Christine Milne (Tasmania, Australian Greens) Share this | Hansard source

I rise today to make comment on the economics committee report on to milk pricing. I want to note that the Australian Greens have signed on to the additional comments that Senator Nick Xenophon put a great deal of work into preparing and have followed the inquiry very closely.

I am one of those senators who is very concerned about the impact of the milk price war on dairy farmers over the longer term. We have had several inquiries in this Senate into what is going on in the dairy industry. There is no doubt whatsoever in my mind that the duopoly of Coles and Woolworths and their behaviour towards producers in Australia is bad for the Australian economy in the longer term. It will make sure that the margin—the farm-gate return—for producers of all kinds will be such that eventually people will not be able to stay in the market. So we will see here what has happened in other parts of the world, where farmers are eventually driven off the land. Yes, we have just heard from Senator Bishop that you can still access milk if you like—long-life milk, or whatever else. You can import it; you can do any number of things. But I think most people want to see fresh milk in Australia produced on Australian farms, with Australian farmers getting a decent farm-gate price.

As to the behaviour of Coles and this argument it is being looked in to—that it is a good thing for consumers that they are getting cheaper milk—that has been the conclusion that has been drawn previously. The fact of the matter is, as Woolworths said in its submission to the inquiry, these prices set a new benchmark and can be expected to flow back to processors and farmers as new supply and pricing agreements are negotiated over the coming months and years. And that is the point: they will recoup this money by taking it from the processors and then of course the primary producers. We know that Coles has already gone back to producers of all kinds of primary products in their supermarkets and told them they have come up with a new efficiency dividend that they have worked out and that they are now compulsorily applying it to all primary producers. What that means is that Coles is going and recouping the so-called losses that it has made as a result of its price war and taken it out of the pockets of every other primary producer. I find it interesting that Senator Bishop made his remarks this morning, given that Senator Carr, as the minister, was standing up here yesterday saying that the government was going to refer this matter of Coles and Woolworths to the ACCC to have a decent look at, because of their now-announced decision for a massive expansion in home-brand product. It was one of the first times I felt quite enthusiastic good about a response that Senator Carr has given. The idea is to get rid of branded products off the shelf, whether it is milk as a branded product or anything else as a branded product, and it will mean that they can import cheap food from overseas, repackage it in Australia and put it out to consumers and the Australian consumer is not going to know where that has come from. It is one of the reasons why the Australian Greens want to see a very close scrutiny of what is going on with the Trans-Pacific Partnership Agreement, particularly as it pertains to primary products.

In July 2011, in his response to the milk price war, the then Chairman of the ACCC, Mr Graeme Samuel, said:

It is important to note that anti-competitive purpose is the key factor here. Price cutting, or underselling competitors, does not necessarily constitute predatory pricing. Businesses often legitimately reduce their prices, and this is good for consumers and for competition in markets

Frankly, that is an incredibly naive statement about what is going on in Australia in this absolute battle between the primary producers, the processors and the supermarkets. What we have not been able to get for milk in particular is a whole look at the supply chain—what the farmer gets at the farm gate, what the processor gets, what the cost of transport is and what is the mark-up by the supermarkets. Let us have a good look here so the consumer can see when they purchase a litre of milk what percentage goes to the farmer at the farm gate. It is absolutely warranted that we get to the point in Australia where we have a really good look at this. Associate Professor Frank Zumbo from the School of Business Law and Taxation at the University of New South Wales said that Australia is out of step with international practice when it comes to competition legislation. He said:

There are two areas that need to be remedied in our competition laws. The first is we need an effective prohibition against anti-competitive price discrimination. Australia is out of line, out of step, with international practice in this area. Other jurisdictions have express prohibitions against anti-competitive price discrimination. We do not. Any hope that section 46 would deal with that issue, I have to say, with all due respect, is somewhat misplaced if not delusional. We therefore do need an express prohibition against anti-competitive price discrimination.

I could not agree more. It is one of the recommendations of these additional comments. I note that I moved for this in the Senate and it was voted down by both the coalition and Labor. But that does not mean that it is not the right way to go. It absolutely is the right way to go. I agree with this recommendation—and I am pleased that Senator Heffernan of the Liberal Party has agreed to sign on to this:

Amend section 46 of the Competition and Consumer Act to effectively prohibit anti-competitive price discrimination. Consideration should be given to relevant legislation in place in the United States and United Kingdom, and the reintroduction of an 'effects test' as per section 49 of the Trade Practices Act 1974.

I totally support that recommendation. It is what I tried to do and will continue to try to do.

The second recommendation is:

Amend the Competition and Consumer Act 2010 to provide for a general divestiture power whereby the ACCC could, in appropriate cases, apply to the Courts for the breakup of monopolies or dominant companies that engage in conduct that undermines competition.

We need that in our suite of laws so that there is an opportunity to take this on. We have got to a situation now where primary producers and processors in Australia are afraid to speak out because of the absolute market power that is now being brought to bear on those primary producers by this supermarket duopoly. I absolutely think it is time we did that.

If anyone is in any doubt as to the kind of power they exert, why is it that we have not read on the front pages of the paper the decision of Coles to go out with this so-called efficiency dividend and tell people that they are going to get less for their primary product imported to Coles supermarkets? It is because they are afraid. They are afraid that if they come out and expose what Coles is doing they will be cut off the list and they will lose their ability to sell into those supermarkets. What a tragedy that we have got in this country companies such as the Coles and Woolworths chains having that sort of power over primary producers in this country.

The other recommendation that is incredibly important is:

That the ACCC undertake a full investigation into whether Coles has engaged in misleading or deceptive conduct as a result of an advertising campaign that may have created the impression that prices are coming down across the supermarket when only a percentage of products have in fact been reduced.

As to this issue that Senator Bishop raised that consumers are getting cheaper milk, they do not know what else in the supermarket they are paying more for so the overall cost is evened out as far as the supermarket is concerned. They are now using the opportunity to come back to primary producers to take more. What is more, there is the long-term issue that when contracts have to be renegotiated between processors and dairy producers we are going to see downward pressure on market prices.

These additional comments strengthened the report. I commend Senator Xenophon for the work he has done in putting this together and the other senators who have signed on to the additional comments. I look forward to continuing to work for that anti-price discrimination provision being restored.