Incentive to ● ● ● Government: Government ● develop developed standards seek to standards Regulatory impact A balanced (industry, A balanced (industry, consumer Regulatory impact balance economic, assessment consumer and societal) and societal) decision-making assessment environmental and social welfare requirements stipulate decision-making body would body would need to be requirements stipulate outcomes. Where welfare that economic, need to be established. established. There is no market that economic, optimising outcomes are not environmental and There is no market incentive incentive for this entity to be environmental and social achieved there is an incentive for social welfare outcomes for this entity to be formed, formed. welfare outcomes are are robustly assessed. although the co-regulatory robustly assessed. the Australian Government to Elevated fuel quality standards framework could require will increase costs of production. develop standards. this. Maintenance of existing Industry: There is limited Maintenance of existing standards “frozen in time” may incentive for industry to develop standards “frozen in time” be preferred by domestic standards that balance economic, may be preferred by refineries because it supports domestic refineries because environmental and social welfare existing competitive advantage, it supports existing because no capital development outcomes. Industry incentives competitive advantage, would be required. However, are maximising financial returns because no capital some fuel importers may see a linked to maintaining development would be competitive advantage in competitive advantage and required. importing lower priced ‘dirty’ minimising capital development fuels. costs. Prior to the fuel quality standards legislation being introduced standards focused on ‘vehicle issues and did not operability’ consider environmental and health considerations.
Incentive to develop standards Government: Government developed standards seek to balance economic, environmental and social welfare outcomes. Where welfare optimising outcomes are not achieved there is an incentive for the Australian Government to develop standards. Industry: There is limited incentive for industry to develop standards that balance economic, environmental and social welfare outcomes. Industry incentives are maximising financial returns linked to maintaining competitive advantage and minimising capital development costs. Prior to the fuel quality standards legislation being introduced standards focused on ‘vehicle operability’ issues and did not consider environmental and health considerations. ● Regulatory impact assessment requirements stipulate that economic, environmental and social welfare outcomes are robustly assessed. ● Regulatory impact assessment requirements stipulate that economic, environmental and social welfare outcomes are robustly assessed. ● A balanced (industry, consumer and societal) decision-making body would need to be established. There is no market incentive for this entity to be formed, although the co-regulatory framework could require this. Maintenance of existing standards “frozen in time” may be preferred by domestic refineries because it supports existing competitive advantage, because no capital development would be required. ● A balanced (industry, consumer and societal) decision-making body would need to be established. There is no market incentive for this entity to be formed. Elevated fuel quality standards will increase costs of production. Maintenance of existing standards “frozen in time” may be preferred by domestic refineries because it supports existing competitive advantage, because no capital development would be required. However, some fuel importers may see a competitive advantage in importing lower priced ‘dirty’ fuels.
act-review-final-report.docx