Canberra's petrol prices will continue to be "horrible" unless planning restrictions are relaxed to encourage more independent operators into the market, former chief minister Kate Carnell says.
Ms Carnell on Wednesday fronted the Assembly's select committee inquiry into the territory's high fuel costs, an issue she described as the "bane of the existence of the ACT since self government".
Ms Carnell, who was chief minister from 1995 to 2000, recounted to the committee how her Liberal government intervened in the market to address a "major lack of competition", which she considered then, and still does now, to be the main cause of high prices.
She said the government offered "special deals", including affordable land and tax concessions, to lure two independent operators - Woolworths and Gull - to set up petrol stations in Canberra.
While the intervention was deemed a failure in the long-term - Gull left Canberra and Woolworths morphed into a market giant - Ms Carnell said it did trigger a brief drop in prices.
Now working as Australia's Small Business and Family Enterprise Ombudsman, Ms Carnell said she believed market competition was the key to bringing down the cost of fuel.
But Canberra's restrictive planning rules made it difficult for independents to both secure land and then utilise it in a way that could maximise revenue, she said.
"The message for Canberra is that until .. we don't let our planning requirements and environmental requirements stop [operators] from doing anything innovative on a site, we will be back here time and time again having another inquiry because petrol prices will continue to be horrible," Ms Carnell said.
Ms Carnell said small independent operators would struggle to survive if they were only selling fuel, meaning they had to find other ways to make revenue from their site.
Committee member Mark Parton said while the government could legislate to increase competition, there was no guarantee that small independents would offer cheaper prices.
"At the end of the day, whoever you get in will do what they do," Mr Parton said.
But Ms Carnell disagreed, arguing the commercial reality was that smaller outlets had to offer cheaper fuel in order to survive.
"Unless they shake the tree, they are not going to be able to compete with the big guys," she said.
Wednesday's public hearing - which was the inquiry's eighth and last - also heard evidence from Scott Desmond, the manager of a Caltex outlet in Fyshwick.
Mr Desmond said he drove past nearby outlets each morning to check his competitors' prices, with the aim of "beating them" by offering cheaper fuel.
When asked by committee chair Tara Cheyne why he didn't use fuel monitoring websites, such as Petrol Spy, to compare prices, Mr Desmond said he did not trust them.
He said there had been instances in which prices listed for his outlet on the website, which can be edited by users, had been misrepresented.
"I'll check periodically [on the website] to find that my price has jumped by 10 cents - which it hasn't [in reality]," Mr Desmond said.
"If someone doesn't like me, or someone is being a little bit shady, [they can edit the website] and suddenly my price jumps a bit."
The committee last week handed down its interim report, which put forward nine recommendations, including the idea of offering fuel subsidies to low-income families.
It will accept more public submissions until July 30, before it hands down its final report later in the year.