Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Hansard source

Like the member for Batman, I rise to support the Senate message and the amendment put in place by the Senate. Indeed, the amendment came from the opposition out of our concern that the operation of the Petroleum Retail Legislation Repeal Bill 2006 should not come into effect until the government has come forward with those relevant and appropriate reforms to section 46 of the Trade Practices Act. Of course, we sought a deferred date because we were not all that confident that the government would be forthcoming on its word, at least not before the repeal bill came into operation.

I do not need to go into Labor’s support for the repeal of the sites and the franchise acts—our views on those issues are well documented. Suffice to say that we do believe that an outdated, 26-year-old regulatory regime is applying a brake to competitive forces in the petroleum retail market and therefore, along with many other factors, is putting upward pressure on petrol prices. So our support for repeal of an antiquated and outdated regulatory regime is without question. But we have always said that the repeal of the sites act and the franchise act must be done in conjunction with the arrival of an efficient and effective Oilcode. I am not sure we have Oilcode 100 per cent right now but, as the minister knows, when you are dealing with various parties in these negotiations you will never get an absolutely perfect outcome. I suspect it is as perfect as we are going to get it, but what gives me faith is that we will have a review of the Oilcode one or two years down the track which will allow us to finetune that document to ensure it is delivering the outcomes we all hope for.

But the other condition, of course, was that the repeal must happen in conjunction with reforms to section 46 of the Trade Practices Act. We in this place all, surely, know by now that section 46 of the Trade Practices Act has lost its effectiveness following a number of federal and High Court decisions, among them the Boral case, the Safeway case and the Rural Press case. They are probably the standouts. What has hurt section 46 of the Trade Practices Act most is the inability of the courts to find (1) whether a corporation in fact has the substantial degree of market power that the act is looking for to prove that it therefore has the opportunity to abuse that market power and (2) the definition of the question of ‘take advantage’; or in other words whether, once substantial market power has been established, a corporation has taken advantage of that substantial degree of market power to the detriment of a competitor. It is quite clear that it is very difficult now for the ACCC to prove either of those points, and in reality the ACCC has now effectively ceased taking cases under section 46, in particular on predatory pricing, because of its view that it is not likely to secure a prosecution on that basis.

The minister for resources has made a commitment here in this place that the government will move quickly to bring forward legislation to reform section 46 of the Trade Practices Act, but there are two concerns with respect to that commitment—and I do not question his word in any respect. What I am concerned about in the first instance is the attitude of his colleague the Treasurer, because the Treasurer seems to be insisting on a certain course of action which requires that section 46 of the Trade Practices Act reform does not come until we have dealt with another reform issue with respect to the Trade Practices Act, and they of course are those reforms contained within the Dawson bill.

As members of the House know, the Dawson bill is currently stalled in the Senate because of a bit of stubbornness on the part of the government, particularly in the area of merger authorisations. The Labor Party has put forward some very appropriate and sensible, and minimal, amendments to the authorisation changes put forward by the government, and we still await the government’s concurrence with that amendment. When the government sees fit to concur with that minor amendment we will be happy to pass the Dawson bill through the parliament.

That main point is that there is no connection between the Dawson bill and reforms to section 46. There is no strong argument—there is no argument whatsoever—that you cannot seek to reform section 46 until you have dealt with the Dawson bill. This is just the Treasurer’s stubbornness. He has decided that small business and independent players in the retail petrol market do not matter sufficiently for him to put his stubbornness aside and deal with section 46 issues prior to the passage of Dawson in the Senate. We know Dawson will go through at some point in time; there is too much pressure from the big end of town for the government to sit on Dawson forever. So the time must surely come when the government sees fit to accept the opposition’s minor amendments.

But the key point is that you do not need Dawson through before dealing with section 46 of the Trade Practices Act. What the government is effectively saying by saying section 46 cannot be done until Dawson is dealt with is that the big end of town matters more than the small end of town. He says that he cannot afford small and independent players in the market appropriate protection until the big end of town gets all it wants on Dawson. That is an inappropriate approach, and I would like to hear the minister come to the dispatch box and indicate that he will do all in his power to persuade the Treasurer that it is absolutely unacceptable to be holding the small and independent players to ransom so that the big end of town can get all it wants on mergers changes in this country. I will invite him to do so.

The other point I want to make is on recoupment, to get this on the record again. We want positive reform to section 46 of the Trade Practices Act; we do not want, in the form of government legislation, section 46 going backwards. It is my view and the view of many trade practices experts, including a range of academics, that, if the government is prescriptive about recoupment in the legislation, section 46 will go backwards. Recoupment, of course, is the concept that you must be able to show that the larger firm or the aggressive firm which was holding prices down with the intention of driving a competitor out of a market was capable of recouping the losses at a later date. Of course, recoupment is a concept which the courts have always taken into account when trying to determine whether a firm with a substantial degree of market power has taken advantage of that market power by holding down prices, possibly below cost, with the sole intention of driving a smaller competitor—or any competitor, for that matter—out of the market.

Of course they would take recoupment into consideration. Of course it is something always in the minds of the court when deliberating on these issues. But, if you write into legislation that recoupment may be taken into consideration when deliberating on these issues, inevitably the courts will feel an obligation to make recoupment a priority consideration in their broader determinations. It is unnecessary, and I fear it is an issue that will force section 46 not forwards but backwards. I urge the government not to be prescriptive about recoupment in the act. Let the courts determine the extent to which recoupment is an issue to be considered in the cases before them.

To summarise: yes, the opposition has supported the repeal of the petroleum retail sites act and the petroleum retail franchising act. We think the 26-year-old regulatory regime is outdated; it is a brake on competition in the industry. In fact, we think the repeal should have happened some years ago but government incompetence in getting agreement on Oilcode has delayed that repeal. But it must be done in conjunction with an acceptable Oilcode and it must be done in conjunction with reforms to section 46 of the Trade Practices Act. Let us not hear any more of this, ‘Well, we will not deal with section 46 until Dawson is passed through the Senate.’ There is no nexus between the two; it is just stubbornness on the part of the Treasurer. He needs to put his pride aside and put the interests of the small and independent sector first, get on with these reforms and bring in a package of reforms to section 46 that are acceptable and that take that section of the act forward in a positive way, rather than take it backwards as I know many at the big end of town would desire.

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