Angus Taylor (Hume, Liberal Party, Shadow Treasurer) Share this | Hansard source

Today I address the Treasury Laws Amendment (Mergers and Acquisitions Reform) Bill 2024 and move the second reading amendment circulated in my name:

That all words after "That" be omitted with a view to substituting the following words:

"whilst not declining to give the bill a second reading, the House notes:

(1) the government has failed to recognise competition risks and sector-specific challenges within the supermarket, hardware, and aviation sectors, and failed to make meaningful progress on the Consumer Data Right, and News Media Bargaining Code;

(2) the Coalition support strong competition policy and the principle of an aligning our merger laws with international best practice; and

(3) the Coalition has concerns about this legislation, namely:

(a) the feasibility of scaled pre-approval and the risk for cost blowouts for the ACCC;

(b) the impact on business activity, innovation—particularly for SMEs and start ups;

(c) the compliance burden being imposed across the economy, compared to targeted and structural ex-post remedies; and

(d) the need to balance regulatory action with market confidence".

The coalition will not oppose this bill, but we do have grave concerns about the risks of its implementation if poorly handled. Australians and Australian businesses have good reason to doubt this government's ability to implement complex policy. Under Labor the price of almost everything has gone up. The Prime Minister famously promised that life would be cheaper under Labor, but nothing could be further from the truth. After two years of Labor, inflation is still too high. It has been persistent and stubborn. Indeed we are at the back of the pack in bringing it to heel. Interest rates have increased 12 times, and, unlike other countries, we're not seeing reductions. Families' real disposable incomes have collapsed. We have been in a per capita recession for 18 months. For the majority of the time Labor has been in power, they have seen a household recession, with the economy going backwards on a per person basis.

As I said a moment ago, we're at the back of the pack in terms of interest rates coming down. We've seen them come down in the United States, Canada, the UK and New Zealand, but here there is no relief in sight. In a very short while, the Reserve Bank will be making another decision, and it will be important to look at what they have to say. At the same time as mortgage payments have increased, families are paying more for their energy bills, paying more at the check-out and paying more for insurance. They're paying more for just about everything. For many families, going to the supermarket for the weekly shop has been a source of enormous stress. Food banks and charities across the nation have seen demand for their services skyrocket. I make a point of visiting food banks and charities when I go to many electorates, and I have seen this time and time again.

When families are struggling with the cost of essential items, it's more important than ever that customers can have faith in the businesses that serve them, including of course the supermarkets. In recent weeks we've seen concerning findings from the ACCC in relation to supermarket conduct. It's clear that the announcement of legal action against Coles and Woolworths by the ACCC should be of concern to all Australian consumers. The allegations in this case relate to practices around discounting. If they are true and if indeed there has been misleading and deceptive conduct in discounting practices by the supermarkets, it's a damning indictment of a market sector that Australian families and farmers rely on for their livelihoods. They need that sector to act in good faith. It's not what we expect, and it's not what families expect, yet this government, we believe, has been way too slow to act on competition policy. That's not just true in our supermarket sector. It's across the economy, whether it's the News Media Bargaining Code; the Consumer Data Right and the support for open banking, which can open up financial services to far more competition; or the serious cartel allegations against the CFMEU. Indeed, this is an area where competition can act as a disinfectant, but there's no interest from those opposite.

We've been leading the way on the issues since the start of this term and, indeed, since before that. We've seen examples of this in the package of bills introduced by me and the member for Maranoa yesterday and in the acceleration of the passage of the Consumer Data Right legislation, after Labor let it sit in the Senate for two years. Our approach is about getting the balance right, strengthening the food and grocery code and introducing a targeted divestiture penalty to put businesses in this sector on notice that we expect them to act in the interests of their customers. The best regulator of any industry is a customer—a well-informed customer with genuine competition to provide goods and services to them—and that's what we want to see more of.

As shadow Treasurer, I approached this bill with a recognition of the need for, as I said, effective competition policy but also with a commitment to practical reform that enhances the strength of our economy without imposing unnecessary burdens. Australia's current voluntary merger clearance system has provided flexibility, encouraging businesses to innovate and grow while the ACCC addresses anticompetitive conduct through established channels. The bill's shift to a mandatory pre-authorisation framework for mergers and acquisitions aligns with the UK and the US, and it marks a significant departure from our tradition, with its voluntary pre-authorisation framework.

Whilst we believe this is well intentioned, we do have real concerns about some of the details of the approach and particularly the risks in implementation, not least because we do believe it imposes a whole-of-economy compliance burden on businesses both large and small. The model may address competition issues in concentrated sectors—and we certainly hope it does—but it does risk, if not carefully implemented, becoming an undue burden on sectors where competition is healthy and thriving. The government must consider whether this blanket approach serves the intended purpose or simply entangles our economy in red tape and implementation. This is why I say the implementation and the way it's done by the ACCC and the government will be absolutely crucial.

I'll go into a little bit more detail on the bill. It introduces mandatory notification requirements for mergers and acquisitions, with compliance costs estimated by Treasury to reach between $50,000 and $100,000 per transaction, potentially generating up to $50 million in new annual compliance costs. Whilst it is true that good regulation can make a difference, we don't want a system that simply feeds more lawyers, consultants and the rest, without delivering a better outcome for consumers at the same time. These sorts of costs may seem manageable for large corporations, but, for smaller businesses, startups and innovators, they risk being prohibitive and dampening the entrepreneurial drive that powers our economy.

We worry that the compliance burden will weigh heaviest on the businesses least equipped to bear it, and that's particularly small to medium-sized enterprises. As I said, they already face a lot of red tape right now in doing business. These companies need the flexibility to thrive, not a policy framework that treats them as if they're the same as market-dominant giants. Imposing these additional costs and regulatory steps on all businesses rather than targeting specific sectors where there are competition concerns risks damaging the very sectors that drive growth and innovation, and the discretion around that will be left to the ACCC, so it's absolutely essential that the ACCC gets that implementation right.

The ACCC's expanded role under this bill will require considerable resources, with phase 2 reviews alone estimated to cost upwards of $500,000 per transaction. Keep in mind that phase 1 is a 30-day process which is designed to clear the vast majority of transactions. Phase 2 is the much more detailed reviews, going up to 90 days. They are estimated to cost upwards of $500,000.

With this bill the regulator's capacity will be tested further. There's no doubt about that. Implementation, as I say, will be crucial. With the ACCC already experiencing a significant increase in both budget and headcount there are serious questions about whether the case has been properly worked through for further resourcing. Indeed, in the last five years, we have seen the ACCC grow, with an extra 400 staff and over $200 million in increased funding. While, if that's delivering better competition outcomes, we absolutely support it, we can't create a behemoth where every dollar of public spending is crucial in a time like today. Stakeholders suggest that transaction volumes may well exceed the government's projections, potentially resulting in costs well above $100 billion annually. These additional regulatory expenses must be justified. The coalition questions whether this cost-intensive approach is the most effective use of taxpayers' money. While there is great value in a good regulatory and well-targeted regulatory framework, a balance must be struck that avoids placing excessive burdens on the private sector while ensuring the ACCC's focus is effective and resource efficient.

The impact of the bill on SMEs and start-ups, as I mentioned earlier, warrants close scrutiny. The compliance costs involved could stifle growth in the very sectors where we need more of it. Start-ups by their very nature rely on timely marketing, flexibility and often rapid strategic changes in a company's direction. Imposing universal pre-authorisation requirements risks inhibiting these businesses which are critical to the future of our competitiveness as an economy and country. The coalition has long championed competition policy that enables innovation and supports small businesses, which are typically much more agile, adaptable and resilient than larger businesses can ever be. In the end, it will be consumers that lose out if the target is wrong.

Our competition challenges aren't evenly distributed across the economy. They're particularly concentrated in some sectors. I have talked already about supermarkets, where the two major players have about two-thirds of the market. In hardware, aviation, energy and the digital economy, in each of those sectors, there is very serious market concentration. The ACCC has rightly highlighted that these are the sectors where competition could be strengthened, and we certainly don't want to see it weakened. We believe that, if the ACCC gets the focus right, those sectors are the ones where they should be showing more scepticism towards transactions that might enhance or increase market power or substantially reduce competition. By focusing on those sectors, I think we stand our best chance of getting the balance right.

The coalition stands committed to competition reform that enhances growth, delivers real benefits for Australian consumers and businesses and, most important of all, puts the customer in charge. That's what we believe in. The customer is the best regulator in the industry. There is a simple reason for that. Ultimately, the customer knows what they want. They know in a way no central planner or bureaucrat can ever know what they want. But they can only do that if they have competition and if they have choice. If they have those things, they become the regulator that we need most. In doing so, in making choices, they help every other consumer. The wonderful thing about competition and choice is that consumers help each other. When they decide that a product is too expensive, they are sending a signal which others benefit from, and businesses have to respond. It's a wonderful thing that we can see—competition providing that sort of benefit to all Australians.

That's why a robust competition framework is essential, but it can't become sludge and red tape. As I say, this will be a challenge for the ACCC. We praise the fact that there will be a review after one year to see it if it is delivering and is being implemented correctly, and it's incredibly important that that review be done well and get the balance right in assessing whether the costs of this framework are in line with the benefits or, hopefully, whether the benefits will be substantially more. We'll continue to examine this closely through the Senate inquiry and Senate estimates processes, and there's an opportunity there to look at whether this can be made to work better and whether the costs are going to be outweighed by the benefits. But we always stand ready to work towards balanced, targeted solutions that will strengthen competition where it is most needed, supporting growth, innovation and, most of all, the prosperity and choices of all Australians.

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