Perin Davey (NSW, National Party, Shadow Minister for Water) Share this | Hansard source

It's really important and I want to make sure that we get on the record our position on this bill and on divestiture laws. It is no secret that the Nationals have been calling for divestiture powers for quite some time. My leader, David Littleproud, was calling for it as recently as February. But it is also very important that we get it right, that we don't rush divestiture powers through and that we take the time to ensure they are fit for purpose. Let me make it clear that most like economies around the world have divestment powers in their legislation. They are a mechanism to ensure that big corporations, particularly big corporations that have monopoly-like scenarios, do the right thing and don't misuse their market powers and that if they do and if they are found to be misusing them there is a mechanism in law whereby action can be taken.

Divestment powers are supported within our economy. In particular, the former ACCC commissioner Alan Fels says granting the watchdog powers to call for the breakup of corporate giants would act as a big stick against anticompetitive behaviour. He makes it clear that the existence of the power is a huge stick that is needed to make sure some parts of the Competition and Consumer Act work more effectively on big business. Section 46 of the act currently prohibits companies with substantial market power from taking advantage of their power by inhibiting rivals. But what we know and what we are increasingly hearing through the Senate committee inquiry into supermarkets is that section 46 is not working. It is not strong enough to ensure that companies with substantial market powers don't inhibit their rivals.

We are hearing stories of the large corporate supermarkets effectively land banking. They are buying blocks of commercial land to prevent rivals from opening up competing stores.

We are hearing stories of supermarkets requiring suppliers, particularly suppliers in fresh food areas like horticulture, to sign exclusivity contracts to provide a set amount of product, but they do not have similar requirements in reverse. So we're hearing stories like those of a supermarket going to a supplier and saying, 'You must supply only us. You can't supply us and your local farmers market. You must supply only us with a product of a set aesthetic, size and quality, and we want, say, 10 tonnes a month.' So the grower goes and plants enough to produce the 10 tonnes a month with enough wiggle room so they all meet the strict quality requirements, but then, at the end of the month, the supermarket says, 'I only need five tonnes, and I'm only going to pay you for five tonnes.' But that supplier can't then go and sell the other five tonnes elsewhere, because of the exclusivity contract, and that's not fair. How is that not taking advantage? How is that not undertaking actions that inhibit rivals?

So I agree with Mr Fels when he says that section 46 of the Competition and Consumer Act is relatively ineffective and has very minor penalties or fines. Most big businesses don't take too much notice of it. They sort of factor it into their business models. 'If we get a little fine through section 46, so be it. That's just the cost of doing business.' That's not good enough. That is why the Nationals have been calling for big stick legislation. It's why we have grave concerns about the fact that three of the big supermarkets control over 74 per cent of the grocery market. They are the market. They dictate prices, and they put pressure on suppliers. But we're also seeing that, when they dictate the price to the suppliers and the farmers, that doesn't translate to the check-out. When meat prices go down at the marketplace, they don't go down at the check-out. Has anyone gone to buy a lamb cutlet lately? I love lamb. It's my favourite meat.

The ACCC needs powers to properly investigate as part of a dedicated inquiry. They need the powers to be able to call witnesses and compel witnesses, and they need the powers to recommend harsher penalties. That's what the Nationals have been calling for. We'd like to see increased penalties, scaling up, and we want to see divestiture powers. We want to be able to force supermarkets who do the wrong thing to be forced to sell off a component of their business—for example, forcing Woolworths to get rid of BWS or Coles to get rid of Liquorland.

What I don't agree with is the current scare campaign by the Business Council of Australia, who are running around saying that, if we introduce divestiture powers, all the regional towns will lose their supermarkets and it will negatively impact on the regions. That's not how we're talking. If we design a proper model for divestiture, which is what the Nationals are working on and what we are currently talking to our opposition counterparts about, it's about designing a model where the ACCC can properly investigate and recommend actions and, where it is found that a market power is not operating in the best interests of suppliers and consumers, an application can be made to a court to enforce divestment. That does not automatically mean that the divestment will occur in a regional area.

The other day, I heard the case study of the town of Cooma. A number of years ago, there was only one supermarket brand in that town. There were a couple of supermarkets, but they were both the same brand, and they had bought up a lot of the commercial land to prevent rivals entering that market. In those circumstances, the court could recommend that that brand would have to divest themselves of either one of their supermarkets or the commercial land that they'd bought up to enable a rival and to enable more competition.

It might be that the recommendation or the action taken by the court is to have divestment of a small business unit within the large business. What it won't be is, 'Get rid of 20 per cent of your stores and we're going to leave it to the market monopoly provider to decide what 20 per cent of those stores are,' which is what the BCA's claims are. 'If you tell Coles or Woolies to get rid of 20 per cent of their stores they're only going to close down stores in regional areas.' I don't believe that for a second. That is a scare campaign being conducted by people who don't want to see Australia have a big stick to hold market monopolies to account, like in other similar economies around the world.

Just yesterday in this chamber we heard Senator Penny Wong talking time and time again about the fuel efficiency standards. 'Why is Australia lagging? Why is Australia the only Western economy not to have fuel efficiency standard? We need to keep up with the rest of the world.' Why doesn't she apply the same thinking to divestment powers? Why is Australia one of the only Western economies not to have divestiture powers for big corporate market operators?

We in the Nationals understand that horticulture farmers and other suppliers to the big supermarket are struggling. We heard examples such as watermelon farmers selling their produce for $1.50, and it being sold for upwards of $5 in the supermarkets. We heard last night from melon growers that their costs of doing business are going up and up—