Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

On behalf of the House of Representatives Standing Committee on Economics, I present the committee's report entitled Advisory report on the Competition and Consumer (Price Signalling) Amendment Bill 2010 and the Competition and Consumer Amendment Bill (No. 1) 2011, incorporating a dissenting report, together with the minutes of the proceedings.

In accordance with standing order 39(f) the report was made a parliamentary paper.

by leave—In this inquiry, the committee conducted the rare task of comparing two bills that have the same purpose, in this case to control price signalling in Australian markets.

In November 2010, the member for Dunkley introduced a bill to this effect and the Treasurer introduced a government bill in March 2011. The government bill followed a consultation process, including an exposure draft in December 2010.

Although the bills have similar aims, they take different approaches. The member for Dunkley's bill only applies to the communication of price related information to a competitor, for the purpose of encouraging the competitor to vary their price, and where the communication has the effect of substantially lessening competition. This bill applies to the economy generally.

The Treasurer's bill creates two proh­ibitions. The first is where a firm privately communicates price related inform­ation to a competitor. This is described as a per se offence because the conduct of itself is so unredeeming that no further elements are required for liability. The second prohibition is where a firm generally communicates information relating to price, business strategy, or its capacity, and does so with the purpose of substantially lessening comp­etition.

The Treasurer's bill applies to sectors of the economy stipulated in regulations. The Treasurer has committed to applying the bill initially to the banking sector and conducting a review before extending it further.

It is immediately apparent that the Treasurer's bill would have a stronger effect and this is the reason why the majority of the committee is supporting it over the member for Dunkley's bill. The committee's concl­usion is consistent with evidence provided by the competition regulator, the Australian Competition and Consumer Commission. It stated that elements of the member for Dunkley's bill would mean that it would be of little practical use to the commission in controlling price signalling.

I would like to thank those organisations and individuals that assisted the committee during the inquiry through submissions or participating in the hearing in Canberra. I also thank my colleagues on the committee for their contribution to the report, including the member for Dunkley, who joined the committee as a supplementary member for the inquiry. I would also like to again place on record my thanks to the secretariat, who, under an increased workload, have again been of magnificent assistance in producing this report. Again I would like to place on record the need to make sure that these committees are adequately resourced. There is a different workload that we have in this parliament from the one before, and they are operating under very trying circumstances. That does need to be recognised; otherwise the work of these committees will not be able to go on.

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

by leave—The report of the Standing Committee on Economics, which has just been presented, does in fact include recommendations from the majority of the committee members, as the chairman indicated. It is important to note that the majority was on the casting vote of the chairman, so it was a bit of a closely run thing as two bills, differently crafted but seeking to achieve the same objectives, were being considered by the committee.

It is important to recognise that the truncated consultation and examination of the government bill, the Competition and Consumer Amendment Bill (No. 1) 2011, caused great concern for the non-government members. The member for Dobell has described the process that gave rise to the two bills being before the committee and, with some enthusiasm, how the government and the committee sought to examine the private member's bill that I produced. If only that same vigour and enthusiasm, and period of examination and scrutiny, had been available to be applied to the government's bill—alas, it was not. It was an incredibly truncated and, I think, somewhat unsatisfactory process for looking at the government's bill.

There is a dissenting report, and on behalf of my non-government colleagues I will speak to it very briefly. It has a different recommendation, as you would imagine, from the government members' report. The government members' report recommends that the Treasurer's bill be adopted and the private member's bill I prepared be rejected. It is quite remarkable, though, that the body of the report shows that there was really very little independent evidence and considered justification presented to the committee, or relied upon in the committee's report, to enable it to arrive at an unequivocal recommendation such as has been outlined in the report by government members.

What is clear is that best practice regulation has not been engaged in in the development of the government's bill. The regulatory impact statement exercise was characterised by some competition law experts as an exercise in self-justification. In my view, that was subsequently reinforced by the appearance of Treasury at our one-day hearing—a one-day hearing at a time when only my private member's bill was available. At that stage, when that hearing was being conducted, we had only an exposure draft of the government's bill. Even yesterday, we received from Treasury some answers that were not terribly illuminating.

This process has not really seen the government bathe itself in glory, when it comes to the addressing the price signalling gap in Australia's competition law. For some years the government ignored calls by the ACCC to address this deficiency and the ACCC's inability to investigate concerns about potentially anticompetitive practices. The existence of this competition law gap has featured in a number of ACCC reports over the years of the Rudd and Gillard government, including reports dealing with petrol retailing. The absence of that power influenced merger and acquisition approvals by the ACCC. It emerged as a concern in relation to banking competition and even attracted the urgings of the OECD to get on with it, without that organisation bringing forward anything practical to help in that task.

So this has had a long history, as Brent Fisse, a leading Sydney based competition lawyer, characterised in an opinion piece. He was quite right and accurate in saying:

There are no simple solutions. Distinguishing between oligopolistic interdependence and unjustified coordination of market activity by competitors is the toughest challenge in competition law.

I think that assessment is absolutely right, and may explain why it took the coalition's private member's bill to lead the way and prompt the government to bring forward its own bill. But that complexity is exactly the reason why careful examination of these bills is justified. The bills need to be guided by sound economic policy and competition principles, as I think the coalition's bill was. We need to be mindful that price signalling can have both a positive and a negative effect on competition and on consumers or may have no effect at all. That needs to shape the way in which the law is crafted, and then that law needs to be embedded in known and understood Australian competition law concepts. You have to be careful not to overreach or to invite unintended consequences that might well be detrimental to the economic wellbeing of Australia and its citizens.

We have seen through this truncated inquiry, and captured in the report that was tabled today, a very divergent view of the action we should take. What worries me, though, is that we started at a point of shared purpose. There was a genuine shared purpose about the need to tackle anticompetitive price signalling. The government and the coalition then took divergent paths, and I am concerned to reflect that the process through which the committee operated has only made that divergent pathway even more divisive. I think it has produced defective legislation from the Treasurer. The government has not availed itself of the considerable technical expertise that was available to the committee through its submissions and has not had a genuine opportunity to examine the recom­mendations for amendments or even some conceptual changes that came forward in what were very high quality submissions. This has damaged the quality of the bill that the parliament will be asked to consider and in fact diminished the committee process. This is not a satisfactory way in which the committee should examine these bills of such moment.

I am concerned at the result of this process. The Law Council of Australia trade practices committee chairman, Stephen Ridgeway, captured this in a comment attributed to him. The Australian Financial Review of 23 May states:

… it was the shortest consultation period he had ever seen and the time permitted for feedback was "manifestly inadequate".

That captures what I feel is a disrespectful disposition to the quality of the submissions that were provided, a disinterest in the expertise that they made available and, frankly, a dishonourable use of the comm­ittee process, when so much more could have been achieved in a cooperative and collaborative way.

I understand that the bills will be brought on with some haste, perhaps even tomorrow. Even though the committee recommendation is simply to pass the bill, I understand that the government will be bringing forward some amendments, in my view underlining the point that there is ample opportunity for improvement. All this remarkable truncated period and poor process has done is prove the point that this is too important an area of policy to have the government adopt a 'mine's bigger and tougher than yours' attitude, purely because the coalition's bill led the way in this area. This is not an area where the Treasurer should exercise what he thinks is his political heavyweight cred­entials while everyone looks at this outcome and thinks, 'This is economic policy lightweight work.' I think we can do better; I wish we had had the opportunity to do so and I hope the parliament carefully considers the report before it, including a shopping list of areas of deficiencies and flaws in the government's bill, which I fear the government will try and jackboot through this parliament after kicking to the kerb a process that could have offered so much more.