Steven Miles’ plan to operate petrol stations ridiculed by experts
Premier Steven Miles’ extraordinary promise to build state-owned service stations isn’t backed by research or modelling, with economists labelling the plan a crude, populist, low-rent gimmick.
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Premier Steven Miles’ extraordinary promise to build state-owned service stations isn’t backed by research or modelling, with economists labelling the plan a crude, populist, low-rent gimmick.
Multiple peak bodies representing retailers and the infrastructure sector have also dismissed the election promise to set up 12 state-owned service stations in order to increase competition as flawed.
And the Opposition declared it the dumbest policy announced by a Queensland premier.
Mr Miles unveiled the bold promise at his first annual State of the State speech, promising a re-elected Labor government would work to bring down the price of petrol by legislating that fuel prices can’t go up by more than 5c a litre a day.
The government would also intervene to make it easier for small and independent retailers to enter the market by setting aside government-owned land and using overruling planning powers.
A re-elected Labor government would also build 12 state-owned fuel stations in areas where competition is most needed, in a plan Treasurer Cameron Dick said would cost $36m to set up.
Mr Miles insisted the latest cost-of-living plan was a “detailed package of initiatives” but conceded the state-owned servo policy was not backed by modelling or research.
“This is an election commitment, so it hasn’t been produced by the public service. This is a commitment that we are making that if elected in October, we will implement this package of initiatives,” he said.
“We have long supported public ownership as a method of intervention to drive prices down.”
The state-owned servos would be owned by Energy Queensland, and likely lean on surplus Department of Transport and Main Roads land for sites.
But economists and peak bodies have labelled the plan bizarre.
Independent economist Saul Eslake said the market intervention was akin to the era from 1915-29 when the Queensland government owned butcher shops.
The wartime cost-of-living measure provided jobs and cheap meat, but was ultimately a significant loss-making economic failure.
“You would have to ask, is that really something that in the 2020s we legitimately expect governments to be doing,” Mr Eslake said
“I just think it’s a crude, populist, low-rent gimmick that should be seen as such.”
Mr Eslake said the plan could make prices more competitive in areas where there are perhaps just a handful of service stations, but only by the state operating at a significant loss.
AMP chief economist and investment strategy head Shane Oliver said building state-owned petrol stations was “bonkers”.
He said if a lack of competition was the root cause of fuel being more expensive in Queensland the government should make it easier for independents and small retailers to enter the market, rather than being a fuel station player.
Australasian Convenience and Petroleum Marketers Association chief executive Mark McKenzie said it “beggars belief” the government had promised to cap daily fuel price increases and enter the market with state-owned fuel stations without consultation.
“History proves that government interference in complex competitive markets inevitably leads to higher costs for consumers,” he said.
“Small independent businesses thrive on the operation of fuel price cycles and are the ones who drive prices down. The proposed price caps will destroy these businesses and cede competition to a smaller number of large businesses.”
The National Retailers Association warned the state-owned service station plan could “push small, independent operators out of the market”.
Mr Miles vowed to work with independent retailers, not against them. Capping fuel price hikes at 5c a litre per day was an initiative of peak motoring body RACQ, with the move designed to stabilise the price cycle so consumers know what’s coming. The RACQ heralded that move, but stopped short of supporting the extraordinary decision to open state-owned service stations.
The opposition slammed the state-owned servo plan as “economic vandalism” and questioned why Treasurer Cameron Dick had gone from saying Queensland had no legislative authority to put in place price caps two months ago to supporting the idea.
“This would have to be the dumbest policy I have seen announced by a Queensland premier,” Deputy Opposition Leader Jarrod Bleijie said. “What is he going to say to the mum and dad that have to close their business down, therefore creating less competition and opportunity in the marketplace, therefore driving up petrol prices?”
Mr Dick said the state didn’t currently have laws in place that gave them authority to intervene in the fuel market, and the election promise was about garnering a mandate to put necessary legislation in place. Mr Dick said the government anticipated it would take a year to have the necessary laws in place.
Federal Treasurer Jim Chalmers said he was not concerned about the state government’s plan to own its own servos.
He indicated there were no constitutional or federal roadblocks to Queensland’s plan that he knew of.
And Brisbane independent fuel station owner Suraj Rathod welcomed the plan.
Mr Rathod has owned the Kelvin Grove fuel station for over seven years, and said the change would be good for the community.
“If they can provide stability in the buying prices, then it is achievable,” Mr Rathod said.
“Buying market has changed over the years and a lot of people are using petrol spy and apps like that.
“So they are aware of what’s happening and a lot of the time we are fairly reasonable compared to other competitors.”
Mr Rathod believed the changes would not impact his businesses, but affect the larger fuel providers like Shell and BP.
“We do need more independent fair businesses like me, and if that’s the idea and the government wants to bring and tell people to support it,” he said.
“They have been [a time where] they were doing $2.39 and I was doing $1.99 and I was still making money, and I heard thank you that many times from customers.”
Mr Rathod said there are only a handful of independent service stations in Brisbane.
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