Chris Pearce (Aston, Liberal Party, Parliamentary Secretary to the Treasurer) Share this | Link to this | Hansard source

I move:

That the amendments be agreed to.

Chris Bowen (Prospect, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

The government’s method of handling the Trade Practices Legislation Amendment Bill (No. 1) 2007 in this instance shows why they are no longer fit to hold office in this nation. The Trade Practices Act is a very important piece of legislation and it has been broken for a very long time. We have been pointing out since 2003 that section 46 of the act is not working. We have pointed out that since the Boral case not one action under section 46 has commenced. In fact, the ACCC discontinued several cases under section 46 following the Boral case. The government has arrogantly ignored the concerns expressed by this side of the House, by small business, by the ACCC and by commentators across the board. Now, at five minutes to midnight, we see the mother of all backflips from this government, and the Treasurer and the Minister for Small Business and Tourism have not even bothered to come into the chamber and deal with it.

We have seen review after review of the Trade Practices Act. We have seen the Dawson committee. We saw the Senate inquiry in 2004. We have seen the Senate inquiry this year. The ACCC has been particularly vocal, and it made a particularly comprehensive submission to the Senate inquiry in 2004. Labor closely reviewed the evidence and moved six balanced, sensible and reasonable amendments in this House and in the other place, and the government rejected them.

Our amendments were crafted to strengthen the Trade Practices Act without undermining the competitive pressures that make our economy work. They were crafted to strike that sensible balance. And what does the government do? Firstly, it says that our amendments are unnecessary. Members will recall the minister for small business saying, ‘Your amendments aren’t necessary, because we’ve consulted with small business and they don’t want them.’ Minister Bailey, for obvious and understandable reasons, is not in the House today; she is too embarrassed to come in and deal with these amendments, because she said they were not necessary. She said, ‘No further amendments are necessary because we’ve consulted with small business.’

Then the minister for small business said to senators in the other place, ‘Please don’t refer this to a Senate committee, because this bill has been consulted on to within an inch of its life and no more changes are necessary.’ And, then, the government dropped their opposition to strengthening the Trade Practices Act. But do they adopt the position of the ACCC? No. Do they adopt the position of the Senate inquiry or the Dawson inquiry? No. Do they adopt Labor’s sensible and balanced amendments? No. Do they consult with the business community? Certainly not. I think there is a considerable amount of evidence relating to the concerns of the business community to suggest that that is not the case. Instead, they adopt an amendment written by Senator Joyce in the Birdsville pub. I have nothing against the Birdsville pub; I am sure it is a very fine establishment. I am sure it is a very nice place to be, but it is not particularly where I would prefer to see amendments to the Trade Practices Act written.

Anthony Byrne (Holt, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

They were drafted there?

Chris Bowen (Prospect, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Drafted at the Birdsville pub, and Senator Joyce’s press release refers to the amendments as the Birdsville amendments. They are the Birdsville amendments by Joyce QC, written at the Birdsville pub. What a way to run a country! No wonder the government is viewed cynically across the nation. At five minutes to midnight they move these cynical amendments after rejecting for years Labor’s calls to strengthen the Trade Practices Act. Now what do we have? We now have a different test for different breaches of the Trade Practices Act. We have a test for ‘substantial market power’ under section 46, but we also have a test for ‘a substantial share of a market’ under the proposed new section which deals with predatory pricing. So we now have a Trade Practices Act which is a dog’s breakfast. We have a Trade Practices Act which is confusing. We have a Trade Practices Act with two different tests, but not for other breaches.

It is worth bearing in mind that the Boral case, one of the big Trade Practices Act cases, was about predatory pricing. Other big Trade Practices Act cases have not been about predatory pricing. There is more than predatory pricing when it comes to the abuse of market power. The Queensland Wire case was not about predatory pricing. The Rural Press case was not about predatory pricing and the Melway case was not about predatory pricing. There have been no changes to those—no change to the recoupment test and no change to the ‘take advantage’ provision. Section 46 stands unamended by this government, ignoring the ACCC, which has been calling for amendment to section 46. Instead, we have the amendments written by Chief Justice Barnaby Joyce in the Birdsville pub. (Extension of time granted) ‘Market share’ has not been defined in the amendments. ‘Substantial market share’ might be 20 per cent, 25 per cent, 15 per cent or 50 per cent—we do not know until there is a court case. So there is a substantial amount of uncertainty. ‘Market’ has not been defined in these amendments, so Birdsville is probably a market all to itself. Certainly Jindabyne would be a market, and Sydney is probably a market, and then we have the national market. We do not know what ‘market’ is and we do not know what ‘substantial share’ of a market is.

We affirm that the way forward in this matter is to adopt Labor’s sensible and balanced amendments, and I reaffirm that, should we form a government shortly, we will proceed with our amendments. We will strengthen section 46 properly. We accept that these amendments have already been through the other place and we accept that they will go through here, but we reserve the right to monitor their operation closely. It is hard to say that there will be unintended consequences, because I do not think the government had any idea what the consequences would be when they did this last-minute backflip to accept the amendments moved by Senator Joyce. This is a last-minute, cynical attempt to get the small business vote at the coming election.

The government have done this before. We know about their attempts to get the small business vote. Recently I read a very good book—the biography of the Prime Minister. When I was reading it my attention was drawn to page 295, which is about small business issues. There is a quote from the Treasurer.

Chris Pearce (Aston, Liberal Party, Parliamentary Secretary to the Treasurer) Share this | Link to this | Hansard source

Mr Pearce interjecting

Chris Bowen (Prospect, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

The parliamentary secretary at the table might enjoy this quote. This is the Treasurer talking about small business paperwork where he says:

‘We successfully gave the impression of something being done without anything substantive being done.’

That is the Treasurer boasting:

‘We successfully gave the impression of something being done without anything substantive being done.’

He was boasting about pulling the wool over the eyes of small business by pretending that they were doing something to help small business when in fact they had done nothing. After years of neglect, years of ignoring the concerns of small business and years of ignoring the concerns of the ACCC, we now have the mother of all backflips with the adoption of amendments written by Chief Justice Barnaby Joyce at the Birdsville pub.

No wonder this government is viewed cynically. This is a cynical attempt to smudge the issues at the last minute. The government have no idea what the consequences of these amendments will be. Government advisers have admitted as such in private to certain business lobbyists; they have admitted that they do not know what the implications of the bill, as amended, are. We accept as a fait accompli that it will go through, but we will monitor it very closely and will continue to press our amendments to make section 46 work as was intended.

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

It is important to impart some philosophy in this debate, because it is clear there is no philosophy on the government’s side. Labor’s economic philosophy is as a party of competition. Labor, when in government, created the open, competitive economy. The purpose of a trade practices act is to ensure that competition prevails, to strengthen competition. Therefore Labor’s guiding principle in considering amendments to the Trade Practices Act is this: the amendments must be pro competition; they must not be designed to protect competitors but to protect competition.

Small business should agree—and most small businesses agree with that fundamental philosophic statement—because small business operators know that they can survive and thrive best in an open, competitive economy. It might be tempting from time to time to argue for protection against competition but they do best when they thrive in an open, competitive economy. It is against that yardstick that we judge these amendments.

As my colleague the member for Prospect has said, the government in this chamber through the Treasurer and the Minister for Small Business and Tourism said it needs to make no further amendments. We were critical of the amendments that the government made because we believed that they were ineffective. Labor proposed a set of amendments that were well considered, balanced and pro competition. They were based overwhelmingly on recommendations on the public record by the competition watchdog, the ACCC, and we were therefore very comfortable in putting those amendments to the parliament. The government rejected them and, in doing so, the minister for small business said this:

The government’s amendment is as a result of the unanimous agreement of the small business groups.

…            …            …

As I said, the member for Rankin will not want to hear that response, but these amendments—and let me repeat it for the member for Rankin and the member for Prospect and everyone else on the opposition benches—are the result of detailed discussions and consultation with the small business groups.

The minister was saying: ‘We’ve got it right. There’s no purpose in adopting Labor’s amendments because we’re drawing a line.’ What line? The Birdsville line. Because Senator Joyce in a pub in Birdsville created government policy.

Senator Joyce, as a senator for Queensland, has every right to go to a pub in Birdsville, talk to his mates and come up with any sort of idea he wants to. But the Treasurer of this country surely does not have any right to then bow to the pressure of Senator Joyce having drafted an amendment to an important piece of competition legislation and then saying, ‘That’s okay. If Joyce QC says it’s okay, it’s okay with me, the Treasurer.’ That is an abrogation of economic responsibility in this country, a total abrogation to just accept an amendment moved by someone who designed it in a pub in Birdsville.

The fact is the government knew it was going to accommodate Senator Joyce. Why? Because the Birdsville amendment was drafted on 28 June of this year, the debate in the House was held in early August and the debate in the Senate just a few days ago. The government knew that it was going to accommodate Senator Joyce. Why do we know that? Because Labor offered to support the government’s bill. We said, ‘If our sensible amendments fail’—as we expect that they would—‘we will pass the bill.’ The Hansard records that the member for Prospect said Labor would join with the government and pass its amendments—the government’s amendments, not Senator Joyce’s Birdsville amendments.

There were 28 Labor senators ready to vote for the government’s bill, but the government knew it had a little caper going with Senator Joyce. The government did not tell us but, more importantly, the government did not tell the business community. Why? Because they had convinced the business community to run a very expensive advertising campaign on Work Choices. If they had told the business community that they were going to shaft the business community then the big business part of our economy would obviously have said, ‘Hold on. We’re going to try and help you on Work Choices, then you’re going to shaft us.’ That is why the Treasurer did not tell them. He knew what he was going to do in relation to Senator Joyce and the Birdsville amendment, and here are some of the consequences. (Extension of time granted). Legal opinion, in this case from Allens Arthur Robinson, is that as a result of the Birdsville amendment:

... it will no longer be necessary to prove that a corporation has ‘substantial market power’ to establish the threshold for the application of s46 to below-cost pricing … it will be sufficient to show that the corporation has a ‘substantial share of a market’.

…            …            …

Under the new amendments, a large market share of itself will be sufficient to attract the application of the predatory pricing provision, even where that market share does not equate to market power because there are low barriers to entry and a number of other competing firms with large market shares.

It goes on to say:

Purpose may be established by inference (s46(7)) or by direct evidence, and it is sufficient if the anti-competitive purpose is a substantial and operative one, even if the corporation has acted for a number of different purposes.

In other words, it is very easy for a business to get tripped up and be regarded as engaging in predatory pricing even when all it is doing is acting competitively as we would want a business to act competitively to keep prices low. There is a big debate in the parliament and beyond about the cost of living. We want businesses to keep prices low as a result of competition prevailing, not having businesses protected from competition.

There is another piece of legal opinion from Corrs, which says—and this backs up what I have just said:

The changes, if passed, are likely to introduce considerable uncertainty in the pricing decisions of large business and may prompt them to price more cautiously and conservatively. There is some potential for the changes to place upward pressure on prices.

The Treasurer is not here to explain the background, the purpose, the thinking. This will be very important, presumably, when the courts have to grapple with the Birdsville amendment. They are getting no guidance, and that is why I am going to ask the parliamentary secretary a number of questions which I hope he will be able to answer so that the courts will have some guidance in relation to the Birdsville amendment. This legal opinion goes on to say:

Restricting such competitive conduct may protect inefficient firms and damage competition.

That is the basis of our concern. So my questions go to these sorts of examples. Suppose, for example, that Tesco, a very large multinational retailer, enters the Australian market. Under the Birdsville amendment, it has no significant market share because it has just come in, so it cannot engage in predatory pricing no matter how able and willing it is to engage in low-cost pricing for a sustained period of time. The point I am making is that Tesco could come in and smash large and small retailers here because it cannot be affected by this Birdsville amendment because it does not have a market share. So the small businesses that the Treasurer and the Prime Minister say they are protecting could easily get screwed to the ground as a result of this. That is what we are talking about: unintended consequences in terms of forcing prices up through restricting competition, and unintended consequences for the small business community, many of whom will quite possibly think this is a great thing for them. They need to be very careful in assessing this. They need to look at the legal opinions.

A second example is an independent supermarket business in a small regional market. Let us consider this case. It could have, say, a 20 to 30 per cent market share. This is a small business in a small regional market. It therefore has a significant market share. That small business therefore could be caught by these provisions on predatory pricing as a result of the Birdsville amendment. There are other examples. Budget airlines entering Australia do not have substantial market share. So you could have Qantas and the other airlines here being unable to match them in a price war. That means it is bad for Qantas and for the other Australian airlines—and it is bad for consumers—because the international firms coming in cannot be caught under this provision but the ones that are here and already have a significant market share can be.

This is a crazy approach to policymaking by Joyce QC. Labor supports small business and Labor supports competition, but above all Labor supports good policy. It just shows how lazy the Treasurer is and how desperate the Prime Minister is in ordering that the Birdsville amendment be accepted. That is why we are deeply concerned about unintended consequences. It is all very good for the Prime Minister to run around and say, ‘We’re the friend of small business.’ We will see about that. (Time expired)

Chris Pearce (Aston, Liberal Party, Parliamentary Secretary to the Treasurer) Share this | Link to this | Hansard source

From the outset, I have to say that I have never heard so much nonsense and rubbish in all my life. In saying that, I have to also say that we hardly need a lesson from the Australian Labor Party about the abrogation of economic responsibility. The last time the Australian Labor Party were in office, they abrogated economic responsibility unbelievably. We had one million people unemployed. You talk about support for small business. The last time the Labor Party were in office, the best they did for small business was 22 per cent on overdrafts.

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

Mr Deputy Speaker, we need answers to these questions.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

Order! The member for Rankin will resume his seat.

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

Answer the questions!

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Rankin will desist from interjecting. He does not have the call.

Chris Pearce (Aston, Liberal Party, Parliamentary Secretary to the Treasurer) Share this | Link to this | Hansard source

It will be a long time before I answer your particular questions, I can tell you, Member for Rankin. And don’t preach to me about history; you have been prattling on for the last 15 or 20 minutes about history. The last thing that you gave small business in Australia was overdraft rates of 22 per cent, so I do not think we need any lessons from the Australian Labor Party.

We heard from the member for Prospect about feedback from business. The feedback that we get from business around Australia is that the very last thing they want is for the socialists in the Australian Labor Party to get their hands on the Trade Practices Act.

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order on relevance. This is a very important question. The courts will need guidance on the intention of this legislation. They will be relying very heavily on the response of this man to the questions that we have asked.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Rankin has made his point of order. The member for Rankin does not have a point unless it is a point on relevance.

Chris Pearce (Aston, Liberal Party, Parliamentary Secretary to the Treasurer) Share this | Link to this | Hansard source

Mr Deputy Speaker, it is an amazing thing: we allow the ALP to prattle on with nonsense and rubbish without interrupting them, but we are not entitled to the same courtesy. It is absolutely stunning and amazing, isn’t it?

As I said, the feedback that we receive from Australian businesses throughout Australia is that the very last thing they want is for the Australian Labor Party to get their hands on the Trade Practices Act. I thought that Labor supported this amendment, but we have heard all this rubbish and nonsense for the last 15 or 20 minutes. I thought that they supported this amendment. They certainly did in the Senate. The question was that the amendments be agreed to. The question was not for us to go on and on about nonsense. We think that this amendment makes sense. We think that it does balance those critical areas of promoting competition, protecting consumers and of course looking after business across Australia. I commend the amendments to the House.

Question agreed to.