John Cobb (Calare, National Party, Shadow Minister for Agriculture and Food Security) Share this | Link to this | Hansard source

by leave—I move:

That this House:

(1)

notes with concern the impact on the Dairy Industry of the Coles milk pricing strategy, and that:

(a)

dairy farmers around the country are today seriously questioning their future, having suffered through one of the worst decades in memory including droughts, floods, price cuts and the rising cost of inputs such as energy and feed;

(b)

unsustainable retail milk prices will, over time, compel processors to renegotiate contracts with dairy farmers and the prospect that these contracts will be below the cost of production may force many to leave the industry;

(c)

for many dairy farmers, the fact that supermarkets are now selling milk cheaper than many varieties of bottled water will be the straw that finally breaks the camel’s back; and

(d)

the risk of other potential impacts include:

(i)

decreased competition as name brands are forced from the shelves; and

(ii)

the possible loss of fresh milk supplies to some parts of the country as local fresh milk industries become unviable; and

(2)

calls on the Government to:

(a)

ask the ACCC to immediately undertake an investigation into the big supermarkets and milk wholesalers after recent price cuts to ensure they do not have too much market power and are not anti-competitive in their behaviour; and

(b)

support the new Senate inquiry into the ongoing milk price war between the country’s major supermarket chains.

The dairy industry has faced many challenges over the years; however, with the current milk price war, dairy farmers and their families across the nation are questioning their future in the industry, having endured a decade of severe droughts, floods, cyclones, increasing operational costs and cuts to farmgate prices. There are over 100,000 people employed in the dairy industry in Australia, mostly in rural and regional areas. It is Australia’s third largest rural industry, with a value of $3.1 billion at the farmgate—or it has been. Just as importantly, the industry provides all Australians with a sustainable, daily supply of fresh, high quality milk and a wide range of dairy products.

For feeding our nation and contributing so much to our economy, all dairy farmers ask and have asked for is a fair day’s pay for a fair day’s work. However, the launch of Coles’s—a wholly-owned subsidiary of Wesfarmers—cutthroat milk discount campaign on Australia Day has devalued milk and savaged the morale of dairy farmers right across the nation. Coles has now made it impossible for dairy farmers to get a fair day’s pay for a fair day’s work. They have dropped the price of milk to $1 a litre. The last time milk was priced at $1 a litre was in 1992. Dairy farmers would like to ask the customers of Coles two things: could they pay their bills if they went back to their 1992 wage? Do they really believe Coles when they say they are absorbing the cost of these 1992 prices? Dairy farmers are pretty logical and pragmatic people, and they know a bulldust story when they hear one.

Coles is a wholly-owned subsidiary of Wesfarmers, a company that was started by farmers as a cooperative in Western Australia and was still controlled by them when it went public in the mid-1980s. They have written to many members who are sitting in this House today and they have claimed publicly and have promoted to their customers that the discounting of milk to $1 per litre will not affect dairy farmers—a load of bull. Their claim could not be further from the truth. Coles are marketing milk discounted to at or below cost to lure customers from their competitors while at the same time growing their market share with their own brand of milk. The effect has been the devaluing of milk right across the nation as retailers competing with the Coles brand of milk have had to drop their prices to try to protect their market share. They have also had to discount their own brands of milk to try to retain their sales. Dairy farmers who have their prices linked to processors’ brands have already seen their milk cheques reduced. Processors will be put under pressure with their next contract negotiation with retailers and then dairy farmers will be put under more pressure

Vendors and distributors are losing deliveries hand over fist with key milk-production markets in New South Wales and Queensland dropping by more than 15 per cent in Queensland and 10 per cent in New South Wales in the last 12 months. This includes farmers who supply milk which goes into Coles supermarket-branded milk bottles. Coles is totally owned by Wesfarmers, who actually have agribusiness people on their board and cannot claim that they do not know what this means. This provides clear evidence that Coles’s claims are wrong or, worse, they have been tricky and purposely selective in quoting facts and figures to mislead Australians. Their public claims are tantamount to false advertising.

I am amazed that the Minister for Agriculture, Fisheries and Forestry and former agriculture minister Burke have both publicly supported Coles ahead of the dairy industry, despite supermarkets now selling milk cheaper than most brands of bottled water. Coles is not going to absorb over $60 million per annum which this discount will cost them; it just will not happen. To believe that Richard Goyder plans to go to the next Wesfarmers AGM with the story of Coles’s drop in profit and market share is farcical. Farmers know that soon they will be paying for Coles’s marketing tactics. Let us remember that Coles is a wholly-owned subsidiary of Wesfarmers. This is not some global company; it is acting like one, but this is a wholly-owned subsidiary of Wesfarmers, who were an icon for Australian industry in how to succeed. But not any longer.

While Coles said it had reduced the price of 5,000 products, it has been silent on what has happened to the price of the 15,000 other products sold in the supermarket. By using tricky marketing tactics like this unsustainable milk price cut, Coles is trying to lure in more customers. Recently the Managing Director of Wesfarmers, Richard Goyder, was quoted as saying that what Coles is doing is hopefully increasing demand for milk. Given Mr Goyder’s pay grade, I would have thought he would understand a little basic economics. Even I understand that the demand for drinking milk is pretty inelastic. Consumers buy and use only a certain volume. We are not going to see customers across the country saying, ‘Gee, milk’s cheap; I’ll have another bowl of cereal,’ or ‘Gee, milk’s cheap; I’m not going to have a beer today. I’m going to go to the pub and ask for a milk.’ Mr Goyder must know this.

These tricky marketing tactics are hurting not only dairy farmers but also small businesses across the nation, and it will only get worse. We all love the convenience of the local corner store. Well, Coles is doing them out of business. Coles, a wholly owned subsidiary of Wesfarmers, is also hurting vendors and the independent petrol stations. It is hurting small business everywhere, which is what Coles is pursuing so that it can grow its own business over the demise of others.

Coles has imported from the UK a whole bunch of British executives who are experts in store brand tactics and taking business from others. But they are currently implementing a strategy that is not right for Australia and certainly not right for a company like Wesfarmers, with the reputation they previously enjoyed. Coles has about doubled its share of the milk market over the last 10 years with its discounted supermarket milk brand. In countries like the UK, you now have to send out a search party to find an independent brand. What happens to consumers when they are left with no choice—and at what price? Dairy farmers do not, and should not, trust Coles—and neither should their customers when it engages in these practices.

Coles, a wholly owned subsidiary of Wesfarmers, needs to stop being tricky and start charging fair prices for its milk supplies. Woolworths and other retailers have stated both publicly and privately that these price cuts are unsustainable—and they must be in a very similar position to Coles. Competition needs to be fair and, in this case, the umpire needs to step in and red card Coles and its team of UK executives. I have asked the ACCC to look at the milk price cuts, and the motion calls on the government to do the same. For all of our futures, in an environment of tightening food supplies and a greater emphasis on food security, these unscrupulous practices of big retailers need to stop. We need to focus on sustaining our critically important food producing industries instead of squeezing them out of business.

I knew the previous chief executive of Wesfarmers. He was a person I was proud to know. He gave Wesfarmers a great name and they were an icon and a success story in Australian business. He took them from a $1 billion enterprise in the mid-eighties up to the multibillion dollar enterprise that they are today. I think he would be horrified at what his company’s subsidiary is doing today. I ask that the House support the dairy industry and back this very important motion.

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

Is the motion seconded?

Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Link to this | Hansard source

I second the motion and reserve my right to speak.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

The dairy industry in Australia was deregulated by the former Howard government, which means that the government does not have a role in determining prices in the market. However, this government has supported the establishment of a Senate inquiry that will look at the recent changes to milk prices. It is a timely and appropriate way to expose a broad range of issues relating to this matter.

As part of this process, the ACCC is in contact with industry participants and is seeking any evidence that those industry participants can provide on this issue. The ACCC will thoroughly consider any evidence that it obtains. To maintain the independence of the ACCC, the Competition and Consumer Act prevents the government from giving it a specific direction in relation to the enforcement of competition law. The ACCC has advised that it is assessing the current pricing of home brand fresh milk by the major supermarkets, including whether it raises competition concerns under the Competition and Consumer Act.

The major supermarkets have been competing very vigorously on their ‘own brand’ milk prices recently. However, although consumers will get some price benefit for now, they could well end up in the future with fewer brands, with prices going up and with the possible loss of locally produced product. While strong discounting is good for consumers and is not necessarily anticompetitive, it should not be at the expense of dairy farmers. Indeed, the real effect may well bring fresh milk prices down to benchmark price levels for international commodity markets like skim milk powder.

Although I hear assurances from Coles that lower milk prices will not drive down farm gate prices for dairy farmers, I am very concerned—as are many others—that Coles’ discounting has the potential to destabilise the fresh milk market totally and thus drive down incomes and returns to farmers. Coles may not see the farm gate impact immediately but, if it continues, it must flow through if only in the loss of contracts for those supplying other brands in the market which are under threat.

Milk is already undervalued in the marketplace. And why do we pay more for bottled water than we pay for fresh milk? According to National Foods in their Senate submission:

… the average price per litre for soft drink is about $1.51 and the average price for bottled water is $1.12.

When you compare the effort to produce a litre of milk this seems unfair. You have to grow grass, cut hay and silage, milk the cows, ensure they get in calf and so on, rain, hail or shine.

In the longer term I fear that this price war will reduce investment and innovation in dairy, because the industry is very capital intensive. Equally, as even Coles have publicly declared, milk processors must also ensure that lower milk prices are not passed on to our farmers.

I worry that what is happening will reduce the competitiveness of small stores in my region. Let’s face it: Coles are all about getting market share for its brand, which will significantly drive out the competition. Logically, the whole Coles/Woolworths retail duopoly is against the interests of the food suppliers and farmers in Australia in ensuring a sustainable return comes back to farmers—contrary to claims by them of the opposite. One local milk distributor I have talked to has seen a 15 per cent reduction in milk sales to corner stores in two weeks. Unfortunately, he is now looking to sell his business.

Whilst I strongly support competition, discounting and lower prices for consumers, we also have laws that prohibit anticompetitive conduct, backed up by an independent regulator, the Australian Competition and Consumer Commission, to enforce these laws. Contrary to claims by Coles the milk price war or ‘bigger market share war’ may well reduce competition from other milk brands. Betta Milk, for example, with around 30 per cent of the local Tasmanian fresh market are a locally owned and operated business. Coles’ action could send them to the wall. Is that what we want as a society—for the small processors to go out of business and for us to become totally dominated by large overseas businesses just interested in making a profit, with no consideration for the diverse and regional businesses that support our dairy industry? The fact is that Coles are using their market power to control an essential and basic commodity and push the smaller operators to the brink.

Prospects for the dairy industry in fact are very positive in my region. Only nine per cent of my region’s milk goes into fresh milk markets. Tasmania will be less affected by the fresh milk price discounting impact because we are focused on export products. However, the impacts will be indirect through the viability of the farmers producing milk for the fresh market being squeezed on the margins for other companies and then back to their farmers. But high-cost production areas are most at risk in Queensland and northern New South Wales and, along with others—including the mover of the motion—I am very concerned for their futures.

In Tasmania the dairy industry is very important, and especially in my region. Work at Climate Futures Tasmania and TIAR show that under climate change scenarios Tasmania will be growing more grass and be very attractive for dairy production. Last year Tasmania produced 673 million litres of milk, and 60 per cent of this was in my region—the Cradle Coast region. That is 270 out of 440 dairy farms. This year milk production has grown by around four per cent in the year to date to December—it was the only region to show growth again. Tasmania now produces 7.5 per cent of national milk production, and this share is growing. Tasmania is the only region I know with growing milk production. In the last 10 years Tasmanian milk production has risen by 10 per cent and national production has fallen by nearly 20 per cent. Farm gate milk production income was some $250 million for Tasmania in 2009-10. That is a considerable contribution to the Tasmanian economy.

Price is dictated by export returns, with Fonterra being the main company. Fonterra’s milk price is the same as in Victoria, which is a competitive market with Murray Goulburn, Warrnambool Cheese and Butter and other companies. Farmers have always received a variable price depending on the export market returns at the time. Importantly, Tasmanian dairy farmers are the most cost-efficient producers in the country. However, recent growth and expansion has come at the cost of higher debt levels, and this has created some financial vulnerability for the industry. This makes farmers vulnerable to price shocks, and price shocks are what we are experiencing now in the price of milk in our supermarkets.

I would add a word of caution: of course consumers benefit from price reductions, and certainly most immediately. I have read, in part, the Coles submission to the inquiry now before the Senate. In it they make the case that we should look to, for instance, the milk processors to see what part of their profit margins should be shared more fairly and known more publicly by consumers. But the market power of this massive duopoly that is taking place is extraordinary, and their powers are extraordinary. The fact is that the horse has bolted: that is the problem in Australia. If we had added antitrust laws—something like those in the United States—then we would not be in this position. I think that the onus of proof has to be on the major supermarkets; that they are indeed not affecting the price of milk to our farmers and to our suppliers.

So to those people who are enjoying reduced milk prices; that is all well and good. But we have to be fairly sure in our own minds that those prices are not going to have a detrimental effect into the future, where they not only affect the price of milk but indeed the quality of milk.

I am happy to support this motion. The government was happy to support the establishment of a Senate inquiry, and we want the ACCC to look into the current pricing of own brand fresh milk by our major supermarkets—particularly including whether it raises competition concerns under the ACCC.

Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Link to this | Hansard source

This motion before the House today is an important move by the coalition to highlight the concerns of the Australian milk industry over the threat of the current milk price war initiated by Coles, a wholly owned subsidiary of Wesfarmers. This is an issue about sustainability of the dairy industry and, indeed, the future of thousands of Australian dairy farmers. It is also an issue about the integrity of Australia’s competition policy principles and, more specifically, the action by Coles to increase its market share through aggressive discounting of milk.

As the member for Calare has already noted, the Australian dairy industry is currently worth $3.4 billion to the Australian economy and employs approximately 100,000 people. A country the size of Australia should be looking to expand its production of dairy products. We should seek to increase dairy exports and to tap into opportunities which are opening up in Asia. Instead, the actions of Coles could lead to a reduction in the volume of dairy products and a decline in the number of Australians who work in the industry.

The latest threat to the dairy industry needs to be considered in an historical context. Dairy farmers have endured challenging times over the past decade as droughts, floods, price cuts and increased input charges have pushed many to the brink. This latest debacle has seen morale among the dairy industry reached an all-time low. Once again milk producers and processors believe they are the whipping boys because of the actions of big business and the failure of government to act.

The decision by Coles to lower their own brand milk to $1 a litre may appear attractive to consumers, but in reality this is unsustainable and not in our long-term national interest. The common perception amongst dairy farmers is that in an attempt to increase their market share Coles is willing to sacrifice dairy farmers and the future of the Australian dairy industry.

Recently I met with farmers across my electorate, and they raised serious questions over the market power of Coles and this latest advertising gimmick. Attending the forum were farmers Mike Jeffrey and Howard Lee from Kempsey, Allan Ussher, Jim Desmond and Greg Desmond from the Nambucca Valley, Jason Bake from Crossmaglen and Heath Cook and Adam Darley, who are dairy farmers on the Dorrigo Plateau. All these farmers expressed the genuine concern that as a result of the price wars branded dairy products would be forced from the supermarket shelves and it would be the end of those products.

The farmers also believe it is inevitable that supermarkets will place further pressure on milk processors to cut their prices and that processors will have no choice but to reduce the farm gate price paid to farmers. For many dairy farmers this will be the last straw. A further cut in the farm gate price will simply make them unviable, and in the long term that will not be good for consumers. Once Coles has got rid of the market competition, their market power will be greater. They will be able to ramp up the retail cost of milk.

Competition is good for the consumer and good for business, but it is wrong that the actions of Coles will reduce competition in the marketplace through massive discounting which Coles can subsidise by cross-subsidising their losses. Let us not forget the impact of this aggressive marketing on small businesses such as the local corner store and milk vendors, who struggle to buy milk for less than the price that Coles are selling it for in their supermarkets. All these small businesses are equally threatened by the actions of Coles, and this is why all members of the House should support this motion.

The motion calls on the government to refer this matter for investigation by the ACCC and also to support the recent Senate inquiry which was established into the milk price wars. As a prosperous dairy country, we should be exporting our product to the world, but if Coles continues to use their market power to undercut their competitors then our dairy industry will be decimated. This will have long-term consequences for our nation’s food security. It will also impact on the consumer, who inevitably will pay more for milk once competition in the market is reduced. The government must take every action possible to ensure that the activities within competition policy are in the national interest. Instead of allowing Coles to use its market share to drive milk processors and dairy farmers out of business, the government must ensure that vital competition is maintained in the dairy sector.

This is a very important motion. I am delighted to have it debated here in the House tonight. It is vital that we support our local dairy industry to ensure that consumers enjoy high-quality milk into the future and that our dairy industry prospers.

Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

This is a good motion, but it is an unusual one. These are unusual circumstances in which we find ourselves. In this place we generally tend to argue for better value and better prices for consumers. I do get the nuance here about protecting our farmers and competition and finding the right balance. I think that is important too, but I think there is a real issue here. This really is an unusual set of circumstances where we have a Senate inquiry being called and people making very good-quality submissions to that. I suppose there is a great task ahead for that Senate inquiry: to make a proper determination of what is taking place in the market and whether there is actually anticompetitive behaviour taking place. I think there is just as much pressure and onus on the ACCC to ensure that we can find where the balance point is in this between striking a good-value price, a fair price for consumers, and making sure that we can protect farmers in some way—although I am not a protectionist in general terms—and that farmers are not robbed in the process of making sure that consumers get good value.

Of course, there would be a lot of attention on what the giants are doing—the Coles and Woolworths of the world—in terms of brand milk. But there are a few significant points I want to make tonight in my short contribution. One is that a price of a dollar a litre is very competitive; it is a cheap price—cheap in the sense of what we are accustomed to. There is an enormous variety if you like your milk as I do. When I go shopping for milk, I cannot find my way through the milk aisle because there is so much choice it is almost ridiculous. There are 30 or 40 different types of milk at times, ranging anywhere from a dollar and a little bit to $3.50 for the same litre. I find that unbelievable. It is incredible that there could be such a difference in what is, for me, a base product. The reality is that Choice magazine has just done a survey, tested all of these different types of milk and found that there is actually no difference in quality or taste between a litre of milk for a dollar and a litre of milk for $3. I find that a really interesting outcome. The only difference, it seems, is the price. I find that very, very interesting.

I am as concerned as anyone else in here about market power abuse—the abuse of power by the majors in the way they compete—but I am also concerned for ordinary consumers and I am certainly concerned for the good electors of Oxley. Oxley is not, on the whole, a very wealthy place, and people have a lot of pressures on their cost of living, and milk is one of them. For a family of five like mine, the $1 difference makes a huge difference in how much we spend a year on milk. It can mean up to $500 of difference given the latest figures on how much milk is consumed by Australians. We love our milk, we think it is a good product and we love that it comes from good-quality Australian farmers. The fact also is that our dairy products are a major export for Australia and are sought after by many countries in the world. I think there is a lot to be said about how all of that works as well.

For us in this place, there are a couple of things that we need to be clear on. One is not to go over the top in the rhetoric of just abusing the usual suspects. I do not think it actually helps anybody. I think we have a good process and a good commission, and we ought to allow the process to go through. I want to know the facts here, because there are assurances given by Coles and others that in fact they are not reducing the margin. If I am wrong on this, fine. I am not saying I am right or wrong; I am just saying what they are stating in their submission. They are giving assurances that that is not the case. They are saying they are reducing the price of milk. If that is true then that is a good thing. If it is not, they will be held accountable for it, and I think they will be very embarrassed, because there will be a whole heap of us in this place who will remind the community and consumers exactly how they misled people. But the fact is that if they can actually reduce the price of milk while not impacting on the margins of the farmers in particular at the farm gate then I will be very impressed.

There may be an issue with the processors. There may be an issue somewhere else along that chain of production. I am not the expert here, but I am keenly waiting to see the outcome of what comes through the ACCC inquiry and what happens in the Senate inquiry. That is the place for the judgment to be made properly so we can have the full information in front of us. That is what this government is doing. We are against anticompetitive behaviour. We do believe, thought, in a strong market and strong market forces. There ought to be drivers and incentives for big producers and the Coles of the world, who are easily criticised in this place on a daily basis. Where they can reduce the price of something, they should. If that is the case now and they are actually doing that then they should be given some credit for it. If it is not the case then they will have a high price to pay as well. But I think that in this one there is actually a lot of room to see that the proper processes are undertaken. (Time expired)

Nola Marino (Forrest, Liberal Party) Share this | Link to this | Hansard source

As a Western Australian it is really hard for me to stand in this place and speak on the member for Calare’s private member’s motion on milk pricing. I cannot believe that Wesfarmers, a company that has its genesis in Western Australia’s agricultural sector, are doing what they are doing through Coles. It is a decision that they know will cause long-term pain to dairy farmers, their families and their communities. This motion is about small business. Dairy farming is small business and I am a dairy farmer.

I was interested to listen to the previous speaker talking about what will come out of this. What concerns me is that we recently had the Senate Economics Committee inquiry into competition and pricing in the Australian dairy industry and a range of issues were delivered by that, but the government and the minister have chosen not to respond to any one of those recommendations. My concern is that what will come out of this may well be ignored in the same way. I have not seen anything from the Minister for Small Business or the Minister for Regional Australia, Regional Development and Local Government regarding this and I am really seriously concerned. There has been no support at all for small farming businesses from the Minister for Agriculture, Fisheries and Forestry. I was really concerned to see that his first response was to support Coles.

If you are a dairy farmer at the moment in Australia, particularly in the liquid milk states of Western Australia, Queensland and northern New South Wales, you are extremely concerned. You know that as negotiations evolve for milk supply contracts this aggressive marketing will affect your bottom line. It is a fact of life that that is what will happen. We know that small business has employed 300,000 fewer workers since this Labor government came to power, so I suppose a few more dairy farmers may not be a problem. This is a complex issue and dairy farmers are absolute price takers. I do not know that this House understands the immediate and longer-term impacts of Coles’s milk pricing on small dairy farming businesses, on farming communities, on our food security, on nutritional quality and on food self-sufficiency. There will be long-term pain for short-term gain.

In a previous address I told this parliament that Australian farmers are hurting. Many survive on very limited returns. Farmers are sick to death of being told that it is great for Coles to continue to be almost voracious in pursuing market share but it is apparently obscene for a farmer to make even a standard Australian wage in some instances. This is the message that the government and even the ACCC are giving our small business farming communities. I refer to part 1(b) of the motion that:

… unsustainable retail milk prices will, over time, compel processors to renegotiate contracts with dairy farmers and the prospect that these contracts will be below the cost of production may force many to leave the industry;

In a liquid milk state like Western Australia, I defy anybody to deliver fresh milk on a regular basis from another state at $1 a litre. Anybody in the transport sector over a period of time knows that this cannot happen. We only have 165 dairy farmers left in Western Australia. We are suppliers of the liquid milk sector. I meet farmers every day who are seriously concerned about this. They know what this is going to do to their farm gate prices. This is not an illusion for them—they know what it will do over time and so do Coles.

Coles know what this will do to the broader market. They know that others have to match that price and they know how that will flow through, particularly in the liquid milk states. They cannot sit back and say, ‘We’re just going to look after one sector.’ They know that this will flow through and come back to the farm gate price as sure as night follows day. That is what is going to happen and Coles started this. As I said when I began, I cannot believe that Wesfarmers, which has its genesis in the agricultural sector in Western Australia, can be the architects of this.

Dairy producers in those three states are now dreading further negotiations in the next year, in the next two years and how this pricing will filter down to them. We do know about the power of the supermarkets. I am seriously concerned about their dominance and what this will do. There are those that cannot speak out and I spoke about these people before the Senate inquiry. I am seriously concerned that irrespective of the findings of the Senate inquiry, like the result of the last Senate inquiry, we will have a minister and a government who will fail to act. It is one thing to identify a problem, but the issue for this government is what they intend to do about it. That is the question facing us: what does this government intend to do about this problem?

Janelle Saffin (Page, Australian Labor Party) Share this | Link to this | Hansard source

I speak in support of the private member’s motion on milk pricing that the member for Calare put before this House. I do so with the support of dairy farmers in my area and all associated with them, community leaders and many people who are not associated with the dairy industry at all but are concerned about the future of the dairy industry. We face a perplexing problem because we live with a deregulated dairy industry. It was deregulated well over a decade ago, so we do not have a lot of tools to talk about regulation and that is not the way it is going.

We are concerned about what is currently happening, particularly Coles’s behaviour. Some go so far as to say it is predatory pricing and we are looking at the issue of predatory pricing at the moment. People in my area are saying people like getting cheap milk because who does not want to go to the shop or supermarket and get something cheaper. We are always looking for a bargain. We all talk about cost of living pressures which are foremost in our minds and affect everybody. At the same time, we know that if what is happening is not sustainable for the dairy industry, it is not sustainable for any of us long term and therein lies the issue.

We want the ACCC to examine this issue so that we have all the facts before us. I do not profess to know all the facts. I know what I know. I have a dairy industry in my area. I know that the dairy industry is the third largest of the rural industries in Australia. I know what it means to my local economy. I know what it means to northern New South Wales and southeast Queensland which is close to where I live. And I know what it means to the industry at large.

It is within that context that I speak. I do not want this issue politicised and neither should it be by anybody. It is an issue of concern to the community, to the dairy farmers—to everybody. I want to be advised on it in a very open and transparent way, and I hope that the ACCC and the Senate Economics Committee’s inquiry into the impacts of supermarket price decisions on the dairy industry are able to reveal this. The Senate inquiry is supported by the government and I understand it is supported by all others. It is a Senate inquiry that has the ability to provide us with the facts and the transparency that we need so that we can make some informed decisions if we need to, or at least make some informed comment on it.

The issue is a concern, and it is something that is being talked about. I was asked by my local radio station today, ‘Janelle, if it is such cheap milk, why are you concerned?’ I said, ‘I have to be concerned about many things, and one is the long-term viability of the dairy industry.’ When it went through deregulation I saw gain by some, but I also saw the pain and I saw what that meant. We do not want an industry that is already feeling it—especially with some of the weather events that we have had—exposed any more.

One thing that I looked at today was Choice magazine. Choice did testing on milk and looked at different brands and so on, and they came up with some interesting findings on the milk. I would like to finish with two of the things they came up with. One was that Lite White and other reduced fat milks are more highly processed. I drink milk, but I like fat milk. I do not like skinny milk or any of those others.

Nola Marino (Forrest, Liberal Party) Share this | Link to this | Hansard source

Regular milk.

Janelle Saffin (Page, Australian Labor Party) Share this | Link to this | Hansard source

I call it fat milk, but it is regular milk. I drink it and it tastes great. It is good milk and it is what I want to keep drinking. I want to keep drinking it at a good price but at a price that is sustainable for the farmers.

Choice questioned whether the $1 a litre milk was really a sign of genuine, healthy competition. They stated:

In our view consumers do not win if short-term discounting reduces product choice or undermines milk quality in the medium or long term.

(Time expired)

Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Competition Policy and Consumer Affairs) Share this | Link to this | Hansard source

I support the call on the government to insist that the ACCC formally and immediately investigate what is happening with the milk wars that are being driven by the big supermarkets and their implications more broadly. I also want to draw attention to the Senate Economics Committee inquiry into the impacts of supermarket price decisions on the dairy industry. This inquiry into the ongoing milk price war is underway, but I seek to draw the attention of this chamber and of those who are listening to the inquiry that we really need to have—that is, whether the toolkit available to the ACCC is adequate, whether it best supports the public policy and economic objectives we have for our country and how well those tools are actually being utilised.

That very inquiry, an independent inquiry, is what the coalition offered the electorate prior to the last election. We were confronted—affronted might be a better way of describing it—by the then Minister for Competition Policy and Consumer Affairs, Dr Emerson, saying, ‘No, no, no. The competition laws in Australia are just fine. There is no scope to improve them. There is no opportunity to recognise changing market conditions. Everything the ACCC needs, it already has.’ That did not last very long at all, because shortly after the election, when we were highlighting—

Janelle Saffin (Page, Australian Labor Party) Share this | Link to this | Hansard source

Ms Saffin interjecting

Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Competition Policy and Consumer Affairs) Share this | Link to this | Hansard source

I have just been heckled by the member opposite, who has little to offer on the issue of competition.

On the issue of price signalling, wasn’t it very interesting how, shortly after the election, when the coalition started working on issues of price signalling, all of a sudden Labor, who had said there was no opportunity to improve the competition toolkit, quickly came along and said, ‘We are going to introduce a price signalling law as well.’ The member opposite who chooses to interject may well benefit from the understanding that this is one sector of the economy. It is a very important one, but as to the concerns she seeks to talk about, if she bothered to learn much about other than what she wants to insist on for everybody else, she would see that these circumstances are actually happening in other parts of the economy. Because they are happening in other parts of the economy, there is a need to examine these concerns not through a straw, looking at a single industry, as important as it is, but also in the context of what else is going on where the supermarket chains are very dominant.

The supermarket chains are seeking to exercise their strong position in the marketplace to extend the range of supermarket own-branded goods and products. They are doing this in alcohol. We have already seen the supermarket chains rolling out their own lines of beer. The beer producers in Australia did not seek to cannibalise their own market, so they refused to play ball. So now the beer is coming in from New Zealand, where again the supermarkets are seeking to get an even stronger position and an even more dominant position in terms of the way they interact with their suppliers.

If the government recognised that there are shortcomings in the competition toolkit that is available, they would see that there is scope to improve it. That is what the coalition offered—an examination of the toolkit, an understanding of the national public policy initiatives that should drive competition law and then a recognition that, if the tools are not up to the task, they need to be improved. We actually believe that competition matters, but there is an important precondition for competition, and that is the existence of competitors. We also believe that there is an issue about durable benefits—

Janelle Saffin (Page, Australian Labor Party) Share this | Link to this | Hansard source

Ms Saffin interjecting

Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Competition Policy and Consumer Affairs) Share this | Link to this | Hansard source

Oh, just pipe down!

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

Order!

Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Competition Policy and Consumer Affairs) Share this | Link to this | Hansard source

We also believe there is an issue about durable consumer benefit, so in relation to the short-term issues that might see a savings in milk, if they are not going to be available in the longer term, what might superficially appear to be attractive may well lead to more problems for consumers down the track.

The member for Calare’s motion is important not only because it seeks to have the ACCC do what it can do with toolkit that is available to it, but hopefully because, through the Senate inquiry, it will highlight how that toolkit is deficient, some of the aspects relating to the misuse of market power and the need to satisfy a substantial market power test which sees a company able to raise prices without losing any business. That is an incredibly high threshold. Maybe the existence of market share might be an appropriate precondition. The issue is about not only the purpose for which a dominant player might be entering into a market or exercising its strength but also the effect of it.

The big players can say, ‘It wasn’t our intention to wipe out everybody in our supply chain. It just happened.’ This is not good for our country; this not is good for our economy. This is why we have 300,000 fewer people employed in small business since Labor was elected. We have seen the competition toolkit failing to meet the challenges of a contemporary market, and I am optimistic that through the prism of this totemic—(Time expired)

Debate interrupted.