Where was the Commerce Commission on petrol price overcharging?

by The Listener / 13 July, 2017
RelatedArticlesModule - Petrol

Photo/Getty Images

There was little surprise when the Government-commissioned report on petrol pricing found fuel retailers are grossly overcharging. What raises eyebrows now is the decision to continue the inertia pending more official chin-stroking while the overcharging continues. Worse, it appears those who are paid to be watchdogs against such anti-competitive practices were not even on the case and will have to be given “special powers” just to start keeping an eye on petrol pricing.

Energy Minister Judith Collins deserves congratulations for commissioning the report as a priority upon taking the job. The report found the mostly foreign-owned petrol and diesel retailers had massively increased their profit margins, particularly in recent years, deterred only in areas where independent operators – 20% of the sector – competed. It was about as clear a case for regulation as could be imagined, especially given that fuel costs affect the price of everything in the economy. They also disproportionately hit lower-income folk, who must typically travel further to work, given vaulting inner-suburban housing prices.

That Collins proposes to await a further official report – meaning any decision is handily deferred until after the election – is therefore frustrating. In fairness, the campaign may not be the ideal time for the extensive consultation required to devise controversial regulations.

However, Collins’s expressed hope that retailers will voluntarily come into line in the meantime raises doubts about the Government’s genuine will to protect consumers. Sure, the companies may temporarily pull their horns in under the current discomforting public focus, but over time their margins will inevitably creep up again unless there’s a framework to restrain them.

More important, the public is entitled to ask why the Commerce Commission was not already on the case. Is this not its job – to monitor market practices and alert the Government to uncompetitive behaviour? Yet the Government tells us, as if this were an act of great beneficence, that it’s giving the commission special new powers to keep petrol pricing on its radar.

How can an agency purpose-built to ensure healthy competition not already have such powers? What else has it been unable to keep watch over because it lacks the authority? The Government should be embarrassed by this, especially given it suggested last year that the commission’s legislation might be reviewed and that has as yet come to nothing.

National-led Governments dislike regulating markets, but in an economy this small, where there are bound to be pockets of unhealthy sectoral dominance, being laissez-faire has political risk. There’s a veritable roll call of dominant companies whose behaviour causes daily grief to consumers, small business and the more vulnerable in the workforce. There’s the growing practice of big companies enforcing months-long delays in paying invoices. Fonterra and big building-sector companies have caused hardship, and the latter even business failure, with this practice, yet the Government remains aloof.

Our supermarket duopoly has immense power over suppliers, which countries such as Australia and the UK have now restrained, but not us.

An Aucklander this year successfully had the bill for his replacement car key slashed through civil action, because he could prove the carmaker’s markup was not reasonable. Although this is not precedent-setting in a legal sense, it’s exactly the sort of case that should make the commission and our legislators sit up and take notice. Every car owner suspects replacement parts are subject to routine price-gouging through lack of competition.

The commission is plainly not toothless: it just ordered Vector to repay nearly $14 million it had overcharged Auckland electricity consumers. But under its nose, fuel-price padding and much else of economic damage continues apace.

It’s true the Government makes more revenue than retailers from petrol. But the 68.3c per litre excise and transport tax benefits consumers in helping fund roading, road policing and public transport. Fuel retailers’ current overall margin of 47.6c per litre appears pure opportunism, given that at times in the past 20 years it’s been as low as 4c per litre.

The economic perspective is sobering: every extra cent per litre we pay for fuel equals a $30 million transfer from petrol buyers – us – to mostly foreign companies. But the issue is much wider than the price of fuel. This furore is yet another urgent cue to update and re-energise our competition watchdogs.

This article was first published in the July 22, 2017 issue of the New Zealand Listener.

Latest

The many miracles of Aretha Franklin movie Amazing Grace
108368 2019-07-15 00:00:00Z Movies

The many miracles of Aretha Franklin movie Amazing…

by Russell Baillie

A long-lost concert movie capturing Lady Soul in her prime is heading to the New Zealand International Film Festival.

Read more
The untold history of China's one child policy
108182 2019-07-14 00:00:00Z History

The untold history of China's one child policy

by RNZ

Nanfu Wang explains the story behind her film One Child Nation, which screens at the International Film Festival this July.

Read more
Is Vladimir Putin right about the death of liberal democracy?
108314 2019-07-14 00:00:00Z World

Is Vladimir Putin right about the death of liberal…

by Paul Thomas

Vladimir Putin reckons “the liberal idea has become obsolete”. As Mandy Rice-Davies said, “Well, he would, wouldn’t he?”

Read more
The psychology of psychopaths and social media users
108199 2019-07-14 00:00:00Z Psychology

The psychology of psychopaths and social media use…

by Marc Wilson

Psychologists are getting a picture of people who are big on social media. It's not always pretty.

Read more
Acclaimed writer Greg McGee on his family's stolen children
108138 2019-07-13 00:00:00Z History

Acclaimed writer Greg McGee on his family's stolen…

by Clare de Lore

Greg McGee always knew his great-grandfather had kidnapped his father and uncles as infants, but now for the first time he’s revealing that...

Read more
Video-streaming platforms are failing their impaired customers
108303 2019-07-13 00:00:00Z Tech

Video-streaming platforms are failing their impair…

by Peter Griffin

When it comes to video streaming, the hearing- and visually impaired can only dream about the technology that’s passing them by.

Read more
We like big vehicles and we cannot lie
108312 2019-07-12 00:00:00Z Politics

We like big vehicles and we cannot lie

by The Listener

It would take a psychologist to explain Kiwis’ love for utes and SUVs. But it’s not the only reason people are revved up over the attempt to reduce...

Read more
Booker winner Arundhati Roy on democracy in peril
108043 2019-07-12 00:00:00Z Profiles

Booker winner Arundhati Roy on democracy in peril

by Sally Blundell

Soon to speak in New Zealand, Booker Prize winner Arundhati Roy discusses her complex relationship with her native India with Sally Blundell.

Read more