Articles – The Centre for Independent Studies

Petrol prices pump up interventionist calls

Charles Jacobs

02 November 2018 | Ideas@TheCentre

One by one, Australia’s markets are falling victim to the hand of an interventionist government. The energy sector — for years the focus of political meddling — has in recent months become the target of proposed price reduction controls. Meanwhile, milk apparently doesn’t cost enough. The government is now pushing supermarkets to raise their store prices.

This week, in the latest manifestation of the Liberal party throwing its free market values under the bus, the government has turned its big stick to the fuel industry. Indeed, Prime Minister Scott Morrison says he is considering ‘any number of measures’ to reduce prices at the pump.

Consumers are undoubtedly frustrated at the rising cost of living, and companies must be prevented from wrongdoing in the form of price fixing — that’s a no brainer. However, the question must be asked: where does it stop?

There are many industries where the government could arguably step in. Take one of Australia’s favourite pastimes — sports entertainment. The cost of an evening at the footy has gone up significantly in the last decade. Ticket prices, food, and parking have all hit fans’ wallets, meaning that for many families going to a game is just too expensive. The number of empty seats regularly seen at the matches of several major codes mean these prices definitely aren’t the result of supply and demand. Surely the government could step in here to bring the cost down?

While the list could go on, it is important to look at what the outcome of the fuel debate might be. When it comes to petrol, several solutions have been proposed. Liberal Party MP Craig Kelly is calling for the government to reduce fuel excise taxes — a solution that he argues could save drivers 10 cents per litre. Others have suggested that petrol price comparison apps will help create a level of competition that will at least keep prices somewhat in check.

However, unlike milk, the fuel market is very much subject to international factors and the volatile Australian dollar. If the government does become too involved it will only drive retailers away — meaning less competition in the long run. As Scott Morrison said of petrol prices on Monday (before his backflip on Tuesday): “there are some things we can’t control.”

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