Judi Moylan (Pearce, Liberal Party) Share this | Hansard source

I am pleased to have the opportunity to pick up where I left off last week. We are in this chamber to debate the Trade Practices Legislation Amendment Bill 2008. It is really a change to the Birdsville amendment—a bill the coalition introduced less than a year ago. The Prime Minister seems to be living proof of the saying, ‘You either die a hero or you live long enough to see yourself become a villain,’ because changing the Birdsville amendment will certainly make him an enemy of Australia’s small business operators.

The provisions of part IV of the Trade Practices Act, which include section 46, prohibit various trade practices that tend to prevent or lessen competition in an Australian market for goods and services. They lay down rules which, as interpreted by the courts from time to time, restrain anticompetitive behaviour and promote competition in the marketplace. The Birdsville amendment was introduced by the coalition to specifically address the issue of predatory pricing. It clearly states:

A corporation that has a substantial share of the market must not supply or offer to supply goods or services for a sustained period at a price that is less than the relevant cost to the corporation of supplying such goods and services—

for a prescribed purpose.

The delineation between market share and market power is essential to how this bill works, especially in how it impacts on predatory pricing. The predatory pricing prohibition introduced by the Birdsville amendment can be considered to apply in a broader sense. The major reason for this is that it is applied to firms with a substantial share of the market rather than firms with substantial market power. The coalition feel this is crucial to protecting small business in this country and we want it given the chance to have some impact. It was enacted less than 12 months ago and we are yet to see it properly tested in the courts. It has not been in place long enough for it to be clear whether it needs changing or indeed how it needs changing. Sound economic policy is one thing but change for change’s sake is something we do not want to see, especially when small businesses are such a significant part of the economy and stand to be substantial losers.

The Prime Minister spoke in July of last year, funnily enough, before he was elected, about helping small business. At that time, he said:

There is no doubt that prosperous small businesses equal a prosperous economy. And the role of government policy is to support them, not to get in their way.

Now he and his colleagues are asking us to support legislation that is going to not only make it more difficult for small businesses but possibly put many operators out of business. The idea behind the Howard government’s introduction of the Birdsville amendment was to bring a level of certainty to the Trade Practices Act. They say the only certainties in life are death and taxes. It is quite ironic, in this instance, as changing the threshold test from market share to market power will, along with the introduction of many new taxes by this government, spell certain death to many of the small businesses in Australia, particularly in my electorate of Pearce.

Thirty per cent of Australia’s wealth comes from small business. More than 90 per cent of Australia’s businesses are small businesses and, as the Prime Minister pointed out last year, small business already employs half the private sector workforce—more than four million Australians—and this number continues to grow. Having said that, the coalition recognise the importance of having both diversity and balance in the marketplace. While we recognise the importance of promoting and encouraging the growth of small businesses, this should not be to the detriment of corporate Australia. Finding the balance between the two has always been a strength of the coalition and if Labor cannot manage this perhaps they should step aside.

While Labor will be quick to point out how certain sections of the corporate sector were quick to voice their disapproval of the Birdsville amendment, it will no doubt ignore the support and praise it received from the very people who will benefit from the amendment—small businesses. The Motor Trades Association of Australia welcomed the introduction of this bill as it will allow small business operators to seek redress against predatory behaviour. The Australian Retailers Association also supported the bill because it distinguishes predatory pricing from legitimate competitive discounting, which was previously unclear. The Council of Small Business of Australia and the ACCC both gave their support to the bill that we had introduced. Apparently they can see its benefits, but the Prime Minister and the member for Lilley cannot.

Small business owners have long claimed the pricing strategies of bigger competitors have been deliberately harming their trade, and I have seen firsthand evidence of this. Following the introduction of the Birdsville amendment, Michael Delaney from the Fair Trading Coalition told the ABC:

There’s been a tendency to, in big business, to see it get ever larger and to capture more and more market share with the effect of driving out small businesses. Now this has been happening on a grand scale, particularly in grocery and in liquor and certainly in petrol.

Despite cries for help, the ACCC has previously been powerless to stop alleged predatory pricing—selling below cost to intentionally harm or eliminate smaller rivals. Professor Allan Fels, the former Chair of the ACCC, said:

It’s a bit like a murder case, if the commission steps in early and saves someone from being wiped out by predatory behaviour, then it’s very difficult to go to court and argue there’s been murder when the person’s still alive. And on the other hand, if they’ve been destroyed and you’ve got a dead body, dead men don’t talk. There’s no evidence you can take to court.

Greg Hoy, finance editor for ABC news, then said:

So for many years the pressure’s been on the Federal Government to give the market watchdog, the ACCC, the legal teeth to do something by bolstering the Trade Practices Act.

I was shadow minister in this place in 1994, and recommendations were made then. It seems to have taken a long time to get to the point where we got good legislation in this place, only now to see it overturned. The Prime Minister and the Member for Lilley, I am sure, would agree healthy competition is absolutely vital for a strong economy. Competition increases efficiency, lowers prices for consumers, provides greater choice, encourages innovation and the uptake of new technology and lifts productivity. As the Prime Minister alluded in his speech from July of last year:

Competition policy properly implemented also provides fairness.

Properly implemented it levels the playing field for small business giving small business people the opportunity to compete with bigger players on fair terms.

The clear imbalance in bargaining positions puts small business at risk of being treated unfairly.

That is why the Trade Practices Act is so important – because it protects competition by stopping big business from abusing their power by driving competitors out of the market and prohibits unfair dealings with small business.

Small business, consumers and the economy are the winners from strong competition laws, and this is why Labor has always supported laws to strengthen competition.

Those were the Prime Minister’s own words. He then goes on to say how the then Howard government was ‘dragging its feet’ in this regard; however, by introducing the Birdsville amendment, the coalition government legislated for what the Prime Minister seems to be advocating in his speech of last July. On top of that, he now wants to change the Birdsville amendment to favour those with market power. The Prime Minister may be the most indecisive figure since Hamlet. Let us just hope his and the member for Lilley’s economic mismanagement does not have the same tragic outcome for the people of Australia—particularly small businesses—as it did for Denmark.

Many proprietors in my electorate of Pearce are already feeling the negative impact. As a former small business owner as well as the former shadow minister for small business, I have maintained regular contact with small business owners and continue to take a great interest in what they have to say. They are the ones who are out there fighting to make a living. I recently conducted a small business survey, and many people had concerns about the amount of red tape that is being introduced by this government, particularly in the form of additional taxes. As the member for Dickson, the shadow minister for finance, competition policy and deregulation, said on the steps of Parliament House on Tuesday:

The reality is that business and consumer confidence has plummeted under this Government over the last eight months and that really is compounding the international problems that are facing our economy at the moment as well.

‘Small business is petrified’ about where our $1.1 trillion economy is headed, he said.

The Labor government clearly cannot manage issues of inflation, and it wants to heap further pressure on it with a new $2.5 billion tax on condensate from the North West Shelf of Western Australia. In light of confirmation from Woodside Petroleum last week that Labor’s $2.5 billion tax grab on condensate will be passed on to consumers, the Rudd government seems inclined to do whatever it wants, regardless of its impact on the businesses and families of Australia. This is again demonstrated by the government’s desire to shift from market share to market power, especially as many small businesses are concerned with the meaning of market power as defined by the High Court. Its narrow definition means the scope of the Birdsville amendment would make it harder for the ACCC to bring action against large businesses who engage in predatory pricing. Whether market share or market power is used as the threshold test, to be found guilty of predatory pricing a business would have to have priced their goods below cost with the intent of substantially damaging or eliminating competition. Unfortunately, this is not easy to prove in court—not that it seems to worry the Prime Minister. Maintaining his government’s white knight image is all that seems to matter at the moment.

We the coalition believe the Birdsville amendment will be beneficial to small business in Australia but will not ultimately be detrimental to big business. This legislation works towards an environment where both can operate in harmony, and it deserves a chance to run its course. Let’s see how it plays out in action. Let’s see whether it does need any amendments and then take any necessary action. But my concern continues to be—and I know that many on our side of the House share this concern—that these practices have made life very difficult and at times tenuous for small business proprietors in Australia. I totally agree with the recommendation of the shadow minister for finance, competition policy and deregulation, the member for Dickson, that the coalition support the bill, with the exception of changes to the Birdsville amendment and the Federal Magistrates Court consideration of section 46 cases.

See this speech in context