Jane Prentice (Ryan, Liberal Party) Share this | Hansard source

This bill attempts to prohibit price signalling, particularly between banks. It does so by claiming that the current status of the industry allows anticompetitive price disclosures that, while falling short of cartel measures, are detrimental to consumers. Anticompetitive price signalling refers to corporations revealing their future pricing strategy to their rivals and in so doing eliminating price uncertainty and reducing the functioning capacity of a competitive market. It has become a topical issue in Australia, particularly after last November's RBA decision to raise rates which prompted the four big banks to all act in a similar way.

I understand the government's sentiment and its need to at least appear that it wants Australian markets to operate with transp­arency and efficiency. However, this bill simply will not achieve this and, despite a huge backlash from industry, the Treasurer will not listen. He does not seem to be willing to make all of the changes required to bring this bill in line with sound economic principle. It is the industry, not the gover­nment and not government departments, that understand how regulation affects their business practice and how the cost of that regulation is passed on to consumers.

While the Treasurer announced this amendment in December last year, he closed public submissions in January. What is this Gillard government trying to hide? Transp­arent consultation is a crucial part of the process of good government. This govern­ment has failed in that process by leaving stakeholders with less than two months—a large portion of which was over Christmas—to make submissions regarding legislation that substantially affects their lives.

The government had an opportunity to rectify this in May this year when the bill was sent to the House Standing Committee on Economics. However, true to form, the government gave only a two-day period in which submissions could be made. This demonstrates yet again that the government is simply not interested in consultation with stakeholders. It appears that the Treasurer is very set on pushing this policy through regardless of the consequences.

This is particularly disappointing as in recent sittings we have seen that some of the Treasurer's colleagues were able to address the faults of their legislation through consultation—a process which has seen commendable legislation put forward in the Tertiary Education Quality and Standards Agency, TEQSA. What a shame the Treas­urer cannot follow Minister Evans's lead and actively engage with the industry to address the faults of this proposed amendment. It seems that the Treasurer is complicit in this government's standard approach—big ideas and rushed announcements but, as usual, no thought for the consequences of its implem­entation.

The government has failed to ground this bill in sound competition policy concepts. To quote the Hansard record of the Treasurer's introduction of this bill to parliament, he stated that:

This important reform will help to ensure that banks can no longer avoid the full force of competition in the marketplace.

This is concerning as a government cannot simply stand over an industry and demand it to be competitive. Market forces need to be allowed to act in order for competition to thrive. Simply introducing one-size-fits-all regulation is unlikely to achieve what the government is aiming for, and coupling that with the lack of consultation, poor drafting, ambiguity, and a less than solid competition policy base has resulted in legislation that could really have disastrous effects on the industry. In fact, the Business Council of Australia has warned that this policy could:

… actually result in poor outcomes for consumers and act as an impediment on legitimate and pro-competitive commercial behaviour.

This reflects what I believe to be one of this government's greatest failings. They fail to understand the ripple effect. They fail to realise that their policies and legislation affect all industry and all members of society.

They seem to approach legislation with the view that they can implement policy that affects only one sector of the economy. They think the carbon tax will only affect 'big polluters', the mining tax will only affect profitable mining companies and cutting medical research will only affect scientists. This simply is not true, and not addressing the ramifications of their policies in their entirety has already and will continue to cause our nation great harm if it is not rectified by this government in the very near future.

By not thinking through the policies of the bill we are debating today, the government seems to have overlooked that the amendment over-reaches into disclosures with legitimate business justification. The private disclosure clause of this bill seeks to prevent corporations from making a private disclosure to their competitors of any information relating to their price, from discounts to strategy. The broad nature of this prohibition makes the legislation ambiguous and illogical when followed through. The government may intend for this legislation to simply stop one bank manager picking up the phone to their counterpart at another bank; however, the drafting of this bill is solely focused on who and how this information is disclosed. It does not focus on the type of information or its purpose in its assessment of anticompetitive behaviour. Not all price discussion is inherently anticompetitive, but this broadbrush policy does not allow for this assessment to be made—you breach the prohibition by disclosing price information to a competitor in any sense. The proposed legislation before us takes the stance that any price disclosure whatsoever is so serious that it need not even be anticompetitive in its nature to be a punishable issue. There is no provision that competitors must be acting strategically. It is unclear as to whether this is the government's intention, it is an unintended consequence or it is simply poor drafting, but the end result is that this legislation has huge scope to overreach—indeed, unjustifiably overreach. Furthermore, by making these per se prohibitions, the government is opening a door for the legislation to be easily circumvented by institutions simply making these disclosures more public, lifting it out of the per se category. In this situation, the objective of stopping anticompetitive price signalling would not occur even if the legislation were in place.

It is also concerning that the legislation is so industry specific. From my understanding of what the Treasurer has put forth in relation to this bill, the focus is to prohibit the banking system from disclosing price strategies to each other. In fact, the Treasurer stated that this is the primary aim of the bill when he said:

Today I introduce amendments to the Competition and Consumer Act 2010 to crack down on anticompetitive price signalling and to get a better deal for consumers in the banking system.

The Treasurer went on in his speech to solely discuss the banking sector, with a particular focus on the big four banks, and the amendment itself, at least initially, will only target the banking sector. This seems contradictory as the amendments themselves are quite general.

The government's position seems to be that price signalling is only bad in the banking sector, but not bad elsewhere—that is, the bill is market specific rather than economy wide, which introduces ambiguity at best and, at worst, uncertainty, into the entire industry. It also goes against the general intention of bills of this nature, such as the Trade Practices Act. As the ACCC said:

The general principle of the Trade Practices Act … is that it should apply with very rare exceptions, such as telecommunications, across all sectors of industry and commerce. We consider that this is an issue that will affect a variety of sectors in industry and commerce in Australia and ought to apply across the board.

This bill, however, is solely focused on the banking sector.

The industry is highly critical of this bill. From the government's arrogance in the consultation process to its blind determination to dig its heels in and not make changes, this bill is simply not up to scratch. I implore the government to consult properly, consult with stakeholders and address the issues raised by the member for Dunkley in his amendment. This is legislation which will have a significant impact on consumers through producer regulation and it is vitally important that the government gets it right.

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