The Rudd Government's FuelWatch scheme could increase petrol prices in the bush, confuse consumers and dampen competition among retailers, according to a new Government document tabled in Parliament last night.
As Prime Minister Kevin Rudd pointed the finger at the public service after a series of embarrassing leaks over FuelWatch, the latest document to cast doubt on the scheme came through official channels.
The document, a "Regulation Impact Statement" accompanying FuelWatch legislation, warns the scheme could lead to more "price co-ordination amongst retailers" and says consumers in the bush are "less likely to benefit from increased price transparency".
It says the Government faces risks in introducing the scheme, including a consumer backlash if prices don't come down.
While concluding that on balance it is best to proceed with the scheme, the new document says it "remains unclear" whether FuelWatch will "be successful in delivering lower retail prices to consumers".
The document was tabled after a day in which Mr Rudd in effect blamed the public service for the explosive leak revealing extensive bureaucratic opposition to FuelWatch. The Department of Prime Minister and Cabinet has ordered a police investigation.
As Australian Competition and Consumer Commission chairman Graeme Samuel hit the airwaves to help the embattled Government sell the scheme, Mr Rudd said he was "absolutely confident" the leak - which revealed that four Government departments, including Mr Rudd's own, warned against the scheme - had not come from a Minister.
He said the Government had not had any "night of the long knives" in the public service when it came to power and "we accept the consequences of that decision".
In a tough message to public servants, Mr Rudd said there had been some criticisms about the public service having to work long hours under his Government.
"I've simply got news for the public service - there'll be more … the work ethic of this Government will not decrease, it will increase."
The secretary of the Department of Prime Minister and Cabinet, Terry Moran, said he had asked the police to investigate the leaking of internal documents relating to FuelWatch. He had also started a "complete internal review by my department of the present arrangements for the access to and distribution of cabinet papers".
The Opposition has vowed to emasculate the FuelWatch legislation when it comes before the Senate next month. The fate of the scheme could be decided after July 1, when the balance of power in the Senate will be held by minor parties and an independent after the arrival of senators elected on November 24.
Mr Rudd said there was a "clear choice" for MPs in dealing with FuelWatch. "Either you vote for consumers or you vote for a cosy deal with big oil companies," Mr Rudd said.
Mr Samuel said the ACCC's most recent analysis indicated FuelWatch would not lead to higher prices, but to a "statistically significant reduction".
He said in certain rural areas where there may be only be two competitors, the adoption of FuelWatch may be "inappropriate" because it could lead to potential collusion and cause higher prices in that area.
FuelWatch is being introduced in all metropolitan and regional areas. But rural towns have an "opt in" provision, under which local authorities will approach the ACCC if they wish to be involved.
Mr Samuel said the ACCC would make recommendations to individual local councils about whether FuelWatch was appropriate in their locations, and the Government would ultimately make the decision.
Mr Samuel and ACCC commissioner Stephen King have also told The Age that while they were asked to front the Government's expenditure review committee earlier this year, they were not shown specific departmental advice.
Dr King said they were simply called in to discuss the results of their economic modelling. The modelling, released yesterday, suggested that a national FuelWatch scheme could lead to a price decrease of 0.7 cents a litre.
"I can say certainly, as far as I know, neither Graeme Samuel nor myself nor (Petrol Commissioner) Pat Walker saw any evidence from any departments or any other economic analysis," Dr King said.
Assistant Treasurer Chris Bowen said Mr Samuel was not provided with the departmental advice because he was not a minister.
"But the concerns raised by the departments as part of the expenditure review process were put to him and he answered them all."
Mr Samuel, who is up for reappointment in July, denied that his recommendation was related to a desire to retain his job, saying "conspiracy theories" were not worth comment.
The ACCC modelling, which included analysis of an existing FuelWatch scheme in Perth, examined factors other than FuelWatch that may have caused price reductions there, such as the growth of Coles petrol retailers.
But the ACCC was still convinced it would reduce prices overall. Separate investigations had also concluded that independent retailers would not be disadvantaged by FuelWatch.
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