Craig Kelly (Hughes, Liberal Party) Share this | Hansard source

Earlier this week the Harper committee released a draft report following their review of our nation's competition policy. Without wanting to criticise the report and noting that it is only a draft report, the Harper committee really has a lot more homework to do. The first area in which they need to do a bit more homework is perhaps the greatest anti-competitive evil that this nation faces and one that our competition policy is not addressing, and that is monopoly power or buyer power.

There are three ways that firms can achieve an unfair advantage in the marketplace: one is violence; another is deception; and, of course, the other is through their bullying and use of buying power. We got a little bit of insight into the extent of the anti-competitive nature of this buying power by some of our larger supermarket chains in a report released earlier this year by KPMG entitled The state of the industry 2013. They noted in the report that there has been a significant increase in trade spend, which is basically the rebate that the supplier pays to the retailer, from 19.5 per cent of gross sales in 2008-09 to 23.4 per cent in 2011-12, without corresponding increases in volumes. If you are a supplier today supplying our major supermarket chains, for every $100 of product that you sell, the biggest cost to you is not your wages, your rent or your business inputs; it is actually the rebates that you pay to the retailer, which KPMG measures at 23.4 per cent. This is the reason why items such as vegemite are dearer to buy off the supermarket shelf here in Australia than they are in the UK or New Zealand. This is the reason why a bottle of Coca-Cola in Australia costs $4, when I can buy that same bottle of Coca-Cola almost anywhere else in the world for $2 or less.

The other area in which the Harper review needs to do quite a bit more homework is in deciding what anti-competitive practices we need to outlaw. We need to make clear the purpose of our competition laws. It is very easy to say that they are about consumer interests—but that puts the cart before the horse. The best way to protect the interests of the consumer is to prevent our markets from becoming overly concentrated. The best way to protect the interests of our consumers is to have an economic environment that enhances business freedom and entrepreneurial opportunities. We should have an economy where someone who wants to be an entrepreneur does not have their opportunities restricted by anti-competitive practices designed to eliminate him from the field. To have those things in place would be in the best interests of consumers.

What is of most concern and where the Harper review needs to do most of its homework is in their recommendations on the misuse of market power. Let us just provide some background on where we are. From 2007, when the Howard government lost office, to 2013, we saw the number of people employed in the small business sector decline by 519,000 people, even though the economy grew. There were 519,000 fewer people employed in small business. We saw private sector employment decline from 53 per cent to 43 per cent in small business. We cannot blame it all on the carbon tax, although that was a major contributor. We cannot blame it all on green and red tape. A lot of it is to do with the competition laws of this nation.

What is being proposed is the 'effects test'. The effects test is being used as a Trojan horse to simply destroy the act. What is being proposed is tack onto the end of the act the removal of anti-prohibitions and to put there that it requires a substantial lessening of competition. We may as well rip up the act. We may as well tell everyone in small business that there will be no protection for you, that predatory pricing will be lawful in this country, that geographic price discrimination will be lawful and that we want to see more anti-competitive price discrimination. That will be the outcome if this recommendation is accepted. We may as well simply rip the act up. (Time expired)

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