Rudd the snake oil salesman

AFTER five months in office, the Rudd Government's modus operandi has become clear - another day, another stunt - in this case another political exercise to get petrol prices off the front page.

To this end, Prime Minister Kevin Rudd announced the adoption of a national FuelWatch scheme, a direct steal of a populist Western Australian program which the Ruddites are flogging as some sort of vague solution to the rising cost of petrol. It is nothing of the sort of course, just another bureaucratic smoke-and-mirrors exercise that will largely present information that is already available to consumers, with the added promise that service stations will have to hold their pre-announced petrol prices for a 24-hour period. On the available evidence and it must be said the petrol market is incredibly splintered across the nation, the WA FuelWatch scheme has presented few, if any, benefits and may in fact have made things worse for Perth metropolitan motorists. The weekly cycle which produces the cheapest petrol for Sydney motorists on Tuesdays has in Perth now become a fortnightly cycle - and motorists who used to have the opportunity of filling their tanks with cheap fuel at least once a week are now denied that chance to buy at the bottom of the market and get a shot at topping up only every other week. Indeed, in that there has been any slight variation of fuel prices in Perth, an Australian Competition and Consumer Commission report released last December suggests that the entry of Coles into the Perth petrol market may have had as much significance as any changes delivered by the WA FuelWatch scheme. Further, according to a survey of Perth motorists conducted for the ACCC, 60 per cent of petrol was sold on the four days of the week when the prices were above the weekly average and the remaining 40 per cent was sold when the prices were below the weekly average. That is, with FuelWatch in place, the majority of Perth motorists ignored it and simply filled up when it suited them. In Sydney, where there was no FuelWatch, 64 per cent of petrol was sold on the four days where the average prices were below the weekly average price, and 36 per cent of petrol was sold on the three days where prices were above the weekly average price. It may be that Western Australians, who turned their backs on Labor at last year's federal election, don't want to be part of Labor's pie-in-the-sky nanny state. People in Sydney are already demonstrating that they can think for themselves and don't need an extra layer of hand-holding bureaucracy to tell them when they can save 5c at the pump. The loss of a weekly low-price petrol opportunity seems to be the most obvious flaw in the implementation of FuelWatch in WA, but each state has different characteristics - which aren't going to be altered by the Pollyana petrol pricing program. Fuel prices in WA, for example, are affected by variables which don't exist in the other states. Perth is geographically closer to Singapore, where much of the refining takes place, and therefore pays less freight on its fuel than the shippers charge to bring it across to the east coast. Offsetting this is the fact that WA has more stringent fuel quality regulations and therefore pays a premium for a cleaner petrol - which motorists in the eastern states don't pay. Queensland subsidises its motorists to the tune of 8.3c per litre and there is some subsidisation in parts of northern NSW and Victoria. Victoria has traditionally had an extremely competitive fuel market and for some years its motorists enjoyed the benefits of extra capacity brought on line to meet exports to a number of Pacific nations. Those exports have now evaporated however and the Altona refinery's production has accordingly been reduced. Victoria is also no stranger to Labor attempts to get into the action. Former prime minister Bob Hawke backed an independent chain of petrol stations when he was running the ACTU, but as with almost all of Labor's attempts to get involved in the marketplace over the years, the venture failed. FuelWatch is another stunt. The data available on comparative metropolitan retail fuel prices and increases in metropolitan fuel prices since January 2001, which can be found on the Australian Automobile Association's website, show little variation between WA petrol prices and those paid in other states. It also shows that the size of price increases have been between those registered in NSW (at the bottom) and Queensland (at the top). Rudd made a lot of feel-good promises before the federal election but to date has achieved nothing of any substance. His pre-election claim to have a plan for the nation was hollow, and when he is not out desperately canvassing for ideas he reverts to form and just makes it up. Squandering taxpayers' money to duplicate information already available on websites such as MotorMouth Price Leaders is an expensive public service exercise in gross redundancy. The available evidence shows that the key to cheaper fuels lies in the sort of competition provided by the supermarkets - not with Big Brother price regulators. Rudd's high-profile, low-impact solution demonstrates the liability of having a government with no front-bench experience in running businesses, let alone any understanding of how markets work. Let's hope these inept apparatchiks discover how to put fuel in the tank before the nation's economic engines run out of juice.