Tony Windsor (New England, Independent) Share this | Hansard source

He may have been able to hear the member for Kennedy outside the chamber. I refer him to the member for Kennedy’s contribution because he made some important points in terms of market power and anticompetitive behaviour, particularly in relation to the market dominance of the two major retailers—Woolworths and Coles. The member for Kennedy referred to the market dominance of major retailers in other parts of the world, particularly the UK. I think I am right in saying that the two major retailers in Australia have about 85 per cent of the market, which is a very dominant position. The member for Kennedy made the point that the next in line in terms of dominance are three companies in the United Kingdom that between them have something like 24 per cent of the market share. He then referred to other nations as well.

I think those issues are extremely important, and I listened intently in my office to the member for Murray’s contribution when she made reference to some of these issues. We are a small nation in terms of population but in a large geographical area. Our agricultural sector oversupplies, but it is an important component of world trade and very important in terms of our economy. That market dominance and the capacity for agriculture to exist in that environment into the future, where that dominating power over price can be exhibited, is very important. We all know about the anticompetitive practices that occur overseas; we like to refer to free trade but there is no free trade. In fact, only in the last week we have seen the European Community looking at instigating certain market protection mechanisms in relation to butter. So there is a range of anticompetitive activity happening both globally and, regrettably, domestically.

I commend the minister for this legislation, which looks at the various penalties for cartel behaviour—where that behaviour can be discovered. I do not think this bill will uncover very much in terms of market pressure and market power between various players, whether they be in the retail sector, whether they be in the agricultural sector or whether they be in the energy sector. But I do think it is an attempt to improve on what has happened in the past. I agree with the member for Braddon, who has now left the chamber, that there was a certain neglect of this issue by the previous government and I think that if one were prepared to analyse the money trail in relation to some of the major companies then one could probably see why that trail was not followed in the past.

The member for Kennedy made some very good points about the mark-up on basic food products, and the figure of 300 per cent kept coming up as the difference between the farm gate price and the retail price. He used the example of the egg, where there is not a lot of value adding—the chook lays it, someone picks it up and puts it in a box and they transport it to the retail sector. He also used the example of the potato, which does not have high costs between the paddock and the plate. The mark-ups on these things—milk is another example—are all very similar; the difference between the farm gate price and the price to the consumer is something like 300 per cent. He indicated that, where various marketing mechanisms had been withdrawn, in certain areas the price to the farmer had actually gone down and the price to the consumer had gone up, under the guise of some sort of competition that was supposedly taking place. I think this legislation attempts to get at some of those issues.

The member for Braddon mentioned that the minister will be monitoring those issues, and I congratulate him for that and wish him well. But there are instances out there now that are very difficult to tie down. Maybe that is why the member for Higgins never went there—it was too hard to do. I will give just one instance. Some months back, oil was US$140 per barrel and we were paying $1.70, $1.80 or $1.90 per litre for diesel at the bowser. The price of oil has now dropped to somewhere in the vicinity of US$40 per barrel and the price of diesel is down to somewhere near $1.25 or $1.30. The price has not dropped nearly far enough in relation to the barrel price. Some suggest this is because of the influence of China or the demands of the Indian market; that the Singapore barrel price or some other barrel price is impacting it—it is very hard to explain but they would not suggest that there is any market collusion or market power driving it. I have written to the ACCC on behalf of constituents and asked: can you explain why there has been a collapse in the barrel price but the price of fuel, both petrol and diesel, has not gone down in proportion, when it went up quite quickly when the demand-driven barrel price reached $140?

The other question that is asked quite often—and I am sure the minister has had this question asked of him—is why diesel is dearer than petrol when it costs less to produce. In some country towns it is 20c per litre dearer than unleaded petrol. Here again we have a difficulty that government policy is going to have to deal with. A lot of people have been encouraged into more efficient diesel engines; in fact, there were certain incentives to do it in some cases. A lot of people were encouraged to go into LPG. A lot of people are being encouraged by the current government to move into more fuel-efficient vehicles and renewable energy sources—to look at solar energy and a whole range of other technologies. Then the market plays this odd game in which a fuel that is cheaper to produce costs more to buy—a fuel that governments in the past encouraged people to move into because it was more fuel-efficient and the economy was better. But, if you are running at 20c per litre dearer at the bowser, the economics start to kick in. Even though the economy of the engine might be better, the economy of the pocket is quite dramatically affected.

When you write to the ACCC and ask: how is all that happening—as a constituent of mine came in and asked: why is that happening—the answer you get is that it is happening because it can happen, because the fuel companies can charge what they like. They are in a competitive market and they can charge what they like. Competition in that sense means they can bid the price up whereas most of us would think—and this was the case when most of the deregulation took place before neoliberalism died in recent weeks—competition was about bidding price down. What we see now is that where there are fewer and fewer players in the market—and I am talking about the fuel market now but this applies to other areas in the energy business—they are bidding the price up. We saw this in the Japanese coal market some years back where everybody used to go to compete on the price of coal.

So I would say to the minister on these issues that, even though there is no allegation of cartel behaviour there, there are allegations, and I think quite strong ones, of market collusion and the capacity for a relatively small number of players—whether it be in the retail sector or in the fuel sector—to actually drive the price to where they want it rather than where it delivers a reasonable profit to the seller. I think it is a fairly weak answer from the ACCC to say to the people of Australia that the price of diesel is 20c a litre more than the price of unleaded petrol because it can be. As I said earlier, in a relatively large land area and with a relatively small population, we need diesel to transport our goods and services around the nation. So I would suggest to the minister that, maybe in his monitoring process, he has a closer look at what is happening in the fuel business in terms of the way in which international conglomerates seem to dominate that particular market. We have had a slump in the global price. We are told that there is a slump in demand in China and India for almost everything but the price of diesel is still reflecting a very buoyant global economy. I think there are some questions that do need to be answered there.

Another area of energy that the minister may be interested in, and where I believe there are a number of mixed messages being sent, is in the area of renewable fuel. I have spoken about this before. We have these mixed messages coming out of government. We have one message which says, ‘We believe there is climate change occurring.’ I believe there is climate change occurring, and I have a private member’s bill before the House at the moment. We are told that we should encourage people to move to more renewable and environmentally-friendly energy sources. In fact under the stimulus package, which I have supported in the parliament, 2.7 million homes are going to be encouraged to put pink batts in the roof. Over time that will save energy and will have an impact in terms of emissions. There are a number of positive things there. The government was encouraging solar energy and then put a limit on the income of the participants in that scheme. This is part of the mixed messages that people are getting.

In terms of the liquid fuel market—and, Mr Deputy Speaker Scott, you would be well aware of these issues because I know there is a facility in your electorate that has recently been opened—we are trying to encourage people into renewable fuel sources, ethanol and biodiesel for instance. But there is subtle pressure at government level and at industry level, probably more at industry level than at government level but the two are linked in terms of pressure points, where the suggestion is that these industries should not promote themselves too far and should not invest too much because we may well in fact tax them at some future date. People would know that the dirty fuels, in terms of the environment, oil based fuels, are taxed in this country at an excise rate of 38c a litre. There is this subtle message out there, even from some within the farm sector, that says, ‘Why should we subsidise a renewable fuel? Why shouldn’t they pay the same taxes as a non-renewable fuel?’ I think there is an onus on the government to actually address that issue, because to suggest, as some have, that the removal of a tax is in fact a subsidy sends a very ordinary message in terms of trying to encourage people not only to value-add to a product or to import substitute but also to move to more sustainable energy use in the future.

So I say to the minister that, in some of these issues, there are mixed messages still out there. The legislation that is before the House in theory does look as though it may do something. The monitoring that the minister will have to perform and the process of reporting back to the House will be very interesting to see the progress of this particular piece of legislation. There have been a few instances in this new parliament where remedies to readily identifiable problems such as the price of fuel—Fuelwatch I name as one; GroceryWatch is another—on the surface react to the demands of the community, who want something done about the price of fuel or the price of groceries to make sure that people are not ripping them off. This particular legislation will not go to the heart of those issues. But I think the government has to look very seriously at getting to the heart of those issues and the diesel unleaded petrol issue that I referred to earlier. That is what the community is wanting government to do—not put in place gimmicks that look as though they have identified the problem and they are going to fix it. We have had two failures in terms of that in the last 12 months. I just hope that this cartel-monitoring mechanism is not going to be a third one in that particular process.

I will be supporting the legislation because I believe the penalties that have been put in place, even though relatively light in some cases, could in fact discourage some activity in terms of market power collusion, particularly in smaller and medium-sized businesses. I think in a lot of cases, as has been shown in the past, many of the major global players would see the penalties here as relatively minor and something that they would be quite prepared to pay if they can get away with it for a considerable period of time. I thank the House for its attention.

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