Fiona Scott (Lindsay, Liberal Party) Share this | Link to this | Hansard source

I move:

That this House:

(1) notes that the first major root and branch review of competition policy in more than 20 years, as promised by the Coalition, is being delivered, and:

(a) is being conducted with a focus on the current laws and competition framework, to ensure that efficient businesses, both big and small, can compete effectively and have incentives to invest and innovate for the future; and

(b) will provide a framework for delivering durable benefits to consumers by building a productive and competitive 21st century Australian economy;

(2) recognises the plans of the Government to support efficient markets which deliver lower prices and better services for Australian consumers; and

(3) commends the Government on its approach to this important economic reform.

I come to this place with a fundamental belief in small government. I also believe in the importance of free trade and a free and fair market. In fact, I believe it is a fundamental role of government to provide that fair and even playing field, a platform that will allow business to innovate and to flourish. It is for this reason I bring this matter to the House. I commend the minister for getting on with the job with a root and branch review of the competition policy. I commend the minister for getting this policy review underway.

The last comprehensive review of competition policy, the Hilmer review, was in 1993, more than 20 years ago. Hasn't the economy—hasn't the world—changed in that 20 years? This root and branch review delivers on a key election commitment. The review is sure to identify ways to build and promote the Australian economy and promote investment, growth and jobs creation. The competition review will examine not only the current laws but also the broader competition framework to increase productivity and efficiency in markets, drive benefits to ease cost of living pressures and raise the living standards for all Australians. We need competition laws for the 21st century. In the words of Professor Harper, who is leading the review, 'We need a modern, responsive competition policy framework that strengthens our economy today and positions us for the new opportunities and challenges we face in the decades to come.'

Good and sound competition policy should enhance innovation, create new goods and services and develop new ways to do business. Ensuring a fair playing field is good for consumers and business alike. Competition has the power to boost growth, enhance our standards of living and drive productivity. I was raised in a small business family and my dad, who at various times throughout his career found new ways to do business and moved into new franchising models, always said, 'Competition doesn't kill you. It makes you stronger. It makes you find new ways to do business.'

More than ever, we live in a changing environment and a changing economy. Our economy is most definitely dynamic. In the years since the last review, the FMCG market alone within our major supermarkets—both Coles and Woolworths—had a market share of about 40 per cent. Today their market share is in excess of 80 per cent, and I expect my good friend the member for Hughes will touch on these exact points. These two competitors are changing not only the face of our FMCG environment but also hardware, fuel, insurance, liquor, pubs—which I am sure the member for Reid will also discuss today—and changing the way business and consumer goods right across our economy are being purchased and acquired.

Also since the last review we have seen the advent of the internet, with social media alone changing the way all consumers communicate, how we do business and how we acquire goods and services. It has also changed the retail experience for all Australians and shoppers right around the world. The World Internet Project's latest report has found that Australia's online shopping grew by 46 per cent between 2011 and 2013, far outpacing the growth of bricks-and-mortar retailing. Last year Australians spent over $14 billion on online retail and 6.5 per cent spending in bricks-and-mortar retail, according to the NAB Online Retail Sales Index. Industry estimates indicate that the growth trend will continue. According to Frost & Sullivan for example, 'Online retail sales will grow by around 13 per cent, year on year, in the next five years.'

In such a dynamic world and an innovative economy, such changing environments also present so many challenges for policymakers and regulators. This is why I am so proud to be part of a government that is meeting these demands and stepping up to the plate to review our competition policy—to have a competition policy that will be right, into the future. Our last competition policy is over 20 years old. It is time we review our competition policy to continue to provide that fair and even playing field for all Australians. I commend this motion to the House.

Ewen Jones (Herbert, Liberal Party) Share this | Link to this | Hansard source

Is the motion seconded?

A government member: I second the motion and reserve my right to speak.

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

I am pleased to rise to speak on the important issue of competition as Labor's shadow minister for competition. We, on this side of the House, have a proud tradition of reforms in the competition space. Through the long salad years of the Menzies government, little was done on competition policy. The Restrictive Trade Practices Act was regarded as relatively weak and it was not until the Whitlam government that Australia, for the first time, had a Trade Practices Act. As Kep Enderby said in introducing that bill to the House for the first time, 'The effect of empowering consumers themselves to take private action to enforce their rights.' And it was a Labor government, under Paul Keating, which put in place national competition policy. As Mr Keating said in 1992:

It is no accident that Australia’s most efficient and commercially successful producers have been those which have been subject to strong competition. And the most stringent competitive standards are those in world markets….

That was a Labor government, like the Hawke and Whitlam governments before it, that recognised that bringing down the tariff walls was a necessary part of competition reform in a nation like Australia. The Hilmer competition reforms eventually resulted in putting in place a National Competition Council and an Australian Competition Commission, now the Australian Competition and Consumer Commission. Those reforms were absolutely vital for ensuring that Australian consumers were better off, and they were of a piece with Labor's tariff reforms, which put thousands of dollars back into the pockets of ordinary households. That should always be the test of competition reform. The question is not, 'Does it assist competitors?' the question is, 'Does it assist consumers?'

The government has been all things to all people, promising a competition review which will simultaneously lower prices and assist suppliers. These are Liberal and National parties with no great track record on the issue of competition policy. While we on this side of the House can claim the Trade Practices Act, the Competition and Consumer Commission and the National Competition Policy as our legacy, those on that side of the House can claim the Birdsville amendment—an amendment apparently conceived in the Birdsville pub.

As Craig Emerson, a great Labor competition reformer, put it:

… Labor's guiding philosophy of economic reform has been a commitment to markets and competition—a commitment reaffirmed by Julia Gillard as Prime Minister. Of course there can be a role for government intervention to correct for market failure, including anti-competitive behaviour and inadequate private incentives for research and development. But the presumption must be that competition is good, more competition is better and markets are better than governments in allocating scarce resources among competing commercial uses.

This philosophy has guided past Labor governments, and that philosophy is why Labor opened up Australia, bringing down the tariff walls. It has been done with the assistance of members of my former profession. Great Australian economists such as John Crawford, Heinz Arndt, Max Corden, Richard Snape, Ross Garnaut and many others have worked to open up the Australian economy.

We can have reasonable discussions on competition policy. There are a variety of approaches internationally on competition policy and we should be open to improvements in the act. But our test must always be: what will assist the vast bulk of Australian families? We must always take the approach that we are for the many rather than for the few. Certainly as a Labor member of this House, I am happy to stand firmly on the side of consumers. Lower grocery prices are a great boon to Australian households. I remember as a little kid my parents needing to save up to buy a pair of school shoes, an item whose price was then doubled or tripled by tariffs but which can now be purchased for $10 or $20 from a department store. The benefits of lower prices flowing to consumers are one of the things that we in this House should defend.

Craig Laundy (Reid, Liberal Party) Share this | Link to this | Hansard source

I would like to commend my good friend the member for Lindsay for putting this motion forward. I always like following those opposite. I will pick up on the member for Fraser's love of the family. If you look at the small business sector over the last six years—and I notice the member for Fraser went a long way further past that—employment numbers decreased by 500,000, taking it from 55 per cent of the employment in this country to 43 per cent. I have always thought that the best form of help you can give a family is to ensure that the people in it could get a job. But, then again, what would I know? I have only done it. I do not teach it. My father has always said, 'Those who can do it do it, and those who cannot teach.' I have been out there doing it and then I found my way here.

I would also like to congratulate the Minister for Small Business, Minister Billson, for his achievement in establishing this vital review. As the motion notes, it has been over 20 years since the last major review of this area has been undertaken. This review is an important part of the government's Economic Action Strategy and a key element of the government's plan to increase productivity and reduce the regulatory burden on Australian business, big and small. Chaired by Professor Ian Harper, one of Australia's best known economists, and with an eminent panel of business leaders and competition policy experts, the Harper review promises to be a comprehensive look at the competitive environment. The review will be looking at the broader area of competition law and will include related issues such as regulatory impediments, government involvement in markets and dealings between small and big business. The review will also focus on concerns in concentrated markets within the Australian economy and Australia's long-term competitiveness, among other areas.

As has been stated in various policy debates recently, Australia's economy is at a pivotal point where decisions and actions must be taken to ensure continued economic growth and a prosperous future for all. This means we need to look at ways to achieve long-term competitiveness, promote investment, increase productivity and achieve higher real wage growth for all Australians. The original competition policy introduced in the 1990s increased GDP by 2½ per cent and resulted in lower prices and improved services in numerous sectors of the economy. This review we are undertaking will help to lay the foundations for a more productive and competitive 21st century economy and a more prosperous Australia.

Competitive domestic markets will also help facilitate the international competitiveness of Australian exporters accessing the global marketplace. Two weeks ago I had the Treasurer in my electorate, at a company called Rode Microphones. They are taking on the world and exporting 97 per cent of what they produce in a factory in Silverwater. These businesses should be encouraged to take risks—to take on debt, employ people and tackle the world head on—and we as government should work out the best way to get out of their way and allow them to do it. Accordingly, the review has been given a broad mandate to consider competition policy, regulation, and restrictions and their impacts on the Australian economy at all levels of government. Consideration of these matters will feed into and support the government's deregulation agenda. It is good that the member for Lindsay starts to raise these discussions we are having today, because, for the last 105 or 106 days, we have focused on the expense side of our national profit-and-loss statement, the budget. We need to move on to the revenue side. I applaud the member for Lindsay for raising this motion because the key area that this review will cover can deliver relatively substantial benefits to productivity by examining and removing barriers to competition.

There are sectors of the economy in which competition can be improved despite the substantial progress of national competition policy reform to date. Examples can be found in the retail sector, professional services, passenger and commercial transport and other markets. Due to the relatively small size of Australian markets and our geographic isolation, Australian markets have been prone to concentration and oligopolistic—that is hard to say!—market features. Small businesses benefit from competition and the exposure to incentives to innovate and reduce costs; however, they can be in a poorer position than many to risk this, and can be adversely affected by an inequality of bargaining power in dealing with larger businesses. Small business groups have frequently voiced concerns in my electorate about the impact of concentrated markets, suggesting they are negatively impacted by an abuse of power by big business that is not adequately captured by competition laws. I applaud the member for Lindsay; I rise in support of this and I applaud the Minister for Small Business.

Clare O'Neil (Hotham, Australian Labor Party) Share this | Link to this | Hansard source

I appreciate the opportunity to make some comments on what is a really important policy debate that the member for Lindsay has ignited today with this motion. I want to congratulate her for doing that. Looking broadly at the member for Lindsay's motion, I have to say there is not a lot here that most people could disagree with. I rise largely to commend the idea of competition as a general principle in policy. There are some issues about the level of optimism expressed about what this government will be willing to do on competition policy, and I will come to speak about those issues.

But I want to spend a little bit of time first discussing the central tenet here, and that is that competition policy is really important. It really matters. As policymakers, I do not think we have done the best job of explaining what competition policy means and why it is important to everyday people. In part I blame the economists—present company excluded—because we hear a lot in these discussions about 'consumer surplus'. Most people probably cannot really tell you what that means. When macro-economists talk about productivity, what they are really talking about is competition. in everyday language this is really a question of how hard we drive private companies to fight for consumers to take on their goods and services.

When you think about the everyday person, have you had a bad experience with a mobile phone company? Have you received an exorbitant bill and not been able to do anything about it? Have you had an experience where you have been frustrated with your bank because they have not passed on an interest rate cut? How do you decide where you do your grocery shopping? Is it because your grocer offers great goods and services and terrific value, or is it because you really do not have a lot of choice in the matter? Do you find it difficult to compare electricity prices and find the plan that is best for you and your household? Inherently these are all questions about competition. They are, in a sense, the top layer of decisions that are made in rooms like this one right around the country, where we decide regulations, rules and laws that will govern the way markets work. For me, competition policy is one of the most important things we can do—outside the context of perhaps a financial crisis—to drive strong economic growth and so on. Broadly, as I say, I am supportive of the sentiments of the Member for Lindsay's motion.

That takes us through point 1 and part-way through point 2, but where I start to diverge is around point 3, where we start to commend the government on the excellent work done that it has done in this area, because I have to say it is much too soon for me to say that there is any indication of deep commitment by the Abbott government to doing anything serious about competition policy. We have heard a lot of talk but seen very little action so far.

I say this for two reasons. The first reason is that, as I say, we have heard a lot of rhetoric, and we are hearing a lot of rhetoric from the other side today, but what has the government really done? They have put in place a review, with, I have to say, a scope that is absolutely tremendous. They are asking a small committee of people to basically review the entirety of the Australian economy, including sectors, competition law, small business, regulatory institutions, and the role of government in the economy. They have given that committee less than a year to come up with its final recommendations, so we have final recommendations due here in the next three or four months, and all we have from this committee so far is an issues paper, which—if any of you have had the time to look at it—speaks largely at the level of principle. I will be very interested to see, when the rubber hits the road, what we actually get out of the review process.

I will make a brief digression here to illustrate the lack of real, deep commitment by this government to deep policy thinking. We have these guys saying that they are committed to competition policy, but they then throw together a review and give that review only a year to come up with recommendations that could potentially transform the Australian economy. There have been worse examples, though—the $7 GP co-payment, the GP tax, which did not have any modelling associated with it before it was announced by that government, is one. This is how these guys do policy and I have to say, from all of my training in public policy, it is not best practice.

The second reason I question the commitment of the government to following through with its big talk on competition policy is that, when we look at other areas of policy where they have had the opportunity to put markets and competition at the centre of what they do, they have fundamentally failed to do so. The biggest example that we can point to is around the issue of carbon pricing, where Labor has for years been advocating for a market-based competitive solution that will drive the Australian economy into a lower pollution future while we still grow. What we have seen from the other side, however, is the exact opposite of the tenets that are in the submission today—a policy which is about a cash splash to the biggest companies in Australia. Labor, alternatively, has the runs on the board. I believe that we are the party with a true commitment to competition policy, and I look forward to continuing this discussion. Thank you.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

I would like to commend the Member for Lindsay for putting this motion together. Firstly, I am a great believer in free markets. I believe that the free market is the greatest force that we have ever had in human history to create opportunity for the working class, to create a middle class, to uplift the poor, to create prosperity and to grow wealth. I am someone who, probably more than anyone in this parliament, believes that too many times government regulation gets in the way of that free market and actually has adverse effects. But there is one exception: what we here in Australia call competition law or what they call antitrust law in in the USA. Unless we get competition law and antitrust law right, all the workings of the free markets, all the benefits that we have from the free market—we simply miss out on. So, perhaps paradoxically, I believe that we need strong competition law, we need stronger antitrust law—as they call it in the USA—to make sure those regulations are effective, to make sure that we get the benefits from the free market.

I believe that, for the last several decades, we in this country—on both sides of the House—have got competition law wrong. We have had too many people long on theory but short on practice deciding what is best for Australian completion law. We have seen an ideology that sometimes big is better, that there are these endless economies of scale. But of course, as history tells us, that is the same mistake Stalin made.

Perhaps nowhere did we get this more incorrect than in the Dawson inquiry. The Dawson inquiry got many things wrong. Firstly, they got wrong the basic concepts of predatory pricing, price discrimination and geographic price discrimination. They simply did not understand those concepts and they simply failed to understand the history of those provisions—how they came about, the reasons why they were there.

Most of all what they got wrong was, firstly, they said that consumers are benefiting from competition. At that time, if anybody had looked at the grocery industry—which was one of the most discussed during that time—and had taken the opportunity or the time to look at the inflation figures from the OECD, they would have discovered that the rate of food inflation in Australian supermarkets was higher than in just about any other developed country in the world. Prices were accelerating at Australian supermarket checkouts faster than anywhere else in the world, and yet the previous review said there were no problems.

What the Dawson inquiry also got wrong was that they said that section 46 of the old Trades Practices Act, the misuse of market power provision, was 'the appropriate means to tackle anti-competitive price discrimination'. Several cases after that showed that conclusion was completely wrong. I would like to quote the comments of Justice Kirby dissenting in a decision:

With respect, the result of the analysis in the joint reasons in this Court does not protect or promote competition or the competitive process. It stifles it.

…   …   …

This is the third recent decision of this Court (Melway and Boral Besser Masonry … being the other two) in which a majority has adopted an unduly narrow view of s 46 of the Act …

In my view, the approach taken by the majority is insufficiently attentive to the object of the Act to protect and uphold market competition. It is unduly protective of the depredations of the corporations concerned. It is unrealistic, bordering on ethereal, when the corporate conduct is viewed in its commercial and practical setting. The outcome cripples the effectiveness of s 46 of the Act … The victims are Australian consumers and the competitors who seek to engage in competitive conduct in a naive faith in the protection of the Act.

Justice Kirby was exactly right, because the current act does not protect consumers. We have the highest rates of food inflation and, by any logical international comparison of our basic food prices—whether it be a bottle of Coca-Cola, a jar of Vegemite or a tub of margarine—Australian consumers are paying much, much higher prices.

The simple reason is that we allow price discrimination in this country. We have no effective provision against price discrimination. So what happens in this country, which would be unlawful in many other jurisdictions in the world, is that large companies are able to go to the suppliers and demand rebates. The rebates only go to the two largest suppliers in the market. The rebates simply become a cost of doing business which then gets added onto the wholesale price, which is the reason why we have the highest prices. Just look at a bottle of Coca-Cola. It is $4 in Australia; it is half the price almost everywhere else in the world. That is because of the rebates and anti-competitive price discrimination. (Time expired)

Ed Husic (Chifley, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Treasurer) Share this | Link to this | Hansard source

A few weeks ago someone alerted me to a problem they were experiencing accessing, of all things, an e-book. The e-book had been purchased in the US using an account the person had set up when they lived there. They have now moved back to Australia and in the course of downloading their apps to a new tablet discovered a problem. This person has a US account for the book app and an Australian account. On attempting to download their US purchases, a blunt warning appeared saying the device is already associated with a US account and if you download purchases with this account you cannot auto-download or download past purchases for 90 days.

Remember the days when you could buy a book, read it and pass on a good read to someone else? The only time you had to wait 90 days for that book is perhaps if you were shipping it from overseas. But in the digital age what has happened to reading a book and doing with it what you wanted? In the information age, things are actually happening to make it harder to access and distribute information. Things like the terms and conditions underpinning e-books have meant the rights and privileges previous consumers enjoyed with a paperback have ended with e-books. You can only enjoy permission to access the book; you do not own the book in any physical sense. The authors in the creative sector will tell you it is a way of clamping down on the serious problem of internet piracy, and I can sympathise with the argument to a degree, but the sellers have monetised data, squeezing more for their product—and competition law and international trade treaties let them do this. The overreach now appears to extend to people who have legitimately purchased data. They have exchanged currency, they have purchased an item, they have ownership and they are still denied access to what they own.

Now, some may argue that this is a copyright issue and we need to loosen the 'digital handcuffs'. That is a term coined by my colleague and friend the member for Throsby, Stephen Jones, when we were sitting on the House of Representatives Standing Committee on Infrastructure and Communications inquiry into IT pricing, which generated a lot of attention, especially from Australian consumers, who felt they had been taken for granted and complained about delayed access to new digital products relative to consumers in other countries while being slugged up to 50 per cent more for the privilege.

Copyright, as I have mentioned, could be the culprit, and there is something to be said about competition law because today, nearly a year after seeing this government of slips, trips and fumbles come to office, it is patting itself on the back for launching yet another review, this time into competition law. But let us look at its track record on freeing up restrictions on digital products.

The report that I am referring to, At what cost? IT pricing and the Australia tax, delivered recommendations to fight this consumer rip-off, and both the electronic and paper versions sit with the Minister for Communications. It urged that competition law be amended and it dealt with some of the things that are in this resolution. Mr Turnbull, the minister, agrees that these types of practices are unfair. He has said:

I think that as we move into more of a . . . global digital economy, the ability to have different limits on rights and licences from one jurisdiction to another is becoming more futile …

Given his apparent support, he has been nudged for a response by the Financial Review and The Australian. When asked to respond, he said he would do it within the first anniversary of the report. That anniversary was on 29 July. We still do not have a response.

Instead, the government is busy doing the bidding of big business. It is obsessed with internet piracy while not taking a look a why Australia tops the chart for piracy. Why not take a look at another chart we top, digital product prices? As Communications Alliance, the industry body, advised the committee, artificial barriers to content, such as geoblocking, are 'a classic generator of online piracy'. Where the big players have made products easier, safer and more price sensitive, you have seen ample evidence of positive changes in consumer behaviour. The best response to piracy is a market led response, but consumers stand aghast as the market skews towards business. Business will always give a full-throated call for deregulation as long as it can game competition and copyright regulation in its favour.

Considering this, my message to the government, on behalf of millions of frustrated consumers, is: stop seeing everyone of these consumers as an internet pirate; respond to the IT pricing inquiry report; and ensure competition and copyright law can unshackle the digital handcuffs on Australian consumers. It is time that there were a fairer deal for the consumer. That time is well and truly here. Australian consumers have suffered long enough. If you want to be fair dinkum about competition policy and competition law reform, act on the matters that have inhibited consumers getting a better deal, some of the things that even the member for Hughes referred to in dealing with price discrimination. If you are fair dinkum about that, you will act rather than talk.

Debate adjourned.