ACCC’s price gouging task under the carbon tax “ridiculous” without price rise guidelines: Coalition

Shadow Small Minister says it is “ridiculous” for the competition regulator to be asked to enforce price gouging under the carbon tax without clarity on how much prices are expected to rise.

“How there can be this decree that anything above a 0.7% price rise is gouging is ridiculous,” Billson says.

Under the tax, which is expected to be made law by the end of the year after passing the lower house yesterday, prices are tipped to rise by an average 0.7%.

Billson’s comments follow those by the Australian Competition and Consumer Commission chairman Rod Sims that the regulator has had “a few potential cases of people saying things that are just silly, and reports of taxi drivers adding a ‘carbon levy’.”

“If people are making claims that price rises have been caused by the carbon tax, they must be able to substantiate them,” Sims told the Herald Sun.

The ACCC, which has been allocated $12.8 million to police price gouging under the tax, did not elaborate this morning on the comments.

But CPA Australia has called on the ACCC to reveal details on pricing under the tax months before it is introduced next July, as happened when the goods and service tax was introduced.

“If you’re going to impose penalties for price gouging, then tell us what is not price gouging,” CPA Australia business policy adviser Gavan Ord has said. Penalties for gouging are as high as $1.1 million per breach.

Business groups have had a mixed response to the success of the legislation.

For the Australian Chamber of Commerce and Industry, it is proof that the minority Government is not working.

For the Australian Retailers’ Association, the tax “ultimately has no environmental benefit and will mean disastrous economic impacts for Australians retailers.”

But Westpac does not agree, saying earlier this month that accompanying tax and compensation changes might actually prove “mildly stimulatory” for households.

The bank noted that while up to one-thirds of households will be worse off under the tax, the average price increase is estimated at just $9.90 per week, whereas the lower-income households who will be overcompensated “generally have a higher propensity to spend”.

“The compensation payments that will be delivered in 2012 Q2 (worth around $1.5 billion) would be the equivalent of 0.5% of GDP. If it is mostly spent, it will provide a boost to consumer spending in that quarter.”

The Government says nine out of 10 households will receive assistance through tax cuts.