Fair Trading (Fuel Pricing Information) Amendment Bill

Committee Stage

In committee.

(Continued from 18 June 2020.)

Clause 2.

The CHAIR: My recollection is that we are still on clause 2. We have had three questions from the member for Florey and we have had three questions from the member for West Torrens.

The Hon. A. Koutsantonis: Me?

The CHAIR: Yes.

The Hon. A. Koutsantonis: In committee?

The CHAIR: In committee, yes. A week is a long time, member for West Torrens. How time flies. I think I am correct in that; yes, that is what the Clerk has. There is a question. Member for Frome.

The Hon. G.G. BROCK: Can the Attorney-General comment on the press release released today by the RAA calling for the passage of a fuel monitoring scheme as a priority, noting that the Hon. Frank Pangallo MLC in the other place has introduced a bill reflecting my own private member's bill, which is likely to come on for a vote tomorrow?

The Hon. V.A. CHAPMAN: I think the member is asking me to comment in relation to the RAA's media release, not my own commentary. As to the reference, the quote is:

'RAA looks forward to Parliament passing the model recommended by the Productivity Commission to ensure motorists in SA can reap the benefits,'…

Is that the reference?

Ms BEDFORD: Point of order: I do not understand that the Productivity Commission recommended anything. They gave you options.

The CHAIR: The Attorney is creating some context, I think, for the answer.

The Hon. V.A. CHAPMAN: I have the media release from the RAA. I think the member is asking me about the section which reads—it is a quote, apparently, of Mr Borlace, who has a position of seniority with the RAA—

Ms Bedford: He's the spokesperson.

The Hon. V.A. CHAPMAN: Whatever his role is, I do not want to diminish that. There is a quote here, and it says:

'RAA looks forward to Parliament passing the model recommended by the Productivity Commission to ensure motorists in SA to ensure motorists in SA can reap the benefits,'…

Is that the section that the member is asking me about? Could you just repeat the question?

The Hon. G.G. BROCK: Can the Attorney-General comment on the press release issued today by the RAA calling for passage of a fuel monitoring scheme as a priority, noting that the Hon. Frank Pangallo in the other place introduced a bill reflecting his own member's bill, which is likely to come to a vote tomorrow in the other house?

The Hon. V.A. CHAPMAN: No, I cannot. I think the member will have to ask the RAA. I have read that as an indication of support by the RAA for the government to pass the model recommended by the Productivity Commission as per the bill.

Ms Bedford interjecting:

The Hon. V.A. CHAPMAN: I hear the member for Florey.

Ms Bedford interjecting:

The CHAIR: What is the point of order, member for Florey?

Ms BEDFORD: He did not recommend anything, sir. They provided options to the government. If the Attorney keeps asserting they are a recommendation, it is misleading the house.

The Hon. V.A. CHAPMAN: I have just simply read something the RAA are saying, sir.

The CHAIR: Yes.

The Hon. V.A. CHAPMAN: I do not want to upset the member for Florey.

The CHAIR: The Attorney was asked by the member for Frome about the RAA press release.

The Hon. V.A. CHAPMAN: Yes. I think to be clear, I cannot answer that. I can tell you how I have interpreted what the RAA has said, but if the member wants to have any further clarity, I think he will need to speak to the RAA, to Mr Borlace. I think what is causing some concern is the assertion that the Productivity Commission have recommended a particular model. I am not claiming that is what the Productivity Commission did. The Productivity Commission have identified what is available, and the bill that is before the parliament is consistent with that.

What commentary is made by the RAA I cannot account for, but the Productivity Commission did make findings that option 1 met with the policy objective of such schemes to be accurate. I cannot make any further comment other than that. To perhaps get into an argument about whether or not it is a recommendation or whether it is consistent may upset the member for Florey. I think it is a matter that the member for Frome would need to take up with the RAA if he is in some way offended by that.

The Hon. S.C. MULLIGHAN: My question again relates to the RAA's release, which came out today. To refresh members' memories, the RAA called today for the urgent introduction of real-time fuel pricing to help drivers avoid being hit by price spikes, which can add an extra $20 to the cost of filling the tank of a typical family sedan. If you consider that this might happen on a weekly basis, that would equate to about $1,000 a year or, given the delay in the government bringing forward a scheme to the parliament, about $2,000 since the last election.

With that in mind, as a former premier used to say, with the 'goad to action' from the RAA for fuel pricing, will the Attorney accept whichever model seems to attract the greatest support from the parliament, notwithstanding it may not be what the Productivity Commission lavished with one additional tick over the other model concluded in its recommendations?

The Hon. V.A. CHAPMAN: It is the government's intention to progress the bill with the model in relation to real-time fuel pricing for all the reasons we have canvassed in this debate. I appreciate that there is a view of the opposition that supports the proposal of the member for Florey, if I can respectfully describe it as a 'price freeze Western Australian model', as a better position. That is not the government's position and I think we have made that very clear. Ultimately, it will be a matter for the parliament to make a decision.

The Hon. S.C. MULLIGHAN: When we were last engaged in debate on this bill, the Attorney suggested that experience in Queensland may suggest that that model, which ostensibly is the model that she proffers in her bill, might actually lead to price spikes rather than decreases. With that in mind, can the Attorney-General indicate whether she would be willing to contemplate supporting the amended scheme as proposed by the member for Florey?

The Hon. V.A. CHAPMAN: For the reasons we have outlined in answer to the question, no. The potential price spike on the Queensland model, which was under consideration at the time, has potential. I think the Productivity Commission has made it very clear that it may well be that the implementation of such a model that is presented does not have the effect of lowering prices. What it does achieve, though—and I think this is the commendable aspect of it—is that it gives the consumer the tools by which they can make a choice about the purchase of this very important, essential ingredient in the family budget. That is the purpose of it, and we think it meets that test.

The Hon. S.C. MULLIGHAN: To summarise the deputy's latest contribution on this matter, the purpose of her bill then is not so much to lower the price of fuel through increased competition but to provide consumers with a greater choice in paying a higher price for fuel; is that correct?

The Hon. V.A. CHAPMAN: No, that is not correct, and I think that is a misrepresentation of the position. What is indicated and confirmed, I suggest, by the Productivity Commission, is that there is still a question about whether the pricing model that is being presented will have the effect of lowering the price. Really, the verdict is out on that. The Productivity Commissioner raised that as an aspect that may or may not be achieved.

The effect of this model is that it gives the consumer the opportunity to have all the information mandatorily required to be made available in application form for them to then make a decision about when and where they purchase fuel, presumably, if they are price driven, by the lowest price in a region that is proximate—in other words, that they are not going to have to travel further than the benefit that can be obtained for the price on the bowser. I hope that makes it clear. It arms them with all the information in real time for them to be able to choose where and when they buy that fuel, to maximise the opportunity for them to buy at the cheapest price, not the highest price.

The CHAIR: Member for West Torrens, you have already had three questions on clause 2.

The Hon. A. KOUTSANTONIS: My apologies, I thought we were on clause 3.

The CHAIR: No, clause 2 still. Member for Frome.

The Hon. G.G. BROCK: From my information all industry participants reject the need for a fuel pricing scheme of any kind. Many argue that the existing market is suitable and it is okay. For example, on page 6 of the submission Caltex argues that it does not believe that there is a lack of price transparency in the South Australian retail fuel market. In your opinion, does this mean that the fuel retailers do not get it at this stage?

The Hon. V.A. CHAPMAN: I would not necessarily say that. I think they are presenting an argument to suggest that it is not necessary. We say it is. We think the public and the consumer in particular need to be armed with all the information. As the member knows, there are a number of products already out there which do provide a service but it is not with all the information available. If everyone is required to provide that information in real time then the consumer has all the information to be able to make that choice. If they only have some of the operators who already voluntarily provide that information, that helps but it is not the best it can be, and we think it should be.

There is no question that the retailers, some of them at least, are going to say, 'Well, what we've got is good enough.' That may be their view, but we would not be here debating this bill if the government were not of the view that that really needs to be followed through. We recognise that we do not want to put an unreasonable burden on retailers in relation to these matters, but we consider that with the capacity to electronically manage this information, this data, it would not be specifically onerous to such an extent that it should not be advanced that they provide this information and that, when they change their prices, within 30 minutes they make the information available.

Some might provide it within seconds because in issuing the edict of a change, up or down, it seems to me that it is not beyond the wit or the capacity of this technology to forward that electronically to the reservoir for the purposes of the information that will populate the applications people use. We do not think that would be an onerous regime that is unreasonable; quite frankly, a number of them provide it already. On balance, we think it is necessary for the consumer.

The Hon. G.G. BROCK: There has been a range of views put by industry, and some of these are more forthright than others. In particular, I note the submission of the Australasian Convenience and Petroleum Marketers Association, which stated, on page 2:

It is neither the role of the ACCC Commissioner, nor any Australian politician, to single out the legal pricing behaviours of any single market participant.

Does the Attorney-General I agree with these comments—that no politician should single out the pricing behaviours of market participants?

The Hon. V.A. CHAPMAN: I am not sure I quite understand the question. Could you repeat the quote?

The Hon. G.G. BROCK: The quote is:

It is neither the role of the ACCC Commissioner, nor any Australian politician, to single out the legal pricing behaviours of any single market participant.

I am asking if the Attorney agrees with the comment that no politician should single out the pricing behaviours of market participants.

The Hon. V.A. CHAPMAN: Again, I am not sure what the context is. This quote is from where?

The Hon. G.G. BROCK: From the Australasian Convenience and Petroleum Marketers Association. It is on page 2, that it is neither the role of the ACCC nor any politician to interfere with the retail prices.

The Hon. V.A. CHAPMAN: I am happy to have a look at the quote in the context that it is there. Introducing a bill such as this demonstrates that we do need to progress a means by which people can have the information available so that they can make a choice because we do have a situation where fuel is an essential and sometimes significant consumer cost. I would not be here proposing a bill on behalf of the government if we did not think it was needed.

Fuel is too much of a critical expense to simply leave it to competitive interests. That is something we have accepted. As a government, we have tried to look at how that can best be managed and how that can be done most effectively. Although the member for Florey has her view about the Western Australian model, I point out that that model has operated for something like 20 years now and no other jurisdiction has picked it up.

I suggest it is probably because of the fuel cycle Western Australia have, which is peculiar, but also because they attempted to deal with a very different issue. In Western Australia, they may also be interested in price as such, but it seems to me that they developed a model within the envelope of people being furious that they would find a different price on the way home from work from when they went to work.

They introduced this 24-hour freeze model, and the disadvantage of that has been that the retailers cannot even drop their price in that time. It may provide certainty, a bit like the ACT model, but it does not give the flexibility for a consumer to be able to say, 'I want to follow this market and I want to be able to have 30-minute information about this, up or down, so that I can make a choice.'

We think that is the better option, to inform the consumer and make the retailers provide that information, as distinct from a price freeze model. That is the government's view, and we think that that is meritorious to implement. I think, as I said to the member for Florey when she was raising her freeze model, that it is not to be disrespectful to that, it is to simply say that this is the one we think is the most beneficial. We are doing this for a two-year period and if it turns out that it has demonstrably failed, for whatever reason, then obviously we will have to have a look at it.

If the technology that supports this type of either information or registration of information under a freeze model is found to be inefficient then we will have to look at something else, it seems to me. But the general principle of whether parliaments or governments should in some way regulate, or interfere with, the free-for-all out there in the fuel world, yes, that is exactly why we are here.

Clause passed.

Clause 3.

Ms BEDFORD: I move:

Amendment No 2 [Bedford–1]—

Page 2, line 12 to page 3, line 27 [clause 3, inserted section 45F]—Delete inserted section 45F and substitute:

45F—Interpretation

In this Part, unless the contrary intention appears—

biodiesel means a diesel fuel obtained by esterification of oil derived from plants or animals;

discounted fuel price, in relation to a type of fuel, means the price per litre at which fuel of that type is available to consumers after any discount (whether by a voucher, discount rate, reward scheme or any other means) is applied;

fuel means any of the following:

(a) a petroleum product within the meaning of the Petroleum Products Regulation Act 1995;

(b) biodiesel;

(c) compressed gas;

(d) liquefied natural gas;

fuel pump display means the numerical display of the normal fuel price appearing on a metered fuel pump at a service station;

fuel retailer means a person or body who carries on the business of supplying fuel for retail sale;

fuel watch area means—

(a) Metropolitan Adelaide; and

(b) any area declared to be a fuel watch area by the Minister under section 45H,

but does not include any area declared not to be a fuel watch area by the Minister under section 45H;

fuel watch website—see section 45J;

fuel wholesaler means a person or body who carries on the business of supplying fuel for wholesale;

Metropolitan Adelaide means Metropolitan Adelaide as defined by GRO Plan 639/93;

normal fuel price, in relation to a type of fuel, means the price in cents per litre at which fuel of that type is available to consumers without any discount (whether by a voucher, discount rate, reward scheme or any other means) applying;

price board means a board, sign or notice at a service station that displays the price in cents per litre of each type of fuel available for retail sale at that service station;

retail sale means a sale in retail quantity for the purposes of use or consumption;

service station means a building, place or premises where fuel is offered and supplied for retail sale, but does not include a building, place or premises where the primary business is the hiring, leasing or sale of motor vehicles;

wholesale means a sale other than a retail sale.

45G—Objects

The objects of this Part are—

(a) to ensure that consumers are provided with up to date accurate information regarding the price and availability of fuel; and

(b) to promote fair, competitive and transparent fuel pricing practices; and

(c) to mitigate negative impacts on consumers and the economy of the State as a result of fluctuating fuel prices; and

(d) to ensure that fuel prices for retail sale and wholesale are made available to the public for ease of comparison.

45H—Minister may declare fuel watch areas

(1) The Minister may, by notice in the Gazette—

(a) declare an area of the State to be a fuel watch area for the purposes of this Part; or

(b) declare that the whole or a part of Metropolitan Adelaide is not a fuel watch area for the purposes of this Part.

(2) The Minister must, before making a declaration under this section, seek the advice of the Commissioner for Consumer Affairs.

(3) In making a declaration under this section, the Minister must have regard to the objects of this Part.

(4) The Minister may, by subsequent notice in the Gazette, vary or revoke a declaration under this section.

(5) Sections 10, 10AA and 10A of the Subordinate Legislation Act 1978 apply to a notice made under this section as if it were a regulation within the meaning of that Act.

45I—Provision of information to Commissioner on price and availability of fuel and restrictions on change of fuel price etc

(1) A fuel retailer must, at the prescribed time, provide the following information to the Commissioner for Consumer Affairs:

(a) the name, address and contact details of the fuel retailer;

(b) the address of the service station at which fuel is available for sale by that fuel retailer;

(c) the price in cents per litre of each type of fuel available for retail sale at that service station.

Maximum penalty:

(a) for a fuel retailer offering fuel for retail sale within a fuel watch area—$10,000;

(b) in any other case—$5,000.

(2) A fuel retailer offering fuel for retail sale within a fuel watch area must not increase or decrease the price at which fuel will be offered for retail sale—

(a) if fuel is offered for sale before 6 am on any day—before midnight on the day following the day on which fuel is offered for retail sale at the price provided to the Commissioner for Consumer Affairs under subsection (1)(c); or

(b) in any other case—for 24 hours from the time at which fuel is offered for retail sale at the price provided to the Commissioner for Consumer Affairs under subsection (1)(c).

Maximum penalty: $10,000.

(3) A fuel wholesaler must, at the prescribed time, provide the following information to the Commissioner for Consumer Affairs:

(a) the name, address and contact details of the fuel wholesaler;

(b) the address at which fuel is available for sale by that fuel wholesaler;

(c) the price in cents per litre of each type of fuel available for wholesale by the fuel wholesaler.

Maximum penalty: $5,000.

(4) A fuel retailer or a fuel wholesaler must, not less than 30 minutes after becoming aware of the fact that fuel will be unavailable for sale by the fuel retailer or fuel wholesaler (as the case may be), provide that information to the Commissioner for Consumer Affairs.

Maximum penalty: $5,000.

(5) It is a defence to a charge of an offence against subsection (1), (2), (3) or (4) for the defendant to prove that—

(a) the defendant did not comply with the requirement due to an emergency; or

(b) it was unreasonable in the circumstances for the defendant to comply with the requirement.

(6) Information required to be provided to the Commissioner for Consumer Affairs under this section must be provided to the Commissioner in a manner and form determined by the Commissioner.

(7) In determining the manner and form for the purposes of subsection (6), the Commissioner for Consumer Affairs must have regard to—

(a) the need to minimise the costs of the fuel watch scheme for fuel retailers and wholesalers; and

(b) any other existing price monitoring or aggregation systems.

(8) The Commissioner for Consumer Affairs must ensure that information provided to the Commissioner under this section is easily accessible to the public on the fuel watch website and in any other manner the Commissioner thinks fit.

(9) In this section—

prescribed time means—

(a) in relation to a fuel retailer offering fuel for retail sale outside a fuel watch area—within 30 minutes of increasing or decreasing the price at which fuel will be offered for retail sale; and

(b) in relation to a fuel retailer offering fuel for retail sale within a fuel watch area—before 2 pm on the day before offering fuel for retail sale at the increased or decreased price (as the case may be); and

(c) in relation to a fuel wholesaler offering fuel for wholesale within or outside a fuel watch area—within 30 minutes of increasing or decreasing the price at which fuel will be offered for wholesale.

(10) For the avoidance of doubt, information need only be provided under this section in relation to days on which a fuel retailer or a fuel wholesaler is open for business.

45J—Fuel watch website

The Commissioner for Consumer Affairs must maintain a website (the fuel watch website) for the purposes of informing consumers of the price and availability of fuel in the State containing—

(a) information provided to the Commissioner under section 45I; and

(b) any other information that the Commissioner thinks relevant.

45K—Offences relating to display of fuel price

(1) If a fuel retailer increases the normal fuel price for a type of fuel, the retailer must change the price displayed on any price board to reflect the increase in price before, or at the same time as, changing the price displayed on any fuel pump display for that type of fuel.

Maximum penalty: $5,000.

(2) A fuel retailer must not display a discounted fuel price on any price board or fuel pump display.

Maximum penalty: $5,000.

(3) A fuel retailer or a fuel wholesaler must specify the normal fuel price for a type of fuel separately from the price of any other type of fuel or any other goods or services offered for sale by the fuel retailer or fuel wholesaler (as the case may be).

Maximum penalty: $5,000.

(4) The regulations may provide for the manner and form in which a fuel retailer must display the normal fuel prices for types of fuel, or a type of fuel of a particular class or kind, on any price board or fuel pump display.

45L—Offences relating to sale of fuel

(1) A fuel retailer must not, without reasonable excuse, refuse or fail to sell fuel on demand for the price provided to the Commissioner for Consumer Affairs in accordance with this Part.

Maximum penalty: $10,000.

(2) A fuel wholesaler must not, without reasonable excuse, refuse or fail to sell fuel on demand for the price provided to the Commissioner for Consumer Affairs in accordance with this Part.

Maximum penalty: $10,000.

(3) It is a defence to a charge against subsection (1) or (2) if the defendant proves that—

(a) they sold a reasonable quantity of the fuel demanded; or

(b) they did not have a sufficient quantity of fuel to supply the quantity demanded in addition to the quantity required to satisfy—

(i) all other existing arrangements under which they were obliged to supply quantities of fuel for consumption or use; and

(ii) the ordinary requirements of their business.

(4) A fuel retailer or fuel wholesaler must not make the sale of fuel to a person conditional on the sale of any other goods or services.

Maximum penalty: $10,000.

(5) A fuel wholesaler must, on request from a person, provide to the person in writing, an itemised list of the cost of any of the following components of the normal fuel price:

(a) delivery of the fuel;

(b) use of a brand in relation to the type of fuel;

(c) use of a credit or payment facility.

Maximum penalty: $10,000.

Amendment No. 1 was deleting price information and substituting what scheme, and I do not want to proceed with that. I am moving that at clause 3 we insert a new section 45F. What this seeks to do is give consumers the ability to take advantage of the high-quality accurate information that everyone wants to see in place as soon as possible. Rather than refer to my amendment's intent as being a freeze, we look on it as price stability for 24 hours. That may seem semantic to you, but to me a price freeze on a market would indicate something else.

There is no other commodity we have need for where the price can fluctuate five or six times in a day. I think your bill can do two things. It can bring in this accurate information that we all desire, but it can also exert some pressure downward rather than upward, because your bill, as you yourself have said, can move the price up. I put this amendment to the house and am quite happy to ask my first question of the Attorney on clause 3 at some point, unless she wants to ask me some, of course.

The Hon. V.A. CHAPMAN: I have no questions for the member. I think we have canvassed the government's position. I hope that I was not disrespectful in calling your model a price freeze. I did not mean any disrespect by that. It is a stabilising process maybe. Our concern, as a government, is that it fixes it at an amount when there is an opportunity that it could go down in that time frame. It is a different approach, and, for the reasons we have explained, we will be opposing amendment No. 2 in the name of the member for Florey.

The Hon. S.C. MULLIGHAN: I speak in favour of the amendment moved by the member for Florey. As we have canvassed previously in the course of the debate on this bill, there is an inherent assumption in the proposition put by the Deputy Premier, and that is that the market will always have a desire to move to a lower price. Current experience demonstrates that that is patently false.

We have a choice between a real-time regime, as pushed by the Deputy Premier, or a best and final offer regime, if I can put it like that, to use the parlance of the real estate industry. You can see why the two regimes will operate differently and have a different impact on prices. To use that analogy of the real estate market and of competing bidders for real estate in a transaction, they are encouraged to put their best and final foot forward—their best, most competitive and aggressive price for a particular property. They are incentivised to do all they possibly can to secure the transaction.

The model that the Attorney is pushing does not do that at all. It enables a fuel retailer to test the market with an initial price during the course of the day, at any point in time of the day, with an eye on their competitors in the local area. It is likely to be the case, given the market penetration by the dominant players in this industry and given what we currently already know, that those dominant players already usually set their prices much higher than the smaller players do. I am thinking of the Libertys in particular, who are usually much more aggressively and cheaply priced than the BPs, for example. It is likely that a BP service station will not necessarily set their price at the lowest they have the capacity to set it at.

They will incentivise another player, a smaller player—perhaps a Liberty, a Mobil or an Ampol, for example, or a Caltex, as the member for Frome mentioned—to have regard for that price and what it is set at. That does not necessarily mean that everyone will rush to the lowest price. It will incentivise those other players to increase their price so that they can maximise their profit margin and be competitive with the higher price that is being set by the other player.

In that context, it is easy to see why the Queensland model does not have the outcomes that the WA model has. Indeed, information that has been taken from ACCC reports comparing the two regimes in Western Australia and Queensland bears this out. Over a 45-day price cycle between Adelaide, Brisbane and Perth, Brisbane had the most expensive prices. I am talking about the 45 days leading up to 11 June 2020. Perth had the cheapest prices, and Adelaide was in the middle. Adelaide had an average price of $1.085, Brisbane $1.116 and Perth $1.052.

If you take that example, we are being asked to choose between a regime currently operating in Brisbane that has high prices of approximately 3¢ above the average price in Adelaide, or a regime operating in Western Australia of 3¢ lower than Adelaide, or a 6¢ per litre difference between Brisbane and Perth, with Perth being the cheaper.

I cannot imagine, given those two examples, why we would proceed in pursuing the Queensland model when we have information that shows the WA model delivers cheaper prices—in particular, when we also have an admission from the Deputy Premier from the last time we debated this that we cannot be sure that prices will not increase if we adopt the Queensland model.

To my mind, what the member for Florey's amendment seeks to do is insert a different and robust regime which provides for a once in a 24-hour period of price setting and, hopefully, an incentive for these retailers to start out with their most aggressive and cheapest price for the benefit of motorists, rather than allowing real-time pricing which enables petrol retailers to adjust their price, not necessarily down but also up. That is something that is not in the interests of motorists. I am surprised that the RAA advocates that model, but I think we have seen from their press release today that all they want is a model so that there is some improvement to the amount of information that motorists are able to get access to before they make their purchasing decisions.

The committee divided on the amendment:

Ayes 22

Noes 23

Majority 1

Amendment thus negatived.

The Hon. V.A. CHAPMAN: I move:

Amendment No 1 [DepPrem–1]—

Page 3, after line 16 [clause 3, inserted section 45F(3), penalty provision]—Insert:

Expiation fee: $315.

Amendment No 2 [DepPrem–1]—

Page 3, after line 21 [clause 3, inserted section 45F(4), penalty provision]—Insert:

Expiation fee: $315.

Amendment No 3 [DepPrem–1]—

Page 3, after line 26 [clause 3, inserted section 45F(5), penalty provision]—Insert:

Expiation fee: $315.

These amendments essentially allow for an expiation fee of $315. I know I have canvassed this briefly in the general content of the debate, but essentially it seeks to make the offences expiable. I think I used the circumstance where there might be a very minuscule time frame of delay, or there might be multiple occurrences of an electronic failure to give within the time frame to provide. So, on the advice that we received, it allows the regulator an appropriate array of compliance actions to still effectively enforce the scheme but to be able to accommodate that circumstance.

The regulator will need to assess the seriousness of the offending on a case-by-case basis and be able to exercise their discretion in determining the most appropriate and proportionate action to take in the circumstances. Where it is appropriate in the circumstances to prosecute, obviously that option continues to remain, and that may be necessary in a serious breach. Essentially, this gives extra tools in the toolbox.

Ms BEDFORD: Is there any special reason why you have chosen $315 when in actual fact if you take a tomato across the border, for instance, and contravene the fruit fly act, it is $375? It is just a 'for instance'.

The Hon. V.A. CHAPMAN: There are obviously commensurate types of expiation fee amounts and on our advice this is commensurate with the nature of the expiable offence for this type of offence. That is the advice we have. Obviously, there are expiable offences for road traffic offences, for example. Sometimes they are much higher. They are all on the advice that we received as to what is a comparative consumer breach, and that is what we are advised.

Ms BEDFORD: What other commensurate impositions are we talking about? What other fines are we talking about that are commensurate with this?

The Hon. V.A. CHAPMAN: I am happy to get that information for the member, but these are breaches of a consumer obligation.

Ms Bedford: Consumer law?

The Hon. V.A. CHAPMAN: Yes. We will get some of that and make it available to the member.

The Hon. S.C. MULLIGHAN: I indicate that the opposition will not be supporting these amendments. I do indicate that we might be of mind to support a more substantial expiation fee, but we have already discussed this evening that the RAA has put out a press release today saying that without the introduction of fuel price monitoring motorists could be worse off by $20 a tank. Really, what we have here is an offer of an expiation fee equivalent to, say, 16 motorists being caught, having to pay a higher fuel price at $20 each per tank.

That is not a slap on the wrist: that is the merest touching of the skin with a feather when it comes to a punishment for a fuel retailer that might be an arm of a multinational business. I mean, really—to suggest this is equivalent to other expiations like speeding for example, you only have to exceed—

The Hon. V.A. Chapman: Sorry, like what?

The Hon. S.C. MULLIGHAN: Like speeding, for example. You would only have to exceed the posted speed limit by 10 km/h or more to be significantly above this. I do not think this is really any threat of any punishment whatsoever to a fuel retailer and if anything it is an incentive for a fuel retailer to roll the dice, to not report what their current price offering is or not be registered under the scheme or the other requirements of the regime. For those reasons, we will not be supporting these amendments.

The Hon. V.A. CHAPMAN: I just indicate in response to that that this is a recommendation of Mr Soulio who is the commissioner who would be responsible for the management of this. He suggests that having an expiable option is sensible, particularly to do with minor and multiple counts of a breach comparable to consumer law and, of course, we have undertaken to get similar amounts because we have not come up with this figure, this is the recommendation that has come to us as to what is comparable in this consumer area.

Just to be clear, I was not suggesting that this is comparable to a road traffic offence. I indicated that just like we have in road traffic offences where we have expiable amounts, they are commensurate in relation to the road traffic matters that they try to keep some consistency. It is not the only area of law in which we have expiable offences, but in this area we are advised that if you have them, this is the rate that is appropriate.

If there is some basis upon which it is a doubled amount, if there is some reason to have a look at that, in that you are suggesting that it is not the comparable rate, then so be it. But I have undertaken to the member for Florey—and will make this available to the opposition, of course, as well—that that information of comparable consumer law-type expiable offences will be provided and we will have that to you as soon as practicable.

The Hon. S.C. MULLIGHAN: Thank you. I do not disagree with the Attorney that it is desirable to have these offences as expiable offences. That would certainly ease the burden of those bodies that will be responsible for administering punishment for an offence against this regime. The point I make is that the level of the fee is far too low.

I am happy to accept that what the Deputy Premier says is correct—that this expiation fee is comparable to other expiation fees that are set in other areas of the consumer law. But we are talking about a regime here that is meant to bring some transparency, and preferably lower prices, to the approximately one million South Australians who find themselves in need of purchasing fuel every week. We are talking about the sum of those transactions being tens of millions of dollars every week.

I do not think it is unreasonable that when we have a market that has so few participants, and amongst those participants there are very dominant players in there, they be incentivised to make sure that their systems, processes and behaviours are such that they can adhere to the law. If they are not able to, for whatever reason, then they should pay a fee or they should have the option to pay an expiation fee that is more commensurate for the ill they do to the community and perhaps even a reflection of their capacity to pay.

The Hon. A. KOUTSANTONIS: I am not sure if the minister has already answered this, but how did she come to the figure of $315?

The Hon. V.A. CHAPMAN: I have answered it and I refer to my previous answer: it is commensurate, apparently.

The Hon. A. KOUTSANTONIS: Does the minister have any evidence to supply to the committee that that is a disincentive for any retailers to behave in a way that would be breaching the act?

The Hon. V.A. CHAPMAN: No, the advice was that this is commensurate with other consumer law of this nature and that is therefore an amount to be recommended. It has come from Mr Soulio. There is an expiable offence and we have included that. There appears to be no objection to that, just the amount. I have undertaken to the committee to provide examples of the comparable breaches upon which the advice that we have been given has relied, and so I cannot do anything further than that.

The Hon. A. KOUTSANTONIS: Given the size of some of the retail outlets, I would have thought that it is pretty common sense to think that the expiation fee is relatively small in comparison to the size and capabilities of these companies. Retailers who are involved in fuel are usually either multinational or very large family businesses that are dealing in the hundreds of millions rather than the millions, and the multinationals would be dealing in the billions.

These are vertically integrated businesses, whether they be miners or explorers who then go to processing and refining and also distribute their fuel. We are talking about a very long and large supply chain. I do not think a $300 or so expiation notice is going to have much impact on British Petroleum or Caltex or Shell or Woolworths—any others?

Mr Brown: The Shahins?

The Hon. A. KOUTSANTONIS: I am not mentioning them—a good, family business. Just to be clear, Shell and British Petroleum spend billions just on exploration, let alone actual mining, actual refining and distribution. I reckon I could hear the howls of laughter out of a pricing room in British Petroleum or Shell if they find out that, if they breach the act, South Australia, a subnational jurisdiction in a city they may never have heard of, will fine them $A315. Let's face it: it is not really a penalty.

In the great Australian vernacular, it is a Clayton's penalty: it is a penalty when you are not having a penalty. The minister can go out publicly and say, 'Well, there are penalties in the act,' but of course the penalties do not mean anything unless they have a real impact. I have to say even $10,000 is not the type of penalty that would make some of these companies squirm, so let's be serious about this.

The minister's intention here is not to lower fuel prices; it is simply to give consumers the ability to know what fuel is being priced at any particular time—two very different outcomes we are seeking here. We on this side of the house want to lower fuel prices; members opposite want people to know how expensive fuel is. There is a difference.

I would have thought that if you want at the very least to make sure the retailers, who have probably been guilty of price gouging and price fixing in the past, obey the law, the penalties would actually match the crime. I just do not think $315 quite cuts it. It is hardly a night in Victor Harbor, a very expensive place to live, I understand. It is hardly enough to stay one night at the President of the Legislative Council's house. It is not a very big fine.

What the government is attempting to do here is not the work of the people but work for retailers, and that is disappointing because I think we are all pushing on an open door here. I do not think there is a person in the parliament who wants to see expensive fuel prices. We are all heading to the same mountaintop, just up a different path—did you like that one, Brownie—but what we want is to actually put pressure, an incentive, on retailers to lower prices and transfer the risk to them, rather than motorists.

This fine, bringing in this penalty, is not commensurate, I believe, with other ordinary consumer law because we are talking about entities that are massive. I would go as far as to say that I suspect one or two of them have larger annual budgets than the state, so a $300 fine is not going to cut it. If the minister thinks it will, I think she is sadly mistaken and she is making an error here. The opposition would ask her to reconsider her folly and leave a penalty in place that would actually get an outcome.

Even if the Deputy Premier is not attempting to lower fuel prices, at the very least, as a minimum, let's make sure we have accurate reporting on what the expensive fuel the Attorney-General is happy with being advertised accurately, rather than the retailers just ignoring the government's legislation because it is cheaper simply to pay the fine. It is like environmental regulations. Environmental regulations are onerous and difficult to implement because we want there to be a real disincentive. You have to make the penalty quite harsh so that the entities are incentivised to spend the money they need to ensure they do not do any damage.

If you are introducing a $300 fine on Shell or British Petroleum, what you are really saying is, 'I'm not trying to interfere with your business model. What I am attempting to do is to pretend I'm bringing in a scheme that would have a certain outcome but without doing any harm to your business model.' I reject that and I think the Attorney-General has got this wrong, even though her intent is good. The fine should be more severe. The fine should be commensurate with the size of the company you are attempting to regulate because otherwise the regulated will regulate us because they can afford to pay the fine.

With those few brief remarks, I would ask the Attorney-General to do something she has never done before: admit she is wrong and agree with the opposition. Those are two things she has never done before. The third is to humbly accept that the penalties should be higher.

The Hon. V.A. CHAPMAN: I thank the member for West Torrens for his contribution on what he thinks would be effective. As I have indicated, this is the advice we have in relation to an expiable offence being an effective option to be included. I have indicated that we will provide comparative prices upon which it is being relied. The members who raised this may well be right that it is not enough. I am happy to consider that between the houses. We will provide the comparable information and consider that.

Please note that we are not actually removing the $10,000 fine. For every breach, there might be thousands of breaches of one second beyond the 30 minutes, for example, that actually impose this. Commissioner Soulio has said, 'I'm going to be asked to be the regulator on this,' not all of these are big, multinational, massive companies, examples of which the member has referred to. There are small independents that may inadvertently breach one of these requirements and that may need to be considered, but that is why we are proposing that the regulator has that option.

We are certainly not wanting to diminish the availability to the regulator of prosecuting under the principal offence with the maximum penalty in any of those three categories. That is not our objective here. I heard what the member had to say. The member for Lee says it should be double. That may be right, but, as I said, we will get the comparable amounts and get some further advice on it and provide that information and, if it is appropriate that we need to change that, we are happy to look at it.

Ms BEDFORD: Attorney, can I ask why you had in your original bill the maximum penalty of $10,000, which you are now amending? I understand that, based on comparable offences, it is usually an expiation of around 20 per cent of the court fine, so that should be $2,000.

The Hon. V.A. CHAPMAN: I cannot agree with the member's assessment of that, as to what her understanding is. This is the advice that we have received for an expiation aspect. There is no change to the $10,000. That is a penalty. If it is prosecuted as an offence, the maximum $10,000 is still there. All that is being added is the option for the regulator to proceed with an expiable offence.

As I say, there might be thousands of council breaches in relation to a matter that justify the regulator considering that they were individually perhaps very minor breaches. All we are doing is adding to the options available to the regulator at his request, but, as I have indicated to other members, if the amount is a bit low, then obviously that will show out in the comparable information that we will provide to the committee.

The CHAIR: Member for Florey, you have had three questions already.

Ms BEDFORD: This is my last question then, isn't it?

The CHAIR: Member for Florey, no, you have had three questions.

Amendments carried.

The Hon. G.G. BROCK: I move:

Amendment No 1 [Brock–1]—

Page 3, after line 26 [Clause 3, inserted Part 6B]—After inserted section 45F insert:

45G—Power to report to Essential Services Commission

If the Commissioner for Consumer Affairs considers that there is price gouging or market inefficiency in retail fuel pricing for any area of the State, the Commissioner may refer the matter to the Essential Services Commission and, in such a case—

(a) the Essential Services Commission Act 2002 applies as if the provision of fuel were an essential service within the meaning of that Act; and

(b) the activities of fuel retailing and fuel wholesaling are declared to constitute a regulated industry for the purposes of that Act.

45H—Fuel subsidy scheme

The Treasurer may establish a scheme to subsidise retail sales of fuel in parts of the State where fuel cannot otherwise be sold at a reasonable cost to consumers.

This is an issue that has really been hanging around for a long time and to stabilise the metropolitan market is a very important measure, not only in its own right but to ensure that country motorists get a fair go. That is why I wholeheartedly supported the member for Florey's amendments today, which were negatived.

The amendments I have moved are designed to add to this proposal, although they can operate independently of it and alongside the government's price monitoring scheme also. My amendment will introduce two new sections to the Fair Trading Act. The first of these, a new section 45G, grants the Commissioner for Consumer Affairs, who is responsible for monitoring fuel prices under the new part 6B, power to refer to the Essential Services Commission (ESCOSA) any concerns about price gouging or market inefficiency in retail fuel pricing in any part of the state.

Proposed new section 45G allows ESCOSA to investigate whether price controls ought to be applied in a part of the state by applying the provisions of the Essential Services Act to the provision of fuel as if fuel retailing and wholesaling were a regulated industry under the act. This is a powerful tool to tackle exploitative market practices, particularly in regional areas.

Proposed new section 45H allows the Treasurer to establish a fuel subsidy scheme in any part of the state where fuel cannot otherwise be sold at a reasonable cost to consumers. This permits the types of previous subsidy schemes that have been used to tackle high fuel prices in regional areas when they have arisen from time to time.

While country fuel prices will often be higher due to transport costs, differing contractual arrangements and a tougher retailing environment, the differential between city and country prices should not be so high as to significantly disadvantage or take advantage of country motorists. I draw the parliament's attention to the fact that governments have historically provided similar subsidy schemes.

Indeed, it was only in the 2010 state budget that the most recent state scheme, the petroleum subsidy scheme, was abolished, on my information, saving around $49.8 million at the time. While it may be there were good reasons for that to happen then, there is a need to have the tools available to support regional communities, and this amendment will assure that. That scheme, in turn, followed the invalidation of the former zonal system of petrol price regulation, which was designed to ensure country consumers did not pay through the nose compared with city consumers.

Both of these new sections are extra tools that will give the government greater ability to stabilise country fuel prices when needed. The reason I am doing this is that some of the prices in country areas are so high that some industries have extra costs and are therefore not competitive. We need to control it and give some sort of subsidy to those industries, otherwise we will see regional industries in particular relocating to Adelaide or maybe to the Eastern States.

The Hon. V.A. CHAPMAN: I refer to the member's amendment No. 1, which is to insert 45G and 45H into clause 3 and which seeks to employ the Essential Services Commission on referral from the regulator, as I understand it, for the purposes of considering any price gouging or market inefficiency in retail pricing. My advice is that the Chief Executive of ESCOSA has not been consulted on this proposal. The member may have, but that is my advice. That would be something that we as a government would certainly need to consider as to whether they are even interested in receiving a referral by the regulator.

I just point out that I suppose we would need to have an understanding of exactly what it is that would be referred, and what the terms of reference would be for them to undertake some kind of determination, and potentially some kind of declaration that would fix a price to provide the benefit that is being sought. ESCOSA do have a price fixing for water, for example, and they undertake that responsibility. To the best of my knowledge, they do not do this for the purposes of fuel, but I am not entirely sure whether it is to be a price fixing model or whether it is to be a referral of an investigation into price gouging.

Most of these situations are no doubt dear to the member's heart. Regarding cost of living in regional parts of the state, the further you leave the metropolitan area, the uglier it gets. I do understand that. There are certain state supplementary supports that are given, for example, in relation to energy production in remote areas of the state, so there are different ways you can address that, but we would certainly need to have some more information before we could agree to such a proposal. We would certainly need to consult with the Essential Services Commission to do that.

I do remind members that although I think the member for Giles raised concerns in the debate about the ineffectiveness of the ACCC, I did not hear in his contribution any indication that he had referred anything himself to the ACCC as a matter which he then sees a failing on behalf of ACCC to investigate, but he was certainly highly critical of the effectiveness of that body in undertaking any kind of role of investigation as to a price gouging circumstance.

In his instance, he claimed that there was a collusion between retailers in Whyalla, the town he represents, on a regular basis, which resulted in there being a very significant burdensome price being charged in the town, and every fuel station he went to in his town having this outrageous price. I hear the concern. I am not sure there has been any action taken by the member to do that.

The member for Frome has been a longstanding member of the parliament, and he does understand the regions. At the moment, we cannot endorse this type of approach without there being some discussion with the Essential Services Commission and some understanding of whether they are going to be a complaint body—the ACCC is already that if it needs to be done—or they are going to be a price-fixing body. We would certainly need to have some detail on that. On the fuel subsidy scheme, it invites the Treasurer to:

…establish a scheme to subsidise retail sales of fuel in parts of the State where fuel cannot otherwise be sold at a reasonable cost to consumers.

It may be that the people of Lower Light think they pay too much for petrol, so I am not quite sure how this is going to be defined or what it actually does. I realise it is a 'may' but I think even our Treasurer would need some pretty clear instructions. I am assuming there has to be some kind of incapacity for there to be any comparable price, presumably because of the distance or the low volume of fuel sold that means that the people who purchase 50 miles south of the Northern Territory border are paying a higher price and looking for some subsidy for it.

The zone, the area, the distance, the factors to be considered are all matters which we would need to have some advice on before we even gave the Treasurer discretion to come up with something of his own. That could be dangerous, actually. Nevertheless, I thank the member for raising the point. I accept that it is a genuine concern but at the moment I cannot support it. I understand that this is a format that has seen its way into another bill in another place and, again, the government would need to have some clarity as to how this is going to be effective, and some indication that ESCOSA would be part of the deal, before we could consent to it.

The Hon. S.C. MULLIGHAN: I also rise to speak on the member for Frome's amendment regarding the capacity for the Essential Services Commission effectively to become active if it is the view of the Commissioner for Consumer Affairs that there is price gouging when it comes to fuel pricing in regional areas.

The Essential Services Commission would be able to effectively start providing a level of regulation to the industry on the basis that it can provide some transparency and downward pressure on prices. The extension to that is then that the Treasurer may establish a scheme to subsidise fuel retail sales. That is something that, as the Deputy Premier says, would terrify any treasurer, given not only the likely expense of that but the difficulty in reasonably administering such a scheme, putting some parameters around it and determining how it should be applied.

I also agree with the Deputy Premier that there is no doubting the motives of the member for Frome here. He and other regional MPs—including the member for Giles, as the Deputy Premier has made reference to, and I am sure other regional MPs around South Australia—would be very frustrated that they see at times a significant price disparity for fuel at retailers. But rather than addressing the cause of the disparity in the pricing, merely subsidising the cost of fuel at taxpayers' expense not only is a very burdensome way of addressing the issue from a state budget perspective but is not a particularly efficient way of doing it because it does not actually prevent the problem that we are seeking to address, and that is the overpricing of fuel in regional areas.

I think it is a little unreasonable for the Deputy Premier to have a crack, effectively, at the member for Giles for complaining about the ACCC. The member for Giles is no orphan in Australia in complaining about the ACCC being a toothless tiger. Of course, there are many complaints that are raised by members of local communities, if not their community representatives, about what they regard to be anticompetitive behaviour. In some cases, we presume, given the lack of action undertaken by the ACCC, the ACCC forms the view that it does not have the resources to pursue that matter or perhaps forms the view that the matter is not serious enough to be worthy of pursuit.

We can also be reminded that the ACCC, along with ASIC and APRA, was one of the independent regulatory oversight bodies put in charge of ensuring that we did not see predatory and anticompetitive behaviour occurring in the banking sector, and what did they do for many years? Largely nothing, particularly at the expense of regional members who were taken advantage of by their banks. So I think we can all sympathise with the sentiments of the member for Giles in perhaps, sadly, reflecting on the futility of referring such matters to the ACCC because I think there is a long history of members of regional communities being given short shrift by the ACCC.

I realise that not passing this amendment, in the absence of some other mechanism, leaves the ill that the member for Frome seeks to address unresolved. Hopefully, whichever scheme of fuel price transparency and monitoring that we come up with will perhaps ameliorate this situation for members of regional communities. Unfortunately, this particular mechanism the member for Frome suggests is not one that the opposition can support.

Amendment negatived.

The CHAIR: Are there any further questions on clause 3?

Ms BEDFORD: I am sure I have a question on clause 3. Can the Attorney-General indicate who the Productivity Commission spoke to in Western Australia? By way of explanation, I understand the commission suggests the Western Australian scheme has not been reviewed and may, for the luxury of knowing when petrol will be cheaper, push up prices for consumers despite unequivocal assertions by WA administrators in the department and industry spokespeople I have spoken to show that the sharing of petrol prices in Perth are lower than the Brisbane prices.

The Hon. V.A. CHAPMAN: Whilst I do not agree with the member's assessment of the lower prices—and other members have referenced the question of using the month of June as a comparator, and leaving that aside—I do not know the name of the person the Productivity Commission consulted. I know the member has had an opportunity to put a submission to the Productivity Commission and meet with the commissioner, so I can only suggest that she raise that question with the commissioner as to who they might have consulted, if it needs to be more descriptive than what is already in their report.

Ms BEDFORD: The real issue that comes to the fore right here and now is the infamous chart with the double tick, the tick and the cross. None of the lines in this chart, which appears on page 33 of the commission's report, seem to take the side of the consumer. In particular, in the section at No. 6, where it says, 'This system, option 1,' which is the Queensland model, which is what your bill is based on, 'is a cost-effective and efficient model for industry'.

If industry can change the price every 30 minutes, as it were, and may be liable to a fine or an expiation of $315 every time something is detected as incorrect, how would that be cost-effective and efficient for the industry if they are liable to a fine every time they change the price if it is not notified correctly?

The Hon. V.A. CHAPMAN: The expectation is that they comply. I know there has been a bit of discussion about the importance of making sure they comply. I have a reference, though, to the Productivity Commission, which indicated that the Fuel Watch model, which is the model that I apparently disrespectfully referred to as the 'freeze model', is not cost-effective and it is inefficient for industry. They have already made that assessment. That does not mean that it might in itself be a good thing to do. These are the things we have to weigh up as to what is going to be useful.

The commission estimated that the Fuel Watch would impose a higher compliance regulatory cost on retailers than the Fuel Check model. That is their assessment. Obviously, it is one of the matters the government has considered as to what we therefore advance as the best way to progress at this point. I am not sure that I can add anything other than the indication from the commission that it is a concern that an increase in the compliance cost in two points of the supply chain would lead to a negative impact on the prices for consumers. We note that. We are taking it into account in our consideration.

I am not sympathetic to the retailers who breach their obligations under this proposal. That is precisely why we want it to be severe and very clear to them that if they comply they will not be fined and they will not have offences, convictions and penalties. There is an expectation of compliance, and they will not be paying anything other than the compliance to provide the data on time each time they change the price.

Ms BEDFORD: Can the Attorney-General confirm that the difference in costs per annum to retailers based upon one-sided information provided by the retailers themselves appears to be only $198,000 per annum for all 450-odd service stations across the state, and does the Attorney agree that is a very fine line to draw on costs?

The Hon. V.A. CHAPMAN: I am not sure I understand the member's question.

Ms Bedford: No, I am not sure I do, either.

The Hon. V.A. CHAPMAN: I am happy to listen to it being rephrased and that might give me some hint, but if it is a matter that becomes clear when I have a chance to read it, we will certainly try to get some answers to the member in between the houses.

Clause as amended passed.

Title passed.

Bill reported with amendment.

Third Reading

The Hon. V.A. CHAPMAN (Bragg—Deputy Premier, Attorney-General) (22:56): Thank you, Mr Deputy Speaker, and thank you for your excellent chairmanship of that committee. I move:

That this bill be now read a third time.

Bill read a third time and passed.

At 22:56 the house adjourned until Wednesday 1 July 2020 at 10:30.