Bernie Ripoll (Oxley, Australian Labor Party) Share this | Hansard source

I rise to speak on the Trade Practices Legislation Amendment Bill 2008. This bill is a very important and major piece of legislation. It will go a long way to creating a truly competitive economy and business sector. The reforms contained in the bill are long overdue. It has taken the election of a Rudd government and its strength and foresight to see these changes implemented. This attitude is contrary to that of the opposition, which always espouses that it is somehow the true friend of small business. But, historically, it always seems that Labor governments make the great reforms and do the work necessary to ensure that small businesses can thrive in this country. Once again, we are in that position. And, once again, that is why we are moving these legislative changes.

As members in the House have come to realise, it has only been Labor governments that have driven competition policy and that have sought to continuously reform, improve and clarify key components in the act so as to foster better promotion of competition, fair trading and consumer protection. These concepts work hand in hand and are important for the future of our economy, for the prosperity of small businesses and for the fair treatment of all consumers. This bill sends a clear message to the business community that the government is committed to providing them with a competitive and fair environment. It also provides business with an environment that works in the good economic times as well as in the more challenging and difficult economic times.

Let me put this commitment into some context. The Australian Labor Party was responsible for the introduction of the Trade Practices Act in 1974—let us not forget that. It was Labor that made substantial improvements to the act in 1986, as well as instigating National Competition Policy in the early 1990s. These have all been very important steps toward providing the right economic environment to ensure that small businesses, the backbone of this country, have had the right equipment and tools to carry on with their business. Let us remember that, when it comes to any kind of major competition reform in this sector, the Labor Party has been the driving force.

Today’s bill looks to amend the Trade Practices Act 1974 and to clarify a number of terms—in particular, the term ‘take advantage’. The bill also seeks to address problems of predatory pricing which relate to the prohibition of misuse of market power in section 46 of the act. The bill will also extend the jurisdiction for section 46 cases to the Federal Magistrates Court. Where the previous government has failed over the past decade to act on important parts of the Trade Practices Act and for the business environment, we are now acting.

The proposed amendments to section 46 of the Trade Practices Act are predominantly aimed at promoting competition in the industry and at cracking down on anticompetitive behaviour by powerful businesses. It is the Rudd’s government intention to continue to stand up for small business and defend them from predatory pricing. What is predatory pricing? Basically, it is when a company sets its prices at a sufficiently low level with the purpose of damaging or forcing a competitor to withdraw from the market. This in turn leaves the company with less competition. It can then disregard market forces, raise prices, exploit consumers and, over time, drive those other businesses out of business. Price cutting or underselling competitors is another form of advantage taken by predatory practices.

However, price cutting is not always necessarily predatory pricing. Larger businesses that are able to legitimately use their size to reduce their costs and the prices at which they sell their products to consumers are acting in a pro-competitive way. So we should be careful to make a distinction. There are genuine businesses, large and small, that are fair, open and competitive in the market. They compete properly and try to drive down costs and provide better services to consumers. Then there are predatory businesses which act only to get rid of their competition and in a manner that ensures that, over a period of time, they will be either the only competitors or amongst a small group of competitors that can control prices and, in the end, exploit the market. Businesses that exploit market power to eliminate or damage competitors are anticompetitive and that is a misuse of the market power that they enjoy.

These are not the only major changes that the government is proposing in this bill. There is also a significant need to give small businesses a permanent voice within the ACCC and to simplify the process of prosecuting businesses which engage in anticompetitive behaviour. They are important factors which ensure that our regulatory watchdog, our competition watchdog—the ACCC—actually has the right advice, the right people and the right environment itself to ensure that these practices do not go on. This will ensure they have a representative voice on their own team. It is high time that small business had a seat at the table. They have been waiting for a long time. We are going to give them that seat at the table and we are going to give them the voice they deserve. With these reforms, and a requirement for at least one of the ACCC deputy chairpeople to have small business expertise, small business will now have a permanent voice within the ACCC. Giving small business a permanent voice within the ACCC will improve the understanding of the special circumstances and difficulties confronted by small businesses every day when dealing with anticompetitive behaviour by more powerful businesses than their own.

So far we have debated the merits of the proposed amendments and identified the necessity for a number of things. If anything, the debate has been going on for too long. There is no better time to act than the present, which is what we are doing. We want to ensure that victims of predatory pricing will not need to prove that the predator has the ability to recoup losses after participating in an anticompetitive, below-cost pricing strategy. This is an important factor in trying to address the after effects of what happens when large businesses take on uncompetitive predatory pricing strategies.

We want to clarify the meaning of the term ‘take advantage’ in section 46. That will address specific concerns raised by business and the ACCC. At present, the meaning of that term has prevented section 46 from capturing anticompetitive behaviour. It is important to define, clarify and give more weight to the definition of ‘take advantage’ so that it is not just included in the act but serves a useful purpose which can be properly used to not only prevent and deter anticompetitive behaviour but give the ACCC the power to act within the terms of the law, if need be.

I would also like to indulge the House for a brief moment and talk about the previous government’s approach to competition policy and the mess they ultimately created. I am sure that people here recall what happened with the two-track process for predatory pricing. It was a process developed under the previous government and it caused considerable confusion amongst businesses because they focused on fundamentally different concepts of market share and market power. It is time we removed the unnecessary uncertainty that has arisen following the two-track process for predatory pricing. I recall at the time that the ACCC voiced particular concern about this scenario. That is why we need to act to provide clarity and certainty for the business community. It is the least we can do in providing the right regulatory environment to ensure that they can get on with their business of acting in good faith.

While speaking about the ACCC, it is important that we also give our consumer watchdog the powers it needs to assist those who will require its continued support. These reforms will provide the ACCC with new information-gathering powers, which will enable it to fully investigate suspected breaches of the law—something that I know has been a complaint of many small businesses in the past when they have tried to take action through this particular process. The government will also extend the reach of the ACCC by removing the arbitrary monetary threshold currently applicable to allegations of unconscionable conduct, enhancing the protection of small business from transactions involving such things as undue influence. Again, that is a very important part and it will remove an obstacle to ensure that the letter of the law not only can be met but also can be followed through. The process is not only about having it codified or written in law but also about following through with the action needed so that those who participate in the system actually understand that the law has weight and that action can be taken.

These amendments will deal with predatory pricing while allowing businesses to engage in genuine competition and discounting, to the benefit of consumers. It is an important step forward and one which is long overdue, and one that I know that all businesses around the country should be more than satisfied with. Small business certainly will be satisfied because it will offer them more protection and more genuine competition in the market, but also it will give some certainty to the way any large business operates with its own competitors—large business against large business. So this is a win-win legislative amendment for all those in business. I have mentioned that these reforms are long overdue—and they are. That is not because the previous government did not know about the underlying problems within the act; it is because they decided that it just was not important enough, not high enough on the agenda, and that it was not a priority in the 12 years they were in government.

During question time today, we heard opposition members asking questions such as, ‘What have you done in the past nine months?’ and I just kept thinking, ‘What did you do over the past 12 years on some really fundamental, important key factors to ensure that small business had a fair, competitive environment and could get on with its job?’ I recall small business screaming out for assistance and for clarification—for the ACCC powers to be enhanced to ensure that they could have some assistance and support when they needed it. But those calls fell on deaf ears. The former government, the now opposition, completely ignored all those calls for significant reform. I suspect that was because, while they mouthed the words that they are the friends of small business, in the end they are not; they are the friends of the big end of town. I will have more to say about that in a moment.

I also believe that the previous government lost touch with the broader constituency—the mum and dad investors, the families that invest not only their time and energy but also their hearts and souls into running a small business, a family business, and into making a major investment. All they are seeking is a fair go, a competitive environment, a chance to operate, a chance to create jobs and a chance to return something to their own family. It is the Rudd government’s fundamental belief that competition policy is at the core of a good economic agenda. This government believes that being pro-business and pro-competition delivers the best results for consumers. Those opposite simply do not have the same concerns for consumers or for small business. At every opportunity they side with the big end of town.

In opposition we decided that we would strengthen the Trade Practices Act to restore its original 1986 intention. I think that is important to note. Those opposite, when they were in government, ignored those key reforms and amendments on a number of occasions quite deliberately. Members might recall sitting here in 2004 for the review of the Senate Economics References Committee. That committee conducted a review entitled The effectiveness of the Trade Practices Act 1974 in protecting small business, which detailed a number of concerns about the effectiveness of section 46 at that time.

So, when I say they ignored it, it was not just a case of them ignoring it because they did not have the information at hand or because they were not informed. In fact, there were committee reports and recommendations that specifically directed the then government to these particular issues that needed to be addressed. One of those issues, which remains today—although not for much longer—was whether the Trade Practices Act gave sufficient guidance as to what constitutes ‘substantial power in a market’. The report also focused on whether the Trade Practices Act provided sufficient guidance as to what constitutes ‘taking advantage of market power’. It also referred to whether the Trade Practices Act provided sufficient protection against predatory pricing or whether the financial power test should be introduced. It went further to say that there should be an examination to proscribe the misuse of market power in a second market. It examined whether the Trade Practices Act provided sufficient protection against the use of coordinated market power and also whether an effects test should be included as an addition to or substitute for the current purpose test. These were all very good outcomes of a good committee and a good committee report, but they were ignored by the Howard-Costello government.

I am sure people have picked up that there seems to be a recurring theme—whether in this debate on the Trade Practices Legislation Amendment Bill, in debates on other bills and in questions during question time today or as a theme that has evolved over the past nine months. Let me give people a small indication of how that theme might read, and maybe they will tune in to what I am getting at.

When we talk in this place about schemes like a Fuelwatch scheme to give consumers some choice and some information—very much like the Fuelwatch scheme which the big end of town, the big oil companies, run very privately for themselves—and when we try to extend that sort of scheme to the ordinary consumer, to give them some choice and some market power of their own, we see the opposition backing big oil. That is the recurring theme. When we try to talk about GroceryWatch, about grocery pricing, about competition in shopping and groceries and about national pricing schemes, the opposition ridicule us. When we try to look after the consumer, when we try to give them some market power back in terms of the prices they pay for their shopping goods, again we see the opposition siding with the big end of town. When we talk about industrial relations law in this place and we look at trying to redress some issues of balance, we see the opposition siding with the big end of town again.

The theme continues and continues. When we talk about interest rates and banks, about passing on interest rate savings, putting downward pressure on inflation, and about putting as much pressure as we can in this place on the banks to pass on interest rate cuts, what do we see the opposition do? They actually back the big banks in keeping interest rates high. When it comes to the Medicare surcharge levy, a levy which has not changed in almost a decade, when we see about moving that levy upwards to save consumers money, what do we see the opposition doing? We see them backing the private insurance companies, backing the big end of town to make sure they reap more rewards. When we see a rebate exemption scheme for condensate off the Western Australian shelf—an exemption on a tax that has been in place for about 25 years—and when we are in a position where we can remove that fairly and pass on those savings to consumers, again we see the opposition backing the big oil end of town and saying that the exemption should remain in place and that the taxpayer should forfeit the hundreds of millions of dollars that would be coming their way.

It is a recurring theme and one that people can spend some time thinking about in terms of the changes we are making to support small business and to make sure there is proper competitive behaviour and that we are doing the job that has not been done for the past 12 years. While we support the changes that we have indicated in this amendment bill, there is more to be done and more that we will continue to do. Labor has a strong legacy of competition reforms, having been responsible for the introduction of the Trade Practices Act in 1974. We will continue to do that—to look after and enhance the welfare of all Australians through the promotion of competition, fair trading and consumer protection.

Interestingly, it is not just us saying it; it is also the peak bodies. They are saying that they are overwhelmingly in favour of our reforms and our moves. They are saying that it is long overdue and they are saying ‘thank God’ that we are doing it. They support Labor’s stance. For example, the Australian Chamber of Commerce and Industry Chief Executive, Peter Anderson, has stated that it will be easier for small business and the ACCC to take action where there is predatory pricing. The Motor Trades Association of Australia also welcomes the moves, as does the Australian Retailers Association and a number of other distinguished bodies, including the Council of Small Business of Australia, who give similar support to the amendments proposed in this bill. The ACCC also think that these moves will be profound and will give them more ability to protect small business and ensure there is more competition. This bill strengthens section 46 and section 51A(6), and I commend the bill to the House. (Time expired)

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