Belinda Neal (Robertson, Australian Labor Party) Share this | Hansard source

I rise to speak to the Trade Practices Legislation Amendment Bill 2008 before the House today. This bill will amend the Trade Practices Act 1974 to clarify the meaning of the term ‘take advantage’. It will also address problems in relation to predatory pricing in the context of the prohibition on misuse of market power in section 46. In addition, the bill will extend the jurisdiction of the Federal Magistrates Court to include section 46 cases.

This bill forms part of the Rudd government’s agenda to make the Trade Practices Act 1974 work more effectively. The amendments will promote competition and fair trading in the Australian market, and they reflect the importance that this government places on competition policy and the protection of small business. This competition policy agenda builds on a strong tradition of Labor initiatives and reform in this area.

The Labor Party introduced the Trade Practices Act in 1974 to enhance the welfare of Australians through the promotion of competition, fair trading and consumer protection. Labor again made improvements to the act in 1986, as well as establishing a National Competition Policy regime in the 1990s. The National Competition Policy put in place many of the policy settings that have resulted in Australia’s strong economic performance over the past decade. The Rudd Labor government has a fundamental belief that competition policy is at the core of the government’s economic agenda.

Unlike those opposite, the Rudd Labor government believes that a pro-business and pro-competition approach to small business will bring benefits to business operators and consumers alike. In my own electorate of Robertson on the Central Coast of New South Wales, small business forms the bedrock of the regional economy. In Robertson, there are approximately 4,500 small businesses that employ staff and 11,700 non-employing small businesses. This economically vital and rapidly growing sector makes a huge contribution to our local economy and constitutes one of the mainstays of my area and its job creation.

Labor supports reward for effort, risk-taking and entrepreneurship in small business. Above all, I believe it is vital that government allow small businesses an opportunity to grow and prosper. Personally, I have spent most of my life in small business. I know that many of those on the other side believe in the stereotype that Labor people are employees and that all Liberal Party members are employers, but that is just not the case anymore. I think it is about time that those on the other side understood it. I have spent the majority of my life working as a small business person and employing people, with all the joys and risks that that includes. I think we need to take a more mature look at this debate. The opposition needs to understand and accept that there is broad experience and understanding of small business on this side of the chamber and that we can debate these issues in a mature and more complex way.

The amendments before us today will ensure that the small business economy of the Central Coast—and, indeed, small businesses across Australia—will continue to grow. There is an increasing trend in the Australian economy, particularly noticeable in the last few decades, in which previously employed people are setting up business entities. This trend also involves the establishment of an increasing number of non-employing small businesses, as well as independent contractors and other microbusinesses. These businesses employ a significant number of Central Coast people, and the number is growing and will continue to grow.

I have undertaken quite a lot of work in the small business area in Robertson, particularly in relation to issues of tenancies in major shopping centres, but also a large range of other businesses have consulted with me and spoken to me about their issues. There are increasing pressures on many small businesses in my area, as there are across Australia. This bill offers more effective measures to deal with anticompetitive behaviour and unconscionable conduct that will be welcomed by many business operators in Robertson. It focuses on increasing competition in the Australian business economy and promoting fair trading, which should be welcomed by both business and the public.

The Trade Practices Act itself—in particular, part IV of the original Trade Practices Act 1974—promotes competition by prohibiting anticompetitive conduct. Section 46, in part IV, prohibits unilateral anticompetitive conduct, most notably by prohibiting corporations from misusing substantial market power to harm or eliminate competitors or competition generally. Part IVA of the Trade Practices Act promotes fair trading by prohibiting unconscionable conduct. Within that, section 51AC prohibits unconscionable conduct in connection with the supply of goods or services to or the acquisition of goods or services from a corporation.

However, it is the government’s belief that a series of court decisions have undermined the operation of the act, in particular section 46. It is not just the government that believes it; the ACCC has made this point for several years. The ACCC has been operating under severe restrictions upon its ability to regulate anticompetitive conduct. So, despite all these attempts at reform, concerns remain that section 46 does not achieve its purpose of prohibiting the misuse of market power.

In the bill before the House today, the amendments to section 46 of the Trade Practices Act are aimed at promoting competition and cracking down on anticompetitive behaviour by powerful businesses. The government intends to enhance the legitimate interests of small business by protecting them from predatory pricing and giving them a permanent voice in the competition watchdog, the Australian Competition and Consumer Commission. This package will ensure genuine competition for the benefit of consumers and small business.

The bill covers four significant areas of reform. The specific areas to be amended and reformed are set out in the schedules as follows. Schedule 1 of the bill amends section 46, ‘Misuse of market power’, of the Trade Practices Act to promote competition in Australia. This enhances the prohibitions against anticompetitive unilateral conduct in business transactions. The amendments contained in this particular schedule seek to address predatory pricing, clarify the role of recoupment in predatory pricing cases, clarify the meaning of the term ‘take advantage’ and confer jurisdiction on the Federal Magistrates Court for section 46 matters. In particular, the schedule amends section 46(1AA) away from the terminology placed in it by the Birdsville amendment, changing it from ‘share of the market’, which was the amendment accepted while the clause was in the Senate in 2007, to ‘degree of power’.

I am somewhat concerned that I heard indicated earlier that the opposition intends to oppose the amendment put forward by this government to rectify the dangers created by the Birdsville amendment. I find it somewhat surprising, in the light of some of the commentators’ comments in relation to that. I draw the House’s attention to a number of comments made at the time. These may have been raised previously, but I feel that it provides benefit to the House to draw the attention of the opposition to them again, bearing in mind that it is considering opposing the amendment in this bill. In the Australian Financial Review on 19 September 2007, in relation to the Birdsville amendment to section 46 of the Trade Practices Act, Bob Baxt said:

What is equally disappointing is the fact that the government on this occasion has not consulted with a significant number of bodies from which it had previously sought views on amendments to trade practices law and in particular the Trade Practices Legislation Amendment Bill (No. 1) (2007) earlier in the year.

Also, in the Australian, again on 19 September 2007, in relation to the amendment that the opposition is still intending to try and retain in this bill, Martin Collins said:

JOHN Howard has single-handedly destroyed the entire premise of the Trade Practices Act through his predatory pricing amendment, which will have the effect of killing price discounting, to the detriment of small business and consumers.

In other words, the Prime Minister’s amendments have the real threat of hurting the very people he misguidedly thought he was helping in accepting the amendment, proposed by Queensland senator Barnaby Joyce and radio shock jock Alan Jones.

I guess everyone makes mistakes. But what concerns me is that, some 12 months after the original mistake, the opposition have not seen fit to carry out the consultation that they should have carried out and to reconsider their position. I urge them, on this occasion, to think a little bit more and accept the fact that they may have made a mistake and that they should reconsider and support the government, because this government is doing what they should have done on the first occasion, and that is to enhance competition for the benefit of small business and consumers.

Looking further on, schedule 2 of the bill seeks to promote competition by enhancing the prohibitions against anticompetitive unilateral conduct that are contained in the Competition Code. It makes amendments to the version of section 46 found in the Competition Code which applies to all persons in the states and territories by virtue of the application of legislation in those jurisdictions.

Schedule 3 of the bill amends the Trade Practices Act and the Australian Securities and Investments Commission Act to extend the protection against unconscionable conduct in business transactions. The amendments contained within this schedule will require that one of the Australian Competition and Consumer Commission’s deputy chairpersons have knowledge of or experience in small business matters—something that I think will provide great benefit. The amendments in this schedule also repeal the thresholds for unconscionable conduct cases under section 51AC of the Trade Practices Act and section 12CC of the ASIC Act. There are also some other amendments contained in this bill which clarify the ACCC’s information gathering powers under section 155 to facilitate the effective enforcement by the ACCC.

In conclusion, this bill makes the Trade Practices Act significantly more effective in its primary objective, which is to improve the competitive processes in Australian markets. Importantly, it enhances the interests of small business and provides the ACCC with the tools it needs to protect competition, promote fair trading and protect the interests of consumers. The amendments in this bill will clear major impediments that have prevented the law from functioning effectively and have prevented more cases under section 46. The Chairman of the ACCC, Mr Graeme Samuel, stated on 11 June this year that, as a result of the amendments contained in this bill:

Small businesses will soon enjoy the greatest protection in 30 years against predatory pricing and misuse of market power ...

More cases will now be eligible to proceed and this represents a win for all those who depend upon the Trade Practices Act to protect the competitive process. This bill contains some of the most significant reforms of the Trade Practices Act in a long, long time. I do not say this is the end; I think we still need more protection, particularly for small business, and I am particularly concerned about the power relationship between large shopping centres and the retail sector. But certainly this is a step in the right direction, and I urge the opposition to support the bill.

See this speech in context