John Murphy (Lowe, Australian Labor Party, Parliamentary Secretary to the Minister for Trade) Share this | Hansard source

May I start, Madam Deputy Speaker Burke, by congratulating you on your elevation to Deputy Speaker. That is a great honour for you and your constituents, and I wish you well. I also take the opportunity to congratulate my colleague and friend the member for Herbert on his re-election in a very difficult election for those members on the other side in Queensland. I also congratulate him on his parliamentary secretary position and wish him well too.

In debating Appropriation Bill (No. 3) 2007-2008 and Appropriation Bill (No. 4) 2007-2008, it is difficult to ignore the former government’s mixed economic performance and its fundamental failure to address many matters of substance, including climate change—which the member for Parramatta has just been speaking about—the skills crisis, innovation and Australia’s crumbling infrastructure. I think it is fair to say that it was true that the government had run out of ideas for the future by 24 November last year. There can be no doubt that the policy lethargy of the past did contribute to the overwhelming support for a change in government, a change in direction and a change in the heart of our country. That is why Prime Minister Kevin Rudd and Deputy Prime Minister Julia Gillard have been elected with a mandate to implement this exciting agenda for change.

The Rudd government has certainly hit the ground running. It has taken weeks, not years, for the Prime Minister to begin implementing good climate change policy. It has taken weeks, not years, for the Prime Minister to advance the cause of reconciliation. These are exciting reforms and do not begin and end with matters typically pigeonholed as relating to social justice—though ignoring these matters would ultimately come at a major cost to the economy. The Prime Minister, Treasurer, Assistant Treasurer, finance minister and minister for small business have all outlined practical reforms to strengthen Australia’s economy, particularly in relation to the war on inflation. With very few exceptions, it will become even more apparent that the former government’s legacy was one of reactive, not proactive, economic reform.

The corollary of this is that, over the past 11 years, there has been a failure to anticipate and act on future challenges, a failure to act on rising levels of inflation, a failure to act on skilled labour and infrastructure shortages and a failure to act on the increasingly dysfunctional nature of federal-state relations—and I applaud the Prime Minister, Kevin Rudd, for making it quite clear in December 2006, when he was Leader of the Opposition, that he would promote cooperative federalism, which is what is happening now. These were the challenges that the former government would not touch and these were the challenges to which it had no answer.

While these challenges would appear at first sight to be a minor irritant for the government of any given day, their impacts are more widely felt by families. The rising cost of living faced by many families in my electorate of Lowe is one challenge the former government refused to face. As we now know, the Howard government regularly informed Australian families that they had ‘never been better off’. However, my office was and still is receiving calls regularly from constituents that are battling to pay increasing grocery bills and petrol prices. It is not enough to spruik one’s economic management by indefatigably pointing to budget surpluses delivered through a once in a generation commodities boom. Surely economic management should also be measured by whether families are able to balance their own budget over the kitchen table. It is aimless to advertise every cent of government debt that is paid off, while ignoring family credit card debts that are spiralling out of control.

Australia’s national economic performance has come on the back of spiralling household debt—and this does not look like abating in light of the increasing cost of living pressures. The Household Expenditure Survey from the Australian Bureau of Statistics shows that the cost of living outpaced inflation by eight per cent between 1999 and 2004. We have all seen the cost of petrol, bread, fruit and vegetables skyrocket in recent years. Plainly, a dollar does not have the purchasing strength today that it had years ago. That is why it is important to implement practical proposals that may relieve some of the pressure rather than arrogantly dismiss the problem by proclaiming that working families have ‘never been better off’.

It is time for some focus to be placed on the economy at home, not just on the national economy. The Prime Minister has already shown a commitment to keeping prices and interest rates low by investing in education, skills and key economic infrastructure. Indeed, as I said earlier, it has taken weeks, not years, for the Rudd government to begin the process of auditing Australia’s infrastructure.

Another way we can keep sustained downward pressure on prices is by resuscitating the Trade Practices Act, protecting small businesses and encouraging competition. There is no better friend for families doing their weekly round of grocery shopping than healthy competition between retailers. With that in mind, it is illuminating that a recent PricewaterhouseCoopers report suggests that Australia’s two biggest retailers, Coles and Woolworths, hold 79 per cent of the market despite mum and dad grocers making up 50 per cent of the sector’s workforce. While the ACCC has powers with respect to cartels, predatory pricing and misuse of market power, those powers could be strengthened for small business and for families saddled with increasing cost of living pressures.

As the Assistant Treasurer has previously indicated, more can be done to protect small business and foster competition in Australian markets. More can be done to achieve the objectives of the Trade Practices Act to ‘enhance the welfare of Australians through the promotion of competition’. In a document published in 2004 titled ‘Committed to small business’, the former Prime Minister rightly extolled the virtues of small business and the important contribution small business makes to Australia’s economy. The former Prime Minister said:

The Government’s commitment to small business is undiminished. That is why we remain attuned to their needs and why we continue to respond to their concerns with practical measures.

Despite 11 years in power, those measures never really eventuated. There are many obvious failings with the Trade Practices Act for small businesses and consumers alike. However, the former Treasurer refused time and time again to tackle those challenges. Cost of living pressures and methods of keeping costs down just did not seem to raise a mention.

With respect to competitive markets and consumer protection, the Howard government certainly promised plenty, delivered little and created a false impression that it was doing everything it could. But it was not. One area crying out for reform is the misuse of market power provisions within the Trade Practices Act. Since the High Court’s decision in Boral, big business will not have substantial market power unless they have the power to raise prices without losing any custom to their rivals. This notion of having absolute freedom of constraint to raise prices before one is considered to have a substantial degree of market power has rendered section 46 useless.

I ask: how can section 46 purport to foster competition when one can only resort to the provision when the market is already a monopoly or close to it? The ACCC has found it close to impossible to launch a misuse of market power case since the Boral decision. Many examples of anticompetitive conduct have no doubt escaped scrutiny as a result, to the detriment of consumers. The paucity of section 46 cases is not necessarily a glowing endorsement of corporate conduct in Australia. As I have said previously, not having misuse of market power cases through the courts is analogous to having no penalties in a football match. While the teams may generally have been well behaved, surely the referee cannot be saying that both teams have been absolutely perfect for the duration of the match.

Observations from the ACCC would suggest that the competition and consumer referee is saying anything but. This referee wants to act on behalf of consumers and small business but the rules will not allow it to. The Assistant Treasurer has rightly observed that there has already been enough debate about the ACCC’s desired changes to the misuse of market power protections. He has clearly stated his intention to put the teeth back into section 46—and I note that the Minister for Finance and Deregulation has just arrived in this place. I am sure he would support what I have been saying in relation to section 46.

While the fruits of any misuse of market power may be attractive for consumers in the short term, the manipulation of the market in this manner will result in fewer competitors, fewer options and higher prices in the long term. Genuine competition is the best way of exerting downward pressure on prices for consumers burdened with cost of living pressures. It is true that the aim of competition is to beat competition. However, no business should be permitted to reduce their prices enough for a short period of time to drive competitors out, then charge whatever they wish for the same goods. Expecting vigorous competition is not inconsistent with the proposition that there must be firm laws against unfair, anticompetitive conduct. No government should hide behind the cloak of so-called healthy competition if conduct is in fact strategically engaged in to undermine the competitive process.

Families in my electorate of Lowe, as well as the countless small business operators in my electorate, would be breathing a collective sigh of relief that there is now a government willing to confront the macroeconomic challenges ahead of it. Another such challenge is effectively outlawing serious cartel conduct in Australia.

The former Treasurer would remember well that the Dawson review—which reported in 2003—into the Trade Practices Act recommended the imposition of prison terms for individuals found to have engaged in serious cartel behaviour. It has taken the Rudd government weeks to initiate an important reform that the Howard government did not achieve in four years. Wise heads, including the chairman of the ACCC and Professor Frank Zumbo, have on countless occasions identified the risk that mere financial penalties allow cartel operators to weigh up those penalties against the millions that can be earned from a cartel. Recent cases demonstrate that cartel operators are continuing to weigh up the small deterrent of financial penalties against the millions in ill-gotten gains from cartel behaviour. Again, it is consumers who suffer. The Rudd government is rightly making this cost-benefit analysis harder for cartel operators by introducing jail terms for serious cartel conduct. I applaud the government on this initiative.

It is astonishing that Australia is one of the few countries in the OECD that does not have jail terms for serious cartel conduct. The Assistant Treasurer has released the exposure draft of the Trade Practices Amendment (Cartel Conduct and Other Measures) Bill 2008 for public comment. I encourage everyone to contribute to that. The exposure draft proposes five-year jail terms for those found guilty of serious cartel conduct. Again, I applaud this initiative.

Finally, a very clear message is being sent to businesspeople that cartel behaviour is tantamount to stealing from consumers and will not be tolerated. There is no doubt that the threat of time behind bars will force dishonest businessmen and businesswomen to pause and take stock of the situation. Far from talking tough, looking tough and then running away from the real battles confronting Australian families, the Prime Minister is tackling these challenges head-on. The Prime Minister has already delivered on numerous commitments, including, most recently, the appointment of a petrol price commissioner to monitor and investigate price gouging by oil companies. We will be keeping a close eye on that in the Easter break.

Rather than reacting to challenges when it is too late, the government is committed to proactive reform and to investment in the long-term drivers of growth, including infrastructure, education, skills, innovation and a high-speed broadband network. There can be no doubt that another of the Howard government’s legacies is its failure to consolidate Australia’s financial position during this once in a generation commodities boom. Despite the commodities boom delivering record prices, Australia outrageously had a balance of trade deficit of $12 billion in the 2006-07 financial year.

I am certainly looking forward to the opportunity as the Parliamentary Secretary to the Minister for Trade to do whatever I can to address the trade deficit that we encounter every month in Australia. Clearly we have to turn that around, and it is not easy in an environment where our dollar is relatively high and a lot of the goods and services that we export are value added overseas where the cost of labour is so much lower than in Australia. That is a big challenge for the government, the minister and me personally, but I will be doing everything I can to bring revenue into this country rather than continuing the sucking in of imports that has happened over the past five or six years particularly.

In the face of ideal conditions for export success, sadly Australia’s export volumes are down. Growth in service exports, goods exports and manufacturing exports have slumped. A strong export base is vital for Australia’s long-term prosperity, but little has been done in the past 11 years to redress the dreadful trade imbalance. Rather than ignoring the challenges and being content with five consecutive years of trade deficit, as was the norm with the previous government, the Minister for Trade is acting swiftly to initiate a comprehensive review of Australia’s trade policies and programs.

Acting quickly rather than reacting late is a premise that the Rudd government subscribes to. Australia can no longer afford a government that recklessly wastes large sums of money on advertising to get themselves re-elected and programs that, in most cases, delivered very few long-term benefits to my constituents specifically and the nation broadly. Finally, that is why many constituents in my electorate of Lowe sought and have received a government with fresh ideas for Australia’s future, which offers much hope.

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