“An 80 per cent fall in Z Energy’s profits, driven by stronger retail competition, shows motorists aren’t being fleeced as claimed by the Prime Minister”, says ACT Leader David Seymour.
“In October last year, the Government and National voted to give the Commerce Commission enormous powers to demand information from entire industries without even a specific allegation of uncompetitive behaviour.
“The Prime Minister then announced an investigation into petrol companies and predetermined the outcome by saying consumers were being ‘fleeced’, showing market studies will be misused for political purposes.
“Unsurprisingly, the Commerce Commission’s preliminary finding was that there was a lack of competition in the fuel market and this will undoubtedly be used as an excuse for the Government to unleash new regulation on yet another industry.
“But today’s Z Energy profit result shows competition, and not government regulation, will keep petrol prices in check.
“There are low barriers to entry for petrol retailers and twenty new sites are coming to market each year.
“Even if the Government’s regulation of the fuel market cuts the importer margin by a quarter – or about 8 cents – it will not make a huge difference to petrol prices. Between September and December last year alone, the cost of 95 fluctuated by 37 cents. Taking a quarter of retailers’ revenue would send them bankrupt but save only 8 cents in the dollar.
“New Zealand already has great difficulty with bureaucracy. Too much red tape and regulation prevents us from raising productivity. Complying with a market study, a high stakes exercise where companies are put under subpoena for detailed data, will be enormously expensive and add to the culture of bureaucracy and compliance over innovation and production.
“The likely outcome is that a new layer of bureaucracy will make business more difficult and have little impact on the price of petrol.
“No doubt both Labour and National believe they can make petrol cheaper for consumers, but both parties underestimate the power of competition.
“ACT stood alone in opposing this legislation and we are proud to stand for sensible economics and high-quality public policy.”