Coalition MPs also want government to consider forced divestiture powers to break up petrol companies

This article is more than 1 year old

This article is more than 1 year old

Coalition MPs are calling for the government to consider reducing the petrol excise tax and expanding forced divestiture powers to break up petrol companies in an attempt to reduce prices at the bowser.

The Liberal MP Craig Kelly told Guardian Australia the government should consider reducing excise by 25%, or 10c a litre, at a cost of $3.5bn a year when the budget situation allows.

The Morrison government has looked to the Australian Competition and Consumer Commission to put pressure on petrol companies but has so far resisted calls to expand divestiture powers beyond electricity companies.

Brian Owler, former AMA president, to run for Labor in Bennelong Read more

On Tuesday the prime minister, Scott Morrison, left the door open, warning petrol companies the government would “consider any number of measures” if they did not do the right thing by consumers.

Petrol prices are at 10-year highs in some parts of Australia owing to higher global oil prices and a weaker Australian dollar. In New South Wales the average price of unleaded petrol was $1.57 on Monday, with drivers in some cities paying up to $1.65 a litre.

On Tuesday, Kelly – the chair of the backbench energy committee – said “any amount” of reduction in the fuel excise tax would make a difference but consumers were unlikely to notice the effect of suspending the indexation, which would reduce prices by just 1c a year.

By contrast “consumers would see” the impact of a 10c-a-litre reduction, although he conceded it would cost “a substantial sum of money”.

Kelly blamed petrol retailers, noting that their margins had “jumped up significantly in the last few years” and the sector was “not as competitive as in the past”. He noted the US has anti-trust divestiture powers and said he “couldn’t see why they shouldn’t be part of our competition laws”.

The Liberal MP said shareholders would be “no worse off” as they gained shares in constituent companies when the larger company was broken up, meaning the plan did not infringe property rights.

Expanding the divestiture power “economy-wide” could occur immediately if Labor offered bipartisan support, he said, but a fuel excise reduction would be “on the wish list” when the budget situation improved.

Australia is on track to return to budget balance in 2019-20 and the budget has experienced a $9bn improvement since the 2018 budget in May.

On Tuesday the former deputy prime minister Barnaby Joyce told the Australian the government did not have the “will” to bring petrol prices down and it would extend divestiture powers beyond the electricity sector if it was serious about helping drivers.

“There is no point in promising people something when either side of politics are not willing to deliver,” he reportedly said. “If there is a will to deliver on lower fuel prices, there would be general divestiture powers. There would be stronger ways of monitoring what is happening in the marketplace.”

The Nationals senator John Williams reportedly said the excise should be frozen if the international oil price rose to $120 a barrel.

Morrison brushes off Turnbull’s advice against moving Australia’s Israel embassy Read more

On Thursday the treasurer, Josh Frydenberg, resisted calls to extend divestiture powers beyond the electricity sector, arguing it was “somewhat different to other sectors”.

Frydenberg has also said the government had no plans to change the fuel excise ­indexation, blaming global oil prices and a lower exchange rate for price spikes.

On Monday, Morrison told 95.5 FM that the ACCC was the “cop on the beat” designed “to make sure that all these petrol companies … do the right thing by customers”.

“There are some things we can’t control, what’s happening with international oil prices and things like that … but we can ensure that the people who are selling it here behave,” he said.

But on Tuesday Morrison said the government was taking action against electricity companies “to make sure we have the big stick to force those prices down and I expect them to respond” and would consider measures to reduce petrol prices as well.

“Now I expect the fuel companies to respond too, and the government will consider any number of measures, but it is in the hands of the fuel companies to do the right thing by its customers and the [Australian Competition and Consumer Commission] and I will be watching very, very closely.”