Bob McMullan (Fraser, Australian Labor Party) Share this | Hansard source

Thank you, Mr Deputy Speaker. I was temporarily distracted by the whip, who was helping me. I rise to support the amendments moved by the member for Hunter, particularly insofar as they relate to the issues of abuse of market power and unconscionable conduct. These are amendments of general application. It is particularly appropriate in the immediate case that they apply to the area of petrol, and that is why the amendments are being initiated here. I welcome that and support that but, in the years in which I have been dealing with this matter, it has become more and more evident that section 46 is the gap in the trade practices regime of this country. It is the gap in the competition regulation of this country.

The former head of the ACCC, Allan Fels, made it clear that he thought that while in every other area there might be need for some finetuning, the Trade Practices Act in Australia works very well. In my view it is in some sense an international leader, but there is a gaping hole that relates to this issue of abuse of market power and unconscionable conduct, typified by section 46 and to a lesser degree section 51.

The High Court’s determinations, which in hindsight are probably correct, have clearly led to the situation where the original intention of the Trade Practices Act—to deal with questions of abuse of market power by major corporations to the original disadvantage of small business and the ultimate disadvantage of consumers—has not been implemented, because the act has been read down to a degree that makes it relatively ineffective. The member for Hunter referred to the case of Boral, which is the most infamous of examples.

What we need to deal with here are a range of issues which are addressed in the amendments. In the long-term, there will probably need to be more, but these are very substantial and deal with the most important issues with regard to the following: the threshold test for determining whether a corporation has a substantial degree of market power; the question of power in more than one market; the question of agreements entered into which can, when taken into account, constitute an agreement that provides the potential to abuse market power; and two criteria. The first criterion is the capacity to sell at below cost, which is evidence of abuse of market power, not in one case—anyone can have a loss leader—but in a continuing, ongoing manner that causes detriment to small competitors and drives them out, which was the principle behind the Boral case.

The second criterion—and I want to concentrate on this in the last minute or two—which the amendments address directly, is the capacity for unilateral variation of contracts. There is nothing more evident of an imbalance in market power than the capacity for unilateral variation of contracts. Who would willingly enter into a contract that says, ‘Yes, we agree these are fair terms but you can change them whenever you feel like it’? No-one would intelligently enter into that—no worker, but they are being forced to do so under the industrial relations legislation; and no small business, but they are forced to do so time and again. If only one of these amendments were picked up—and I support all of them—it should be the capacity to deal with unilateral variation. This would transform the lives of franchisees and small businesspeople around this country, particularly those in the petroleum industry.

If we are going to have respect for free market capitalism in this country, we need to create a framework for handling the imbalance of market power between small and large business and between employer and employee. It is the failure to realise that that lies at the heart of the government’s failure to address this hole in the Trade Practices Act. It lies at the heart of the refusal to make the referral to which the member for Hunter refers, because the government cannot tell the difference between the interests of the largest Australian companies, which lobby against all these changes, and the interests of the economy. (Time expired)

See this speech in context