Rex Patrick (SA, Centre Alliance) Share this | Hansard source

I rise to contribute to the debate on the Treasury Laws Amendment (Australian Consumer Law Review) Bill 2018. I wasn't planning to speak on this bill. However, I observed some quite thoughtful and considered filibustering, particularly from those in the coalition, on other bills this week, so I'm sure the public will be pleased to see such considered debate on legislation that has bipartisan support.

Centre Alliance supports this legislation, which makes a number of amendments to the law to clarify and strengthen consumer protections. I won't be going into any further details about the provisions of the bill, as that's been fairly well covered, but I do want to take the opportunity to speak about an issue that relates to consumer protection, specifically protection for consumers from monopolies.

Many of you would be aware that the ACCC recently approved CKI's takeover of the APA Group. Senator Molan stood up in the chamber the other night and made a considered and measured statement in a speech on the adjournment debate which represented some people within the coalition and sent a signal to others within his party—although I'm not in any way suggesting that is the position of the party. Senator Molan's contribution—unsurprisingly, noting that he's a former general—focused on the national security concerns with the project. I share his concerns, but noting he's already traversed that topic and it's not relevant to consumer law, I'll steer clear of this aspect and focus on competition.

I have to put it on the record that on 3 July this year I wrote to the then Treasurer, Mr Scott Morrison, requesting that he exercise his powers under the Foreign Acquisitions and Takeovers Act to prevent this takeover from occurring. On 12 September, I wrote to the current Treasurer, Mr Josh Frydenberg, setting out the same concerns and suggesting that on balance the takeover should not be allowed to proceed. APA Group own 15,000 kilometres of gas pipelines across Australia that keep gas-fired power stations running, keep large gas-energy users in operation and provide domestic customers with gas. In the 2016 ACCC east coast gas market report, the ACCC indicated that there was 'evidence that a large number of existing pipelines have been engaging in monopoly pricing'. The ACCC did not name APA Group, but it is clear that they are the dominant gas player in the east coast market.

Switching to a recent electricity report, we note that in the ACCC's 2018 retail electricity pricing inquiry report the ACCC made a recommendation on the need for constraints on some further consolidation on generation ownership, given the existing levels of concentration in the market. They went so far as to recommend constriction on further concentrations beyond certain levels and mechanisms to force divestiture of assets or market share in particular circumstances.

There's a considerable economic concern for consumers in respect of APA's current east coast gas pipeline monopoly status. East coast businesses and consumers have only just finished experiencing the tops of gas prices, but they are still way too high. We certainly don't need any sort of reversal in our gas price fortunes. If this deal went ahead, particularly giving it reference to my constituents back in South Australia, we would see CKI in charge of 95 per cent of SA's electricity transmission arrangements—its wires, because they also own SA's power networks—and 85 per cent of its gas transmission infrastructure. The Grattan Institute's energy expert, Tony Wood, was quoted in the Australian Financial Review on 15 June as saying, 'You add APA to CKI and you get the mother of all gas monopolies; it will sit like a gorilla across the Australian landscape.' I note that he did go on to say, 'That doesn't necessarily mean that it shouldn't be approved, but it will be the ultimate test of our regulatory model.'

As we 're adjusting these laws, I want to suggest that the current regulatory framework also needs strengthening in other areas. Unfortunately, because of the way the law is defined, the ACCC was not able to recommend against the takeover because it was not creating a monopoly, simply preserving one. In my view, that's not good enough. Australia has many concentrated markets that are dominated by a few very big businesses, and our current competition law exists to prevent anticompetitive behaviour and misuse of market power. However, the ACCC is powerless to act if the transaction doesn't change the composition landscape.

We need to concentrate on the end state here. The consumer laws are designed to protect us against monopoly situations. We do not let companies merge to get to a monopoly situation. Once again, that is recognition that the end state is a bad place. So we shouldn't also let a circumstance develop where, in this case, a foreign entity, but perhaps even a domestic entity, is permitted to buy into a monopoly where the end state already exists. Perhaps there's a way of, in some sense, regulating against monopoly status by making sure boards understand that if they get to a point where they do have that monopoly status, there is a risk that when they sell the company the ACCC will order it to be broken up in some way. In some sense the CKI model does that, because the ACCC said to them, 'You simply cannot conduct this takeover if you retain existing pipelines in Western Australia,' because that would have increased the monopoly status. I would like to bring that to the attention of the chamber. When we're considering consumer laws, we act to protect consumers—that's the responsible thing to do. We need to think about how we protect from the end state of a monopoly supplier.