Deborah O'Neill (Robertson, Australian Labor Party) Share this | Hansard source

I rise to speak in support of the Competition and Consumer Amendment Bill (No. 1). This bill once again demonstrates the government's commitment to competition and consumer law reform and to ensuring that ordinary Australians experience the benefits of a strong economy. Those opposite attempt to decry the word 'competition' as a Labor word. I assert that in a genuinely competitive economy consumers benefit because of lower prices and the economy benefits as a whole because of the need for business to be more efficient. A truly competitive economy is a Labor ideal that benefits working families. It benefits working families bec­ause a competitive economy can provide goods and services that are of a lower cost and better quality. Whilst those opposite may argue that they are the party of small business and competition, it is the Labor Party and Labor governments that have successively and truly achieved central reform in this area.

The main issue addressed in this bill is the competition between banks and other financial institutions in home loan interest rates. The ideal of competition is that it lowers the ability of a business in a market where competition is ideal to increase or control prices. We have, sadly, been confronted with the issue that when the Reserve Bank increases its cash rate target the banks and other financial institutions increase their home loan interest rates beyond the Reserve Bank increase. This has occurred because banks are able to signal, before a potential increase in the cash rate targets, an intention to increase the home loan rate to a level beyond the cash rate. This lowers the fears of competitors that they might lose customers if they act in the same manner. The result of this signalling is a breakdown in the competitive forces in the provision of home loans and it negatively affects hardworking families for whom loan repayments can make up a really significant part of the family budget.

This bill will help address these issues by prohibiting banks from privately disclosing information on pricing policies to a competitor. Such disclosures are unfair and uncompetitive and result in home loan interest rates which are not reflective of the competitive ideal. This bill will prohibit outright a bank from disclosing privately to a competitor information regarding the market to which the price information relates. Additionally, this bill gives the ACCC vital powers to prosecute banks who communicate price intentions and other strategic informa­tion to a competitor for the purpose of substantially lessening competition.

I understand that regulation of the financial industry needs to be appropriate and cannot stifle the role of financial institutions in what is a healthy free market economy, but the regulations proposed in the bill are appropriate and needed because the banks need to be responsible when they are making their pricing decisions. The Aust­ralian banking sector remained stable during the global financial crisis. This was due to both good economic management by the Australian government and long-term good management of the banks. Despite this history of good management, the banks should not have the ability to engage in anticompetitive practices to the detriment of consumers. Indeed, our economy is greatly influenced by consumers who live in mortgage belt areas. The Central Coast and the seat of Robertson, which I am proud to represent in the parliament, display the typical characteristics of a mortgage belt area. The Central Coast is an outer suburban region which has had a fast-growing population over the last 30 years. The Gosford City local government area exper­ienced the 19th largest population growth in New South Wales.

Debate interrupted.

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