Barnaby Joyce (New England, National Party) Share this | Link to this | Hansard source

On behalf of the Standing Committee on Industries, Innovation, Science and Resources, I present the committee's report entitled Internet competition inquiry: inquiry into impacts on local businesses in Australia from global internet-based competitiontogether with the minutes of the proceedings.

Report made a parliamentary paper in accordance with standing order 39(e).

by leave—The arrival in Australia of Amazon, the world's largest online retailer, has focussed attention on the effect of internet based competition on Australian business. I'd like to note to the House that the market capitalisation of Amazon is $600 billion. The total retail expenditure of our major supermarkets, including Coles and Woolworths, is $90 billion, so we're talking about an absolute giant here.

Online shopping has grown rapidly in recent years, and this has enabled overseas firms to compete directly with Australian retailers in the domestic market. For some Australian businesses, competing with overseas firms based in lower-cost markets is proving challenging. This is also noted in such things as when people in shopping malls have to pay rent while people online only have to pay for stamps to send the products.

Nevertheless, while online retail is increasing competition, it is also creating opportunities for Australian businesses to export their goods and services globally. For example, almost 90 per cent of Australian small businesses using eBay are exporting products overseas.

The size of the customer base available online enables small manufacturers and retailers to establish highly specialised business models that can succeed and grow. In addition, it allows businesses based in regional Australia to access the same market opportunities as those in urban areas.

A key role for government is to ensure that the digital economy operates with a level playing field and that Australian businesses are equipped with the skills and technologies needed to succeed.

Therefore, the committee has recommended the establishment of a grants program to assist Australian small businesses to take advantage of digital economy opportunities. The grants program should provide matched funding for businesses that are looking to improve their capacity to engage in online retail.

The committee has also recommended that the government develop education materials to assist small businesses to understand the risks and benefits of using online platforms and emerging digital technologies. These materials should also assist businesses to improve their cybersecurity processes.

The committee believes it is important to share the stories of Australian companies that have benefited from engaging in the digital economy. Promoting these stories, especially from companies outside the technology sector, will encourage other small businesses to explore the opportunities that new technologies are creating in their industry.

The speed with which new internet based firms have been able to become significant market actors is unparalleled. For example, in a number of Australian cities it took Uber only a few months to disrupt the taxi market.

The committee heard from representatives of the hotels industry about their concerns relating to the growing market power of online accommodation booking sites. I note that, even in my own local area, basically you have to follow the conditions of the online booking agencies, even though at times they get 25 per cent of the price of the accommodation. If you don't want to be part of them, you don't get any clients.

The hotels are upset by what they perceive as unfair contract provisions and commission rates charged by the booking sites. Due to the popularity of the sites, however, the hotels have little choice but to accept the contract conditions.

There is a concern that digital platforms are able to gain possibly damaging levels of market power before regulators can adequately respond. The committee has, therefore, recommended that the government consider future reforms of competition law in light of the potential for digital platforms to act in anticompetitive ways. I note that I've had a distinct interest in this for a long period of time, since section 46(1AA), otherwise known as the Birdsville amendment.

New digital technologies are changing the world of work and the potential employment impacts of automation and artificial intelligence are a concern for many people.

As with every preceding wave of rapid development there will be some jobs that are replaced by new technologies. The effect on the retail industry may be a movement of staff from customer service roles to warehousing and logistics roles.

Overall, however, the digital economy should result in more jobs being created than lost.

Nevertheless, there are many Australians who have developed skills and expertise in jobs that are at risk from technologies such as automation. For this reason the committee has recommended the creation of a digital retraining fund.

The fund would assist Australian workers develop their digital skills helping them to maintain their employment or, if necessary, transition to new jobs.

It is easier to find a job if you already have one, so it is important to assist Australian workers improve their skills now before digital disruption places them at risk of unemployment.

The committee has also recommended that the government invest in the development of the nation's capacity to forecast future skill needs. This would assist education and training providers prepare courses as well as help local businesses with their workforce planning.

I would like to thank the organisations and individuals who appeared at public meetings or provided submissions to the inquiry. I would also like to thank my committee colleagues and note that this is the first report since I became chair, so I acknowledge those who preceded me for their contribution to the inquiry.

I commend the report to the House.

Luke Gosling (Solomon, Australian Labor Party) Share this | Link to this | Hansard source

by leave—I join the chair in thanking all those that have contributed to this inquiry, a very important inquiry into the impact on our local businesses in Australia from global internet based competition. I want to thank all those that came and gave us their time, their ideas and their thoughts on how we need to prepare for these challenges and what government's role needs to be. In particular, I want to mention Mr Mitchell, the member for Lyons; and Peter Khalil, who supported me in my role as the deputy chair in contributing, with our colleagues from the opposite side, to putting together what I think is an important report. I also want to quickly acknowledge the previous chair, Ms Landry.

The impacts on local businesses are many and varied. It's important that we support small businesses in particular. That's why it's great that the committee has recommended the establishment of a grants program to assist Australian small businesses to take advantage of the opportunities because, whilst there might be challenges in this space from these behemoths, these international global giants, like Amazon, there are also many opportunities. We've recommended that the government fund small business to take advantage of those opportunities. Education materials have also been recommended to assist small business understand the risks and benefits of these emerging digital technologies.

The committee also believes it's important to share the stories of Australian companies and the way they are adapting in this space and doing well. So, to lead by example, I want to quickly mention some people from the Territory and promote their story. Injalak Arts produce fantastic products from the largely Aboriginal community of Gunbalanya. Injalak Arts sell their products through Etsy and regularly receive orders from all over the world, including from as far afield as remote areas of Myanmar, so you've got remote areas in the Northern Territory selling products through the internet to remote areas of Myanmar. There are truly incredible opportunities. They are remote but the internet has levelled the playing field somewhat for them.

Another example is in Darwin, in my electorate—Injalak Arts at Gunbalanya is in the member for Lingiari's electorate. In Darwin some young Territorians have started up an online earring business called Frunky. Marketing for Frunky is conducted primarily through Instagram and sales are made through their website. They're looking to expand their product range shortly. Our committee has promoted the telling of these stories. These are just two from the Northern Territory, and there are many others.

With the advances in marketing through these platforms there truly are great opportunities for small businesses. However, the committee also heard disturbing stories—from the Hotels Association for one and the Booksellers Association for another—about the possibly damaging levels of market power. The committee has, as the chair discussed, recommended that, in light of the potential for digital platforms to act in anticompetitive ways, future reform of competition law would be a good thing to do.

We've heard about the disruption of online businesses, but we also need to focus our mind on adaptation. We must change and adapt and we must help our businesses do the same. That's why we've recommended the creation of a digital retraining fund. The workforce is so important in this space. Workforce is the next big challenge in STEM. I want to recommend to the government something that is not in the report: instead of giving $17 billion to the banks out of your corporate tax plans, how about we put that into education so that our kids in the future can adapt and can get the jobs that are going to be required to be all that we can be as an economy and as a people by using the internet and using the global online marketplace? Workforce is a big challenge and we need to do more.

I again want to thank my fellow members of the committee on that inquiry. I look forward to finding out when we next meet what our committee will turn its mind to next. There are some great recommendations in the report. I recommend it to everyone. We must adapt to stay competitive in this new global scene. I also commend this report to the House.