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Friday, 11 October 1985
Page: 1087

Senator MASON —Is the Minister for Resources and Energy aware that because of petrol price discounting currently in New South Wales some people pay as low a figure as 42c a litre for super grade petrol, while others, especially in country areas, pay 59c? Is the Government not concerned that its petrol pricing policies are in such disarray that some people pay 17c a litre more than others-the highest figure I can remember? Is it not especially serious that the effect of these distortions is a disincentive to decentralisation in Australia? Since the present petrol pricing policy of the Government is plainly farcical, what does the Government propose to do about it?

Senator GARETH EVANS —The Commonwealth Government's legislative authority to control retail prices, including petrol prices, is constrained to a very large degree by constitutional considerations, with that authority really lying with the States.

Senator Durack —You have been learning about the Constitution lately, have you?

Senator GARETH EVANS —Not with any assistance from Senator Durack, with the utmost respect. While the Commonwealth has been able to operate a maximum wholesale prices surveillance system through the Prices Surveillance Authority, because of the co-operation of State and Territory governments and the oil industry, it does not have the power to enforce any PSA direction if the States or, more particularly, any part of the industry decide to ignore it. Actual retail prices, as Senator Mason no doubt will be aware, are set by the refining companies, their distributors and agents. These prices naturally reflect differences in supply costs and, more particularly, reflect differing degrees of competition. Consequently, they vary both over time as conditions change and as between outlets. The reality is that in discounting we are seeing a competitive market at work with all the advantages and disadvantages that may be perceived to flow from that. The problem of discounting, or more particularly the absence of it, is most acutely felt in country areas of Australia where there is less competition, or very often no competition at all. That is the primary explanation for the very substantial difference in price levels to which so many people have been drawing attention between metropolitan and country areas. There are also the added costs associated with freight to consumers in country areas and the higher wholesaling and retailing costs associated with smaller sales volume in those areas.

Any attempt to regulate petrol prices with a view to making them uniform, either as between the States or within the States as between different locations, will, the Government believes, introduce significant distortions into the operation of the market. Any savings made in costs in particular areas would only be short lived and could eventually give rise to major structural adjustment problems.