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Thursday, 20 May 1965

Senator WRIGHT (Tasmania) (12:25 PM) . - May I correct any misunderstanding that may exist? New South Wales is one of the States where price control does not exist?

Senator Anderson - That is right.

Senator WRIGHT - I wish to discuss an actual instance in order to get an understanding of this matter.

Senator Anderson - I am sorry. I misquoted the position. The States in which prices control exists are Queensland, South Australia and New South Wales.

Senator WRIGHT - Then I take an instance in Victoria where there is no price control. I direct the attention of the Minister to the supplement to his speech that relates to the schedule of subsidies in Victoria. There is a 6d. subsidy, I take it, on motor spirit in the town of Glen Valley. Am 1 correct?

Senator Anderson - Yes.

Senator WRIGHT - Let us assume that the price of petrol in Melbourne was 4s. a gallon in December 1964.

Senator Anderson - In Melbourne the wholesale price of petrol was 2s. 9$d.

Senator WRIGHT - Let us take 3s. a gallon as a round figure. Is there anything in this scheme or otherwise to prevent an oil company raising that price of 3s. a gallon in December 1964 to 3s. 4d. a gallon in December 1965? That is what 1 want to know.

Senator Anderson - There is not any reason but we are to pay on the differential as it was pegged in 1964.

Senator WRIGHT - That is the point. I want to get an understanding of this matter. The Minister says the price is pegged. I say: " No ". 1 suggest that what the Minister means is that there is an agreement between the Government and the oil companies as to what the price then was. They were able to satisfy each other as to what price was then being charged. To take the instance of a non-price fixing State, Victoria, I think it is quite clear that there is nothing to prevent an oil company, say, the Shell Co., although 1 have no brief for or against any oil company, from varying its price according to its commercial judgment and reason. We will take the actual figure mentioned by the Minister, which was 2s. 9Jd. There is nothing to prevent that price being raised to 3s. a gallon in the following December. We know the degree to which trade depends upon the retail price, or the retail price upon the capacity of the traffic to bear an increased price. There is an inevitable attraction and tendency in every avenue of commerce, once an advantage is given into the periphery of the industry, to increase a price. The farmer and the transporter in the country will be getting a benefit out of this scheme to the extent of, say, £90 and £900 respectively. A petrol company could say: " There is not so much buyer resistance to the product. The buyer is able to bear a higher price". So, the charge of 2s. 9Jd. a gallon goes up to 2s. lid. a gallon. That in itself erodes the advantage. It seems to me that one of the weaknesses in this scheme is that there is no law which prevents an oil company from raising its price while the scheme is in operation and no adequate safeguard in the legislation or the scheme to prevent the basic price from being increased. A company which increased its price would say that there were commercial considerations which warranted an increase. But there is an inevitable tendency once the benefit reaches the periphery of the industry - and this subsidy will go to the ultimate purchaser - for there to be less buyer resistance. There will be an inevitable tendency also for the oil companies to take some benefit from that situation. What safeguard is the Parliament providing in that respect?

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