Tim Wilson (Goldstein, Liberal Party) Share this | Link to this | Hansard source

On behalf of the Standing Committee on Economics I present the following reports: Review of the Reserve Bank of Australia Annual Report 2017 (Second Report), and Review of the Australian Competition and Consumer Commission Annual Report 2017, together with the minutes of proceedings.

Reports made parliamentary papers in accordance with standing order 39(e).

by leave—On 29 June 2018 the Australian Competition and Consumer Commission appeared before the committee and discussed its activities in relation to enforcing the Competition and Consumer Act 2010 and related legislation. The ACCC has an important role to play in monitoring and holding individuals and groups to account for anticompetitive behaviour in breach of Australia's Consumer Law. In the last year the government has extended the ACCC's roles and responsibilities to include regular inquiries into competition in the financial sector, inquiry powers to increase transparency in the gas markets, examining the electricity markets and inquiring into the supply of residential insurance products in northern Australia. The committee notes the ACCC's assurance that it is taking a more proactive approach to issues in the financial sector in response to the committee's recommendation in its November 2016 report on its review of the four major banks.

The government established a new financial services unit. Through the FSU, the ACCC now has a permanent role in monitoring the banks on competition matters, enabling the regulator to play a competition champion role. The FSU will undertake regular inquiries into specific financial competition issues, facilitating greater and more consistent scrutiny of competition matters in the sector. The committee shares the Productivity Commission's concern that the financial sector has been without a competition champion, and it will continue to monitor the ACCC's work in this area. It looks forward to the ACCC further developing its role of competition champion.

While strong competition laws and corresponding penalties have been in place since 2007, until recently this has not been reflected in the pecuniary penalties imposed in competition cases. There is still much work to be done by the ACCC and in the legal system to clearly demonstrate to companies that for serious competition breaches there will be serious consequences. In particular, penalties for competition law breaches must take into account company size and turnover for them to be an effective deterrent to anticompetitive behaviour.

While the ACCC appears well placed for its new enhanced competition role, the committee notes the regulator's advice that it has been a different story when it comes to Australian Consumer Law. However, the recently passed Treasury Laws Amendment (2018 Measures No. 3) Bill 2018 will correct the disparity between competition and consumer law penalties. The maximum penalties under the Australian Consumer Law will now align with the maximum penalties under the competition provisions.

The ACCC is also doing important work in energy markets on electricity and gas supply and affordability. In particular, the committee notes that the ACCC will now be monitoring and reporting to the government on electricity prices at least every six months until 2025. The ACCC will be empowered to require energy providers to support relevant information, and the regulator may make recommendations to government on how to improve electricity outcomes for consumers.

The government has also directed the ACCC and the Australian Energy Regulator to set a default price for electricity, which is expected to apply, at the latest, from July 2019. The committee will continue to monitor the ACCC's work on energy with a particular focus on and interest in making sure that we do what we can to reduce prices.

On behalf of the committee, I thank the chairman of the ACCC, Mr Rod Sims, and other ACCC representatives for appearing at the hearing. I would also like to thank the former chair of the committee, Ms Sarah Henderson MP, for her contribution. With that, I commend the report to the House.

Sharon Bird (Cunningham, Australian Labor Party) Share this | Link to this | Hansard source

I think there may be some people interested in speaking on this report, but firstly the member for Goldstein in continuation.

Tim Wilson (Goldstein, Liberal Party) Share this | Link to this | Hansard source

On 7 August 2018, the Reserve Bank of Australia, the RBA, left official interest rates unchanged at 1.5 per cent. In making this decision, the governor commented that accommodative monetary policy was continuing to support growth in the Australian economy and the board did not see the need to alter the cash rate.

At the public hearing on 17 August 2017, the committee scrutinised the board's decision to maintain the cash rate at its lowest historical level for the past two years, given that Australia's economy is now growing above three per cent and the unemployment rate has dipped below 5½ per cent. The governor noted: 'In the broad sweep of our economic history, these are a pretty good set of numbers,' and he said that the RBA expects further progress in reducing unemployment and having inflation return to target; however, he said that this progress is likely to be gradual.

Australia's economy continues to grow strongly, and the RBA expects GDP growth to average around 3¼ per cent by the end of 2018 through to the end of 2019, reflecting above-trend growth in a number of major economies. This is being supported by a pick-up in non-mining investment, strong commodity prices, growth in investment and energy projects and public sector infrastructure, low interest rates and the tax cuts that have already been put in place for small and medium businesses—and exciting ones to come.

While the global economy is growing strongly, the governor reported that a number of risks have emerged that could dampen investment and growth, such as the escalation of trade tension between Australia's biggest trading partners, the United States and the People's Republic of China. He noted that it was in everyone's interests for China and the United States to resolve their differences and that it was important that Australia continue to promote free trade as a pathway to prosperity in international fora.

Australia's labour market has continued to strengthen, with the labour force participation rate currently at 65.5 per cent, which is close to its historical high. Strong, continued growth in employment is expected to further reduce spare capacity in labour markets and generate a gradual increase in wages and inflation. While growth in average wages has been relatively low, we have turned the corner on wages growth. The wage price index increased by 0.6 per cent in the June quarter, which is the fastest quarterly increase since March 2014.

On behalf of the committee, I thank the Governor of the Reserve Bank, Dr Philip Lowe, and other representatives of the RBA for appearing at the hearing on 17 August 2018. I would also like to thank the former chair of the economics committee, Ms Sarah Henderson MP, for her contribution. On that note, I commend the report to the House.

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Assistant Minister for Treasury) Share this | Link to this | Hansard source

by leave—I rise to speak, firstly, in respect of the RBA hearing before the Standing Committee on Economics on 17 August. Much of the debate revolved around the slow wages growth that Australia has been experiencing. I'm not sure I agree with the chair in saying that we've turned the corner on wages growth. We've had another annoyingly slow year when it comes to wages growth, in that growth has been basically slow or non-existent for too many Australians. Workers and those on a wage are getting a dud deal, with a falling share of national income. It's really a tale of two nations at the moment, with a divide between those workers who are doing a fair day's work but waiting for a fairer day's pay and those who aren't.

This is a point that the Governor of the Reserve Bank of Australia, Philip Lowe, made in looking at and analysing wages growth in the Australian economy in recent times. He said that sustained low wages growth diminishes the 'sense of shared prosperity' that we all have as Australians. He said:

I have certainly been talking for a couple of years about the benefits of stronger wages growth.

The governor said that wages growth, unfortunately, in the lower levels of the wage price index is set to continue for some time. This echoes Labor's concerns about the growing inequality that we're seeing throughout the country. We all know that with low wages growth it's those who are in marginalised occupations and those who are on award wages that tend to suffer the most. Unfortunately, they are people who are working in casual and part-time occupations, with an increasing number of women in those occupations. That ensures that those who are at the lower levels of the wages bargain, if you like, continue to fall further behind.

There's a sense that we do need to do more to look at boosting wages growth in this country. We all know that the enterprise bargaining system has been smashed in recent years by this government, and we're starting to see, for the first time in Australia since the inception of enterprise bargaining in the 1990s, that the number of agreements that are being made is actually falling in this country. That's a great shame, because, to get real increases in incomes beyond those that are catered for by the awards system, people need to collectively bargain through that enterprise bargaining system, and changes to that system that allow companies to put workers back onto the award system if they can't reach an enterprise agreement with a company are, I believe, contributing to lower wages growth in this country. It is ensuring that we're not getting the boosts to incomes that will fuel consumption and bring us out of the economic malaise that we've had for some years now.

There was also quite a discussion about the cost of electricity, particularly for large and small businesses throughout the country, and the fact that very, very high electricity prices are contributing to inflated cost pressures for many of those businesses, which is impinging on potential growth and potential employment opportunities. We all know that this government has been in the midst of a war for the last decade about its views on climate change and its approach to improving renewable energy uptake in our economy and eventually reducing the cost of electricity throughout the economy. We all know that we have an obligation to make a smooth transition away from dirty coal-fired power to cleaner, renewable energy sources. But this government is intent on halting that process and, in doing so, has created uncertainty for investors in this industry, which is pushing up the cost of electricity for households and businesses in Australia.

All Australians are paying for this government's inability to work out its arguments and the war that's been going on around climate change and energy policy for the last decade. Nonetheless, I thank the Reserve Bank and the deputy governors who appeared before us on 17 August for, once again, being very frank and honest with the committee about the economic progress of the country.

Turning to the second report, about the ACCC, again there was a broad-ranging discussion. Electricity and the cost of energy were included in one of the principal discussions, but I want to turn my attention to some of the discussion that occurred about independent mechanics and the process that they have in potentially forcing up prices for motorists when they get their car serviced. In December 2017, the ACCC released its final report for the new-car retailing industry market, with studies and details of findings from almost 18 months of investigation, consultation and research. The ACCC says that independent repairers must be provided with access to the same technical information that car manufacturers make available to their authorised dealers and preferred repair networks at reasonable cost. This is something that the Labor Party wholeheartedly agrees with the ACCC on.

Everyone should be able to choose where they get their car serviced, but the car manufacturers have, unfortunately, been pushing a view that you need to get your car serviced with them if you're going to maintain your warranty and if you're going to be able to ensure that you can resell your car in the future. It is absolute garbage. It does not reflect the Australian law and these big dealerships are forcing many Australians into having their car serviced with them, at often inflated prices, by not supplying information to independent mechanics that can ensure that they can access the technical details that are required. Cars are computers on wheels these days and they need to access that technical information.

We had a review of the industry's voluntary code in September 2016 that this government promised to deliver. They failed to do so. They also promised to review the voluntary code by October 2016 and, again, the deadline came and went without action. Labor now, in the wake of the government's inaction on this issue, have developed a plan to ensure that car manufacturers share their technical information so that vehicles can be serviced by independent mechanics. Labor will require car manufacturers to share that technical information with independent mechanics on commercially fair and reasonable terms, with safeguards on the environmental safety and security related technical information to be shared with the independent sector. The result will be more money back in the pockets of car owners and a rev up for our nation's 23,000 independent repairers.

It's a shame that Labor has had to act on this when the government's had many, many months. For many years, they've known that this is an issue and they've been unable to work on developing the process of putting in place good policy. I urge the members of the government to support Labor's approach and to support the policy of ensuring that the big dealerships provide that important technical information on a fair and reasonable basis to repairers.

Once again, I thank the members of the ACCC who appeared before us and I thank the committee secretariat for their work in preparing both of the reports.

Tim Wilson (Goldstein, Liberal Party) Share this | Link to this | Hansard source

I move:

That the House take note of each of the reports.

Sharon Bird (Cunningham, Australian Labor Party) Share this | Link to this | Hansard source

The debate is adjourned. The resumption of the debate will be made an order of the day for the next sitting.