Shayne Neumann (Blair, Australian Labor Party) Share this | Hansard source

I speak in support of the Trade Practices Amendment (Cartel Conduct and Other Measures) Bill 2008.  Competition is good, competition works, competition lowers prices; cartels are oligopolistic. Cartels distort markets, cartels raise prices. Cartels are agreements to organise prices and production. Cartels price fix. They determine production outcomes, they allocate customers, they divide territorial boundaries and they engage in all manner of nefarious conduct. Adam Smith, in The Wealth of Nations, published in 1776, said this:

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

I concur with the man often described as ‘the great prophet of capitalism’. He is right. Cartels are iniquitous arrangements which harm consumers and usually those who are weak in terms of their financial arrangements—those on low incomes and those who are not in a position to exercise choice as wisely as they ought. Cartels are a problem in Australia.

On 21 November 2008, the ACCC chairman, Graeme Samuel, said in relation to cartels, and particularly this bill, that this bill was terribly important in the current global financial crisis. He said:

The global financial crisis has given some companies an incentive to collude with others and raise prices …

The bill under consideration today has been the subject of intensive community consultation. All the relevant stakeholders have been engaged in this process. The bill amends a great Labor government initiative, the Trade Practices Act, which did so much, from 1974 onwards, to protect the rights of consumers, to give them choice and to ensure that we had as level a playing field in business, in pricing arrangements and in the market as we possibly could. But, sadly, there are some in our community who do wrong, both corporations and individuals. That is why we have the Corporations Law and the criminal law.

What we are doing today is very long overdue, as the member for Isaacs has said. He described the pace of reform under the previous Howard government as glacial; I would describe the Howard government’s approach as that of idleness and ignorance. We are aligning the law with that of our OECD partners—for example, a term of 10 years imprisonment for the most egregious criminal behaviour is the same as applies in the United States of America.

As with so many of the bills that have been introduced by the Rudd Labor government since 24 November 2007, we have members opposite getting up and saying, ‘We were going to do that.’ The member for Pearce talked about how this was to happen under their government, but when you look at the years and years of procrastination one wonders. This bill’s genesis does not go back to the report of Sir Daryl Dawson, known as the Dawson review. It goes back much further. The member for Isaacs was absolutely correct when he referred the House to the OECD reports of 2002 and 1998. The Dawson review, much vaunted and acclaimed by those opposite, actually recommended that there should be criminal sanctions for serious cartel behaviour and that there should be a definition in the Trade Practices Act for serious cartel behaviour. That was a report from 2003, some four years before the Howard government was turfed out of office.

It took at least 1½ years before the then Treasurer, the member for Higgins, finally decided to do something about this matter. He announced on 2 February 2005 that the Howard government would amend the Trade Practices Act accordingly. But it is interesting that nothing happened until 24 November 2007, when the Rudd Labor government was elected. The member for Higgins’s bill—what I would describe as the fictitious Higgins bill—was never introduced. Perhaps it was to be introduced in the 13th year of the Howard government. Indeed, Prime Minister Howard stated that the coalition government, if re-elected, would re-examine the Trade Practices Act and ‘make changes if needed’, effectively ignoring the work of the OECD in 1998 and 2002 and snubbing Sir Daryl Dawson and his review. This was a gross failure of the regulation of business, of criminal law and of competition policy in this country. As has been the case on many occasions, it is left to Labor to stand on the side of consumers. In the lead-up to the 2007 federal election, the Labor Party committed itself to the implementation of the Dawson review recommendations.

The 1998 OECD report was very interesting and was adopted by the council of the OECD on 25 March 1998. There were some very strong recommendations in that report that dealt with fighting hardcore cartels. It was subsequently discussed and examined in a 2002 OECD report called Fighting hard core cartels: harm, effective sanctions and leniency programmes. This second report reiterated the findings of the first report that hardcore cartels are the most egregious violators of competition and hence a principal focus of competition policy and law enforcement. The recommendations were very strong, direct and unequivocal. The report stated that world trade was at risk if there was no effective application of competition policy and that these anticompetitive practices constituted an obstacle to the achievement of economic growth, trade expansion and other economic goals of member countries. The recommendations can be found in bold in the report. Member countries were urged strongly to consider all obstacles to effective cooperation of enforcement laws against hardcore cartels and to consider whatever actions were necessary, including national legislation, to eliminate or reduce those obstacles.

We have seen consumers across Australia, including in my electorate of Blair, in South-East Queensland, rise up against oligopolistic practices, against too-high prices at supermarkets and petrol stations and against other organisations which offer their services at too-high prices. Nothing irritates Australian consumers more than paying too much for goods and services that are offered in the marketplace. They absolutely hate it, and they talk to us politicians about it all the time. I do mobile offices almost every Saturday morning in my electorate, and I can guarantee you that when I am at Brassall Shopping Centre in Ipswich on Saturday morning someone will come and talk to me about the prices of goods offered in the supermarkets across Ipswich and beyond. We have seen absolutely stark displays of malfeasance by leading companies in this country in relation to price fixing. It is a national disgrace and it really annoys the Australian public. The Visy group of companies was fined $36 million and there were separate pecuniary penalties for the former chief executive and the former general manager. Before that, there was for years secretive behaviour from individuals and various corporations dealing with price fixing, collusion and anticompetitive behaviour, and no-one knew about it. It was only by almost inadvertence that the matter came to the attention of the Australian Competition and Consumer Commission. There was a request by Amcor for immunity from prosecution and it all flowed from there.

The key elements in this bill are to be applauded—they are very worth while. The idea of aligning the maximum term of imprisonment of 10 years or a maximum fine of A$220,000 for an individual is a good thing. It lines us up with our OECD-friendly neighbours and our competitors. For a corporation, a fine is imposed that is either $10 million or three times the value of the benefit from the cartel, whichever is the greater, or, where that value cannot be determined, 10 per cent of the annual turnover is required. I think that is a very worthwhile reform in the circumstances. It sends a very clear message to individuals and corporations not to engage in this sort of behaviour.

The government has decided that the offences will no longer include the words ‘with the intention of dishonestly obtaining a benefit’ and has decided to adopt a more liberal and widespread approach to make it easier for prosecution. Instead, the government has adopted fault elements under the Criminal Code in the legislation: intention, knowledge and belief. They are aspects of the criminal law which are known throughout Australia and I applaud that particular provision.

There are many anticartel provisions in this legislation. There are parallel civil prohibitions as well and also a strengthening of telephone interception powers because cartels engage in very secretive arrangements. It is extremely difficult to discover cartel arrangements and it is hard to get the evidence. I spoke last week in relation to the Telecommunications Interception Legislation Amendment Bill (No. 2) 2008 because that allowed Queensland, my home state, to join in the same type of law enforcement that we see elsewhere. For a long time the Howard government opposed the requests of the Beattie and Bligh Labor governments to allow Queensland to come into the 21st century when it comes to telecommunications interception, simply because—as I understand it—there were objections to the public interest monitor.

But now, allied with the trade practices amendments we are dealing with today, we see telephone interception powers which will be nationwide and which will allow police services—for example, the Queensland Crime and Misconduct Commission and the Queensland Police Service in my home state—to investigate and have the kinds of powers that are necessary to get around the cloak of secrecy that so many individuals and corporations engage in when they try to rip off the Australian public.

I am pleased that, allied with the legislation before the House today, last week we dealt with the telecommunications interception legislation. The other bill which is so critical to what I would describe as a code which is being established—a new legislative framework or architecture—is the bill which we discussed last week and also this week: the Federal Court of Australia Amendment (Criminal Jurisdiction) Bill 2008. That particular piece of legislation, which is integral to the whole framework of the legislation that we are considering to deal with cartels in this country, was all about giving the Federal Court of Australia the criminal law jurisdiction which is necessary to deal with cartels. That was a long overdue reform and it allows the Federal Court of Australia to deal with indictable criminal offences, serious criminal behaviour and serious anticompetitive behaviour by cartels. It is a great legislative reform and it allows the Federal Court of Australia, which has significant expertise in cartel conduct in civil jurisdiction, to deal with this area in criminal law.

The Federal Court of Australia has a significant body of jurisprudence and history of case law in this country, and also the precedent to deal with this type of matter. Having a uniform set of procedures in criminal law, rather than a referral to the various sets of state rules and procedures in criminal law, is a very wise move by the Rudd Labor government and I applaud that particular legislation, which is integral to the legislation that is before the House today.

There are additional measures that the Rudd Labor government has taken to bring forward the prosecution of cartel behaviour. It was a Labor government which brought in the Trade Practices Act and it is Labor that really believes in free enterprise—Labor believes in free markets and we believe in free trade. We believe that it is necessary to prohibit cartels. Too often our media, even our police and our various directors of public prosecution focus on blue-collar crime in this country. It is sensational and easy to report. Media outlets show good pickies—if I can put it like that—on the Channel 9, Channel 7 and Channel 10 news on Sunday nights, but white-collar criminal cases are not particularly interesting because all you see are people walking into courts. You do not see—I will put it bluntly—the blood and guts that you would see in blue-collar crime. You just do not see it.

But it irks and irritates the Australian public that the big fish seem to get away with so much. It is very important that we have this type of legislation. If you go to the magistrate’s court in any particular part of this country you see lots of people with drink-driving, drug or stealing offences. They are facing criminal charges in a magistrate’s court or a court of petty sessions across this country. Too often, we do not have the big guys, the big corporations—the big fish. They seem to escape the net. We are rebuilding the net with this legislation and the two other pieces of legislation. We are actually building a great net that is going to capture cartel behaviour and we will legislate for the benefit of the Australian public.

That is why I support this bill and why I think that this bill will send a message to those individuals and corporations who engage in this type of behaviour. It is why this bill says a lot about where we are as a country and what an educative process it will be for the Australian public to see this type of legislation on the statute books and enforced properly for the benefit of the Australian community. I commend the bill to the House.

See this speech in context