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Bowen has no idea.



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Senator the Hon Helen Coonan Shadow Minister for Human Services

Media Release

Media Contact: Giorgia Christmas Mobile Number: 0401 059 059

5 June 2008

BOWEN HAS NO IDEA

Chris Bowen again misled the House this afternoon during an answer in Question Time in which he falsely claimed that Liberal frontbencher Helen Coonan “confirmed this morning… that the Australian Treasury was comfortable with the work of the ACCC”.

Senator Coonan did no such thing.

Treasury could not possibly have been comfortable with the revised work of the ACCC when they had not been given an opportunity to review the material.

Mr Bowen has misrepresented the effect of Treasury’s evidence.

Below is Senator Coonan’s press release from earlier today, which proves quite the contrary to Mr Bowen’s assertions.

In fact, Treasury was not comfortable with the econometric model underpinning the ACCC Report. Mr Jim Murphy of the Treasury Department gave evidence that Treasury was responsible for getting the ACCC to undertake further work.

The methodology of the “futher work” but not the underlying data was set out in the ACCC report dated 29 May 2008.

Surprisingly, however, Treasury evidence was that Treasury had not yet analysed the “further evidence”.

Mr Bowen should get his facts straight.

Senator the Hon Helen Coonan Shadow Minister for Human Services

Media Release

Media Contact: Giorgia Christmas Mobile Number: 0401 059 059

5 June 2008

FUELWATCH - WHERE’S THE EVIDENCE?

Evidence given to a Senate Estimates Committee last night showed that Treasury asked the ACCC to do further modelling work to improve and clarify the data supporting it’s December 2007 report that had not recommended the introduction of FuelWatch.

The modelling was included by the ACCC to support its December 2007 Inquiry into the Price of Unleaded Petrol, which the Prime Minister has cited as justification for the introduction of FuelWatch.

When Liberal frontbencher Senator Helen Coonan asked “Is it correct to conclude that from the original report the results (of the modelling) were inconclusive?”, Executive Director of the Markets Group within the Treasury Department, Jim Murphy answered, “Well, we would say that, yes”.

Treasury officials also revealed that Treasury asked the ACCC to re-do the modelling after identifying some deficiencies. The additional modelling that the ACCC undertook was done “because we asked questions about that and we felt that further work could be done”, Mr Murphy said.

This morning the ACCC Chairman Graeme Samuel described the “further work” that was carried out by the Commission at Treasury’s request was an “iterative process” which took place from “early February through to early April” and was relayed to the government department through verbal discussions between officials.

The Treasury’s reservations about the modelling now mean that it is the fifth government Department to express serious concerns over the FuelWatch policy. Last week’s Departmental leaks were particularly damaging to the Government and Assistant Treasurer Chris Bowen has been desperate to get FuelWatch off the front page.

It was revealed that, after panicking on 28 May because of the leaks, the Assistant Treasurer asked Treasury to have the FuelWatch legislation available the next day. This resulted in Ms HK Holdaway working a 36-hour shift to rush through the legislation to the Minister’s office.

When asked what time she went home by Senator Eric Abetz on 28 May, Ms Holdaway responded “I didn’t leave the office that night”.

Yet despite the fact that the Minister’s own department did not accept the ACCC’s modelling and asked the ACCC to re-do the modelling, the Assistant Treasurer rushed in the legislation even though Treasury did not have a chance to review the re-done modelling.

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“And was or did Treasury also review the further results that were contained or appended or referred to in the ACCC’s press release dated a few days ago, the 29th of May 2008?”, Senator Coonan asked Treasury during Estimates.

“We have not had the opportunity to do that,” Ms Holdaway replied.

Today Senator Coonan questioned the real motive as to why the Treasury officials were made to spend 36 hours straight at work to rush through the legislation even though Treasury had not yet reviewed the revised modelling that it had asked for.

“Why is the Assistant Treasurer rushing this legislation through even though his own department has not reviewed the revised research into FuelWatch’s effectiveness?

“Chris Bowen is really panicking. He is desperate to rush through this legislation to get it off the front page.

“Making Ms Holdaway and the other two staff work for 36 hours was not necessary - but it was convenient for a Government addicted to spin and media management”, Senator Coonan said.

“The revelation that Treasury is now the fifth Department to have questioned the case for FuelWatch raises some serious questions.

“This Government is failing the people of Australia when it develops a policy on the run and casts about for arguments that support a decision it has already taken.

“Labor is making it up as they go along,” Senator Coonan said.

5/06/2008

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BEHIND THE SCENES:

WHAT REALLY HAPPENED WITH FUELWATCH

14 December 2007

ACCC presents report to the Government which does not recommend nor denounce FuelWatch - but puts it forward as an option.

Late January/Early February

Treasury is tasked with preparing the FuelWatch Cabinet Submission - but they aren’t happy with the econometric modelling.

HELEN COONAN: So it is correct to conclude that from the original (ACCC) report (of December 2007) the results were inconclusive?

JIM MURPHY (Exec Dir, Markets Group, Dept of Treasury): We would say that, yes.

Senate Estimates 4 June 2008

Treasury discusses deficiencies with the modelling with the ACCC and asks them to do further work to clarify.

MURPHY: Treasury was of one of the causations of that work… We felt that further work could be done… So that further work actually came from the discussions with Treasury.

Senate Estimates 4 June 2008

14 April 2008

Minister for Resources Martin Ferguson sends a letter to Assistant Treasurer Chris Bowen, the Prime Minister Kevin Rudd, Treasurer Wayne Swan and Finance Minister Lindsay Tanner voicing considerable doubt over the effectiveness of FuelWatch.

“Your assertion that FuelWatch will be pro-competitive is unsubstantiated and ignored the very substantial evidence that it is anti-competitive… I remain concerned about the substantive elements of FuelWatch, which I believe will seriously damage the government’s economic and regulatory reform credentials.”

Letter from Martin Ferguson

Cabinet also faces opposition on the measure from the Department of Prime Minster and Cabinet, Department of Finance, Department of Industry and Department of Resources.

5/06/2008

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15 April 2008

Establishment of a National FuelWatch Scheme announced. Prime Minister Kevin Rudd and Assistant Treasurer Chris Bowen announce the Government will accept the ACCC option of FuelWatch outlined in the original report of 14 December 2007.

26 May 2008

The letter from Martin Ferguson is leaked.

28 May 2008

Advice from the four departments against FuelWatch is leaked.

Government seemingly panics following the leaks and moves to rush legislation through the following day.

This results in HK Holdaway, Manager of Competition & Consumer Policy Division, Department of Treasury, working for 36 hours straight to prepare bill.

“I didn’t leave that evening (28 May).”

HK Holdaway 4 June 2008

29 May 2008

ACCC press release referring to methodology of “further work” which is said to support the adoption of a national FuelWatch scheme.

ACCC modelling, but no underlying data, given to Treasury who have not analysed it as yet.

COONAN: Did Treasury also review the further results that were contained or appended or referred to in the ACCC’s press release date 29 May 2008?

HOLDAWAY: We have not had the opportunity to do that.

Senate Estimates 4 June 2008

5.41PM: Assistant Treasurer Chris Bowen introduces the FuelWatch bill to the House of Representatives.

5/06/2008

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4 June 2008

Chris Bowen denies any bureaucrats worked overnight on 28 May 2008 in order to prepare the rushed legislation, directly contradicting Holdaway’s statement of “I didn’t leave that evening (28 May)” made same day.

5 June 2008

9.05AM: Joe Hockey and Peter Dutton put forward censure motion against Chris Bowen for his misleading of the House by claiming that Treasury officials did not work through the night of Wednesday 28 May 2008.

Censure motion is disallowed by the Government exercising its majority numbers in the House of Representatives.

5/06/2008

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Economics Senate Estimates - 4th June 2008

COONAN:

If you’ll forgive me putting it in very simplistic terms, it wasn’t the kind of work that simply you know checks additions. It was a review - correct me if I’m wrong - that would have involved using the ACCC’s data and starting pretty much from the ground up from your earlier answer and coming up with your own analysis, methodology and econometric tests?

MURPHY:

Well we tested their methodology.

COONAN:

Perhaps would you mind just describing what you did please?

MURPHY:

Right, OK.

HOLDAWAY:

I can answer that, Senator.

COONAN:

Thank you Miss Holdaway.

HOLDAWAY:

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The ACCC sent us the data set that they’ve created to be used as part of econometric analysis.

That was in the form of a [inaudible] software, made sure the results were identical and that it provided statistically significant results. He confirmed all of that.

COONAN:

And was or did Treasury also review the further results that were contained or appended or referred to in the ACCC’s press release dated a few days ago, the 29th of May 2008?

HOLDAWAY:

We have not had the opportunity to do that.

COONAN:

Will you be doing that?

MURPHY:

Probably but I think that my understanding is that work that was further released Treasury was sort of one of the causations of that work to be released because we asked questions about that and we felt that further work could be done that would clarify the efficacy or the benefit that you could get out of FuelWatch. So that further work actually was came from the discussions with Treasury.

COONAN:

Thank you Mr Murphy, are you able to give me some idea of when the ACCC was asked to clarify their earlier approach or data?

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MURPHY:

Could you just clarify Senator, what [inaudible] or when we met with the ACCC following the report? [inaudible] It was early, early in this calendar year, so, but we can take it on notice if you wish.

COONAN:

Thank you very much well I’m just interested in the progression to the ACCC doing some I think they describe it as ‘further work’ or ‘further results’ and when Treasury’s consultations with the ACCC prompted that work to be undertaken if I understand you correctly. Alright? So that was you think early this year?

HOLDAWAY:

Yes.

COONAN:

Which, could you have a stab at which month?

MURPHY:

Senator, we would have to check our records, so we’ll take it on notice.

COONAN:

Were you at that time preparing a cabinet submission? The cabinet submission?

MURPHY:

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I think we would have been in discussions with the ACCC prior to that Senator.

COONAN:

So I’m just trying to forgive me, I don’t want to ask to, I’m not trying to test your recollection unreasonably but it is important to understand the sequence and timeframe of how this contentious piece of work that has somehow or rather jumped you guys and has superseded every department who normally does this work how this comes to be the preferred modelling of the government. So you can appreciate that I’m interested in what consultations you had with the ACCC on the shortcomings if I could put it that way, of their original work.

MURPHY:

We the best I think is we give you the dates and the times of our meetings with the ACCC, then that’s what we did [inaudible] we’re not saying we didn’t find any shortcomings in that work their initial work we found that the methodology that they used was robust and what we found was we felt that if you ran further regressions that you could get a better case or a justification of what you’re trying to do. Right? So we didn’t find fault, we just thought if you did more work, you could get more clarification as to the results that you’re saying will occur through introducing a FuelWatch scheme.

COONAN:

Right, so is it correct to conclude that from the original report the results were inconclusive?

MURPHY:

Well we would say that, yes.

COONAN:

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And that was the basis and at that stage you were working on the implementation of FuelWatch as a policy recommendation?

MURPHY:

Yes, yes.

COONAN:

So you’d received policy authority to get on with preparing the cabinet submission.

MURPHY:

Yes. However there had been further, as well as the report there’d been, presentations by the ACCC to senior ministers who had the opportunity after being briefed or having briefed by their departments the opportunity to test the proposals and the recommendations of the ACCC on this.

COONAN:

Now were you present at any such presentation?

MURPHY:

No.

COONAN:

You weren’t? Do you know when the presentations took place?

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5/06/2008

MURPHY:

Well I [inaudible] we can seek to clarify [inaudible]

COONAN:

They’ll be here tomorrow anyway. [inaudible] No it’s just that you gave the evidence that as part of the sequence they presented to senior ministers. Now was this presentation before or after Treasury asked the ACCC to do some further work? To clarify what their data showed.

MURPHY:

I think Senator we would need to check our records on that.

COONAN:

Alright well…

MURPHY:

So we can take that on notice.