Warning over bogus GST, ETS price hikes

Photo / Glenn Jeffrey

Businesses who use the emissions trading scheme and the pending GST hike as an excuse to ramp up prices are being warned they could find themselves before the courts.

Petrol prices and the cost of energy will increase when the Emissions Trading Scheme takes effect tomorrow. Consumers face further price hikes when the GST increases to 15 per cent in October.

But the Commerce Commission says businesses should be careful not to mislead consumers about the reasons for price increases, because they could be in breach of the Fair Trading Act.

"Businesses are not required by law to give reasons when they raise prices.

"However, when a business does try to justify a price increase to its customers, the reasons they give must be accurate and not misleading," Commerce Commission Wellington enforcement manager Greg Allan said.

Even if a business did not explicitly state they put prices up because of the rise in GST, they must take care not to create the misleading impression that GST was the sole reason for the price increase if the increase was more than the extra GST, the watchdog said.

The same rule applied to the Emissions Trading Scheme, Allan said.

"The impact of the ETS on each electricity or petrol company will vary, and consumers are not best placed to understand the technicalities of this, so must rely on the information provided by these businesses."

It was therefore important businesses were accurate and not misleading about the reasons for the increase and did not overstate the cost of the ETS, Allan said.

Those that did could be in breach of the Fair Trading Act.

Breaches can attract a fine of up to $200,000 for a company and $60,000 for an individual, Allan said.

Prime Minister John Key said earlier this week he didn't want to see gouging as a result of the Emissions Trading Scheme.

Key said consumers had the ability to shop around and change suppliers with relative ease and urged them to do so if they felt they were being taken advantage of.

Contact Energy is putting prices up an average of 3.2 per cent because of the ETS and in the Dunedin area the percentage price rises were in double figures.

"That can't possibly be justified on the back of an emissions trading scheme, and for a company to blame the emissions trading scheme for that sort of price increase is quite incorrect," Key said.