adversely the recovery of profitability levels in real terms during the six-monthly period under review. The Tribunal also found, as a corollary

of this situation, that in some sectors of manufacturing industry relatively few firms sought in this period price increases designed not only to meet their cost increases but also to achieve higher profitability and facilitate new investment. This is not to say that the market place imposed constraints of this kind in all

areas or that the Tribunal found it unnecessary during the second half of 1977 to exert a restraining influence in respect of proposed price increases. The material in Attachments C and D gives details of quite a number of cases where the Tribunal used its influence in this way. At the same time the Tribunal has been anxious to ensure—especially in current economic circumstances—that its operations are con­ sistent with the need to maintain business confidence and to promote investment and economic recovery.

7

ATTACHMENT A Price Notifications processed by the Tribunal

Table 1: Notices processed by the Tribunal during the six months ended 31 Decem­ ber 1977 by Industry Classification.

Details o f processing action

Industry classification Total

number Notices Notices Notices

processed unchanged amended withdrawn

Manufacturing Food beverages, tobacco 236 205 26 5

Textiles, clothing, footwear 40 38 2 —

Wool, paper, priming and publishing 56 49 6 1

Chemicals and related products (a) 83 68 10 5

Petroleum products (a) 148 73 55 20

Glass, Clay, cement 93 70 17 6

Metal products 88 80 6 2

Transport equipment 174 115 34 25

Household appliances 136 121 13 2

Leather, rubber, plastic 36 30 6 —

Other industrial equipment (b) 79 65 11 3

Service Industries Transport services 36 29 6 1

Pastoral (wool selling brokers) 24 23 1 —

Retail (c) 68 50 9 9

Other 35 28 5 2

TOTAL 1332 1044 207 81

(a) including wholesale (b) including imports _

(c) includes retailing subsidiaries of manufacturers and importers and labour rates associated with consumer durable service contracts.

8

Table 2: Comparison of notices processed by the Tribunal during the six months ended 31 December 1976 and 31 December 1977.

Six months ending 31.12.76

Six months ending 31.12.77

Manufacturing Food, beverages and tobacco 447 236

Textiles, clothing & footwear 138 40

Wood, paper, printing and publishing 75 56

Chemicals & related products (a) 191 83

Petroleum products (a) 105 148

Glass, clay and cement products 192 93

Metal products 234 88

Transport equipment 227 174

Household appliances (including television and radio) 262 136

Leather, rubber and plastic products 80 36

Other industrial equipment (b) 191 79

Service industries Transport services 48 36

Pastoral (wool selling brokers) 86 24

Retail trade (c) 316 68

Other 279 35

2871 1332

(a) Including wholesale (b) Including imports (c) Including retailing subsidiaries of manufacturers and importers and labour rates associated with consumer durable service contracts.

9

ATTACHMENT B Major indicators o f price and wage changes in Australia (percentage changes)

Percentage change from

Average preceding quarter

quarterly — ----- ----------------------------------

increase during 1976 1977

Item 1974 1975 1976 Sept. Dec. Mar. June Sept. Dec.

Implicit deflators (a) (A.B.S. Ref. No. 5206)

private final consumption 3.9 3-5 2.6 1.9 2.0 3.8 2.4 1.9 1.5

major components of GNE 4.8 3.7 2.6 2.4 1.3 4.0 2.5 1.7 1.4

gross non-farm product 5.4 4-0 2.6 1.8 2.0 3.8 0.7 2.2 2.0

Consumer price index (A.B.S. Ref. No. 4601) all groups 3.9 3.4 3.4 2.2 6.0 2.3 2.4 2.0 2.3

excluding food 4.4 3.8 3.5 1.9 6.6 2.4 2.2 1.4 2.5

excl. hospital and medical services 3.8 4.0 2.6 2.2 2.8 2.4 2.4 2.1 2.5

Building materials (A.B.S. Ref. Nos. 6407 and 6408) house building 5.2 3.2 2.9 2.5 1.9 3.3 2.0 2.3

1 .

1.3

other building 5.6 3.6 2.9 2.0 1.9 2.7 2.1 2.2 1.8

Manufacturing (A.B.S. Ref. Nos. 6411 and 6412) materials used in 2.4 2.3 2.7 5.4 1 1 6.9 3.3 1.0 -0 .5

articles produced by 4.4 3-0 2.4 2.1 2.1 3.6 2 1 1.7 1.8

Average Weekly Earnings (a) (A.B.S. Ref. No. 6302) 6.4 3-1 3.0 3.4 1.4 2.5 3.3 3.1 0

(a) Seasonally adjusted

Source·’ Australian Bureau of Statistics

10

ATTACHMENT C Particulars of significant price increases processed by the Trib unal during the six months ended 31 December 1977.

I FOOD, BEVERAGES AND TOBACCO

In this section of the Report, particulars of the more significant price increases pro­ cessed by the Tribunal in respect of food, beverages and tobacco during the second half of 1977 are provided under the following headings: □ Coffee, cocoa and tea

□ Bread □ Flour Π Other foodstuffs □ Alcoholic and non-alcoholic beverages

□ Cigarettes and tobacco During the period in question, price rises processed by the Tribunal in respect of foodstuffs tended to be rather higher than in most other areas. To a large extent the increased prices reflected higher costs; there were also a number of cases where the higher prices allowed for some improvement in profitability.

In the latter half of 1977 the foodstuffs sector of the consumer price index rose at a somewhat greater rate than the index as a whole. The food component of the consumer price index increased by 6.06% in the period June-December 1977 and for the year to December 1977 by 11 % as compared with the overall consumer price index increase for the year of 9.3 %. At the retail level, the largest increases in the

June-December 1977 period were in the prices of fruit and vegetables, soft drink, ice cream and confectionery, fish, poultry and dairy products. It would be misleading to suggest, however, that there is necessarily a close cor­ relation in any particular period between the trend in the retail prices of foodstuffs as measured by the consumer price index and the wholesale prices of those foodstuffs which are the subject of notifications to the Tribunal. Apart from such factors as

differences in timing, the prices of some of the more volatile items of foodstuffs (such as meat, fruit and vegetables) do not come within the Tribunal’s notification system. The prices of certain foodstuffs in this period were affected also by pricing deci­

sions made by various other Authorities. Examples of such decisions are given below.

□ On 16 June 1977 the Commonwealth and Queensland Governments authorised an increase in the price of sugar by 8.4% across the board and this resulted in flow- ons in respect of domestic retail pack sugar and industrial sugar which passed into prices of products using sugar during the latter half of 1977. □ In December 1977 the Australian Wheat Board increased the price of wheat for

domestic consumption by $5.76 per tonne; this increase was reflected in higher flour prices later in December and in higher bread prices after the close of the calendar year.

11

COFFEE, COCOA AND TEA

The upward movement in the prices of cocoa-based products slowed down and the price of coffee did not rise during the period. The huge increases in the previous year in the cost of imported coffee and cocoa were reversed as international market prices fell. This reversal was not reflected in this period in reduced product prices in Australia

because manufacturers and processors had anticipated some falls in the cost of their imports and had not sought to write into their domestic prices the full cost of purchases made when international prices were at their peak. The Tribunal maintains continuous surveillance over these products and expects some price reductions to take place in the first half of 1978.

International tea prices fell significantly in the second half of 1977 and this led to a marked change in the domestic price situation. In the first half of the year, all of the major wholesalers of tea in Australia had found it necessary to effect substantial increases in tea prices. As indicated below, only one major company (Lipton Tea

Company Ltd) notified a price increase in the second half of the year and this occurred in mid-July before the company had received the benefit of international price re­ ductions. On 24 October 1977 the market leader (Bushells) announced a reduction of 35 cents per kilo in its domestic tea prices.

The particulars set out below also include two cases illustrating the effects of previous increases in international cocoa prices.

Product: Tea

Company: Lipton Tea Company Ltd

Product sample Previous price

(31.5.77)

New price (18.7.77)

Percentage increase

Packet tea Yellow label 250 g (per kg) $2,815 $3,696 31.3%

Quick Tips 250 g (per kg) $3,049 $3,904 28.0%

Bulk tea A.M. (5.0 kg) $14.01 $18.29 30.5%

Tea Bags Tea Cup 40 x 25 (per Ό00) $13.58 $14.37 5-8%

The weighted average increase for the notified products was 14%.

12

Product: Milk, grocery and chocolate products etc.

Company: The Nestle Company (Australia) Ltd

Product sample Previous price

(17.6.77)

New price (21.9.77)

Percentage increase

Milo Tonic (24 x 200 g) $11.42 $12.10 6%

Full Cream Powdered Milk (24 x 375 g) $15.04 $15.27 1-5%

Sweetened Condensed Milk (48 x 400 g) $16.05 $16.27 1.4%

Chocolate large blocks doz. $4.04 $4.44 9-9%

Chocolate family blocks doz. $7.28 $7.68 5 5 %

The range of price increases for milk products was 1.4 % to 6.8 % for grocery products 2.7 % to 8.9 % and for chocolate products 2.7% to 10.0%.

Product: Cocoa-based confectionery and other foods

Company: Cadbury-Schweppes Pty Ltd

Product sample Previous price

(26.5.77)

New price Percentage increase

Chocolate—Family block (12 x 200 g) $6.88 $7.04 (20.7.77)

$7.21 (28.9.77) $7.37 (22.12.77) 7-1%

Bournville Cocoa (24 x 250 g) $23.45 $28.14 (28.9.77)

$42.09 (22.12.77) 79.5%

Each of the three price notifications lodged by the Company during this period was the subject of downward amendment after discussion with the Tribunal. Apart from increases in domestic costs similar to those experienced in other sectors of the economy, prices in this area have been influenced significantly during the past year by substantial movements in international cocoa prices.

BREAD

Increases notified to the Tribunal by companies in respect of their bread prices in capital cities during the period are set out below. (In Sydney and Adelaide, bread prices are not notified to the Tribunal as the prices in these cities are controlled by State Prices Authorities).

Melbourne - Increase of 1 cent per loaf all bread home delivered and wholesale Brisbane - Increase of 1 cent in respect of both wrapped and unwrapped bread Perth - Increase of 1 cent sliced and wrapped - July 1977 2 cents unwrapped

Wholesale 0.85 cents sliced and wrapped 1.70 cents unwrapped - September 1977

A.C.T. - Increase of 1 cent per loaf on suggested reselling prices.

13

FLOUR

Company: Fielders Ltd

Product sample Previous price

(29.11.76)

New price (29.11.77)

Percentage increase

Sydney Metropolitan wholesale prices Bulk per tonne $182-70 $185.80 1.7%

Bagged 67 kg jute $192.20 $196 65 2-3%

As a result of the wheat price increase of $5.76 per tonne, the price of flour supplied by this company increased by a further $5.50 per tonne. Similar increases were implemented by other flour millersin all States in December 1977 and January 1978.

OTHER FOODSTUFFS

Product: Poultry products

Company: Inghams Enterprises Pty Ltd

Product sample Previous price New price Percentage

(23.12.76) (22.8.77) increase

per kg per kg

Fresh Chicken No. 7-8 $1.62 $1.68 3.7%

Company: Steggles Pty Ltd

Product sample Previous price New price Percentage

(22.8.77) increase

per kg per kg

Fresh Chicken No. 7-8 $1.61 $1.66 3-1%

Product: Ice cream

Company: Streets Ice Cream Pty Ltd

Product sample Previous price New price Percentage

(8.9.77) increase

11 litre bulk vanilla (N.S.W. & Vic.). $4.45 (4.5.77) $4.90 101%

11 litre bulk flavoured (N.S.W. & Vic.) $4.84 (4.5.77) $5.25 8-5%

Cornetto x 12 (N.S.W.) $2.87 (27.5.77) $3.05 6-3%

Cornetto x 12 (Vic.) $2.64 (27.5.77) $2.80 6-1%

The weighted average price increase over the range of the companies’ products was 5.7%.

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Product: Grocery items

Company: Kraft Foods Limited

Product sample Previous price New price Percentage

(16.12.76) increase

250 g Cheddar Slices x 12 $5.36 $5.63 (8.7.77) 6.72%

$5.72 (16.11.77)

235 g Vegemite x 12 $6.88 $7.24 (8.7.77)

$7.42 (16.11.77) 7.85%

Product: Biscuits, cakes, plum puddings

Company: Arnotts Ltd

Product sample Previous price New price Percentage

(6.6.77) increase

Limmits—Cheese Crackers 175 g $0,795 $0,811 (18.7.77)

$0,838 (11.10.77) 5.41%

Assorted Creams 450 g $0,804 $0,816 (18.7.77)

$0,840 (11.10.77) 4.48%

Family Assorted 450 g $0,689 $0,698 (18.7.77)

$0,719 (11.10.77) 4.35%

Cheeze Jatz 200 g $0,426 $0,432 (18.7.77)

$0,445 (11.10.77) 4.46%

Milk Arrowroot 225 g $0,304 $0-308 (18.7.77)

$0,317 (11.10.77) 4.28%

The weighted average increase on 18.7.77 was 1.67% and on 11.10.77 was 2.98%.

Product: Pet foods

Company: Effem Foods Pty Ltd (Uncle Ben)

Product sample Previous price New price Percentage

(9.12.76) (2.8.77) increase

Pal 405 g x 24 $6.31 $6.70 6-2%

Goodo 500 g x 20 $7.71 $8.36 8 4 %

Whiskas 425 g x 24 $6.62 $6.80 2.7%

The above prices were for purchases of 144 to 503 cases. The overall weighted average increase for the notified products was 4.79 %. This was lower than the price increase originally sought by the company.

15

ALCOHOLIC AND NON-ALCOHOLIC BEVERAGES

Increases in the prices for alcoholic and non-alcoholic beverages were due mainly to increases in labour costs arising from determinations of the wage-fixing authorities. Other increased costs were mainly on account of increased prices for metal cans, bottles and other packaging materials.

Product: Non-alcoholic carbonated beverages

Company: Associated Products and Distribution Pty Ltd

Product sample Previous price New price

(1.8.77)

Percentage increase

Carbonated beverages Returnable bottles 12 x 900 ml (N.S.W.) $2-96 (12.10.76) $3.04 2-7%

12x1000 ml (Vic.) $3.38 (19.11.76) $3.54 4.7%

Cans 24 x 370 ml (N.S.W.) $4-36 (12.10.76) $4.54 4-1%

24 x 370 ml (Vic.) $4.80 (19.11.76) $4.98 3.8%

The weighted average increase for the notified products was 4.6%.

Company: Cadbury Schweppes Aust. Ltd - Schweppes Division

Product sample Previous price New price Percentage

increase

Returnable bottles 12x900 ml (Vic.) $3.28 $3.36 (1.8.77) 2-4%

12x900 ml (N.S.W.) $2.96 $3.12 (1.8.77)

$3.28 (2.12.77) 10.8%

Cans 12 x 370 ml. (Vic.) $2.43 $2.52 (1.8.77)

12x370 ml (N.S.W.) $2.18 $2.27 (1.8.77)

$2.36 (2.12.77) 8.3%

Product: Bulk and packaged beer

Company: Carlton and United Breweries Ltd

Product sample Previous price New Price Percentage

(25.5.77) (7.10.77) increase

Bulk Kilderkin $43.44 $43.97 1.2%

Packaged 740 ml bottles x 12 $6.27 $6.36 1-4%

370 ml cans x 12 $3.65 $3-74 2-5%

The overall weighted average increase for the notified products after removal of excise duty included in the above quoted prices was 3,9%. This was less than the increase sought initially by the company. '

16

Company: Tooheys Ltd

Product sample Previous price

(5.4.77)

New price (5.10.77)

Percentage increase

Bulk Kilderkin $43.01 $44.11 2.6%

Firkin $22.21 $22.81 2.7%

Packaged 740 ml bottles x 12 $6.22 $6.36 2.3%

370 ml cans x 12 $6.93 $7.17 3.5%

The weighted average increase for the notified products was 2.9%. The agreed increase, after excluding excise, was 7.713%. This was lower than the increase proposed initially.

Product: Bulk and packaged beer

Company: Tooth and Co. Ltd

Product sample Previous price

(16.3.77)

New price (5.10.77)

Percentage increase

Bulk Kilderkin $42.90 $44.10 2.8%

Packaged 740 ml bottles beer x 12 $6.19 $6.36 2-7%

740 ml bottles stout x 12 $6.35 $6.71 5.7%

370 ml bottles—Premier x 12 $4.16 $4.20 1.0%

740 ml cans beer x 12 $6.19 $6.55 5.8%

The weighted average increase for the notified products was 2.74%. This was less than the price originally sought by the company. The agreed increase, after excluding excise, was 8.17%.

Product: Packaged beer

Company: Castlemaine Perkins Ltd

Product sample Previous price New price Percentage

(22.11.77) increase

Bottled beer—Brisbane 740 ml bottles x 12 $5.96 (27.9.76) $6.14 3.0%

370 ml cans x 24 $7.04 (27.6.76) $7.21 2-4%

The weighted average increase for the notified products was 2.8 % and after excluding excise, 6.82%.

17

CIGARETTES AND TOBACCO

Each of the three major manufacturers of tobacco and cigarettes notified a price increase during the latter half of 1977. In each case nearly six months had elapsed since the previous price increases; the price increases (excluding excise) ranged between 1.2% and 2.4%. Cost increases for labour, packaging materials, and tobacco leaf were the major factors behind these rises. In each case, agreement was reached with the companies on prices lower than they had initially sought; the reductions ranged

between 7.5% and 50% of the price increase proposed.

Product: Cigarettes

Company: Rothmans of Pall Mall (Aust.) Ltd

Product sample Previous wholesale New wholesale Percentage

price (27.5.77) price (18.11.77) increase

Peter Stuyvesant *000 $31.87 $32.25 119%

Rothmans KS Ό00 $31.50 $32.25 2.38%

Winfield Ό00 $28.87 $29.25 1.32%

Company: W. D. and H. O. Wills (Australia) Ltd

Product sample Previous wholesale New wholesale Percentage

price (27.6.77) price (1.12.77) increase

Ardath Ό00 $24.37 $24.75 1.6%

Benson & Hedges ΌΟΟ $32.25 $32.62 1-2%

Craven Special ’000 $31.87 $32.25 1-2%

Escort ’000 $25.87 $26.25 1.5%

Company: Philip Morris Ltd

Product sample Previous wholesale

price (31.5.77) New wholesale price (20.10.77) Percentage

increase

Alpine ’000 $29.62 $30.00 1.28%

Black & White Ό00 $23.62 $24.00 1.61%

Peter Jackson ’000 $27.37 $27.75 1.39%

18

II TEXTILES, CLOTHING AND FOOTWEAR

Only a few of the companies engaged in these industries are required under the Act to notify the Tribunal of proposals to increase prices. Each of these companies sought price increases during the latter half of the calendar year 1977. Their price increase proposals were based mainly on increases in operating costs but some companies sought increases which were designed also to restore profit­ ability.

TEXTILE FIBRES, YARNS AND WOVEN FABRICS AND HOUSEHOLD TEXTILES

Product: Sewing threads

Company: Coats Patons (Australia) Ltd

The company sought a weighted average price increase of 5.1 % comprising 2.7 % for cost recovery and a 2.4% profit element. After considering the company’s existing and prospective profit situation, the Tribunal reached the opinion that the inclusion of this profit element was not justified. The company was advised of this decision on

15 December 1977.

Product: Bath towels, hand towels, bath mats, washers, tea towels, baby squares, roller towelling - (Australia-wide)

Company: Bonds Coats Patons Ltd

Product sample Previous price

(24.3.77)

New price Percentage increase

Bath towel D.9 $49.20 $50.50 1.7.77

$51.15 18.11.77 3.96%

Large towel G.5 $80.00 $86.00 1.7.77

$89 00 18.11.77 11.25%

Tea towel D.2 $17.88 $18.00 1.7.77

$18.00 18.11.77 0.67%

Baby squares G .l $12.50 $13.00 1.7.77

$13.95 18.11.77 1160%

The case for those higher prices was based almost entirely on cost increases including cost increases stemming from the higher prices of bought-in goods.

19

Product: Mens and Boys clothing (including jeans and overalls) - Australia-wide

Company: King Gee Clothing Co. Pty Ltd

Product sample Previous wholesale

price (5.4.77)

New price (3.10.77)

Percentage increase

0101 Combination overalls $13.55 $14.10 4-1%

0401 Drill shirt . $6-05 $6.15 1.6%

2225 School zip-ups $3.65 $3.75 2.9%

These price increases were designed to offset higher costs. The weighted average price increase for the notified products was 3.0%.

Ill WOOD, WOOD PRODUCTS AND FURNITURE

WOOD AND WOOD PRODUCTS Few notifications were lodged in the second half of 1977 by companies engaged in the wood and wood products industries. The price increases in this period were relatively moderate and were based primarily on increases in the cost of labour and raw materials. In each of the two cases detailed below the price notifications were processed in July 1977 and there have been no subsequent price rises.

Product: Western Australian hardwood timber

Company: Bunning Timber Holdings Ltd

The weighted average increase for the notified products was 3.3%.

Company: Millars (W.A.) Pty Ltd

The weighted average increase for the notified products was 2.2 %.

20

FURNITURE

Product: Nursery furniture

Company: Raleigh Nursery Pty Ltd

Product sample Previous price New price Percentage

(25.1.77) (27.7.77) increase

‘Regal’ baby carriage (P. 677) $69.95 $74.00 5.79%

‘Foldaway’ hi-chair (H. 2) $35.00 $38.50 10.00%

Bassinette and stand (B. 2) $28.00 $29.50 5.36%

The weighted average increase for the notified products was 6.2%.

IV PAPER AND PAPER PRODUCTS, PRINTING AND PUBLISHING As a result of cost increases experienced within this industry, the prices of Australian manufactured newsprint increased by 5.3 % between February and December 1977 while price increases of a similar magnitude were notified in respect of other paper products at various dates in the latter half of 1977. Some representative examples

are given below. In the area of printing and publishing, increases in advertising rates ranged from 10 to 18 % whilst the cover price of a number of newspapers rose by amounts ranging between 1 and 3 cents. In addition to meeting increased costs some of the price increases in this area included a profit restoration element.

PAPER AND PAPER PRODUCTS

Product: 30 lb newsprint

Company: Australian Newsprint Mills

Product sample Previous price New price Percentage

(10.2.77) increase

30 lb newsprint per tonne $285.00 $295.00 (20.7.77)

$300.00 (21.12.77) 5.3%

21

Product: Paper and paperboard grades

Company: Australian Paper Manufacturers Ltd

Product sample Previous price

(18.10.7 6) per 50 tonnes

New price (5.8.77)

Percentage increase

Brown kraft wrapping 39 gsm bulk $693.00 $720.00 6.98%

Brown bag kraft 39 gsm bulk $619.00 $661.00 6.78%

Mf. brown sack kraft 67 gsm $552.00 $576.00 4-35%

M.G. litho 56 gsm $703.00 $723.00 2.84%

Unlined boxboard unposted $297.00 $321.00 8-08%

The weighted average increase for the notified products was 7.76%. In assessing this notification, the Tribunal took account of the cost of servicing substantial new capital investment.

Product: Paper products

Company: Associated Pulp and Paper Mills Ltd

On 22.12.77 the Tribunal issued a notice of No Inquiry in response to the Company’s proposal for a weighted average increase of 4.73 %. The previous prices were estab­ lished on 20.12.76.

Product: Tissue Paper and Paper Products

Company: Bowater-Scott Ltd

The company initially sought a weighted average increase of 4.5% to recover cost increases but, after discussion with the Tribunal, subsequently agreed to a weighted average of 4.134% on 19.8.77. More than half of this price increase was due to the higher cost of woodpulp. The previous prices were established on 9.2.77.

Product: Paper and paper products

Company: Kimberly Clark of Australia Pty Ltd

Product sample Previous price New price Percentage

(19.1.77) (18.7.77) increase

Kotex Sanitary Napkins—Regular $14.64 $15.24 4.1%

Kimbies Nappies—Daytime $24.99 $26.36 5-5%

Toilet tissue plain per case $11.48 $11.82 3-0%

The weighted average increase for the notified products was 3.9 %.

22

PRINTING AND PUBLISHING

Product: Cover price and advertising rates of The Advertiser newspaper

Company: Advertiser Newspaper Ltd

Product sample Previous price New price Percentage

(16.12.76) (21.9.77) increase

Cover price to public $0.12 $0.15 25%

Advertising (6.7.76)

Casual rate per column $3.91 $4.46 14%

Classified general (Mon-Fri.) per line $0.66 SO. 76 15%

The weighted average increase was 14.5 %. The price increase was designed to meet newsprint labour and delivery cost increases.

Product: Newspaper advertising rates

Company: Nationwide Newspapers Pty Ltd and Mirror Newspapers Ltd

Product sample Previous price

(15.3.77)

New price (1.8.77)

Percentage increase

Daily Telegraph (per cm) $7.90 $8.90 12.5%

Sunday Telegraph (per cm) $13.00 $14.30 10.0%

Sunday Mirror (per cm) $9.00 $9.90 10.0%

The above increases represent a weighted average increase of 11%. The increase was designed to offset increased costs (principally labour).

Product: Advertising rates in The Herald

Company: The Herald and Weekly Times Ltd

Product sample Previous price New price Percentage

(10.3.77) (18.7.77) increase

Display - 250 cm $6.50 $7.65 17.69%

Classified - casual $0.80 per line $0.90 per line 12.5%

The weighted average increase was 17.5%. Whilst recovery of newsprint, labour and delivery cost increases was involved, the price increase also included profit restoration element.

23

Company: News Limited

Product: D a i l y T e le g r a p h and D a i l y M i r r o r newspapers

Product sample Previous price New price Percentage

(15.3.77) (27.9.77) increase

Daily Telegraph cover price $0.14 SO. 15 6-7%

Daily Mirror casual advertising rate (per s/c cm casual) $8.90 S9.80 10.11%

The above increases represented a weighted average increase of 7.32%. The increase was designed to offset increased costs.

V CHEMICALS AND PETROLEUM PRODUCTS

PETROLEUM AND PETROLEUM PRODUCTS

In August and September 1977 the Tribunal found that general price increases were justified over the whole range of petroleum and petroleum products. The Tribunal’s findings were arrived at after examining the prices proposed by Esso Australia Limited and after considering similar price increases proposed by the other major companies

engaged in the supply of these products.

The main reasons for these price increases were:

(a) an increase of 0.25 cents per litre in the excise on aviation turbine fuel, premium gasoline, regular gasoline and distillate announced in the Federal Budget on 16 August 1977; (b) an increase of 5 % in the prices of crude oil imported from Saudi Arabia and the

United Arab Emirates. This increase was announced by the Organisation of Petroleum Exporting Countries on 29 June 1977 and became effective on 1 July 1977, and (c) an increase of $1.00 per barrel in the levy imposed by the Commonwealth Govern­

ment on the production of indigenous crude oil and also the implementation of the first stage of the progressive movement towards import parity pricing for indigenous crude oil.

Details of the wholesale prices found to be justified in respect of products supplied by Esso Australia Limited are given below; similar increases were found justified in respect of other companies.

24

Company: Esso Australia Limited

Product: Petroleum and petroleum products

Product sample per litre

Previous price 31.5.77 New price

Percentage increase for period

Aviation turbine fuel 11.31c

11.56c

11.56c 17.8.77 11.65c 18.8.77

11.65c 13.12c 15.9.77 16.0%

Premium motor spirit 14.94c

15.19c

15.19c 17.8.77 15.28c 18.8.77

15.28c 16.75c 15.9.77 12-1%

Regular motor spirit 13.94c

14.19c

14.19c 17.8.77 14.28c 18.8.77

14.28c 15.75c 15.9.77 13.0%

Power kerosine 10.07c 10.16c 18.8.77

10.16c 11.63c 15.9.77 15.5%

Lighting kerosine 10.27c 10.36c 18.8.77

10.36c 11.83c 15.9.77 15.2%

Heating oil 10.45c 10.54c 18.8.77

10.54c 12.01c 15.9.77 14.9%

Distillate 14.45c

14.70c

14.70c 17.8.77 14.79c 18.8.77

14.79c 16.26c 15.9.77 12.5%

Diesel fuel (per tonne) $109.80 $110.81 18.8.77

$110.81 $128.17 15.9.77 16.7%

L.P. gas ex-refinery (per tonne) • Propane $52.00 $67.00 15.9.77 28.8%

• Butane $42.00 $57.00 15.9.77 35.7%

Fuel oil (per tonne) $73.54 $78.54 15.9.77 6.8%

Note: -

The prices shown above, are those applicable in Melbourne, Perth and Brisbane. The wholesale prices for premium and regular motor spirit in New South Wales and for regular motor spirit in South Australia were lower because of the determination of price regulating bodies in those States.

CALTEX INQUIRY

In August 1977 Caltex Oil (Australia) Pty Ltd sought certain price increases, on an Australia-wide basis, to recoup the additional costs incurred in manufacturing super petrol with a lead content not exceeding that prescribed under the Clean Air legislation enacted by the Parliament of New South Wales.

25

The matter was put to public inquiry and a summary of the Tribunal’s findings appears on page 00. In brief, the Tribunal decided that the price increase should be lower than that sought by the company and that any price increase should be con­ fined to those areas of the State (Sydney, Newcastle and Wollongong) where restric­ tions are placed on the sale of motor gasoline containing lead additives beyond prescribed amounts. The prices recommended by the Tribunal have not been applied pending consideration of the matter by the New South Wales Prices Commission.

PETROCHEMICAL INDUSTRY

A large proportion of the petrochemical industry is now exempt from the notification provisions (section 18) of the Act.

CHEMICAL PRODUCTS

Product: Cosmetics and toiletries

Company: Avon Products Pty Ltd

On 27 October 1977 the Tribunal agreed that higher operating costs justified a weighted average increase of 5 % in the prices of this company’s products. This was less than the price increase initially sought and less than the cost increases incurred

since the previous price was established in March 1976.

Product: Soaps and detergents

Company: Colgate-Palmolive Pty Ltd

Product sample Percentage increase

Detergent powders 5-1%

Toilet soaps 2-5%

Detergent liquids 3-6%

Cleansers and cleaners 2-7%

The price increases in respect of this company’s products were arrived at after a public inquiry. The company sought a 2.38 % weighted average increase on total turnover to recoup higher advertising costs. The Tribunal’s finding, accepted by the company, was that a 1.66% weighted average increase was justified. There were no increases in the prices of certain products such as shave preparations, toilet articles and some classes of detergent powders and cleansers. Further details are given in the summary of the Tribunal’s report on its public inquiry on page 00.

2 6

Company: Lever and Kitchen Pty Ltd

Product: Fabric, personal and household w ashing products

Product sample Previous price

(11.3.77)

New price (6.9.77)

Percentage increase

Fabric Rinso (12 x 1000 g) $12.47 $12.89 3-4%

Surf (12 x 1000 g) $11.19 $11.57 3-4%

Drive (12 x 1000 g) $13.71 $14.17 3-4%

Personal Lux (72 x 125 g) $13.95 $14.74 5-7%

Lifebouy (72 x 125 g) $13.22 $13.27 0-4%

Household Lux Liquid (18 x 750 ml) $13.62 $13.88 1-9%

Handy Andy (24 x 500 ml) $12.13 $12.54 3-4%

The weighted average increase for the notified products was 3.6% and was designed to recover cost increases.

Product: Range of aerosol products and toiletries

Company: R. & C. Products Pty Ltd—Samuel Taylor Division

Product sample Previous list

price (18.3.77) New list price (22.12.77) Percentage

increase

Mortein Pressure Pack (150 g x 24) $23.52 $24.72 5.10%

Aerogard (125 g x 24) $25.40 $25.91 2.00%

Pure and Simple (250 g x 12) $12.66 $13.36 5.53%

Mr Sheen (200 g x 24) $17.06 $17.90 4.92%

Uncle Sam Deodorant (125 g x 24) $19.91 $20.91 5.02%

Loxene Shampoo (200 ml x 12) $9.58 $10.54 10.02%

The weighted average increase for the notified products was 5.78 % and was designed to recover cost increases.

VI GLASS, CLAY AND OTHER NON- METALLIC MINERAL PRODUCTS

GLASS PRODUCTS

Companies operating within this area in the half year ended 31 December 1977 did not incur any unusual cost increases. Price increases were moderate and were generally within the weighted average range of 4 to 5.5%.

2 7

Product: Clear float glass

Company: Pilkington A.C.I. Operations Pty Ltd

Product sample Previous price

(15.6.77)

New price (8.11.77)

Percentage increase

3.0 mm F.R.S. $2.18 $2.45 12.5%

4.0 mm G.S.S. $3.60 $3.87 7-5%

6.0 mm F.R.S. $5.66 $5.77 2 0 %

The weighted average increase of 5.4% for the notified products mainly was based on recovery of cost increases. In the case o f 3 mm float glass some profit improvement was involved in view of com­ paratively low previous returns on this product.

Product: Automotive safety glass

Company: Pilkington A.C.I. Operations Pty Ltd

On 5 August 1977 the Tribunal issued a Notice of No Inquiry in response to the company’s proposal for a weighted average price increase of 4.28%; the previous prices were established on 16 March 1977.

Product: Glass containers

Company: A.C.I. Operations Sales Ltd

Product sample Previous price New price Percentage

(19.6.77) (1.12.77) increase

740 ml—beer $105.40 $110-07 4.43%

370 ml—beer $49.00 $51.85 5.82%

750 ml—wine $111.57 $117.85 5-62%

2.25 litre flagon (per ’000) $274.99 $286-46 ' 4.17%

Agreement was reached with the company on price increases lower than those initially proposed. The weighted average increase agreed upon was 4.3 %.

CLAY PRODUCTS

Only moderate price increases for bricks were sought during the half year. The industry is suffering from a relatively low level of demand for its products.

28

Product: Clay bricks—Melbourne

Company: Brick and Pipe Industries Ltd

Product sample Ex-yard price New ex-yard price Percentage

(15.6.77) (25.10.77) increase

Grey Rocktex Bricks (per Ό00) $122.60 $124.10 1.22%

The increase approved for the notified products was $1.50 per 1000 bricks.

CEMENT PRODUCTS

In many cases a lower increase than originally proposed has been agreed upon with the companies. Nevertheless it is understood that the cement companies have found it difficult to implement in full the price increases which have been cleared with the Tribunal.

Product: Bagged and bulk cement

Company: Australian and Kandos Cement Holdings Ltd

Product sample Previous ex-works

price (25.5.77) New ex-works price (1.8.77) Percentage

increase

Cement Bagged per tonne $52.63 $55.38 5.23%

Bulk per tonne $51.51 $54.26 5.34%

The company sought a weighted average increase of $6.17 per tonne (12.8% weighted average) to restore declining profitability and improve cash flow. The matter was heard at a Public Inquiry and the Tribunal found that a considerably lower increase of $2.75 per tonne was justified. Further details are given in the attached summary of the Tribunal’s report on this Public Inquiry.

Product: Bagged and bulk cement

Company: Blue Circle Southern Cement Ltd

Product sample Previous price New price Percentage

(15.12.77) increase

Sydney metro, bagged per tonne $55.65 $57.15 2.69%

Bulk fly-ash blended cement per tonne $43.06 $44.19 2.62%

This company’s price increases were designed to assist profit restoration.

29

PRE-MIXED CONCRETE

Unlike other industry sectors closely associated with the building industry, the pre­ mixed concrete industry continues to be relatively buoyant. Proposed price increases have been largely based on increased costs of cement, labour and quarry products.

Product: Pre-mixed concrete sold in the Victorian Metropolitan Region

Company: Pioneer Concrete (Victoria) Pty Ltd

Product sample Previous ex-plant

price (8.2.77) New ex-plant price Percentage

increase

Pre-mixed concrete per cubic metre (20 Mpa) S 30.ll $31.90 19.7.77

$32.25 24.10.77 $33.06 14.12.77 9.8%

VII METAL PRODUCTS

BASIC IRON AND STEEL .

Product: Steel products

Company: Broken Hill Proprietary Co. Ltd, and Australian Iron and Steel Proprie­ tary Limited

On 30 September 1977, the companies lodged a notice in respect of iron and steel products seeking a weighted average price increase of 4.08 %. After examination the Tribunal found that an increase of the magnitude sought was justified to enable the company to recoup not only wage and salary rises based on the three preceding wage indexation decisions, but also substantial increases in materials charges and other costs. Details of the price increases are given below.

Product sample Previous price

(20.6.77) %jtonne

New price (20.10.77) %\tonne

Percentage increase

Structural shapes Universal sections $265 $276 4.15%

Hot rolled strip Mill edge sheet industry $188 $196 4.26%

slit edge $253-50 $264 4-14%

Merchant bar Commercial fiats $240 $249.50 3-96%

Reinforcement steel deformed bar $233.00 $242.50 4.08%

Coiled rods—wire industry $226-00 $235.50 4-20%

Narrow cold rolled strip $307.50 $318.50 3.58%

Electrolytic tinplate S77.40/S.I.T.A. S79.25/S.I.T.A. 2.39%

3 0

NON-FERROUS BASIC METAL PRODUCTS

Weighted average increases of 6.25 % were granted by the Tribunal in July and August 1977 in respect of the prices of aluminium ingots, semi-fabrications and other aluminium products supplied by three major producers—namely Alcan Australia Ltd, Alcoa of Australia Ltd and Comalco Products Pty Ltd. The previous prices had been established in January 1977.

The price increases reflected increases in domestic labour costs and also took account of overseas movements in the prices of aluminium products.

Product: Aluminium Products

Company: Alcoa of Australia Ltd

Product sample Previous price New price Percentage

(20.1.77) (25.7.77) increase

Natural 99.5% ingot $907.00 $964.00 6.3%

per tonne per tonne

The overall weighted average increase for all products including sheet and extruded products was 6.25 %. This was lower than the increase originally proposed by the Company. Similar increases were granted subsequently to Alcan Australia Ltd and Comalco Aluminium (Bell Bay) Ltd.

OTHER METAL PRODUCTS

The price rises in this sector mainly reflect changes to labour, freight, financing charges, and, in particular, price rises flowing on from the iron and steel manufactur­ ing sector.

Product: Nuts, bolts, industrial fasteners, etc.

Company: Ajax Nettlefolds Ltd

On 7 July 1977 the Tribunal issued a Notice of No Public Inquiry in response to the company’s proposal for a weighted average price increase for the notified products of 5%; the previous prices were established in December 1976.

Product: Building and industrial products

Company: John Lysaght (Aust.) Ltd

Product sample Previous price New price Percentage

(23.2.77) increase

Cold rolled sheet per tonne $358.35 $363.75 6.7.77

$379.00 18.10.77 5.76%

31

Product: Beer, beverage, open top and general line cans

Company: J, Gadsden Pty Ltd

Product sample Previous price New price Percentage

(5.1.77) increase

Beer cans 370 ml $69.90 $73.13 23.8.77

$77.51 12.12.77 10.89%

500 ml $86·50 S90.50 23.8.77

$95.90 22.12.77 10.87%

Beverage cans 370 ml $70.45 $73.70 23.8.77

$78.11 22.12.77 10.87%

per ’000

Product: Beer and beverage cans

Company: Containers Ltd

Product sample Previous price New price Percentage

(22.11.76) increase

Beer cans 370 ml $70.05 $74.50 7.7.77

$78.05 22.12.77 11-42%

Beverage cans 370 ml $72.45 $76.95 7.7.77

$80.50 22.12.77 11.11%

per ’000

Product: Steel pipe and tube

Company: Tubemakers of Australia Ltd

The weighted average increase for the notified products was 0.96%, and was based on the recovery of wage, production, freight and fuel costs. The notification was processed in November 1977 and the previous price increase was in June 1977.

VIII TRANSPORT AND INDUSTRIAL EQUIPMENT

In the latter part of 1977 price increases in the motor vehicles sector continued to be due almost wholly to cost increases resulting primarily from wage indexation and increases in the prices of materials, including imported vehicles and parts. In the imports segment costs have reflected exchange rate fluctuations brought about mainly by the appreciation of other currencies against the Australian dollar.

The depressed state of the Australian new car market has forced most companies into a situation where profit margins are being severely eroded.

32

In the agricultural equipment sector weighted average price increases ranged from 2% to 11.7%.

In the second half of 1977 the Tribunal concluded two sets of public inquiries relating to the prices of spare parts for motor vehicles and the prices of spare parts for agricultural equipment. As a result of these inquiries the Tribunal recommended, in the case of some companies, that certain price reductions be effected. Further

details are given in the summaries of the Tribunal’s reports set out in Attachment D.

Details of significant increases in the retail prices of motor vehicles and of various items of industrial equipment are given below.

MOTOR VEHICLES AND PARTS

Product: Cars, trucks and options

Company: Ford Motor Company of Australia Ltd

Product item Previous price New price Percentage

increase

Escort XL 2 Door $4905 1.6.77 $5011 23.6.77

$5061 14.9.77 3.18%

Falcon 500 Sedan $6018 3.6.77 $6079 23.6.77

$6176 19.8.77 $6377 14.9.77 5.97%

Fairmont 4 Door Sedan $7604 3.6.77 $7681 23.6.77

$7804 19.8.77 $7964 14.9.77 4.73%

Fairlane 500 Sedan $10118 10.6.77 $10270 23.6.77

$10474 19.8.77 $10653 14.9.77 5.29%

D Series Truck DO 712 3050 WB

$9656 2.3.77 $10428 23.6.77 $10436 19.8.77 $10749 14.9.77 11-32%

LNT 8000 Truck $40590 1.6.77 $41402 14.9.77 2.00%

All three notifications were designed to recover cost increases.

33

Product: Statesman, Torana, Sunbird, Gemini vehicles and options

Company: General Motors Holden’s Ltd

Product sample Previous price New price Percentage

increase

Premier Sedan $7452 10.6.77 $7783 14.7.77

$7943 8.9.77 6.59%

Kingswood Sedan $5957 10.6.77 $6377 14.7.77

$6498 8.9.77 9.08%

Torana 6 Cylinder SL Sedan $5948 7.3.77 $6161 14.7.77

$6352 8.9.77 6.79%

Isuzu KB 20 P.U. $4412 14.4.77 $4572 9.11.77

$4806 14.12.77 8.93%

The above price increases were designed to recover cost increases.

Product: Motor vehicles

Company: Australian Motor Industries Ltd

Product sample Previous price New price Percentage

increase

C.B.U. models Corolla 2 Door Manual Sedan $4099 24.6.77 $4199 6.9.77 2.44%

Cressida Saloon Manual $7249 24.6.77 $7529 6.9.77

$7779 2.11.77 7.31%

C.K.D. models Corolla Manual SB Saloon $4429 25.5.77 $4529 9.9.77

$4639 14.12.77 4-74%

Corona Manual L Saloon $4959 25.5.77 $5089 6.7.77

$5209 12.10.77 $5339 14.12.77 7.66%

Crown Manual Saloon $8450 21.12.76 $8800 29.8.77

$9250 22.12.77 , 9.47%

Crown Auto Saloon $8910 21.12.76 $9260 29.8.77

$9750 22.12.77 9-43%

Increases in the prices of CBU models were designed to recoup increases in the cost of duty, freight and insurance and foreign exchange variations.

The prices of CKD models were affected by the above cost increases as well as local cost increases.

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Product: Commercial vehicles

Company: Thiess Toyota Pty Ltd

Product sample Previous price New price Percentage

increase

F.J. 40R —KJQ Landcruiser— Canvas Top $5465 $5768 12.7.77

$5960 16.8.77 $6125 8.11.77 12.08%

R.H. 22 RV—IRQ 4 Door Van $4945 12.7.77

$5286 16.8.77 $5417 8.11.77 9.54%

KLA 300—3 Diesel Cab Chassis $9274 $9674 12.7.77

$9953 16.8.77 7.32%

These price increases were designed to recover cost increases only.

Product: Tractors, construction machinery, engines etc.

Company: Massey-Ferguson (Aust.) Ltd

The company increased prices in line with cost increases, on two occasions during the period. The first price increase (on 4 August 1977) represented a weighted average increase of 5.4% and the second price increase (on 14 December 1977) represented a weighted average increase of 3.9 %.

OTHER MACHINERY AND EQUIPMENT

Product: Transmission assemblies and equipment

Company: Borg-Warner (Aust.) Ltd

Product Sample Previous price

(22.6.77

New price (28.9.77)

Percentage increase

Rear Axle Assembly 0578 - 0074 Automatic Transmission 0540 - 000082 $152.25 $354.63

$157.03 $371.69

3- 14%

4- 81%

The weighted average increase of 3 % for the notified products was designed to recover cost increases.

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Product: Tractors and options

Company: Ford Motor Company of Australia Ltd

Product sample Previous retail New retail Percentage

price (26.1.77) price (27.7.7η increase

Agricultural — Model 7700 $15508 $16909 9-03%

Industrial — Model 420 me $7611 $8626 15.96%

The weighted average increase for the notified products was 11.7% and was designed to recover cost increases. Most of the cost increases were attributed to imported materials.

Product: Australian made wholegoods

Company: International Harvester Australia Ltd

In December 1977 agreement was reached with the Company concerning a weighted average price increase of 1.59% to recoup increased costs. The company had sought a larger price increase. The previous price increase was in June 1977.

Product: Agricultural machinery and industrial equipment

Company: J. I. Case (Aust.) Pty Ltd

Product sample Previous retail New retail Percentage

price (19.1.7η price (4.12.77) increase

Dozer 1150 $55749 $57879 3.82%

Loader 450 $30367 $30867 1.65%

The weighted average increase for the notified products was 9%, representing recovery of cost in­ creases. The company initially sought a somewhat larger increase.

Product: Agricultural machines and attachments

Company: Sperry Rand Australia Ltd

The weighted average increase for the notified products was 9.93 %, representing recovery of cost increases only. The company had initially sought a somewhat larger price increase. The previous price was established in March 1977 and the Tribunal agreed to the new price in September 1977.

Following the completion in June 1977 of the public inquiries into the prices of farm machinery spare parts (which resulted in certain reduced prices) the Tribunal undertook studies of prices charged by various companies for farm machinery whole- goods, with a view to assessing the need for a public inquiry into this area. During this time Sperry Rand Australia Ltd made reductions in the prices of its combine har­ vesters.

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IX HOUSEHOLD APPLIANCES AND ELECTRICAL EQUIPMENT During the second half of the calendar year the market for smaller household appli­ ances was reasonably buoyant but sales of larger items, such as washing machines and refrigerators, were depressed. Consumer spending in this area continued at a low

level reflecting, in part, the lack of any general resurgence in new housing activity which might in turn stimulate purchases of household appliances. The depressed state of the market for larger household appliances has been preventing manufacturers from fully recovering labour and other cost increases which

they have incurred. Stocks of finished goods have built-up to an excessive level and costs associated with holding these stocks are not readily recoverable. In these circumstances there were few significant price increases during the period in question.

Product: Domestic appliances

Company: Malleys Ltd

On 16 August 1977 the Tribunal issued a Notice of No Public Inquiry in response to the company’s proposal for a weighted average increase for the notified products of 4.2%; the previous prices were established in February 1977.

Product: Twin-tub washing machines

Company: Hoover (Australia) Pty Ltd

Product sample Previous price New price Percentage

(4.3.77) (4.11.77) increase

Model 3318 F $181.27 $194.87 7.50%

Model 3318 EF $191.59 $205.96 7.50 %

X LEATHER, PLASTIC AND RUBBER PRODUCTS

LEATHER FOOTWEAR

The Footwear Division of Dunlop Australia Limited is the only footwear manu­ facturer which is required to notify the Tribunal of price increases and no significant price increases were effected in the latter half of 1977.

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PLASTIC AND RELATED PRODUCTS

In respect of plastic and related products proposed price increases were between 5 and 6% for the period. Material cost increases were an important element in the situation.

Product: Records and cassettes

Company: E.M.I. (Australia) Ltd

Product sample Previous price

(26.4.76)

New price (19.9.77)

Percentage increase

Special records and tapes (before tax) Full price records (including distributor) $2.92 $3.94

$3.57 $4.73

22.26% 20.05%

The weighted average price increase of 14.5 % was somewhat lower than the price increase sought initially by the Company.

Product: Polyethelene resins

Company: Union Carbide Aust. Ltd

Product sample Previous price New price Percentage

(17.2.77) (18.8.77) increase

LDPE Film—Ucal 1108 $7.85 $8-86 7.5%

HOPE Blowmoulding DMDL 4003 $7.98 $8.57 1.6%

The weighted average increase for the notified products was 5.2%.

Product: Containers for milk and fruit juice

Company: Pure Pak Australia Pty Ltd

Product sample Previous price

(12.1.77)

New price (27.7.77)

Percentage increase

per ΌΟΟ per Ό00

200 ml $17.60 $18.60 5.68%

600 ml $24.50 $25.60 4.49%

2 litre $68.50 $73.10 6.72%

The weighted average increase for the notified products was 6%.

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RUBBER PRODUCTS — TYRES

The tyre industry in Australia remained competitive in the second half of 1977 parti­ cularly in the area of passenger tyres with heavy discounting by retail outlets. The swing-away from passenger bias ply textile tyres to steel belted radial tyres continued. In November 1977 added protection was afforded the local industry by way of an increase in ad valorem duty from 25 % to 40 %. However the added protection had minimal effect in the period to 31 December 1977 because stocks of imported tyres held prior to the tariff change had not yet run down.

Proposed price increases during the period were based primarily on increased labour and raw material costs. In the two cases listed below, the price increases were somewhat less than those sought by the companies.

Product: Motor vehicle tyres

Company: Uniroyal Pty Ltd

Product sample Previous retail New retail Percentage

price (22.3.75) price (22.7.77) increase

Steel Belt Radial ER 785 14 $64.15 $67-05 4.52%

Product: Motor vehicle tyres

Company: Olympic Tyre and Rubber Company Pty Ltd

Product sample Previous price

(29.6.77)

New price (31.10.77)

Percentage increase

Passenger-Tubeless Crossply 695 S x 14 $47.50 $51.05 7.47%

Passenger-Tubeless Reflex Radial 185 x 14 HR $68.70 $71.25 3-71%

Highway Premium Nylon Truck 900 x 20 x 12 $224.10 $233-05 3.99%

XI SERVICE INDUSTRIES

Although the Tribunal still has power to investigate prices charged by companies in the service industries— and does itself institute inquiries and follow up numerous representations from consumers of various services—amendments to the Prices Justification Act have resulted in companies in most service industries being exempted

from the obligation to notify the Tribunal of their proposed prices.

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Details are given below of certain price increases processed by the Tribunal in the latter half of 1977 in respect of companies providing transport services and wool­ broking services. Reference has already been made earlier in this Report to the prices of certain other services—such as advertising services provided by newspapers and television stations.

FREIGHT AND TRANSPORT SERVICES

The Tribunal considered notifications from five major freight companies during the period. The main elements of cost put forward in justification of freight rate increases in this area included increases in award labour rates and fuel costs and (in some instances) increased shipping and rail charges.

Rises of the order of 6.5 % occurred in road transport haulage charges in this period. Details in respect of one company are given below.

Product: General and express freight services

Company: Thomas Nationwide Transport Ltd

The weighted average increase for these services was 6.48%. The notification was processed in September 1977 and the previous prices were established in May 1977. The Tribunal is notified of proposed changes in maximum rates levied by opera­ tors. Significant variations may occur in contract rates below the maximum, depend­ ing on competitive factors.

WOOLBROKING CHARGES

During this period the Tribunal considered notifications from four woolbroking companies. In assessingthese notifications, the Tribunal became aware of technological changes within the industry and of the need to look more closely at the basis on which the charges for woolbroking services are calculated. A public inquiry into this matter was initiated by the Tribunal shortly after the close of the calendar year.

CARGO HANDLING CHARGES

Following an announcement by the Commonwealth Government, the funding basis for redundancy and idle time payments on the Australian waterfront was varied from a mainly manhour valuation to one determined by cargo tonnage and the respon­ sibility for collecting the requisite funds was undertaken by the stevedoring and container terminal companies.

In November 1977 Seatainer Terminals Ltd notified the Tribunal of an intention to increase rates by 78 cents per tonne of manifest cargo to fund the levies. The Tribunal also commenced discussions with conventional stevedoring com­ panies to determine the effect on costs and prices of the changed basis of levy deter­ mination. Information has been sought from Austral Port Services (Vic.) Pty Ltd,

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Brisbane Wharves and Wool Dumping Ltd, and the Patrick group. It is expected that the Tribunal will be required to assess further notifications based on levies in early 1978. A notification of increased rates proposed by Seatainer Terminals Ltd, based

on cost increases incurred since the Tribunal’s public inquiry in 1976, was received in December 1977. Following examination by the Tribunal and discussions with the Company, Seatainers agreed to substantial reductions in the rates they were seeking. Many sectors of the Australian economy require little, if any, Tribunal surveillance.

Competitive forces, either domestic or imported, operate to ensure that prices do not markedly diverge from costs, generating excessive profits. Services such as steve­ doring and container handling, however, do not fall in this category. In these circum­

stances the Tribunal’s notification procedures provide for public scrutiny of those prices not subject to market discipline.

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ATTACHMENT D Summaries o f public inquiry reports issued by the Tribunal during the six months ended 31 December 1977

I REPORT ON PRICES OF MOTOR VEHICLE SPARE PARTS SUPPLIED BY EIGHT MANUFACTURERS

In response to Notices received from the Minister for Business and Consumer Affairs, the Tribunal carried out in 1977 two sets of inquiries under Section 16 of the Act into the prices of automotive spare parts.

The first inquiry—which was the subject of a report issued on 30 June 1977— was concerned with the prices charged by fifteen companies engaged in the importa­ tion and/or distribution of automotive spare parts. The Tribunal recommended adjustments in the prices for spare parts supplied by the three importers covered by the Inquiry, together with the abolition of the surcharges which were being applied by some distributors to the recommended list prices. The necessary price reductions were made promptly and the surcharges applied by those distributors who were subject to the Inquiry were removed before the end of July.

The second set of inquiries—which was the subject of reports issued during August 1977—was concerned with the prices charged by the following major manufacturers or suppliers of spare parts:

Supplier

Lucas Industries Australia Limited and Related Companies Borg Warner (Australia) Limited and Related Companies Robert Bosch (Australia) Pty Ltd and Related Companies Ford Motor Co. of Australia Ltd and Related Companies General Motors-Holden’s Limited and Related Companies Chrysler Australia Limited and Related Companies Leyland Motor Corp. of Aust. Ltd and Related Companies Repco Limited and Related Companies

Matter no. Date o f Report

SI6/77/034 3 August 1977 S16/77/035 5 Ausugt 1977 S16/77/036 5 August 1977 SI 6/77/030 19 August 1977 S16/77/029 19 August 1977 S16/77/031 19 August 1977

SI 6/77/032 19 August 1977 SI 6/77/033 19 August 1977

In an effort to alleviate problems arising from the fact that the Companies’ prices were frozen for a lengthy period by reason of the Inquiry, the Tribunal released, in advance of this main report, reports on the prices charged by the first three com­ panies listed above. In those reports, the Tribunal expressed the opinion that:

(a) after taking account of all relevant factors, including cost increases incurred since the Inquiry began, the prices charged by these three companies for auto­ motive spare parts as at 30 June 1977 were in most instances justified;

(b) the mark-ups on some items between the distributor and the retail levels were unduly high and should be reviewed by the companies with special attention being paid to the possibility of reducing mark-ups in excess of 100 per cent between the distributor and the recommended list price.

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For the remaining companies—Ford, Chrysler, Leyland and Repco— the Tribunal in its final report concluded that: (a) after taking account of all relevant factors, including cost increases incurred since the Inquiry began and the degree of profitability of the Companies, it

should not recommend ‘across the board’ reductions; (b) the companies should review some of the higher mark-ups in respect of: (i) spare parts manufactured by the companies and sold to distributors in cases where the mark-ups on cost of manufacture exceeded 75 per cent,

with special reference to those mark-ups in excess of 100 per cent; (ii) sales of ‘bought in’ parts made by the companies to distributors in cases where the mark-ups on ‘into-store’ costs exceeded 50 per cent, with special attention being paid to those mark-ups in excess of 75 per cent; (iii) items included in the manufacturer’s recommended list prices in cases where

the cumulative mark-ups, as between the suppliers’ cost and the retail list price, exceeded 250 per cent on cost of manufacture in respect of spare parts of a company’s own manufacture and 175 per cent on into-store costs in respect of ‘bought-in’ parts. In reaching its conclusions the Tribunal had regard to the nature and extent of cost increases incurred during the course of the Inquiry, the profitability generally

of the spare parts operations, the existing economic conditions in the motor vehicle industry as a whole and the reduction in prices of certain parts which would result from the review of the relatively high mark-ups. The Tribunal has been exercising continuing surveillance in this area and a signi­ ficant number of downward adjustments in mark-ups has been effected by the Com­ panies concerned in the period since the Tribunal’s reports of August 1977.

Π REPORT ON HIGHER PRICES PROPOSED BY COLGATE-PALMOLIVE PTY LTD FOR DETERGENT POWDERS, DETERGENT LIQUIDS, TOILET SOAPS, CLEANSERS, CLEANSERS AND DENTAL CREAMS

An inquiry was held by the Tribunal in July-August 1977 under Section 18 of the Prices Justification Act, into higher prices proposed by the company on 19 April 1977 for the supply of detergent powders, detergent liquids, toilet soaps, cleansers, cleansers and dental creams throughout Australia.

The company stated that the proposed price increase of 2.38 % was based solely on increased media advertising costs totalling $1.711m. This amount took account of escalations in print, radio, television and production expenses incurred by the com­ pany in the period to March 1977. The company submitted that this amount covered

only the additional cost in 1977 of maintaining the level of advertising exposure achieved in 1976. The company indicated that, if the company was unable to recoup this amount, it would have to reduce its advertising thus impairing its ability to com­ pete. It was argued ihat this, in turn, would increase its unit production costs and

would benefit its competitors rather than the public. Submissions on the question of advertising content, as opposed to the actual level of expenditure on advertising, were made by various parties to the Inquiry including The Council of Australian Government Employee Organisations, The

Australian Federation of Consumer Organisations, The Advertising Federation of

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Australia, the Honourable S. D. Einfield, M.L.A., N.S.W. Minister for Consumer Affairs and Minister for Co-operative Societies. The Honourable Wal Fife, M.P., Minister for Business and Consumer Affairs, wrote to the Chairman of the Tribunal concerning Government policy on company pricing and the level of advertising.

After taking into account the various submissions made the Tribunal reached the view that the company should not be expected to absorb all of the substantial in­ creases in advertising rates which had occurred and that some increase in prices on this account was justified.

The Tribunal made its own calculation of the amount of increased media advertis­ ing cost which it considered justified an increase in prices and arrived at a figure of $1.202m. The resultant weighted average increase in prices necessary to recoup this amount was calculated at 1.66% to net sales on an annualised basis. The Tribunal indicated that the higher prices should operate on or after 1 September 1977; the Tribunal’s findings were accepted by the company.

ΙΠ REPORT ON HIGHER PRICES PROPOSED BY

AUSTRALIAN AND KANDOS CEMENT HOLDINGS

LTD FOR BULK AND BAGGED CEMENT

This inquiry related to a notice lodged by Australian and Kandos Cement Holdings Ltd, on 9 June 1977 that its related companies Australian Portland Cement Ltd, and Gippsland Cement Ltd proposed to increase the prices of bulk and bagged cement by a weighted average of $6.17 per tonne or 12.8 per cent.

The company submitted that the proposed price increases were justified on grounds which included the following:

(a) the return on shareholders’ funds and cash flows were inadequate; (b) there was no incentive for shareholders to invest; (c) without capital expansion, its viability as a major cement manufacturer in Australia would be adversely affected.

The Tribunal considered the results of various tests which it applied including the price increase necessary to re-establish, in real terms, the company’s return on funds achieved prior to 1973. However, some downward adjustment was considered necessary as the Tribunal was not convinced that the company was entitled to achieve the same percentage return on real funds as it had earlier received on funds the value of which was calculated on the basis of the historical or original costs. A second approach was to take the market value of the company at the beginning of 1974 as reflected in the acquisition price paid by its shareholders and to apply the historical rate of return achieved in 1973 to this amount.

The exact adjustment which the Tribunal deemed appropriate was influenced by the company’s cash flow position, and in the light of its cash flow projections a price rise of $2.75 per tonne was considered justified at that time. The Tribunal emphasised that its decision as to the justified price on this occasion should not necessarily be regarded as a standard for the future, since in the company’s particular circumstances, immediate cash flow factors had carried more weight than profit tests.

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IV REPORT ON HIGHER PRICES FOR GASOLINE AND OTHER PETROLEUM PRODUCTS PROPOSED BY AMOCO AUSTRALIA PTY LTD

This inquiry concerned a notice (N77/2322) given by the company to the Tribunal on 9 September 1977 that it proposed to increase the wholesale prices of the under­ mentioned goods by the amounts shown:

Premium gasoline Regular gasoline Power kerosine Lighting kerosine

Heating oil Distillate Diesel fuel Fuel oil LPG-propane (ex-refinery) LPG-butane (ex-refinery)

0.17 cents per litre 0.17 cents per litre 0.17 cents per litre 0.17 cents per litre

0.17 cents per litre 0.17 cents per litre $2.03 per tonne nil

$21.42 per tonne $18.75 per tonne

The company sought higher prices for gasoline and other petroleum products as a means of recouping its cost disadvantages associated with the shipping of indigenous crude oil from Westemport to Brisbane. The higher prices proposed for L.P.G. were designed to compensate Amoco for increased costs resulting from a change in the formula for the allocation of indigenous crude oil announced by the Minister for National Resources on 12 April 1977.

Whilst agreeing that the company’s coastal freight rates were higher than those of other refiners the Tribunal decided that, in all the circumstances, this factor alone was not sufficient to sustain a case for higher prices. The Tribunal observed that it was also necessary to take into account the company’s current profitability and other factors affecting its overall operations. The Tribunal also concluded that, whilst Amoco would incur some minor additional costs as a result of the change in the formula for the allocation of indigenous crude oil, no price increase was warranted

on that account.

V REPORT ON HIGHER PRICES FOR PREMIUM GASOLINE PROPOSED BY CALTEX OIL (AUSTRALIA) PTY LTD

On 19 August 1977 Caltex Oil (Australia) Pty. Ltd, submitted to the Tribunal a Notice (N77/2131) proposing higher wholesale prices for premium gasoline to recoup the estimated costs to the company for complying with the second phase of the lead reduction programme authorised in the Clean Air Act, 1961 of New South Wales.

Under that program, the maximum lead level permitted in petrol sold in Sydney, Newcastle, Wollongong and surrounding areas after 1 May 1977 was reduced to 0.45 grams per litre. To recover the additional costs, Caltex originally proposed to increase wholesale

prices throughout Australia and to make a charge to other wholesale marketers who obtain their supplies from Caltex.

45

In its report of 17 November 1977 the Tribunal concluded that, in current cir­ cumstances, residents of other States and of rural areas of New South Wales should not be required to pay higher petrol prices to meet the cost of the anti-pollution measures. The Tribunal found an increase of 0.20 cents per litre to be appropriate, but in the prescribed urban areas only. The Tribunal concluded also that any charges made to other wholesale marketers should not lead to an increase of over 0.20 cents per litre in their prices in the prescribed areas.

In reaching this decision the Tribunal substantially reduced the company’s claim for additional annual costs estimated at $4 355 000. Pending consideration of the matter by the New South Wales Prices Commission the prices found justified by the Tribunal have not been applied.

The Tribunal also observed in this report that, from the standpoint of the most efficient use of Australia’s resources and of the desirability of keeping cost and price increases to a minimum, there might well be a case for giving further consideration to the question of how governmental anti-pollution objectives in this area might best be achieved.

VI REPORT ON HIGHER SKI-LIFT CHARGES PROPOSED BY THE K.G. MURRAY PUBLISHING COMPANY PTY LTD AND SMIGGINS (KOSCIUSKO) LIMITED

On 14 July 1977 the Tribunal presented a report on its inquiry into the current and proposed prices for ski lift services provided at Perisher Valley and Smiggin Holes by the K. G. Murray Publishing Company Pty Ltd and Smiggins (Kosciusko) Limited. These companies had proposed that the price of the day ticket—which is the key price in their schedule of ski lift charges—should be $12 for the 1977 snow season as

compared with $11 in the 1976 season. In the previous year, the price of the day ticket had been $8.50 at Perisher Valley and $8.00 at Smiggin Holes. The companies pointed out that the industry was subject to special climatic risks and was operational only for a limited period in a year. It was claimed that the in­ creased charges were justified to enable the companies to improve and extend their facilities.

The companies also submitted that the price structure was based on the costs of maintaining the snow field as a whole, including those incurred in the provision of accommodation for the public and companies’ employees; over-snow transport; parking facilities; public amenities and other facilities.

The Tribunal was not convinced that the current and proposed charge for the ski lift services provided by these two companies were justified and concluded that a lower schedule of charges, based on a price of $10.50 for the day ticket, should operate as from 22 July 1977.

In arriving at this conclusion the Tribunal was influenced by a number of con­ siderations including the fact that the Mountain Division of these companies had been enjoying a return on its assets well in excess of the general profit level of other companies in Australia. At the same time the Tribunal recognised that there were risks and special problems associated with snow field operations and that, in these circumstances, companies involved in ski lift operations naturally look for a relatively high rate of return on their investment.

RM77/30265 Cat. No. 78 9072 5

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