GROG MAYHEM: STOP TALKING, START ACTING
By JOHN McBEATH
A new forum on alcohol problems, while having brought together
groups with opposing viewpoints, needs to do more than go over old
ground, according to a prominent local alcohol campaigner.
Barbara Curr, of the Peoples' Alcohol Action Group (PAAG), says about the forum - for invited people only - which was seeking to identify grog problems in the town: "PAAG did this last year. Our group has met 25 times during 1996.
"More than 200 people have been contacted by PAAG in relation to this problem and we've already said we must collate all the statistics," says Ms Curr.
"PAAG is presently trying to organise research funding to collect the statistics so that the full extent of the problem can be made into a political statement."
Ms Curr says several studies have already taken place: "Pamela Lyon's study of 1991 published a variety of useful statistics.
"We have a sessional committee on the use and abuse of alcohol drawing submissions from a very wide section of the community.
"There's the Living With Alcohol program running until the year 2000, which has already completed many reports and surveys.
"DASA held a large public meeting, similar to the recent forum, in 1991.
"Charlie Perkins convened a meeting under the sails in December, 1995, out of which came the formation of PAAG and other interested groups.
"I think to say ïwe are ignorant of the extent of the problem' is wrong," she says.
"What we really need to consider is what does this community of Alice Springs need to do to become healthy so it doesn't live in grog strife?"
Ms Curr says that the Alice community has now a high degree of co-operation between often opposing bodies: "This is a step forward."
Another prominent figure in the alcohol debate who attended the forum is Shane Arnfield. He took up a petition last year to campaign against limiting alcohol availability.
Mr Arnfield welcomed the forum: "This is the first really co-ordinated approach from all areas.
"We do have a number of alcohol services in the town, and they all have statistics and figures, but there's never been an absolute, all out, concerted, combined effort at this problem, and this is what this forum has done."
He says some of the action groups from the forum will "undoubtedly forge ahead rapidly in their research areas".
Mr Arnfield's own action group will be examining Aboriginal employment, and the question of a total ban on all public alcohol advertising.
More than 30 people attended the forum convened by the Drug and Alcohol Association (DASA) and run by David Crosby, Chief Executive Officer of the Alcohol and Other Drugs Council of Australia based in Canberra.
Mr Crosby says he was impressed by the interest and diversity of the people who attended: "Represented were police, government and non-government agencies, the NT Liquor Commissioner, Aboriginal organisations, Alice Springs Town Council, licensees of hotels and take-aways, and people from the community with an interest in the alcohol issue, some of whom have been involved in controversial public debate."
Mr Crosby says six key issues, from 45 nominated, were identified:-
Alcohol related disorder generally (violence, vandalism etc).
Alcohol education, particularly for young people.
Underlying issues and culture associated with alcohol problems.
The need for a range of co-ordinated strategies against alcohol misuse.
A greater emphasis on making individuals responsible for alcohol misuse.
Recreation and employment for young people.
Various people undertook to carry out action plans in researching these issues, says Mr Crosby: "There was acknowledgement of the need to go beyond public rhetoric, name calling, assertion-making, and the anecdotal story, and move towards some kind of report, a collection of existing data about what is actually happening in Alice Springs around grog problems.
"What are the police statistics? What are the retention rates in schools? What are the employment statistics? What are the alcohol sales figures," he asks.
"These are all the kinds of things that will allow a much better informed debate, and also tell us whether or not the things that are being done now are actually making a difference."
The question of alcohol availability generally was discussed, but "it wasn't felt that reducing availability, or locking more people up, or having compulsory education in schools were on their own, a solution; they are all contributions to what may or may not work.
"The problem is most of the debate has been held in ignorance. We don't know the extent of the problem." Mr Crosby will now write a report.
In three month's time there will be a follow up review to see that people have carried out their undertakings in relation to the key issues.
Another meeting will then be called later this year to examine what has been achieved, and to decide on the next step.
FUEL PRICES IN THE OUTBACK: ARE WE SUBSIDISING THE CITIES?
By KIERAN FINNANE
Are motorists in the bush - including The Alice - subsidising fuel
prices for urban dwellers, although public transport beyond city limits
is usually a bad joke, and theres no way we can live without our cars?
The Alice Springs News asked local Mobil retailer Ian Reid to explain.
According to Mr Reid, Alice Springs fuel retailers operate on a margin of around 10 per cent - not huge by anyone's standards.
Freight, whether the fuel's coming from Singapore via Darwin or from Adelaide, costs 6.5 cents a litre for petrol, 7.5 cents for diesel.
For centres outside Alice, the likes of Ti Tree and Ayers Rock, add an extra five cents a litre.
What is not generally realised, says Mr Reid, is that these freight charges are effectively subsidising free delivery in the capital cities and in some major regional cities.
The major costs of distribution are in fact capital costs, not transport over distance, he argues, and rural Australians are the ones paying.
In the highly regulated fuel industry, the four major oil companies - Shell, Mobil, BP and Ampol - have been allowed to determine free delivery areas (FDAs) since the early 1970s, in order to give a competitive edge to the retailers with whom they have their commercial arrangements.
The Australian Competition and Consumer Commission (ACCC) says that while delivery costs are not charged in the FDAs, they are included in base prices "to provide for recovery".
The net impact of these cross subsidies has not been calculated, says the ACCC. The oil majors also determine who is to benefit from fuel discounting which fluctuates according to product demand.
There is only a very small margin of output flexibility for a refinery: Consequently, when demand slows for a product, as it does for diesel at the end of the northern hemisphere winter, then the surplus supply is discounted.
The winners are the retailers in close vicinity, to whom it can be delivered quickly and cheaply, and their customers.
This explains why Geelong, Victoria, for instance, where a Shell refinery is located, can enjoy prices as low as 69.9 cents a litre (during the week after Christmas last year).
The ACCC says that during 1996 in Victoria the average wholesale discount was about 2.5 to three cents a litre.
"Based on the volume split of 80 per cent metropolitan demand and 20 per cent rural demand, wholesale prices in the country would have had to have increased by between 10 to 12 cents a litre to ïsubsidise' city discounting," according to the ACCC. "Wholesale price caps clearly prevented this possible outcome.
"City discounting was to the detriment of the bottom line performance of the oil companies as well as distributors and retailers, to the extent that they were forced to share the pain."
The ACCC goes on to say that "decisions on when to provide wholesale discounts, the level of such discounting and the spread of discounting are matters for the commercial judgment of the oil companies".
While the ACCC acknowledges that retail prices for petrol are higher and more stable in country locations than in the cities, it says that there are only minor differences and relatively few concerns about retail distillate prices.
It also says that city / rural petrol price differentials are not just an Australian phenomenon but are experienced in the USA and the UK.
Since 1974, there have been some 30 Federal Government enquiries into the fuel industry, with pricing always a key focus.
In the latest of these the ACCC recommended deregulation of the industry, which the Government has committed itself to do in the near future.
Deregulators always argue that a free market will ultimately benefit consumers.
In the words of Peter McGauran, Federal Minister for Sciences and Technology in the House of Representatives on February 4: "The task that we have set ourselves [following the ACCC's report] ... is a most ambitious set of reforms which will bring in competition which will lead to a downward pressure on prices."
He went on to describe the price differential in country areas as "generally between five cents and seven cents, including transport costs".
(As the News has demonstrated above, the differential between Port Augusta and Alice Springs is more than 10 cents a litre.)
Elsewhere in his address the Minister says: "When you have 8,500 service stations and there is no law against charging the highest price the market will pay, of course a lot of individuals through the pricing chain will take advantage of a captive market or heavy volume through their petrol bowsers."
The Federal Government has put deregulation on hold until the oil industry has given "undertakings" in particular in relation to the so called Oilcode, a self-regulatory code of fair business practice for the industry.
The Oilcode, together with closer monitoring of fuel prices, open access to oil terminals and terminal price transparency are the combined measures upon which the Government will rely to bring prices down.
Under the monitoring process anti-competitive practices will be reported and investigated by the ACCC. The Trade Practices Act provides for penalties of up to $10m for proven offences.
The Automobile Association of the Northern Territory is involved in the monitoring process by providing retail fuel pricing data for major locations in the Territory. The biggest obstacle to open access to oil terminals has been the Laidley Agreement struck between the Petrol Distributors Association and the Transport Workers Union in 1980.
Minister McGauran says that the Government will dismantle the agreement and it will also "write to major oil companies, seeking a commitment to open access to oil terminals".
With the Laidley Agreement out of the way, independent operators in rural areas would in theory be free to source their fuel directly from the refinery, benefiting from discounted supply along with their city counterparts, provided they could access the necessary infrastructure for storage.
Federal Labor Shadow Minister for Competitive Policy Mark Latham has criticised the open terminal access policy as being confined to physical access.
The terms and conditions of wholesale purchase will still be dictated by the oil companies.
He argues in favour of competitive price access, giving retailers the right to shop around, thus breaking the vertical integration of the industry (where the four majors have substantial ownership and control at the distribution stage and tight franchise agreements at the retail stage).
The Government's response is that there are too few players, too few refineries in Australia for this to be realistic.
However, all these factors will have no impact on a whopping 50 per cent slice of our fuel costs.
In fact, 43 cents for every litre of unleaded petrol goes to the Federal and State Governments: 36 cents a litre makes the fuel excise the third largest contributor of revenue to the Commonwealth.
The Northern Territory Government's fuel tax accounts for the other seven cents per litre. Only Queensland does not impose a fuel tax.
Once again, it could be considered that rural Australians with fewer transport alternatives are being disadvantaged by these Government charges and are effectively subsidising services in the cities.
However, the ACCC says that some national programs funded from general revenue are exclusively rural in nature, while others have a significant rural component, citing as an example much of the expenditure of the Department of Primary Industries and Energy.
"Any claim that by paying the same excise as metropolitan consumers, country motorists are disadvantaged by the lack of public transport options needs to take account of this," says the ACCC.
Territory MHR Nick Dondas believes that the excise is too high and that the best hope for a reduction in fuel prices lies with a reduction of the excise.
He told the Alice News there would be a back bench outcry if there were any further increase in the excise, introduced in 1982 at just 6.1 cents per litre.
Initially, some 70 per cent of the revenue raised was used to fund national road projects.
Now less than 10 per cent of the revenue is used for this purpose, according to a petition, carrying more than 15,000 signatures, which Mr Dondas tabled in the House late last year.
The ACCC responds that revenue from the excise is not hypothecated, that is, it is not allocated to the sector of the economy from which the revenue was raised.
New trends could have a further impact on fuel prices.
Woolworths is now a player in the discounting game, experimenting with an operation in Dubbo, in north-western NSW.
Woolworths plan to sell fuel at 200 sites around Australia although there is no indication yet that they have plans to enter the Northern Territory market. Liberty, an independent retailer, has also announced an expansion of its retail network into country areas.
There is a concern that this move could send independent retailers to the wall and give big companies market dominance, with no obligation to continue supplying a cheaper product.
(Following deregulation in the United Kingdom, over a period of 10 years, supermarkets have gained a 21 per cent share of the fuel market; in France over the same period they have gained a 54 per cent share.)
However, the ACCC says that far from being anti-competitive, the move is pro-competitive.
"This is based on overseas experience where the entry of supermarkets to fuel retailing has significantly reduced prices, causing much needed rationalisation of surplus and inefficient sites.
"The initial effect in locations where Woolworths has commenced fuel selling operations appears to have been the widespread availability to consumers of cheaper fuel, at some two cents a litre less than board prices," says the ACCC.
Countering this scenario is another development that may not be all that dissimilar in its effect: Shell and Mobil are grouping retail sites in given areas into a single franchise in order to maximise the economies of greater volume of trade and minimise management costs.
The Federal Government appears to support this development.
In a joint statement made last December Treasurer Peter Costello and Minister for Industry, Science and Tourism John Moore said: "The ACCC found that current high prices in country markets often reflect particular problems at the retail level, including too many low-volume, old, undiversified sites which require high margins to survive.
"The Government is concerned that greater efficiencies at the wholesale and distribution level will not flow through to consumers if these problems at the retail level are not resolved.
"Site rationalisation in many of these markets appears to be important to lower petrol prices."
The joint statement also called for removal of legislative restrictions concerning petrol retailing at State and Local Government levels, and for improved planning approvals for the retailing of petrol by supermarkets.
At the same time, the joint statement recognised "distributors' and franchisees' concerns about market power in the industry", saying that business conduct issues associated with franchising, small business and the petroleum products market were being considered by the House of Representatives Fair Trading Inquiry.
Return to main page