Senate FuelWatch

So I testified before the Senate’s Economic Committee on the FuelWatch bill. Not surprisingly, virtually all of the questions I got came from the Opposition Senators. Senator Abetz was particularly concerned about the fact that I had co-authored so many papers with Stephen King (who had appeared earlier that day on behalf of the ACCC) and was also the PhD supervisor of one of the ACCC staff who ran the econometrics that proved so influential in getting FuelWatch into policy. He seemed to imply it was some sort of revelation but I guess that has never been a secret. So amusingly, the Senator pointed to a paper, co-authored with Stephen, and cited in my submission to the Committee as more evidence of this. Of course, the paper he picked was one of our series on shopper dockets; something that I argued that the ACCC had neglected to pay much attention to. This seemed to me to be a very odd way of implying I was somehow biased towards the ACCC. The (sometimes) “outrageous” Graeme Samuel is unlikely to see it that way.

Anyhow, my main point was that the data that was used by the ACCC for its study needs to be widely available for other econometricians (not myself) to use. Alas, the ACCC doesn’t have the rights to deliver that data to us and that right rests with Informed Sources who have been very selective in the academics they have given the data to; Sinclair Davidson and Don Harding — both of whom are anti-FuelWatch in their conclusions. I told the Committee that such selective data allocation undermines the independence of these researchers and serves no one’s cause (Something I think they will agree is the case). Put simply, while the industry is keeping the data to themselves or to those it can ‘trust’ one has to assume that, in fact, they are not confident about the results going in their favour. The problem is that this is denying some very talented, young IO econometricians a chance to study an interesting problem and contribute to public debates.

I also told the Committee that I hoped that (a) the underlying FuelWatch prices would be easily available and that the government should be proactive in making it available for use by entrepreneurs (unlike the toilet situation) and (b) that consideration be given to running trials of different mechanisms for FuelWatch including going away from the 24 hour pricing rule.

Senator Fielding then asked me about the position of independents. I said that I thought they had much more to worry about than FuelWatch (e.g., shopper dockets and chains). Also, I thought that if it moved the basis of competition to price and away from branding it would be an opportunity for them. Funnily enough for a conservative, he seemed to be implying that we shouldn’t want market forces to do their job in petrol retailing. What a tangled web politics is. I really hope we will be done with the whole FuelWatch thing soon.

8 thoughts on “Senate FuelWatch”

  1. I told the Committee that such selective data allocation undermines the independence of these researchers

    How so? Both Don and I were opposed to FuelWatch before we got the data. That is how Informed Sources discovered us (at least me). The ‘villian’ here is the ACCC and Graeme Samuel in particular for refusing to release the ACCC data and then refusing to have the ACCC modelling reviewed by anyone other than Treasury. In the end all Treasury did was confirm that the regression had been run correctly.

    I also think your PhD student has been poorly treated in all this. (Not explictly of course). I can’t imagine that Appendix S was ever designed to bear the weight of proof to sustain such a silly idea.


  2. Sorry Sinclair, I presumed you were taking an objective look at the data. The ACCC are not allowed to release the data. Just ask Informed Sources yourself.

    Personally, I think free data availability would improve the process alot.

    By the way, what makes you think that anyone inside the ACCC started out with a positive view towards FuelWatch before doing the econometrics? I must have missed that discussion.


  3. Sorry Sinclair, I presumed you were taking an objective look at the data.

    Should be clearer – I had crunched non-Informed Sources data and formed an adverse opinion of FuelWatch before I got the Informed Sources data.

    The ACCC are not allowed to release the data. Just ask Informed Sources yourself.

    That’s not what Graeme Samuel told the Senate – he said Informed Sources asked him to release the data.


  4. Law and politics stunt the mind. Lawyers see causes of action everywhere and politicians perceive partisan conspiracy in every breeze.


  5. Actually, I think it was cleared up later but the ACCC did not subpoena the data but was given it contractually with restrictions preventing them from giving it to others. I am sure Informed Sources could just lift those restrictions if they wanted to. The question you need to ask is why don’t they want to?


  6. I think you’re scraping the barrel. The ACCC have made use of secret data, secret econometric tests, secret analysis, and secret recommendations to government to propose a national FuelWatch scheme. The Informed Sources data was only part of the whole story. I am currently expanding my own Senate submission into a paper. Let me replicate here the section where I discuss the data dispute and peer review.
    The ACCC have refused to make their data availble for analysis and have provided a somewhat confused explanation for their refusal to do so. The evidence provided to the Senate by the ACCC, and in particular Graeme Samuel, was misleading, if not false. There are two points worth making; first Graeme Samuel keeps suggesting that the data belongs solely to Informed Sources and that independent analysts could replicate the ACCC analysis if Informed Sources chose to release the data. Those suggestions are wrong. The second point relates to the misleading statements the ACCC made regarding peer review. The ACCC had no intention of allowing their analysis to be peer reviewed.

    (1) Graeme Samuel; �We were asked by Informed Sources the other day whether the data we had could be made available. We advised Informed Sources that, of course, it is their proprietary data, they can make it available to whoever they want, whenever they want, in whatever form they want and the parties to whom they make that data available can then do whatever they like with it. That is not under our control. That is a matter for Informed Sources. It is their data.� This statement is at page E32 of the Senate Estimates transcript (Senate Estimates 5 June 2008). Informed Sources do not own the entire dataset that the ACCC use. Informed Sources only own the price series. In other words, it is not possible for Informed Sources to make the ACCC data set available to the public. This was acknowledged by Joe Dimasi (at E34); �The other adjustment we made was for fuel premiums. That is not available to people. That is also confidential data so people would need to go [to] the refineries to get that. We could not release that without the refineries� agreement. That is their data.� In other words, Joe Dimasi indicates that the data do not all belong to Informed Sources. Yet later at page E42 of the Senate Estimates, Graeme Samuel again indicates that releasing the data set used by the ACCC is within Informed Sources power.

    (2) The ACCC have worked very hard to avoid any peer review especially relating to any data release. Graeme Samuel at page E42, �� I am not in a position to be able to say that we would make our data and our methodology available to anyone out in the public arena. We are not prepared to make all this available for any economic modeller or any economic student to simply go through and then to engage the already heavily worked staff of the ACCC in debate on these issues.� Notice that what was Informed Sources data is now the ACCC data. Further Joe Dimasi had said at page E 33 (emphasis added), �I might add that a peer review would normally involve the peer getting access to the original data and running their own tests on it. That is what a peer review would normally involve. We have provided the results for people to do that. The tests that we ran are known to other econometricians. As Treasury has also verified, they are standard. As long as the owners of the data are prepared to release it, people can go in and apply the standard tests.� The very next speaker in Hansard is Graeme Samuel saying, �If Informed Sources wants to release the data that they gave to us to anyone else�they gave it to us under subpoena�they are entirely free to do so.� Yet again Graeme Samuel suggests that the data set is Informed Sources data. The exchange between Senator Barnaby Joyce and Graeme Samuel is worth quoting in full (at page E42).
    Senator Joyce�Let us cut to the chase: what you are saying is that you will not allow independent reviewing of that modelling work?
    Mr Samuel�I would have thought that I did not say that. I said that Treasury had undertaken its own robust analysis. But if there is an economic consulting firm that wants to do its own analysis of the impact of FuelWatch in Perth then they can approach Informed Sources. Not that it is our right to do so anyhow, but we have said to Informed Sources, �You are absolutely free to make whatever data you want available to whomever you want on whatever terms and conditions you want to make it, so they are entitled to do their own research and use whatever test they want to use and whatever methodology they want to use. I am sure that there are some economic consulting firms that will find someone prepared to give them a brief to do that.

    The extent of Treasury�s �own robust analysis� was revealed to the Senate Estimates Committee the previous day. Senator Helen Coonan asked for a description of the review that the Treasury had actually done as part of their �robust analysis�. Ms HK Holdaway replied, �The ACCC sent us the data set that they created to be used as part of the econometric analysis. That was in the form of a starter software that allows you to run these programs. I, myself, actually use Eview and was not able to do that so, �, I referred to one of my colleagues � who has the expertise of this software and I asked him to basically run exactly the same regressional equation that was provided in the ACCC�s analysis and to check to make sure the results were identical and that it provided statistically significant results. He confirmed all of that� (Senate Estimates 4 June 2008 pg. E90 � 91). In other words, the Treasury �robust analysis� consisted of them re-estimating the ACCC model, using the ACCC data and using the same software to determine that the same result obtained.

    The Senate Estimate transcripts can be found here.


  7. Senator Fielding a conservative? Economically, I don’t think he’s ever claimed so. He’s all about the families, and as near as can tell economically illiterate.


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