Stuart Robert (Fadden, Liberal Party) Share this | Hansard source

I rise to make comment on the Trade Practices Amendment (Cartel Conduct and Other Measures) Bill 2008. The government has introduced this bill to act as a deterrent to price fixing. Criminalising cartels will bring Australia into line with the United States, Canada and the United Kingdom, who have had similar sanctions in place for quite some time. Consequently, the coalition looks to support the bill.

The bill makes it an offence for a corporation to make or give effect to a contract, arrangement or understanding between competitors that contains a provision to fix prices, restrict outputs, divide or share markets or rig bids. The government has prescribed a maximum jail term of 10 years to send a clear message about such outrageously wide cartel conduct. The penalty for the offences is, for an individual, a maximum term of imprisonment of 10 years and/or a maximum fine of $220,000 or, for a corporation, a fine that is the greater of $10 million or three times the value of their benefit from the cartel or, where the value cannot be determined, 10 per cent of annual turnover.

The government, though, through speakers from the government side, have attempted to use this to indicate their support for free trade and a free market. The issue with this statement is that it flies in stark contradiction to a range of actions over the preceding weeks. Our Prime Minister—who has morphed from a fiscal conservative into a Christian democrat and now into a social democrat—in his 7,000-word expose on the evils of neoliberalism and free trade, would simply fly in the face of what members of his party have indicated here this morning. Neoliberalism is apparently the cause and the raison d’etre for all ills within our current economic circumstances, according to the Prime Minister’s somewhat wonkish 7,000-word treatise. He fails to explain, though, why the Deputy Prime Minister stood up at a world forum to explain that our banking system was the envy of the world. So much for the failures of so-called neoliberalism, as they are described by this chameleon of a Prime Minister, who changes so rapidly from a social democrat to an economic conservative to something else! The question is: what will he become next? Will it begin with ‘M’ and end in ‘arxist’?

We have seen a department of deregulation put forward with the intent of trying to convince the people that this government is about further deregulating the market, yet in the 7,000-word treatise all we have seen is an attempt to reregulate because of the evils of neoliberalism. Somehow the Prime Minister forgot to indicate in his article that, of the 16 banks in the world with an AA rating, four are our four big banks and that, if the rest of the world had followed the regulatory environment put in place by the Howard market, there would have been very little fallout from a global financial crisis. We would not have seen the massive subprime loans, since under our regulation less than one per cent of loans were subprime, whereas, of the $2 trillion lent in 2006 by US banks, up to 25 per cent of loans were subprime. If the rest of the world had followed our lead in the reregulation that we had put in place, especially the pillars including the establishment of APRA out of ASIC in 1998 and the true independence of the Reserve Bank, there would not have been bank failures, because the gross negligence of these widely disparate derivative products would not have been permitted. If the rest of the world had followed our regulatory lead, the economies of the world would not be heading into recession at the rapid rate they are.

Our sense of the balance between regulation and free trade and the balance between bureaucratic red tape—which is still too high for my liking, coming from a small business environment—and regulation, combined with incentive and opportunity for entrepreneurialism, was the right one. Our economy, with its zero debt—prior to the Rudd government coming in to spend it all with their spending spree—and our regulatory structures were the envy of the world. If only the rest of the world had followed our lead. So forgive me, Mr Deputy Speaker, if I take the 7,000-word essay on neoliberalism and throw it in the bin, where it belongs. We are now faced with an era of big government and big spending—because the government are here to save the day, apparently. It would be nice if the government stopped spending money—and stopped racking up $9½ thousand for every man, woman and child—on many unproductive measures as part of their spending spree. For government members to use this bill as an example of their love for, delight in and embracing of free trade is a mockery at best and a complete sham at worst.

But back to the bill. The idea was first floated for the cartel provisions in 2002 under the Howard government. On 2 February 2005, the member for Higgins, the former Treasurer, Peter Costello, announced his intention that the government would amend the Trade Practices Act to introduce criminal penalties for serious cartel conduct. The Howard government had this on the agenda and on the radar for a number of years. The Trade Practices Act sets out a range of definitions of cartel conduct. It does this through a number of sections, although not overtly. This bill will specifically pertain to serious and hardcore cartel conduct. It has become necessary. As the OECD has now defined hardcore cartels and given businesses the opportunity to operate in a truly global marketplace, to align Australia’s laws with those of our OECD cousins does make a degree of sense, particularly to prevent cartels crossing international borders.

It is argued that the measures in this bill meet community expectations that a tough line should be taken with regard to cartel conduct. It certainly formed part of the Rudd government’s pre-election commitments—this is noted—and, as the final draft exposure bill reads, will place us in line with those other nations. The government believes that the new legislation will enable a proportional response to cartel conduct. Criminal investigations and prosecutions will be targeted at serious cartel conduct. The key elements of the bill include parallel criminal and civil prohibitions, a maximum jail term of 10 years, the criminal cartel offence no longer requiring proof of any dishonesty, telephone intercept powers being used to investigate suspected criminal cartel offences, and proceeds of criminal cartels able to be seized under the proceeds of crime legislation.

The only caution that should be offered in taking the cartel provisions into the Criminal Code is the challenge on who to charge. Do we go after the chairman of a company or its board of directors? Do we go after the CEO or the senior staff? Do we go after the head of purchasing, who should have known what the purchasing provisions were and what prices were being charged? Do we go after the head of logistics, who should have known where goods and services were moving to if indeed there was cartel activity occurring? Do we go after the head of strategy, who would apparently have had to sign off on it? Do we go after the chief financial officer and the core financial staff? Or, frankly, do you take the lot on?

The issue of who to charge within a criminal court is significant and serious. And, whilst the intent of the bill is to ensure that corporations deliberately engaging in serious and significant cartel operations should be held responsible and accountable for their actions, it is important to ensure that the people directly responsible, who knew about what was occurring, are those who face the criminal prosecution. The challenge of who to charge will be a significant challenge when this law is first put in place in the courts of the country.

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