Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I have made two matters of public interest speeches to the Senate so far in my two years here. This my third. Both of my previous speeches have been on matters deeply important to me—especially before I came into the Senate—and I recognise the privilege of being able to speak at this time in a non-political, non-combative way to raise issues that are critically important both to my state myself. The first speech I made reflected upon the growing environmental disaster of marine debris, especially marine plastics. I talked about how plastics reach all corners of our marine ecosystems—how you can find tonnes and tonnes of litter and debris washed up on even the most remote beaches of the otherwise pristine World Heritage areas of Tasmania's south-west coasts. In that speech I offered one of several solutions to help address this problem, including container deposit scheme legislation—legislation that recent studies by CSIRO have shown successfully reduce wastage and litter levels in South Australia and in South Australian waters and beaches. We could lead on this nationwide.

Unfortunately, the industry lobby has been too powerful and has sought to kill off any momentum towards this goal. That was reflected in the parliamentary decision of 2012 to reject the Greens' national container deposit scheme.

In my second MPI I talked on whaling. It was in the days leading up to the International Court of Justice case against Japan for whaling in the Southern Ocean. In that speech I urged caution—caution not to prematurely celebrate what a successful court victory could mean in the fight to prevent whaling. I then urged the government to prepare before the case a diplomatic strategy on how to engage with Japan to maintain enough pressure so that Japan would not seek to circumvent the court verdict and return to whaling. The government prepared no such strategy.

When the Japanese Prime Minister visited here, Prime Minister Abbott was silent on whaling. It took the media scrum to raise the issue. The government prepared no strategy when it visited Japan in bilateral talks on trade. What we have seen since is Japan seeking to circumvent both the International Court of Justice decision and the will of the International Whaling Commission, which was firmly reflected in a motion put by the New Zealand government last week—not the Australian government; the New Zealand government—once again, with no significant diplomatic pressure from Australia. When Minister Hunt was asked by the media if Japan could bring back whaling following the ICJ decision, he scoffed at the suggestion. He was wrong and the Australian government's inaction has now come at a cost, with Japan seemingly pushing on in its endeavour for commercial and lethal scientific whaling.

The third speech that I would like to give today is on the importance of the Southern Ocean and Antarctic research and research communities to my home state of Tasmania. Hobart is one of the few precious southern ports on this planet—with Capetown in South Africa, Ushuaia—the capital of Tierra del Fuego in Argentina, and Christchurch in New Zealand. Hobart is one of a small club of these precious few cities that face south, that have an affinity with the Southern Ocean—as many people who live in these cities and town have an affinity with the Southern Ocean.

There is a special feel to these places. It is an international outlook. You feel that you are a long way from the rest of the world, but you are a city that everyone who wants to head off into the 'wide blue yonder' has to pass through to get to the depths of the Southern Ocean or to Antarctica. These cities are taking part in a major, strategic global economic race—a science race; a geopolitical race; an economic race; a race to be the leader in Antarctic and Southern Ocean research and to subsequently secure a large slice of the growing Antarctic economy as the superpowers of the globe cast their eyes south. All of the world has to pass through one of these four cities to get to Antarctica. These are the launching places to voyage south. It is either Capetown, Ushuaia, Christchurch or Hobart. And, for the eastern half of Antarctica, the list narrows to South Africa, Australia or New Zealand. Our geographic location gives us distinct advantage, and our track record in research and logistics rams it home.

Hobart is home to the Australian Antarctic Division, the Institute for Marine and Antarctic Studies at the University of Tasmania, CSIRO Marine and Atmospheric Research, and the Antarctic Climate and Ecosystems Cooperative Research Centre. These are heavy-weight global institutions that have all made monumental contributions to our understanding of Antarctica, especially in the last decade, the Southern Ocean and especially our understanding of global and regional climate change. These 'big four' institutions play a critical global role in climate science. They provide research that is essential to our understanding of the fate of the planet and the fate of future generations of humanity.

I cannot underestimate the value of this research. How fast will the world warm? How fast will the oceans acidify? How high will the seas rise? How much drier or wetter will Australia get? These are questions we cannot properly answer without continuing and expanding research efforts in Antarctica and the Southern Ocean. As an economist I can say that there has been no single valuation given to the impacts or the potential risks and impacts of climate change. But we do know from a range of studies that it will be in the trillions of dollars. The only people who would place no valuation on those potential risks are climate deniers.

Only recently have we come to grips with the quirks of expanding Antarctic sea-ice and the significant decline and potential collapse of the continental ice-sheets. We are learning that the Southern Ocean is warming faster than other oceans and faster than we expected. We have also learned that the climate and rainfall of Australia is connected to the climate of Antarctica. The decline of rainfall of south-west Western Australia is directly related and highly correlated to climate changes in Antarctica and events such as snowfall. We need this research. We need these institutions to carry out this research. And we need these institutions to be based in Hobart.

Until recently there were as many as 630 scientists as part of a community of 800 professionals involved in Antarctic research based in Hobart, and there are many more people employed in technical support work, such as engineers, tradespeople, dock workers et cetera. For a low-average income state all of these jobs are high paying—twice the state's average wage. The employees are highly specialised scientists or tradespeople who need to develop deep expertise to be able to carry out and support work in the Southern Ocean and Antarctica. The Tasmanian government estimates the Antarctic sector has a direct and indirect economic benefit to the state of $600 million to $700 million per annum. Any growth in this sector is an economic boon for the state, and any decline in this sector will have dire economic consequences—not to mention social consequences to a tightly knit Hobart community.

Growth is necessary from a national interest perspective on the need for climate knowledge alone. It is also needed from a national interest perspective because we need to maintain a significant presence to our south to justify the claims of sovereignty we make on the Southern Ocean, the whale sanctuary and Antarctica itself. But growth in this sector is also possible from outside of Australian government support. The world needs this scientific research. The world wants a deeper understanding of Antarctica. I believe this is very close to the single biggest economic opportunity for our state. But, unfortunately, this current government is going in the wrong direction. Massive across the board cuts to the Australian Antarctic Division and the CSIRO Marine and Atmospheric Research Centre has caused an enormous and ongoing brain drain and also cut our technical and logistical capacity to undertake research. These cuts are a direct assault on the economic future of Tasmania and put at risk the greatest opportunity we have.

Our researchers are world-class and world respected. We attract students from all over the world to study at UTAS and IMAS—something Peter Rathjen talked about here at Parliament House last night. Those researchers work in collaboration with the other institutions. But we need a critical mass, now and into the future, to retain them and to encourage future investment. Cuts to funding across the board only add uncertainty to their potential and their future careers in science.

It is no secret that China and other world powers are looking to boost their research presence and capability in the Southern Ocean and in Antarctica and are looking for partnership opportunities, but they need to choose between Hobart, Christchurch, South America or Cape Town. What will swing the decision will be logistics, research capacity and reputation. Reputation is everything in scientific research. Collaboration is essential for reputation, and vice versa. Our research capacity at the moment is at risk. We are doing okay on the logistics front. We have a shiny new CSIRO research vessel, which I and the Southern Ocean inquiry committee members were able to visit only last week. The Southern Ocean inquiry is very timely. It is finishing this Friday. It has certainly shone a light on the importance of research in the Southern Ocean and the Antarctic, to both Tasmania and Australia.

We are tendering out the construction of a new ice breaker and the AAD has an Airbus A319 to take passengers and light cargo down to Casey Station when it can. But we are cutting our research output and we are taking the axe to logistics routine expenses. We are getting fewer days of research on the Aurora Australisand, shockingly, the brand new RV Investigator only has a budget for 180 days, not the 300 days a year it was purchased for and scientists were promised. This means that research projects are now on the backburner. I quote from the recent Southern Ocean inquiry hearing in Hobart that early career academic researchers are 'sitting twiddling their thumbs'. Other scientists question whether this is a false economy as it adds to both research and maintenance costs for the vessel to have it sitting in the dock and taking shorter voyages. It also means that we will not be able to undertake climate research in all seasons. This may punch holes in long-running climate projects and skew our understanding of climate change impacts. We have an impending crisis in our Southern Ocean endeavours. It is cutting to the core of our ability to undertake research and it is a handbrake on the sector's ability to grow and prosper.

I offer a suggestion to the government. The government has committed $38 million to extend the Hobart runway. This is an important initiative in the long term. It is not necessary or anywhere near the most pressing issue in Antarctic logistics and scientific research at the moment. It is the wrong time to allocate these funds when the sector has crises elsewhere. Here are my issues with the extension of the Hobart runway as a tool to benefit Antarctic research. The purpose of extending the runway is to enable Hobart to take larger planes that can carry heavier payloads, yet there is no assessment of the airfreight or passenger needs with regard to Antarctic transport. I do not see $38 million in value to the Antarctic sector at the moment from this investment. Our Wilkins runway at Casey Station, opened in 2008, was built for 30 flights a year, but due to ice melts it has barely managed to reach 10 a year. In some years they have had as few as four flights. Why add more capacity at one end of an air link if the other end is broken? Competition with the US-NZ route is often flagged as a reason to expand Hobart airport, but even Hobart airport recently admitted they could never compete with this 50-year relationship.

It makes sense to look at expanding Hobart runway, but only when you have a full assessment of all the Antarctic transport needs together: air and sea freight; Hobart and Wilkins runways. We also need to look at intracontinental transport on Antarctica itself. To say that we need this runway extension to attract immediate Chinese investment is a furphy. It would be like building all the stadiums before you have won the right to host the Olympics. I propose that the government commission Infrastructure Australia to undertake a full and independent review of Antarctic logistics: freight and passengers, ports and airports, air travel and sea travel. We need to look at both ends of the air chain: Hobart runway and Wilkins runway. I suggest that $1 million should be enough.

The funding for Hobart airport should be deferred until all of this planning has been undertaken. A business plan just for Hobart airport alone is insufficient justification for $38 million in spending. In the interim, the remaining funding should be redirected immediately to allow extra days of research to be carried out by the RV Investigator and the Aurora Australis. Both boats are sitting at dock in Hobart. The RV Investigator costs approximately $140,000 a day to run. Redirecting this money could give it over 85 days per year research over the next three years and would solve a major research logistical bottleneck. All of these things were very clearly pointed out to us by both the senior management of these major research institutions in Hobart as well as some of the world's best scientists, who cannot access this boat for two years for some absolutely critical projects, like ocean acidification projects. When the Antarctic transport review is completed, then we could look at reallocating funding to the Hobart runway extension, once a full business case has been produced by the government and by Infrastructure Australia, if it is deemed necessary.

We need to get this sector sorted. It is the future of my state and it is critical to our understanding of the fate of the climate and our planet. We cannot allow the brain drain and logistical crisis to continue in Tasmania. We need to intervene now. I have put forward a positive practical suggestion and I hope that the government will consider it seriously.

Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

The American radio businessman David Sarnoff once said:

Competition brings out the best in products and the worst in people.

In my view, that nicely sums up the dilemma that we have in harnessing competition to deliver good outcomes without damaging our own ethics and morals. Competition is a means to an end. As consumers, we want cheap, affordable and high-quality products. The best way to ensure that is to have choice and competition. If there is no threat that I could change my custom from one business to another, there will be no desire for others to go to great efforts to deliver what I want. Competition ensures that businesses never forget that the customer is always right, and David Sarnoff was right in saying that competition brings out the best in products.

The other part of the quote is true too—competition can bring out the worst in people, especially when some businesses seek to stifle the competition that makes life hard. David Sarnoff himself, as President of RCA, had a large AM radio network in the 1920s and 1930s. The emergence FM radio, invented by Edward Armstrong, was a clear threat to Sarnoff, so he lobbied the Federal Communications Commission to make changes to the FM band, which rendered many FM radios at the time useless. He tied Armstrong up in endless litigation, contributing to Edward Armstrong's suicide in 1951. Not only that, the actions of RCA at the time put back the widespread adoption of FM radio for 20 or 30 years.

Although undesirable, the desire to damage a competitor is a perfectly rational response, and some element of it is simply the competitive process. I cannot compete vigorously without risking damage to some individual competitors. Where there are winners, there will always be losers, too. However, what we should not allow is businesses that seek to damage the competitive process as a whole rather than just individual competitors.

That is why I welcome the Harper review's draft report which was released on Monday. This has been the first comprehensive, root-and-branch review of our competition law for more than 20 years, and the review has made some recommendations to strengthen our competition laws, especially those concerning the misuse of market power is laws under section 46 of the Competition and Consumer Act. Their recommendations would prohibit a corporation that has a substantial degree of market power from engaging in conduct if the proposed conduct has the purpose, or would have, or be likely to have the effect of substantially lessening competition in that or any other market.

The Harper review's proposed wording differs from the current wording of section 46. Under our current laws to prove the misuse of market power three things must be proved: first, that the corporation must have a substantial degree of market power; second, the corporation must have taken advantage of that power; and, third, the corporation must have acted for the purpose of damaging a competitor, preventing the entry of a person to a market or preventing a person from engaging in competitive conduct. The last two of these tests have become problematic and the Harper review's recommendations essentially seek to alter these tests. As the ACCC said in its submission to the Harper review:

... as currently drafted and interpreted, the provision is of limited utility in prohibiting conduct by firms with substantial market power which has a detrimental impact on competition.

The most stark of these limitations is that for an action under section 46 to be successful the complainant must prove that the action has been taken for an anticompetitive purpose. The keyword there is 'purpose'. Because proving why I act is an incredibly high hurdle for people to meet in our courts. Proving that I did not go for a run this morning is a pretty simple matter—I didn't do it—but proving why I didn't do it would take lengthy debate. I would argue that it is simply because I was busy preparing this very important speech this morning, but my wife would probably say it is just because I'm lazy.

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

Which one is right?

Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

She is right, Senator Sterle. The current wording of section 46 is the competition law equivalent proving intent in criminal law—it is a much harder thing to do. The Harper review has recommended that the purpose test should be supplemented by an effects test. This would mean that corporations with substantial market power must not engage in conduct that has the effect of damaging competition.

It is important to note here that there are two changes being proposed. The first is to make large firms with significant market power responsible for the effects of their decisions. Those that seek to oppose such a change must answer the question as to whether big businesses should take into account the effects of their decisions. Do large companies in our retail, financial and utility industries believe they have an obligation to act in ways that promote competition rather than detract from it?

The second change is that corporations will only be liable for the impact of their decisions on the competitive process, not on individual competitors. It is clear that the effect of some perfectly reasonable—indeed, socially beneficial—business decisions will harm competitors. The very act of opening up a business will take custom from one business to another, thus causing harm. What we do not want, however, is damage to the competitive process as a whole. It is one thing to open up a store and compete; it is another thing completely to engage in conduct that is exclusionary, predatory or deters others from opening up a business lest they risk being subject to such behaviour.

The Harper review's changes will also remove the 'take advantage' test. The take advantage test has become too obtuse and hard to interpret. The test that requires that the advantage be taken in respect of the market power a business might have is in effect another quasi-purpose test within section 46. You have to prove that a business acted in a way that gave them an advantage and they did so with the purpose of using that in their market power. The take advantage test has become one of great dispute in for recent competition law cases, including in Melway, Boral, Rural Press and Cement Australia. These cases have involved the courts launching into long, hypothetical deliberations about the conduct of a corporation in a hypothetical world in which it does not enjoy market power. After two of these cases, the parliament made additions to section 46 to clarify the take advantage test. As the Harper review has succinctly summed up, however:

It is doubtful that the amendments assisted.

It is probably clear now that we simply need to remove such a test to remove any such ambiguity that remains, and that is what the Harper review has recommended.

The broader case that the Harper review makes for change is strong and it is supported by both logic and evidence. The first point to make is that the introduction of an effects test would not simply end up protecting inefficient companies to the detriment of consumers. Out-competing your rivals by competing on merit would not amount to conduct that significantly lessens competition under the proposed changes. ACCC Chairman Rod Sims reiterated this in a recent letter to the Harper review, saying that section 46 should protect and promote the competitive process:

… not by protecting the losers, but by preventing conduct by firms in a position of substantial market power that excludes efficient and innovative competition which would otherwise benefit consumers.

I recognise that there are some that disagree with this view but I think we can all agree on one thing: this debate should be informed by evidence, not speculation, and we can use evidence in this case because an effects test exists here in Australia and there are examples of effects tests overseas in other competition law regimes.

Here in Australia, an effects test already exists in regards to the telecommunication sector. Part XIB of the Competition and Consumer Act specifically prohibits a telecommunication company with a substantial degree of market power taking advantage of that power, '… with the effect, or likely effect, of substantially lessening competition ...'.

Overseas an effects test is the predominant way that competition laws are enforced. The law in the United States prohibits conduct that unreasonably restrains competition by creating or maintaining monopoly power. The courts have largely interpreted this prohibition to only capture firms with substantial market power. The Federal Trade Commission stated in their submission to the Harper review:

In recent cases, intent is rarely, if ever, the focus of the analysis … A subjective intent test risks attributing too much weight to hyperbole or unrealistic speculation or too little weight to the harm from objectively anticompetitive acts.

Over the past century, US courts have moved from using intent to an expressly objective effects test.

This view was also summed up recently by the US Court of Appeals for the District of Columbia Circuit in the famous case—the US v Microsoft. They said in that case:

… to be condemned as exclusionary, a monopolist's act must have an "anticompetitive effect"—

and they use the word 'effect'—

That is, it must harm the competitive process and thereby harm consumers.

That is a very nice summary of exactly what the Harper review has recommended.

The US Federal Trade Commission also notes that the US courts apply the effects test pragmatically and that the test permits flexibility of proof based on the context and best available evidence. Similarly, in Europe they have provisions in their competition law relating to an 'abuse of dominance' test. Under the EU competition law—as well as in a number of European countries, including the UK and France—determining whether an arrangement is anticompetitive is assessed on the basis of its objective—like our test, the purpose test—or its effect on competition in the marketplace.

There is a simple effects test right here for the opponents of an effects test. If the effects test is to wreak such havoc on our economy, then people should be able to point to the effect of the effects test in other countries and here in our telecommunications sector. Surely, if the effects test is so detrimental to competition and if it is to have a chilling effect on the marketplace, that would have become apparent in the US and Europe, who have had decades of experience of such laws.

In a recent unpublished paper on New Zealand's competition law, a competition law expert from Howard University, Professor Andrew Gavil, noted that the omission of an effects text is inconsistent with trends in competition law internationally. He was highly critical of what he termed 'the counterfactual test'. That is the test that I described earlier that our courts have applied in trying to work out if corporations have taken advantage of their market power. Professor Gavil noted:

The counterfactual test substitutes a hypothetical inquiry into the conduct’s possible efficiencies for the more important question of its actual effects, both pro- and anti-competitive, when practised by a specific, dominant firm in a market with specific characteristics.

Professor Gavil gets to the heart of the issue when he says that the problem with the counterfactual test is that:

It never asks whether the anticompetitive effects are far more substantial than any realized efficiencies.

That is any efficiency associated with promoting competition or not regulating competition. I will put it in plainer English—mainly because my parents and children are in the gallery today, if they are still awake. The whole point of competition laws is to stop the negative effects of anticompetitive conduct and to promote the positive effects of pro-competitive conduct. We cannot achieve this unless we are actually looking at the effects of that conduct, not just their purpose.

As a legislator I am not interested in the state of mind of a big business and I am not concerned about the intent or purpose of their actions; I am interested in their effects. That is why we should have an effects test. We should have a competition law that is firmly focused on promoting the great benefits of competition, not on whether people are intending to act in a competitive way. If competition is a means to an end, why would we focus on the intent of actions and not their effect? I agree that competition is only a means to an end. It is a process to provide good things. With that in mind, competition laws should be firmly focused on those ends that are actually achieved by businesses, not what their hypothetical objectives or ends might be.

I agree with the ACCC: the proposed effects test is neither novel nor anticompetitive. I know that the recommendations the Harper review has made are now going out to consultation and there will be further submissions made on this. I certainly support the direction of the changes, but I too have some reservations about some of the proposals they have made. The Harper review has provided some defences to an effects test. First, the Harper review has said that a business could defend itself from a successful claim of misuse of market power by arguing that a rational business without market power would have acted in that same way. I am concerned that this would simply put us in the same hypothetical hyperspace that marks current section 46 cases. Although I note that the change that they have proposed would put the onus of proof on the business or on the defendant to prove that hypothetical situation rather than putting the onus of proof on the plaintiff or ACCC.

Second, the Harper review has provided an additional defence that the anticompetitive effect is in the long-term interests of consumers. I worry that that phrase is not well-defined enough in our current laws, although it has been used in the context of access pricing regulation. Even so, more work would have to be done to clarify exactly what that would mean in this context. Overall, however, I applaud the Harper review for suggesting these changes. Clarifying and strengthening our anticompetitive laws will be a shot in the arm for small businesses and farmers that are suffering under the yoke of too much market dominance. We should never put people in the position where they can basically be threatened or blackmailed into providing more and more every time. Business relationships are just like other relationships: they thrive best when there is give and take.