Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Hansard source

It is important to impart some philosophy in this debate, because it is clear there is no philosophy on the government’s side. Labor’s economic philosophy is as a party of competition. Labor, when in government, created the open, competitive economy. The purpose of a trade practices act is to ensure that competition prevails, to strengthen competition. Therefore Labor’s guiding principle in considering amendments to the Trade Practices Act is this: the amendments must be pro competition; they must not be designed to protect competitors but to protect competition.

Small business should agree—and most small businesses agree with that fundamental philosophic statement—because small business operators know that they can survive and thrive best in an open, competitive economy. It might be tempting from time to time to argue for protection against competition but they do best when they thrive in an open, competitive economy. It is against that yardstick that we judge these amendments.

As my colleague the member for Prospect has said, the government in this chamber through the Treasurer and the Minister for Small Business and Tourism said it needs to make no further amendments. We were critical of the amendments that the government made because we believed that they were ineffective. Labor proposed a set of amendments that were well considered, balanced and pro competition. They were based overwhelmingly on recommendations on the public record by the competition watchdog, the ACCC, and we were therefore very comfortable in putting those amendments to the parliament. The government rejected them and, in doing so, the minister for small business said this:

The government’s amendment is as a result of the unanimous agreement of the small business groups.

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As I said, the member for Rankin will not want to hear that response, but these amendments—and let me repeat it for the member for Rankin and the member for Prospect and everyone else on the opposition benches—are the result of detailed discussions and consultation with the small business groups.

The minister was saying: ‘We’ve got it right. There’s no purpose in adopting Labor’s amendments because we’re drawing a line.’ What line? The Birdsville line. Because Senator Joyce in a pub in Birdsville created government policy.

Senator Joyce, as a senator for Queensland, has every right to go to a pub in Birdsville, talk to his mates and come up with any sort of idea he wants to. But the Treasurer of this country surely does not have any right to then bow to the pressure of Senator Joyce having drafted an amendment to an important piece of competition legislation and then saying, ‘That’s okay. If Joyce QC says it’s okay, it’s okay with me, the Treasurer.’ That is an abrogation of economic responsibility in this country, a total abrogation to just accept an amendment moved by someone who designed it in a pub in Birdsville.

The fact is the government knew it was going to accommodate Senator Joyce. Why? Because the Birdsville amendment was drafted on 28 June of this year, the debate in the House was held in early August and the debate in the Senate just a few days ago. The government knew that it was going to accommodate Senator Joyce. Why do we know that? Because Labor offered to support the government’s bill. We said, ‘If our sensible amendments fail’—as we expect that they would—‘we will pass the bill.’ The Hansard records that the member for Prospect said Labor would join with the government and pass its amendments—the government’s amendments, not Senator Joyce’s Birdsville amendments.

There were 28 Labor senators ready to vote for the government’s bill, but the government knew it had a little caper going with Senator Joyce. The government did not tell us but, more importantly, the government did not tell the business community. Why? Because they had convinced the business community to run a very expensive advertising campaign on Work Choices. If they had told the business community that they were going to shaft the business community then the big business part of our economy would obviously have said, ‘Hold on. We’re going to try and help you on Work Choices, then you’re going to shaft us.’ That is why the Treasurer did not tell them. He knew what he was going to do in relation to Senator Joyce and the Birdsville amendment, and here are some of the consequences. (Extension of time granted). Legal opinion, in this case from Allens Arthur Robinson, is that as a result of the Birdsville amendment:

... it will no longer be necessary to prove that a corporation has ‘substantial market power’ to establish the threshold for the application of s46 to below-cost pricing … it will be sufficient to show that the corporation has a ‘substantial share of a market’.

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Under the new amendments, a large market share of itself will be sufficient to attract the application of the predatory pricing provision, even where that market share does not equate to market power because there are low barriers to entry and a number of other competing firms with large market shares.

It goes on to say:

Purpose may be established by inference (s46(7)) or by direct evidence, and it is sufficient if the anti-competitive purpose is a substantial and operative one, even if the corporation has acted for a number of different purposes.

In other words, it is very easy for a business to get tripped up and be regarded as engaging in predatory pricing even when all it is doing is acting competitively as we would want a business to act competitively to keep prices low. There is a big debate in the parliament and beyond about the cost of living. We want businesses to keep prices low as a result of competition prevailing, not having businesses protected from competition.

There is another piece of legal opinion from Corrs, which says—and this backs up what I have just said:

The changes, if passed, are likely to introduce considerable uncertainty in the pricing decisions of large business and may prompt them to price more cautiously and conservatively. There is some potential for the changes to place upward pressure on prices.

The Treasurer is not here to explain the background, the purpose, the thinking. This will be very important, presumably, when the courts have to grapple with the Birdsville amendment. They are getting no guidance, and that is why I am going to ask the parliamentary secretary a number of questions which I hope he will be able to answer so that the courts will have some guidance in relation to the Birdsville amendment. This legal opinion goes on to say:

Restricting such competitive conduct may protect inefficient firms and damage competition.

That is the basis of our concern. So my questions go to these sorts of examples. Suppose, for example, that Tesco, a very large multinational retailer, enters the Australian market. Under the Birdsville amendment, it has no significant market share because it has just come in, so it cannot engage in predatory pricing no matter how able and willing it is to engage in low-cost pricing for a sustained period of time. The point I am making is that Tesco could come in and smash large and small retailers here because it cannot be affected by this Birdsville amendment because it does not have a market share. So the small businesses that the Treasurer and the Prime Minister say they are protecting could easily get screwed to the ground as a result of this. That is what we are talking about: unintended consequences in terms of forcing prices up through restricting competition, and unintended consequences for the small business community, many of whom will quite possibly think this is a great thing for them. They need to be very careful in assessing this. They need to look at the legal opinions.

A second example is an independent supermarket business in a small regional market. Let us consider this case. It could have, say, a 20 to 30 per cent market share. This is a small business in a small regional market. It therefore has a significant market share. That small business therefore could be caught by these provisions on predatory pricing as a result of the Birdsville amendment. There are other examples. Budget airlines entering Australia do not have substantial market share. So you could have Qantas and the other airlines here being unable to match them in a price war. That means it is bad for Qantas and for the other Australian airlines—and it is bad for consumers—because the international firms coming in cannot be caught under this provision but the ones that are here and already have a significant market share can be.

This is a crazy approach to policymaking by Joyce QC. Labor supports small business and Labor supports competition, but above all Labor supports good policy. It just shows how lazy the Treasurer is and how desperate the Prime Minister is in ordering that the Birdsville amendment be accepted. That is why we are deeply concerned about unintended consequences. It is all very good for the Prime Minister to run around and say, ‘We’re the friend of small business.’ We will see about that. (Time expired)

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