MITCHELL:Mr Rudd, good morning.
PM: Good morning, Neil.
MITCHELL:Is it correct that under your FuelWatch legislation that, in fact, companies that bring down the price of petrol could be fined for doing it?
PM: Well, as in Western Australia, there is am enforcement regime which means if the information provided to the FuelWatch scheme is wrong, or if the prices vary during the day, then, of course, that's when the enforcement regime applies.
MITCHELL:So you'd be fined for bringing the price down?
PM:And the reason for that is if you have gaming of the system, which means, for example, the possibility of an individual petrol station or a petrol company artificially shifting the price up overnight so that they can be seen to be bringing it down the next day. It actually undermines the whole system.
MITCHELL:So you don't differentiate - any reduction in price in that time and you're fined. How much?
PM:Well, the fines regime contains legislation put into the parliament yesterday for individuals go through this. First of all, there are infringement notices, lesser penalties of about $550, up to $2,250 for corporations. And the ACCC then has discretion as to how to handle infringement notices. And beyond that, if there are more systematic abuses, then the ACCC then looks at a more substantial fines regime up to $22,000 for individuals. And that's basically, I think, being modelled on what's been done in WA. And the key thing is, to give motorists choice. To enable them to choose where the cheapest petrol is. So, you've got to therefore have some discipline in the system.
MITCHELL:Can you guarantee prices will be lower under FuelWatch?
PM:I couldn't provide any guarantee on the future of petrol prices, Neil. I said this before the election, I'll say it since the election. That's irresponsible. Because you've got a whole lot of factors impacting the overall cost of petrol.
What we've always said - this just gives motorists more choice. Because if you're in metro Melbourne, for example, you can have, on any given day, the prices varying between 15 and 20 cents across stations. And we think that individual motorists should have that information and be able to make their choice about where to go and get the cheapest petrol.
MITCHELL:Well, yeah, but it's possible to look at the world price, to look at the refining margin and everything else, and say that ‘this is what petrol should be'. And you can't escape that. It should be a certain level. The point is, that there is profiteering that goes on, isn't there?
PM:Well, if you look at what the ACCC said, the competition watchdog, they've been pretty clear cut on this.
If I looked at what Mr Samuel from the ACCC has had to say about this, he describes the oil industry in Australia as representing, quote, ‘a comfortable oligopoly', and, then he goes on elsewhere, I think only yesterday, to say that that's its close to collusion, its close to tacit coordination as you could ever get. So what we are trying to do is try and give more power to the consumers and motorists.
MITCHELL:Okay. My point is, you can assess what the price should be with all those factors - the refining margin, the international price, and everything. And, you can say, on that basis, whether FuelWatch is working. Would you not reassess this in that way as it runs?
PM:Well, what we said when we put out the FuelWatch policy itself, as a decision of the Cabinet in the middle of April, at the 12 month point it would be reviewed. We've always said that. Remember, the data which is put together on which this scheme was based in Western Australia was examined over a seven year period and that's the collection of data which enabled the competition watchdog to conclude that, overall, in WA, it represented something like a price difference between Perth and the eastern states of up to 1.9 cents a litre.
As I've always said, this is simply to help at the margins because the overall impact from global oil prices is so huge.
MITCHELL:So is that the best case scenario, perhaps 1.9 cents a litre?
PM: We've always said that, Neil. This is competition policy at the margins. But on top of that, to give consumers choice. As I said, one of the things that we've been taken by, and I think Graeme Samuel from the ACCC has said the same, is, motorists get really angry when they see such huge price variations across the city and within the one day. What we want to make sure is that when they go home at night, they can go to FuelWatch, find out where the best petrol price is for the next day, and go and get it, if that's what they want to do.
MITCHELL:But Prime Minister, your own regulation impact statement says that this could increase prices in the bush, it could confuse consumers, and could cut competition. Do you agree with that?
PM:On the question of impact in the bush, that's why we've put out the statement on the policy back on the 15th of April. The Assistant Treasurer and myself, were very clear cut. In rural and regional Australia, where you have less petrol outlets, they have an opportunity to opt into the FuelWatch scheme if they want to through their own local authorities. Or, remain outside the scheme.
FuelWatch works best when you've got lots of petrol outlets. That's what we said from the very first day. And we stick by that.
MITCHELL:So, will it increase prices in the country?
PM:Well, I've said before, Neil, that I won't provide any future guarantees on the price of oil. We've got -
MITCHELL:No, no, no, outside of the price of oil. Assuming the price of oil stayed static, would this increase prices in the country?
PM: Well, what I'm saying to you Neil is what I said prior to the election. I won't provide any future guarantees on the price of petrol, the price of oil. This is competition policy which helps at the margins. We got whacked for not providing such a guarantee before the election.
MITCHELL:But I'm not asking for a guarantee. I'm asking for an assessment. Could this increase prices in the bush?
PM:No, on the question of prices in the bush, as I said, on FuelWatch, it is a matter entirely for local government authorities in the bush to opt into the system if they want to, because we recognise that they don't have as many petrol outlets. Therefore, the opportunity for greater competition out there is less. That's why we're not imposing it on them.
MITCHELL:Will it cut competition as your regulation impact statement says?
PM:When it comes to competition, what the interesting thing is about WA, and this is the only experience we've got to go on, is what happens when the Liberal Government in Western Australia introduced this, I think, in 2000-2001, through until 2007, and when the competition watchdog, the ACCC, looked at that over time and took submissions from the WA Government, they found that the proportion of independent petrol stations in the overall number of petrol stations in Perth represented some increase.
You know one of the reasons for that? If you've got FuelWatch operating, local newspapers, for example, hop into it, get the data, and they put the information out there which often advantages some of the small players through free publicity about where you get a good price.
MITCHELL:But it's reported today that the number of independents in Western Australia has dropped from 200 to 17 -
PM: I think -
MITCHELL:If FuelWatch came in in 2001, the number of independent retailers has dropped from 200 to 17.
PM:Well, the submission that I have on the actual number of independent operators in WA, is along these lines. In the submission to the ACCC via the WA Government, they said that the overall proportion - well, the absolute number of independent, branded independent and independent chains decreased. The proportion of sites operated overall by independent operators increased slightly.
Secondly -
MITCHELL:When was that from?
PM:This is since 2001, and it's a submission to the ACCC inquiry that was obviously held in the last six months of last year. And on top of that, here is a statement from the Western Australian Department of Consumer Employment and Protection, which says, that the proportion of sites owned by independent operators and supermarkets has increased. Now, I'm just simply basing it on them.
And then you go to Michael Delaney, the Chief Executive of the Motor Trades Association, who has said that, ‘we took the view that it would assist motorists and our member's capacity to sell fuel'.
MITCHELL:Why is it that you accept the ACCC's argument. Why do you accept them ahead of the four major departments who have been critical of it? Why does the ACCC outweigh them?
PM:Well, the first thing to say is that when this report was first commissioned by the previous Treasurer, Mr Costello, he was very clear about why this agency was selected, that's the competition watchdog, and I'll quote him from last year.
MITCHELL: You're going to use Peter Costello as your reference?
PM:Well -
MITCHELL:You've been telling us for years he's a dill and now you're using him as a supporting argument.
PM:Neil, there's no news here, I said this exactly in the parliament here to Mr Nelson. Because they are saying why would you bother to rely upon the ACCC. Well, here is what Mr Costello said when he launched this inquiry. He said, quote, the ACCC is an independent regulator that has more expertise in the area of access and pricing than any other federal government instrumentality or agency and that is why it is very important that it is engaged in all these pricing issues, unquote. He said that in Melbourne, by the way.
MITCHELL:And the ACCC outweighs your four such major departments?
PM:Let me give you the reason why it is the central piece of advice on this - because they alone have done the econometric modelling. Not just at one stage, but, they went back and re-examined their assumptions as well. They actually crunched the numbers on this. They came up with the conclusion that, overall, based on the WA experience, that you could yield an outcome for motorists which was in the vicinity of up to two cents a litre better than would otherwise be the case.
That's their analysis. We, therefore, have taken that as the basis as why we will proceed with the FuelWatch legislation. And Mr Nelson's got a very clear choice. He can either kill it, in the vote in the Australian Parliament next week, and side with the big oil companies, all of which are opposed to FuelWatch. Or, he can back the Labor Government's attitude, which is that we should stick up for motorists and consumer choice.
MITCHELL:Or, perhaps Mr Nelson, Dr Nelson, could also be siding with four major departments of yours?
PM:Well, I go back to the question of, first of all, which agency within the Government has the expertise on the question of pricing. The former Liberal Treasurer, Mr Costello, said repeatedly that this was the right place to go to get this advice done. Secondly, they crunched the numbers. That is, they went to detailed econometric modelling. And you know something Neil, if we found ourselves today, let's just imagine we were having this interview and we decided not to proceed having got this report from the ACCC on FuelWatch. There'd be a hullabaloo out there in the community about why we were ignoring FuelWatch given the fact that a 300 page report was produced at great expense based on detailed economic modelling saying it would give motorists two cents a litre better then otherwise would be the case.
MITCHELL:But you must see that it's a little unusual, having spent so long telling us Peter Costello was inept, that you're now using him as the very argument of what you're doing.
PM:On the question of the use of Government agency advice, that is, which agency actually has one, the greatest expertise on pricing questions and two, the fact that they are more competent than other sources of information on this, because they do the economic modelling - that's just an objective statement. And you know something, Neil, I said it in parliament yesterday, I said it the day before, and I said it the day before. Dr Nelson can't have it both ways. Remember, he was a member of Mr Costello's Cabinet when Mr Costello made these statements -
MITCHELL:Ah, well we know there is disagreement in Cabinet, Mr Rudd, don't we. Like your own.
PM:Well, when it comes to our Cabinet, as I said before, this debate last week really got going in ernest. I've always said this is a controversial decision. And I said earlier this week that there were conflicting views both within the Government and beyond the Government. Because it's controversial. And you know something, Neil, the best thing to do is to have an argument, have a debate, have a discussion -
MITCHELL:Yeah, I agree.
PM:And sort it all through. The idea that you simply elect members of a Government, Prime Minister and Ministers to simply be yes men for any individual government department, I think is ridiculous.
MITCHELL:So are you happy to have any contrary views from your Cabinet Ministers expressed publicly? Or do you want Cabinet solidarity?
PM:Well Cabinet solidarity is what the Westminster system is based on.
MITCHELL:Well I thought you wanted debate, I mean Martin Ferguson clearly disagrees with you and he has been pulled into line, who else disagrees with, who else in Cabinet thinks FuelWatch is a bad idea?
PM:You know something Neil, when you have board running a private company, presumably -
MITCHELL:But you are encouraging debate Mr Rudd, you said it is a good thing. How many people in Cabinet disagree with FuelWatch?
PM:Neil, you know something, when you have a debate, you have it at multiple levels. One is a big public debate like we are having at the present, about what is good, what is bad, what evidence is available. Then secondly, you have one within the, basically the Government equivalent of a board of a major public company, called the Cabinet.
And that like the board of the company which 3AW is part, is held in confidence. And you have that and then you reach a decision. And you know something -
MITCHELL:3AW is not running the country, much as we would like to at times.
PM:Well you are probably a public company mate.
MITCHELL:Fairfax, it's called. It is a public company.
PM:And when the board meets, I imagine they have a sense that the confidentiality of board papers is a reasonable way in which to go.
MITCHELL:Well that has been breached well and truly. Well will you tell me, in general terms, is Cabinet unanimous in it's support of FuelWatch?
PM:Yes they are -
MITCHELL:Even Martin Ferguson?
PM:We had the debate, we the discussion, we reached the conclusion. Martin has confirmed that. You see, what happens in a Cabinet discussion is not just on this. We have had a whole range of debates in the last six months whereby Ministers put different views. And we sit down and we sort it through. But the contrast is this, remember a few years ago when Mick Keelty the Police Commissioner put his hand up and said he though Al Qaeda might have had something to do with the bombing of that train in Madrid. What did the previous Government do?
MITCHELL:They pounced on him.
PM:They publicly slammed him and said he was reflecting the views of Al Qaeda. That is not our approach. We have just a completely different view.
MITCHELL: Robert, go ahead please Robert.
ROBERT: Oh, Mr Prime Minister.
PM:Hi Robert, how are you?
ROBERT: Good morning. I am very interested in listening to your program because I am, actually own and operate six retail service stations as an independent in the Geelong region and -
PM:Where abouts mate, I didn't hear.
MITCHELL:Geelong.
ROBERT: In the Geelong region and I firmly believe that your plan with this price watch is actually price fixing, because you are not enabling us to compete. Because I cant bring my price down freely. And I have got to notify 24 hours if I am going up and I have got to notify 24 hours if I am going down.
Now I think that is commercial nonsense. And that is price fixing. And it is against competition policy for you to legislate such things. You may as well fix the price of petrol at a certain level and let it float up and down with the international price.
I mean do you want competition or do you want price fixing? And I think you are into price fixing Mr Rudd.
MITCHELL:Prime Minister.
PM:The second is, we have had a long discussion with the competition watchdog on this and they believe that this actually is the best overall for the consumer and that is why we have gone in this direction.
And on the question of the fluctuation in price. I think what many motorists would say is, we understand that prices are going to go up and down across the normal cycle but why should they vary so wildly within a given day and what is wrong with saying to motorists the night before, hey, tomorrow this is what we are going to have as our price at our petrol station and 24 hours later it may change.
But why should it go up a dozen times in the one day. That's what motorists are saying to us.
MITCHELL:Were you quoting the Motor Trades Association in Western Australia?
PM:No, no, no. Michael Delaney, Chief Executive of the Motor Trades Association.
MITCHELL: Yeah well there is another one there that doesn't agree with that. (inaudible) Motor Trades Association Western Australia says that it has in fact kept prices up.
PM: Well as I said before Neil and at the time when we launched this policy in the middle of April, it is controversial. People have different views. And you know something - we are talking about something which at best helps at the margins here.
MITCHELL: That's the worry. I mean all this energy is going into it - it's really not going to help much is it?
PM: Well remember, I have said in parliament yesterday and through the week. This is, first of all, it is a global problem. Secondly, it requires a long term solution which deals with supply, demand, deals with alternative fuels, public transport, fuel efficient cars, and what you can do to help the family budget, given that petrol prices and grocery prices are going up.
And then finally, how you actually assist with competition policy as well. And we have always said, right from when we launched this, this is a modest measure, aimed to put more power in the hands of motorists. And I go back to my point, Dr Nelson has exactly the same view here as most of the major oil companies who are opposed to the scheme.
MITCHELL:Prime Minister you say it is a modest measure. The petrol commissioner was the keeper of your policy before the election. I can do something about petrol prices, will appoint a petrol commissioner. This is what he is going to do and it is modest. Surely you have failed in what you said you could deliver?
PM:Well prior to the election, let me be very clear about the undertakings that we gave. We got attacked on many occasions for refusing to give a guarantee about the impact of the measures we were proposing on petrol prices.
MITCHELL:That's true, but you said the Petrol Commissioner was the answer. And the Petrol Commissioner now is going to deliver this which you said is just the margins.
PM:Well we got asked questions like, can you guarantee if you win Government petrol prices will fall. Answer, no we can't provide that guarantee at all. Mr Costello slammed us for saying that last year.
MITCHELL:Oh he is a dill again is he?
PM:No, I am just saying we got slammed for it, we got slammed for it last year. And I have just been very blunt about what we said last year. What we always said last year is that what we are going to try and do in this area, that is, improving competition policy within the petrol industry, was to put more power in the hands on consumers.
And again I reckon it is really important to say, just to paraphrase what Graeme Samuels from the competition watchdog said yesterday, he said that fuel companies have it all over us. They have a very sophisticated price sharing system run by a company called ‘Informed Sources' where they know the price that every one of their competitors is charging at every service station in the metropolitan areas of Australia at any point in time through the day. And that is as close to collusion as you get. What he is trying to do is to give more power into the hands of consumers and that is what we are trying to do.
MITCHELL:We'll take a break, quick break, more from the Prime Minister.
....
MITCHELL:I'll try to be quick, you haven't got long left. The Prime Minister is on the line. Mr Rudd, do you still trust the public service?
PM: We have a great relationship with the public service.
MITCHELL:But can you trust them after the leak?
PM:Well the Secretary of the Prime Minister's Department who has responsibility for this has commenced the usual review processes as would occur in these circumstances to see what that throws up.
MITCHELL:But do you trust them?
PM:We have a great relationship with the public service. In all the public servants that I am dealing with personally, we have complete trust in the advice which they provide, that is that it is provided in the best spirit on the best basis that they have available to them. Whether we accept that advise is entirely a separate matter.
MITCHELL:Of course, but do you trust them not to leak?
PM:Well we trust all those public servants that we are dealing with. And we don't know the -
MITCHELL:Somebody has leaked.
PM:I think that is probably indisputable.
MITCHELL:Well Laurie Oakes said it wasn't a minister which must have relieved you something. You, how can you trust, if the highest levels of public service have leaked?
PM:Well as I said the other day, when I gave a briefing to (inaudible) new cabinet, when we are talking about cabinet documents guys, we don't mean those documents you leave on the counter.
MITCHELL:How can you trust them?
PM: Well obviously there is a problem in the system somewhere. The Prime Minister's Department has got a responsibility for looking at that. But when I talk to my Ministerial colleagues about their relationship with their departments, they say that they are in really good working order and in my own case, the chief executives I deal with are a fantastic team of public servants to deal with. And I support their professionalism. But you know, you are dealing with tens of thousands of public servants here.
MITCHELL:Are you telling me tens of thousands of public servants saw these documents?
PM:No of course not.
MITCHELL:How many saw them?
PM:Neil, that's why the -
MITCHELL:You must have an idea, was it 100, was it 20, what was it -
PM:Neil, I actually don't run the public service. That is the Secretary of the Prime Minister's Department. And in terms of the distribution of these documents or associated documents, that is a matter for him, that is something I don't get in engaged in.
MITCHELL:Do you want to see criminal charges out of this.
PM:What we would like to establish is what has transpired here. Again it would go to the analogy I used before. I mean, if there is a Fairfax board meeting and suddenly all the board documents go tipping out. I imagine that Fairfax would want to know what happened there. And ours is much the same, because if there are problems in the security of the system then we have simply got to fix that. Because if it has occurred on this, does it occur on a national security matter in the future - you have got to just make sure your system is as water tight as it can be.
MITCHELL: We'll take a very quick call, Shirley, go ahead.
SHIRLEY:Thank you. Good morning Mr Rudd.
PM: Good day Shirley how are you?
SHIRLEY: Oh I am very tired Mr Rudd. People have been bombarding me with phone calls etcetera, in response to my emails -
MITCHELL: Sorry this is Shirley Grant who led the protest on the steps of the Flinders Street Station for pensioners.
PM:G'day Shirley.
MITCHELL:Shirley what was your question?
SHIRLEY: I would just like Mr Rudd to, if he could, to arrange a meeting with myself and Senator Steve Fielding who in turn sent a letter to Mr Rudd last Wednesday requesting a meeting on my behalf. Now something has got to be done.
MITCHELL:On the matter of pensioners. Mr Rudd.
PM:Good Shirley. Thanks for that. Unaware of the letter yet. I see Steve from time to time. Can I just sort something out with him. I am unaware of the letter. On the question of pensioners and carers. We have heard your message loud and clear. We need to continue to work our way through this. I know that it is very difficult, but in terms of the letter from Steve, I will now go and have a look for it and we will get back you.
MITCHELL:Thanks Shirley, Prime Minister do you support Qantas in their handling of their industrial dispute?
PM:Not across the details is the honest answer to that Steve, sorry, Neil. I have been focussing on other things during the course of the week. I have seen some initial reports on it but I would rather get across the detail before saying who is right and who is wrong.
MITCHELL:Would you suggest this has been your worst week as Prime Minister?
PM:Oh it has been tough Neil but you know in politics, you take a whacking one week, it gets a bit better the next. You take a whacking the following week, it has been that way since I have been leader of the Labor Party. It is just normal.
MITCHELL: Are you a bit rattled?
PM: No. The key thing is just to get on with the job.
MITCHELL: What did you say when they told you that four, that the advice from four departments had leaked to Laurie Oakes?
PM: These things happen. You just shrug your shoulders and say, ‘well that is an interesting day in politics'.
MITCHELL:These things happen. Not one little profanity?
PM:No it is just one of those things. You know, you get elected to do a job, and our job is to do what you can to help families with their budgets and a few practical things like that.
MITCHELL:Prime Minister, in Sydney.