‘There is profiteering’ in the fuel industry – Jacinda Ardern

The AM Show 09/10/2018

The Prime Minister has doubled down on her crusade against the fuel industry, reiterating her stance that excise tax is only a small percentage of rising prices.

"I acknowledge what people have been saying around excise, but it is not by far the most substantive part of the problem here," Jacinda Ardern told The AM Show on Tuesday.

At a post-Cabinet press conference on Monday, Ms Ardern appeared visibly frustrated as she explained how New Zealanders have been "fleeced" by fuel companies, and believes a new Bill will force the industry into greater transparency.

"I am hugely concerned at the level of price consumers are currently paying at the pump for fuel," she told media.

Speaking to The AM Show, Ms Ardern said anti-competitive behaviour in the fuel market means the Government will prioritise passing the Commerce Amendment Bill when Parliament resumes next week.

The Bill will compel companies to produce information to the Commerce Commission to fully understand how markets are functioning.

The Prime Minister spoke to The AM Show on Tuesday.

After it passes there will be a one month transition until it goes into effect, during which Commerce Minister Kris Faafoi will seek nominations from fellow Ministers for possible market studies.

"We are literally changing the law so the Commerce Commission can go in and demand information from the fuel companies," Ms Ardern said.

The Government is now facing the prospect of a nationwide petrol boycott after a Facebook group took aim at the Government for increasing petrol prices.

More than 7000 people have committed to the boycott on October 26, with a further 10,000 showing interest in making a stand, united against what the group calls "unjustified" price increases.

The looming boycott comes after petrol prices increased by 3.5 cents nationwide last week as an increase to the fuel excise tax came into effect. Further 3.5 percent increases will be introduced in 2019 and 2020.

But the Prime Minister told The AM Show excise tax is not what has been pushing up prices, but rather fuel companies engaging in unfair practices.

"I know people have focused a lot on excise, but if you look at the last year, up until the end of September when the regional fuel tax had come in, fuel had gone up 39 cents in a year," she said.

The Prime Minister said if the Government were to drop the excise tax, she cannot guarantee that fuel companies would not simply absorb that themselves and consumers would pay the same price.

BP's managing director Debi Boffa has welcomed the Government's new legislation, saying the Commerce Commission's inquiry would provide greater assurance to New Zealanders and the Government that the company is engaging in fair pricing.

Z Energy, which is partially owned by the New Zealand Superannuation Fund, also welcomed the Government's move, but disagreed that the fuel industry is "fleecing" New Zealanders on pricing.

"Z disputes that prices are unjustifiably high, and while margins have increased from an unsustainable level in 2008 which saw fuel majors exit New Zealand, it has not increased at the level suggested," said chief executive Mike Bennetts.

Prior to 2015, fuel prices were reasonably similar across the country, but by 2017 average gross margins in the South Island and Wellington have grown to almost 10 cents more expensive than the rest of the country.

The Prime Minister said New Zealand has the fifth lowest fuel excise in the OECD, and that taxes have played only a small role in the cost increase.

She said the new Bill is necessary in order to "force the hand" of the fuel industry which has refused to cooperate with previous efforts to understand pricing.

Watch the full interview with Jacinda Ardern above.

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