Andrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Treasurer) Share this | Hansard source

I move:

That this bill be now read a second time.

The Australian economy is excessively concentrated in many sectors. In department stores, newspapers, banking, health insurance, supermarkets, domestic airlines, internet service providers, baby food and soft drinks, the biggest four firms control more than four-fifths of the market. In petrol retailing, telecommunications, credit unions, cinemas, liquor retailing, bottled water and fruit juice, the largest four firms control more than two-thirds of the market. In pharmacies, pharmaceuticals, hardware, gyms, snack food, magazines, newsagents and international agencies, the big four firms account for more than half of the market. If you apply the notion that a concentrated market is one in which the big four control more than a third of the market, then over half of the Australian economy is excessively concentrated.

This doesn't of itself demonstrate that we have a problem with competition, but rarely do you see problems with competition arise in markets where there is not a concentration issue. Bullies aren't usually the scrawniest kids in the playground. Yet one of the questions is how we go about enforcing our competition laws to make sure consumers get a good deal. In the United States, at the moment, around 90 per cent of all antitrust cases are initiated by private litigants. Recognising the public value of those cases, the United States has a measure that allows for triple damages in such cases. In Australia the share of antitrust litigation brought by private individuals is, according to Caron Beaton-Wells of the University of Melbourne, only around 26 per cent.

Labor wants to change that. At the last election we took forward a policy known as Access to Justice, and I pay tribute to my shadow ministerial colleague Michelle Rowland for her work on developing that policy, as well as to the shadow minister for small business, Senator Katy Gallagher, and the shadow Treasurer, Chris Bowen, for their work on this policy. Labor's policy simply said that we want to allow private litigants who are bringing action under part IV of the Competition and Consumer Act to apply to a court at an early stage, seeking relief for potential adverse costs orders. Costs orders from courts can represent an unsurmountable barrier for many small businesses. They're willing to pay their own legal costs, but they're terrified of being bankrupted by the armada of QCs employed by the other side.

The European Union has called on jurisdictions in which costs follow the event to carefully review the appropriateness of this approach in competition cases. In the United Kingdom the Competition Appeal Tribunal has been granted the discretion to make any order it sees fit in relation to costs, as opposed to the usual rule that costs follow the event. Labor's measure ensures that we don't have a risk of frivolous or vexatious litigation by funding the small business ombudsman to vet small business applications for no adverse costs orders. This three-person section in the Small Business and Family Enterprise Ombudsman has been costed at around $500,000 million per year. For that price, Australians get better enforcement of our competition laws and consumers get a better deal. The vexatious and frivolous cases won't go ahead, but we will see more actions by the small end of town, standing up for our competition laws.

I am disappointed not to be debating in this place the bill which has passed the Senate for Access to Justice, the Competition and Consumer Legislation Amendment (Small Business Access to Justice) Bill 2017. Labor's Access to Justice bill passed the Senate on 10 August 2017 by a vote of 36-22. At the time, we called on the government to bring that bill to this place so those who've said that they stand on the side of the little guys, such as the member for Dawson, would have the chance to vote on this legislation. Access to justice shouldn't be a partisan issue. I know that there are many on the other side of the House, particularly in the National Party, who in their hearts support Access to Justice. I hope we can bring the bill, which has passed the Senate, to the House and make it law. I am not the only one who hopes that. The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, said:

Access to justice is an important issue for small business operators. … The Senate bill allows Federal Court judges to waive liability for adverse costs to small business private litigants in cases related to the misuse of market power.

It gives small business operators confidence to proceed with legal action, knowing they will only be liable for their own costs.

This has the added benefit of filtering cases that might potentially be considered vexatious or unlikely to succeed, saving time and money for all involved.

Peter Strong, the CEO of COSBOA, said:

… access to justice for small business people has always been an issue for our members. The cost of going to court and facing highly paid barristers and expensive quarrels of lawyers is confronting when you know that to lose the case will bring exorbitant costs to cover the opposing sides legal expenses. We congratulate Bill Shorten and Labor on this initiative.

In March 2016, the Business Council of Australia chief executive, Jennifer Westacott, said:

The ALP policy announced today goes to the heart of the issue which is access to justice.

The organisations I have just quoted, COSBOA and the Business Council of Australia, don't agree on every matter in competition law, but they do agree that Labor's measure would make a positive difference.

You will hear occasionally from the other side of the House that an effects test might be a better way of tackling things. But the reason that then communications minister Malcolm Turnbull argued against an effects test in cabinet—alongside former Treasurer Joe Hockey, George Brandis, Andrew Robb and Senator Cormann—is that an effects test could potentially drive up consumer prices. It could increase uncertainty. It could stymie innovation and growth. As former Treasurer Peter Costello said:

If you take the view that competition is there for the consumer, which is what I believe is the fact, everything else will fit into place. That's why I’m against the so-called effects test, [which is] designed to protect competitors, particularly less efficient ones, from a competitive challenge.

Graeme Samuel, former ACCC chairman, said:

Under the Harper amendment, businesses would curb their competitive behaviour because of the legal risk. This would have drowned the commercial activity of big business in a sea of uncertainty. Lawyers and economists would need to sit at the right hand of business CEOs to guide them on the legality of every significant transaction.

By contrast, Labor's approach is to allow better enforcement of our competition laws. This sits alongside the suite of policies that Labor has championed to get consumers a better deal. At the last election, we called for anticonsumer conduct to be penalised, not to a maximum of $1.1 million but to a maximum of $10 million. We were pleased in this year's budget to see the government come on board with that. We also believe that the penalties for anticompetitive conduct should be raised, that Australia should adopt the European Union's penalty system for anticompetitive conduct based on 30 per cent of the annual sales of the relevant product or service, multiplied by the number of years the infringement took place, limited to the greater of 10 per cent of annual turnover or $10 million. We would use some of that additional revenue to increase the Australian Competition and Consumer Commission's litigation budget to twice its current level.

Alongside Access to Justice, Labor believes the Australian Competition and Consumer Commission needs greater power to take on anticompetitive conduct. We would amend the Competition and Consumer Act to give a market studies function to the competition watchdog so that we could explore public issues such as pricing discrepancy and increased market concentration. We would task government to investigate the impact of increased market concentration on income inequality and produce policy recommendations on how the negative effect of market concentration can be mitigated.

The increase in concentration in the Australian economy is to the detriment of consumers across the board but particularly to the detriment of low-income consumers. Increased monopoly power can turn into increased monopsony power in which large firms are able to drive down wages of workers, where workers don't have a choice of other firms to go to. That may be one of the reasons we're seeing lousy wage growth in the economy at the moment. Increased market concentration decreases the incentive to invest in research and development. Why would you do research and development when you can simply buy up a competitor? We're seeing a slowing of business start-ups in Australia. The business start-up rate in the current decade is lower than the first decade of the 21st century. But, while the start-up rate has fallen, the merger rate has risen. Merger activity is on the rise; start-up activity is on the wane. Wage growth is sluggish, and anticompetitive conduct needs to be tackled. Labor's access-to-justice measure helps give consumers a better deal. It's been commended by the Business Council, by COSBOA and by the small business ombudsman, and it should be commended by all right-minded members of the House.

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