Katy Gallagher (ACT, Australian Labor Party) Share this | Link to this | Hansard source

The Competition and Consumer Amendment (Misuse of Market Power) Bill 2017, which is before us today, seeks to implement the so-called effects test, and it certainly will have an effect—an overwhelmingly negative one. It will have the effect of chilling competition and reducing innovation, and it will affect the prices that Australians pay for goods, in a very bad way. What the government is seeking to implement is bad law. It has not been thought out at all, and it will have a deleterious impact.

The Australian people should get no comfort from the fact that, according to leaks from the cabinet, the Prime Minister, the Treasurer, the Minister for Finance, the Attorney-General and the Minister for Revenue and Financial Services all think this is a bad idea. Given these names, how could this bill possibly have come forward? It's clear that they were rolled by the Deputy Prime Minister. It's a very bad thing for the nation when it's the Leader of the Nationals calling the shots in relation to competition policy in Australia.

What the proposed effects test means is that, instead of looking at the intention of a company with significant market power, you would look at the effects of their actions, particularly if the effect of their action is a substantial lessening of competition in any market. You could understand why this would look like something that should be done. I don't deny for a second that there are issues and problems which need to be addressed, and I will turn to Labor's alternative plan for doing that.

The fact of the matter is that these issues have been addressed, looked at and considered in Australia for a long time. Since the early 1970s, there've been 12 reviews of competition law in Australia, and 10 out of those 12 reviews recommended against an effects test. These have been reviews by serious people looking at this in a very considered fashion. The overwhelming majority have recommended against the implementation of an effects test. The 1976 Swanson committee recommended against an effects test on the basis that the section should only prohibit abuses by monopolists that involved a proscribed purpose. The Blunt review in 1979 recommended against it on the basis that it would 'give the section too wide an application, bringing within its ambit much legitimate business conduct'. The 1984 green paper recommended an effects test, one of only two of the last 12 competition reviews to do so. The 1989 Griffiths committee said that there was 'insufficient evidence to justify the introduction of an effects test'. The 1991 Cooney committee said that an effects test 'might unduly broaden the scope of conduct captured by section 46 and challenge the competitive process itself'. In 1993, the Hilmer committee recommended against an effects test, saying it 'would not adequately distinguish between socially detrimental and socially beneficial conduct'. In 1999, the Baird committee said that 'such a far-reaching change to the law may create much uncertainty in issues dealing with misuse of market power'. The 2001 Hawker committee recommended against an effects test and said it would 'await the outcome of further cases on section 46 before considering a change to the law'. The 2003 Dawson review said the addition of an effects test would 'increase the risk of regulatory error and render purpose ineffective as a means of distinguishing between procompetitive and anticompetitive conduct'. The 2004 competition inquiry by the Senate Economics References Committee said that, while the committee was sympathetic to some of the arguments, the difficulties with introducing it meant that the committee did not recommend the inclusion of an effects test.

It is a well-understood principal of competition law, and the law generally, that, if a business with market power intends to reduce competition for its own benefit, this should be dealt with. This is not acceptable behaviour, and it should be dealt with. Companies with substantial market power should not act to reduce competition for their own benefit. That should not be their intention. But it is a dangerous leap to change this principal and to disregard the intent of the company and, in effect, outlaw a company making life more difficult for their competitors simply because they are innovating or increasing their own competitiveness. It is a dangerous time for Australia when the National Party is dictating economic policy like this.

This has been through a Senate inquiry, and the critics of the bill were very clear in their views. The Business Council of Australia criticised this bill and opposes it very strongly. You have companies opposing this government, which claims to be probusiness and which lauds its probusiness credentials right around the country. These companies are going to the Senate inquiry and saying this is a bad idea, whether they be BlueScope or Woolworths. They are saying this not just because of the intent of the government in doing this and because he government is designing a system which would reduce the competitive juices in the economy, but also because of the way the government has gone about it. The way the government has gone about it creates uncertainty and a lawyer's picnic. The only people who will be happy with this will be competition lawyers. Despite the fact that they think this is bad policy, many lawyers in Australia will nevertheless see the commercial opportunities that will abound because of this government's ineptitude.

Another sign of the government's ineptitude in relation to this policy was the Treasurer at the last minute introducing amendments to the bill and briefing the media about it before the bill was finally dealt with in the House. What these amendments went to was to remove certain defences in the bill, the mandatory safeguards which were recommended to be put in by the Harper review. The Labor Party broadly believes the Harper review was very good; we obviously disagree on this effects test. It was recommended that these safeguards be put in. The government's amendments were described as an 'astonishing amendment from a supposed free market government'. These are not my words. They're not even the words of the shadow Treasurer or the shadow Assistant Treasurer. They are the words of the Business Council of Australia. That is what the group which the government goes around the country lauding for its support of the big company tax cuts thinks. Mr Grant King, the President of the Business Council, is quoted as saying in relation to this bill:

The Turnbull government seems intent on putting pressure on the household bills of every Australian … The proposed 'effects test' is so broad and ambiguous that companies risk being sued by their competitors merely for offering discount prices for consumers.

The government’s latest amendment removing ‘mandatory factors’ completely disregards Ian Harper's recommendation that safeguards are needed to protect against legitimate competitive conduct being captured.

The mandatory factors didn't provide nearly enough protection for legitimate business conduct, but the answer should have been to improve them, not to remove them altogether.

Mr King and the Business Council are right about these points.

On our side of politics we are not prone to agree with the Business Council on every occasion, but we call it as we see it and we will say when they are right—and they are right about this issue. We could've engaged in politics and supported the government and said that we would crack down on these nasty big businesses, but consumers would've paid the price for that and consumers will pay the price for that if the government succeeds in getting this legislation through the parliament.

The fact of the matter is that there are issues that need to be addressed. Labor is the party of competition reform. We're the ones who have always delivered serious reform. The first federal competition law in Australia, which was an issue with the Whitlam government, was the Trade Practices Act. That was the first serious national competition law that we had. Consumers affairs protection was included in that as well. Then there were the competition policy reforms of the Hawke and Keating years. The national competition policy was a key reform in leading to the 26 years of uninterrupted economic growth that we've had in this country and it improved the competitive juices of our economy. Then we had, coming together with the reform of the competition act, the criminalisation of cartel conduct and the harmonisation of consumer affairs laws across the country under the Rudd government.

So our side of the House is pro competition. We believe that the beneficiaries of competition are the people we are here to represent, people going about their business and wanting a good deal from the economy, because competition produces that good deal. But competition policy must be finely calibrated and carefully designed, not written on the back of a coaster in a hotel, as the Deputy Prime Minister likes to boast that he does from time to time—that he writes his ideas for competition policy reform down on the back of a coaster in the Birdsville Hotel.

The proposal put forward by the Labor Party and taken to the last election—and, indeed, passed by this chamber last week—is a much better solution to the challenges that small businesses face. Because some big businesses have deep pockets and armies of lawyers, the risk of a small business being overwhelmed and having to pay the big business's legal fees if they take on a competition action against a big business is very substantial, and it means that it doesn't happen as often as it should.

This is not just about the ACCC enforcing the law. That has its place and is an important part of it. But businesses can begin and bring their own actions as well. At the moment they're not doing that, for very understandable and legitimate reasons. They are concerned that the court case would be very expensive and that they may well have costs ordered against them and that that would drive them out of business.

Indeed, the policy which we enshrined in draft legislation and which passed this chamber last week sought to address that with our access to justice bill, the Competition and Consumer Legislation Amendment (Small Business Access to Justice) Bill 2017. I would urge the government to consider supporting that when it goes to the House and changing the position of their vote from last week. This access to justice reform has been welcomed by the Business Council of Australia and by the Australian Small Business and Family Enterprise Ombudsman, who also believed it was a practical way to assist small business in addressing the level playing field issue.

The access to justice reform was welcomed, as I said, by the Business Council of Australia, and it would be a sensible and practical support for small businesses around Australia—unlike this legislation, which was originally opposed by the Prime Minister, the Treasurer, the finance minister, the Attorney-General and the minister for revenue, but which was, apparently, supported by the Deputy Prime Minister and insisted upon by the Deputy Prime Minister as part of the coalition deal when the Prime Minister rolled the member for Warringah in the party room. That was the price for keeping the peace. And it is not the way to write economic policy in this country.

This will impact on the cost of living of Australians by putting upward pressure on prices. It stands to reason that if you have a big business or even a medium-sized business that has substantial market power in one particular market, they will talk about how they can improve their operation in that market, and they may say: 'Let's discount—let's go on a discounting process; let's reduce our prices; let's be more competitive,' but now there will be this effects test in the way, if this legislation passes, and they may have to say: 'But this might affect some of our competitors; some of them might actually go out of business if we're as competitive as we possibly can be. If our prices are as cheap as they possibly can be, some of them might actually be adversely reflected.'

Every boardroom and every manager will now have to consider that, and not just consider that in a national sense but consider their approach to smaller markets and their approach in any particular market segment. Even if their intent is not adverse, which in many cases it will not be, if the effect of their actions is adverse then they will be taken in by this piece of legislation. This is a fundamental change to the principles that have underpinned competition policy and competition law in Australia for many decades, certainly since Commonwealth control and Commonwealth authority in the 1970s.

This bill also contains amendments that would repeal the telecommunications-specific anticompetitive conduct provisions in part XIB of the Competition and Consumer Act. Currently, part XIB provides the ACCC with powers to take speedy action and better resolve disputes when anticompetitive conduct is suspected. This allows disputes to be resolved faster and more cheaply than by relying on general competition law. Given the concentrated nature of the telecommunications market, it remains appropriate to preserve this section. Labor considers that the stronger powers under part XIB remain necessary to deter misuse of market power. There is no good case for the repeal of this particular section of the act, and the government has not been able to put forward a single credible argument. It is a reckless approach to policymaking and sums up the incoherence of the Turnbull government. Labor will not support this repeal.

There is no way, given the weight of expert evidence from competition lawyers in Australia, that sensible commentators in the competition space think this is a good policy, because it's not. It should be resisted by sensible Senators opposite. As we know, it was resisted originally—to give them credit—by the Prime Minister, the Treasurer, the finance minister, the Attorney-General and the Minister for Revenue and Financial Services. You would think that that would be enough to maintain the position for sensible policy within the Cabinet. But, in another sign of this government's weakness, the Prime Minister, the Treasurer, the finance minister, the Attorney-General and the Minister for Revenue and Financial Services have been rolled on this important matter of economic policy.

On this side of the chamber we are of one mind. We stand for good policy, and this is not good policy—quite the contrary. This is very bad policy. As I have said, there have been 12 reviews of this since the 1970s and 10 have said that this is a very bad idea. It should be resisted and opposed here in the Senate. Thank you.

Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I rise to speak on the Competition and Consumer Amendment (Misuse of Market Power) Bill 2017. The effects test is a very necessary change to competition law that will basically make it easier for the ACCC to crack down on anticompetitive behaviour. For too long in this country we have sat back as a parliament while major corporations have been able to abuse and misuse their market power to the detriment of smaller players, to the detriment of primary producers and to the detriment of the Australian people. I commend all of those people and organisations who have worked so hard for so long to bring about this important reform.

I also want to acknowledge the work of my friend and colleague Senator Whish-Wilson, who for a long time has carried the torch on this issue for the Australian Greens. He has advanced this debate and the campaign through his work in this place. As a result of the work he has done, I have no doubt that he contributed significantly to the outcome that I believe we're about to see when this legislation passes through this place.

As I said, there is a range of people, organisations and political parties who support an effects test. It is odd, very odd indeed, given all the people, all the organisations and all the political parties that are lined up in support of an effects test in Australia, that it is the Labor Party who stands alone alongside the Business Council of Australia as a voice against an effects test in this place. How odd. How very odd! The Labor Party voting against a law that is supported by progressive people—a law that actually is progressive, a law that looks after the little guys in their endless fight against big corporations, a law that takes on big business and a law that's good for competition, good for consumers and good for the economy.

How could this be? How could it be that the Labor Party is the sole voice against this legislation? I will tell you how it could be. I have got three letters for you: SDA. The Shop, Distributive and Allied Employees Association—the 'shoppies', as they would be better known to the HR departments of Coles and Woolworths. The shoppies have a good thing going with Coles and Woolworths. They've got a good thing going with Maccas, KFC, Hungry Jack's and a host of others in the retail and fast food industry in this country. This is the good thing they've got going: every time a 16-year-old or 17-year-old signs up for eight hours a week pushing trolleys, stacking shelves or flipping burgers, their employer slips them a membership form for the SDA. It's a regular part of the paperwork: 'Sign here, here and here and you are good to go.' That's right. Those employers unionise these kids the day they get a job.

Mr Acting Deputy President, you might be thinking, 'That's amazing.' You might be thinking that means we live in a workers' paradise. Unfortunately, nothing could be further from the truth, because these kids are just numbers to the shoppies. The shoppies have cynically exploited these kids and others who are part of one of the lowest-paid and most casualised workforces in this country for decades just to get the numbers. The shoppies started trading away penalty rates well before Tony Abbott and Malcolm Turnbull thought it was fashionable—

Cory Bernardi (SA, Australian Conservatives) Share this | Link to this | Hansard source

Senator McKim, I would ask you to refer to members of the House by their appropriate titles.

Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

The shoppies started trading away penalty rates well before Mr Abbott and Mr Turnbull thought it was fashionable, and they did so just to get the numbers. The shoppies, according to no less of an authority than the full bench of the Fair Work Commission, signed off on a workplace agreement that resulted in more than half of Coles workers being paid less than the minimum rate. That's right. Let's be clear about what happened there. The shoppies got its members a worse deal than what they would have gotten had there been no deal at all, just to get the numbers—numbers in preselection, numbers in this parliament and numbers on the floor at the national conference of the ALP, all so they can push their retrograde social agenda.

The shoppies are a relic of a bygone era in this country. They're a relic of the old Catholic right that kept the Labor Party so divided for the better part of 20 years. The shoppies carry the ghost of Bob Santamaria, and that ghost stalks the halls of this building to this very day as a result of the way the shoppies conduct themselves. They are an anchor on the ALP and a handbrake on progressive politics in this country. Every time Labor tries to go forward, there are the shoppies holding them back. We could have had marriage equality five years ago in this country if it weren't for the shoppies. We could have had truly needs-based education funding in this country—the original Gonski—if it weren't for the shoppies. In all likelihood, we would have an effects test years ago if it weren't for the shoppies. When something like the effects test comes up, the shoppies' allegiances are not with their members and not with the broader public; they are with the companies that their business model is built upon, because what's bad for Coles and Woollies is bad for the shoppies.

So it is that Labor stands alone in this chamber today. I have got no doubt this sticks in the craw of a good number of Labor senators who see this legislation for what it is: good law and a necessary legislative change. Bound as they are by factional pacts, those Labor senators will vote against it today.

Those who defend the shoppies by saying that its members should organise to change their union if they have issues fall for the same faulty logic as those who support individual agreements. There is a power imbalance. How on earth is a 16- or 17-year-old who is pushing trolleys, stacking shelves or flipping burgers meant to overhaul the political-industrial complex that is the shoppies in this country? I have a short answer for you: they can't. That's why some have set up an alternative union—a real union that's got its members' interests at heart rather than being obsessed with what people get up to in their bedrooms.

The Retail and Fast Food Workers Union are taking on the shoppies, and strength to their arm and good luck to them. I hope they break the shoppies wide open and end this rotten situation in our country and within the Australian Labor Party that is doing no-one any good. Strong unions are good for this country. Strong unions have delivered the weekend to Australia. They've brought us health and safety protections and minimum wage laws. But, when a union uses its strength to cosy up to big companies like Coles, Woolies, KFC, Macca's and Hungry Jack's and screw over its workers, someone needs to call it out. That's what I'm doing here in the Senate today.

The SDA is a shocking advertisement for unionism to the hundreds of thousands of young workers who start their first job in retail or fast food only to find out their union is the reason they're getting screwed and paid below the award. The SDA gives unions a bad name. It will put off some young Australians from being union members for life.

This is a good law. It's law that the Australian Greens have led the campaign for over many years in this place. We've advanced the arguments, we've worked closely with a range of small-business stakeholders and we stand here today and will vote accordingly and proudly for an effects test. We stand here today proudly opposed to the unholy alliance of big corporations, the shoppies and the Labor Party in this place. I say again to the good senators of the Labor Party—and there are many of those good senators in the ALP—have a think about your position on this. Stop allowing yourselves to be manipulated by the SDA. Stop allowing yourselves to be directed by one of the great forces of conservativism in this country—the SDA.

Cory Bernardi (SA, Australian Conservatives) Share this | Link to this | Hansard source

I have to say at the outset that I was somewhat conflicted about how to go on this bill, because I am a free marketeer. I do believe markets are, in general, very good, but I'm being tortured by what Senator McKim has said: that this bill is somewhat a progressive agenda and an initiative of the Greens. If ever it's going to turn off my vote, he's nearly done it! But I hate to say that he's got a point. Free markets only work where there is a level playing field, if you will. As I remarked in the Senate last week, there is not a level playing field for small business in this country.

When I'm talking about small business, I'm not so much talking about the medium-sized businesses that have an HR department that can do those things. I'm really concerned for the mum and dad operators—the ones that put their financial lives on the line. They sacrifice a lot of family time and mortgage their houses to live the dream and start a business. Sometimes they don't pay themselves; they struggle and pay their employees. I find it extraordinary, just extraordinary, that these small businesses, which have to deal with the bureaucracy and the red tape that government foists upon them—they have to deal with the industrial relations laws that are an impediment to employment; they have to deal with onerous taxation requirements and occupational health and safety requirements—just to live their part of the dream, are also having to compete with big business that has been allowed to trade away employee entitlements to benefit the union movement.

Senator McKim is happy to put his anti-Catholic rhetoric out there and blame the shoppies union and the ghost of BA Santamaria and so forth. Let's dismiss the Greens' hatred of religion, unless it's the worship of the earth, and deal with the facts. It is wrong for a union to be able to do a deal with business that benefits the union and disadvantages the worker. That is absolutely wrong. We know there is a huge track record of this. Mr Shorten himself is as guilty as sin in this respect. I do note that the minister said, in effect, under the laws about corrupting benefits for unions that were changed last week, that Mr Shorten would probably find himself charged with an offence were he to do the same thing again today.

I am also quite sympathetic to the shoppies union, as Senator McKim said. They are a bastion of conservativism, or they were until recent times. That doesn't mean they are perfect. There is only one pure conservative party in the place and the shoppies are welcome to join it any time they'd like to. I'll straighten out their sharp edges, if you like, and we can ensure there is a voice for conservativism across the political divide. But they've done the wrong thing here, and I cannot, in good conscience, stand and defend big business, notwithstanding the benefits they provide to the Australian people. They provide stacks of jobs, they provide opportunities, they invest and all of those things, which are positive, so I'm not anti-big business, but I am absolutely pro small business.

On balance, this gets the balance right in protecting small business. When I say 'protecting', I mean in trying to level the playing field as much as it can. This is the great torment for us; there's no perfect science in this. Do you say, 'Big business will misuse its market power?' Yes, that benefits consumers in the short term and they can provide lower priced products, but I also know that competition is absolutely vital. If I look at Coles and Woolworths—it's easy to beat up on them, and I will—they have been charging Australian consumers far in excess of what their international competitors do from a margin point of view, which means the cost of our groceries, the cost of our goods and services are far greater here than they should be. Australia is a high cost-of-living country.

This is also compounded by the fact that small business is not effectively able to compete where there is a misuse of market power, there are onerous obligations, there is a huge potential for legal consequences and costs incurred simply to have the fight and have the battle. You can be mobbed in small business via lawfare that will cost you hundreds of dollars every time you have to respond to a legal letter from one of the big businesses, and it is simply onerous. Sometimes small business goes, 'It's just too hard.' We need to be able to get some legal redress here.

But I'm talking about the very smallest businesses. I know that later on you're going to have a discussion and one of the senators will come in here and talk about misuse of market power, and they're going to be defending a big supermarket chain that is not Coles or Woolworths. They will be defending them and saying, 'This is a small business that's really struggling.' A small business that turns over $100 million a year is not that small a business, as far as I'm concerned. Similarly, it would be no coincidence that this small business that a senator later on will talk about will no doubt mention on the public record that all the employees of that small business were given time off or paid to man their polling booths for them. Let's not pretend that some of the strongest advocates in this space are not absolutely self-interested.

What I can tell you is that I'm interested in making sure that small business in this country gets a fair go. I want to make sure that Australian consumers get a fair go. In order to do that, it sometimes means trading off the short-term immediate benefits that come with a lower price tag, which eventually drives out competition and leaves a market monopoly or a duopoly. I'm very happy to see that change. I'm happy to see the international entrants come into this space—in the retail space, in the consumer goods space—but, more importantly, I want small businesses to be able to have a crack. That means they've got to be able not only to source their products but to run their businesses on par.

If there was any doubt about my support for this test, it was effectively nullified when I recognised just what the union movement had done in trading away workers' rights so that Coles and Woolworths could get some sort of competitive advantage—as if they didn't have it already—and so that the unions themselves could benefit from it. This is the most self-interested behaviour. It was Sir Robert Menzies, who would be an Australian Conservative today—if he were alive I am sure he would be—

John Williams (NSW, National Party) Share this | Link to this | Hansard source

He would be a Nat!

Cory Bernardi (SA, Australian Conservatives) Share this | Link to this | Hansard source

No, he wouldn't be a Nat, Senator Williams. It is about the forgotten people who don't have that voice for them anymore. They don't have the budgets to hire lawyers, expensive accountants and lobbyists to patrol the halls of Parliament House. They're the people who don't have an HR department. Their HR department is their kitchen table every Sunday night. They're the people who can't afford to engage or employ a union or pay off a union, effectively, to get better deals for themselves. They're the people who are the forgotten ones in our country. They're the ones who provide the engine room, the growth and the innovation for our economy. They're the ones who employ people. Government and unions, unfortunately, now seem to be putting a roadblock in their way at every single turn. Whether it be about the bureaucracies I mentioned, whether it be about taxation, whether it be about HR impediments or whether it be about unfair advantages that the union has negotiated for big business at the expense of small employees—however you want to do it—small business is up against it all the time.

Unashamedly, I'm a fan of small business. I started in small business, and my family's been involved in it for our entire lives and continues to be involved in it. I know exactly what it's like for people to make a go of it—and make a success, I have to say. But the success doesn't come without a whole bunch of pain along the way. No-one sees the pain except the families involved in it. Sometimes the employees see it. No-one sees the pain except the two people or the one person engaged in it with the stress. People only see the success at the end, but I can assure you nothing is further from the truth.

In conclusion, I will be supporting this—not without reservations, I have to say—because I do like competition. I do like competitive forces and I like markets that are free so that people can compete on a level playing field with innovation.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

And fairness.

Cory Bernardi (SA, Australian Conservatives) Share this | Link to this | Hansard source

Senator Williams makes a good point: it is about fairness but not in the sense of social justice, equality, or anything like that. It is about fairness where you know that, if you can source a product, you can sell it at a reasonable price or at a fair price, but you also know that your competitor across the road is not able to pay $3 or $4 less an hour because of some cosy sweetheart deal that's taken place. These are the questions that often go through the minds of people who believe in something. We've got to balance the ideal scenario against what we can achieve.

I don't want the perfect to be enemy of the good. I think, in the end, that the good—and what is most important and what is so important for this country—is for small business to have that fair go and to have that opportunity to grow into medium-sized businesses. I have no horse in this race apart from that. There is no-one that's going to be paying their employees to man my polling booths for me. There are no lobbyists that are making massive donations to my political campaign or to my union. The only interest I have is in the mums and dads of Australia, so that they can have a business they want to make a go of and make a success, because their success is our success.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

I would like to contribute to this debate on the Competition and Consumer Amendment (Misuse of Market Power) Bill 2017—certainly not for 20 minutes, but just to put a few points on the record.

This recommendation is a result of the Harper review, and it is about maintaining competition. Let me expand on that. If you start a small business and you start to become successful, one of two things is going to happen: big business, the big end of town, are either going to buy you out or they are going to squash you out. Make no mistake about that: if you're a threat to big business they will squash you out.

For years I have asked the question: how do we make section 46 effective? The purpose test simply has not worked. I have had many discussions with a bloke I have a huge amount of respect for, Mr Allan Fels, the former boss of the ACCC. Allan Fels was telling me: 'You need an effects test.' Let me explain this to those in the chamber and those in the gallery.

If I were part of a big multinational company, say we had 300 stores, and we started up a branch in a country town that had a successful small business just poking along, employing seven, eight or 10 people, we could sell at cost—we could sell at a ridiculously low price. Under the purpose test, if I were a small business and I or the ACCC had to take them to court to prove that the purpose for that big business selling at half price was to send me broke, that was a very difficult case to prove. Now, with the effects test, I can simply go to the ACCC and say, 'The effect of this big business charging $10 for some product in all their stores around Australia but charging $5 in the store opposite me in the street is sending me broke.'

This is about maintaining competition. I'm surprised the Labor Party are not supporting this. This is about maintaining competition and seeing competition that means small businesses can survive. I give an example: I know many small businesses—the corner stores. Where do they buy their cans of Coca-Cola? They go to Coles and Woolworths and buy their Coca-Cola there when it's on special. Why? Because they can buy it cheaper at a retail price from Coles or Woolworths than they can by buying directly from Coca-Cola. That is a fact. Why? Because when Woolworths and Coles order their Coca-Cola, they order in umpteen pallets. They bulk purchase, with a big discount. The small business at the corner of the street can't do that.

That is what the direct responsibility of the amendment to section 46 of this legislation is: to see the effect of the business is not to use their power, their strength and their might simply to squash a small business or to move into town—especially in country towns—and squash a small business that has been established there. It could have been a family business that might have been there for generations; it might be the local IGA. But the big business can't go in and say: 'Righto, this town is growing. It's got a good future. We'll sell it at half price or even less,' simply to cripple and shut down their opposition.

That is unfair, and as Senator Bernardi said, it is about fairness. I believe that life is about fairness, and the current section 46 is not treating small business fairly. That's why we need this amendment. As I said, and I will repeat it, it is to maintain competition. If we're going to have a situation where the big end of town, the multinationals, can squash their small businesses in competition, we're going to have three or four companies run this nation in retail.

Master Grocers Australia has welcomed the bill. The National Farmers' Federation says that the effects test will help protect Australia's 135,000 farm businesses from unfair marketplace conduct, which will in turn drive innovation and jobs growth for the Australian economy. The Australian Small Business and Family Enterprise Ombudsman strongly supports a business environment that allows small businesses to participate in markets and to compete on their merits alongside larger businesses. This freedom depends on the existence of a level playing field, where those with substantial market power are effectively prevented from using that power to lessen competition.

The Institute of Public Accountants highlighted the effect that Australia's concentrated market structure has on competition, noting that small or medium-sized businesses are vulnerable to exploitation or exclusion by firms with substantial market power. The current situation is simply David and Goliath; and, as the biblical story says, it is not often that David wins. So this should be supported from all around the chamber. I am very confident that Senator Xenophon and his team will support this. Senator Xenophon and I, and many others in the National Party, especially Senator Canavan, and many in the Liberal Party as well, have been on about this. Craig Kelly is one who says this might not be the whole answer but it may be helpful. But we cannot have this situation for small business. I am referring largely to small business in the smaller regional cities and growing regional towns, not so much the big cities. But certainly it could be the case in a big city that a big business comes in and cuts the price; and it can do that because of its bulk purchasing power, the huge volumes that many of these big businesses purchase when they order their stock.

I think this is a very fair piece of legislation. As I said, it will encourage competition. The more of your opponents you can cripple and shut down the less competition there is. It is good to rely on small businesses for service. Small businesses are renowned for good service and the friendly service they provide, but there's a limit on that when it comes to price. You can provide all the service you want but if you're double the price of your competitor, customers will look for the discounts and the best deal, especially to save a dollar with the cost of energy prices and so on. Here is a situation where we will have some fairness in the market through this effects test, some fairness with the powers given the ACCC under section 46 and some fairness to not only allow existing small businesses to survive but to give incentive to future generations of Australians who want to start a small business. This will say: if you want to mortgage your house on a low-doc loan, if you're going to have a go, we're going to make a level playing field out there; we're going to see that the big end of town doesn't do the Goliath bit and stomp on you.

This legislation is very fair. I question why some opposite are not supporting it. I question why they are anti-small business and supporting big unions and big business all the time. Small business is the biggest employer in our country. They are the hard workers. Many in small business do not have superannuation and do not pay themselves penalty rates. They work on weekends and public holidays to save costs because they simply cannot afford to employ many people on weekends and public holidays. They work hard and deserve to be rewarded for their efforts. This legislation adds weight to that. It is a sad situation when we lose something in Australia. I think hard work should always be rewarded. But under the current legislation, the purpose test in section 46, hard work is not enough. It is very disappointing when people work hard only to find that they get put down the financial tube, their business goes belly up, because of the power, might, purchasing power, tactics and strategies of huge businesses, multinational businesses in many cases, who simply squash their opponents. I commend the bill to the Senate and I hope for support. If Labor and the Greens are not supporting this bill—I hope the Greens are: Senator Whish-Wilson has been very familiar with small business in his life. And I hope the crossbenchers support this bill to give a go in this very competitive world.

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

Let me start by putting it on the record that the Greens will be supporting this legislation. In fact, the Greens have campaigned for an effects test in section 46 for nearly five years. Prior to my entrance to the Senate, Christine Milne had campaigned on this. She was from a farming background and worked very closely with and was very popular with Tasmanian farmers. She understood the pressures on supermarket supply chains over a number of years, and she had seen the dairy industry reduced to nearly a quarter of its size from numerous pressures, including being squeezed by the big supermarket chains. This is something my party has long campaigned on because we support small businesses, rural communities and our farmers. Let me also make it very clear and be up-front that there is the policy aspect of this and then there is the political aspect. I think it helps to cover off on, to quote Peter Garrett, 'the power and the passion' behind any particular piece of important legislation when it comes to parliament and goes through the political process to become legislation and, hopefully, ultimately, law. I will make some brief comments on that.

Let's start with the policy. Competition policy in this country is reasonably complex. There are a large number of components to competition. The one that has caused the most controversy over time is section 46. Section 46 is designed to prevent the misuse and abuse of market power or market concentration. Essentially, it is unworkable—section 46 in its current form is unworkable. This is something I talked about last week when Labor brought their private member's bill into this place. I quoted the ACCC. Mr Sims, who we all think does a really good job with the war chest he has available, has been making it clear that section 46 is unworkable. The Harper review, instituted by the government, also recommended that section 46 be changed, to introduce an effects test.

Probably the best analogy I have read, which simplifies what is fairly technical and complex detail, is that it is similar to the difference between a manslaughter charge and a murder charge. Currently, the way section 46 is set out, for any death you would need to prove motivation for murder. We have all grown up watching detective shows—Law and Order and those kinds of things on TV—and we know that a manslaughter charge is different to a murder charge. It has a lower burden of proof. The comparison is a really good one with the misuse of market power under section 46. The way section 46 is structured at the moment, you have to prove murder. You have to prove intent; that anticompetitive behaviour is designed to stamp out your competition. The reason it has been unworkable is that it has been almost impossible to prove intent. However, if you look at the effects of the action of a company that does stamp out competition, and that can be proven, then you have your manslaughter. You have your lower burden of proof. It is actually a really interesting and easy to understand comparison. The way that competition law is set out at the moment, it is virtually the same as trying to prove a murder charge where a much higher level of proof is required, and you have to prove motivation and intent. Whereas, over time, we see that markets fail and there are important roles for regulators to play and very tough regulations and laws to prevent, for example, market concentration, where monopolies and duopolies exist and crush competition. Lack of competition is not just bad for consumers, it is also bad for those who provide the inputs into the supply chain, like farmers and distributors. It is actually a really important debate.

Section 46 is not workable. Don't take my word for it. Let's hear what the ACCC have to say. In their submission to the Senate Economics Legislation Committee, Mr Rod Sims in his submission said:

The ACCC continues to strongly endorse the proposed, simplified reformulation of the misuse of market power provision of the Competition and Consumer Act 2010 (CCA) (section 46).

They go on—and, senators, it is well worth reading this if you have not read it—to talk about a number of objections to the adoption of a lessening of competition which is called an SLC, and a test in section 46 of the CCA. In this submission, they debunk the myths that have been put out there by those who oppose an effects test. No guesses who the power is behind this debate when we are talking about the power and the passion. It is big business. As we heard from Senator McKim, I think quite surprisingly to most Australians, behind that big business is also a big union—the SDAs, who we call the 'shoppies'—and the deal they have done with big business.

Mr Sims goes through, talks about the purpose of an effects test and refutes, one by one, the arguments that have been put in place; for example, that an SLC test is novel or uncertain. On the contrary, he says that it is a 'well understood test that is applied in the majority of the other competition provisions of the CCA, including anticompetitive agreements, mergers and acquisitions.' But there is more. He then goes on to talk about arguments that adopting a SLC test will prevent or deter competition. He says:

The adoption of an SLC test will not restrain large businesses from competing on their merits, reduce productivity, chill investment or lead to higher prices.

And he sets out all the reasons why. Labor's key argument here today is that somehow this is going to lead to higher prices. Mr Sims also refutes arguments that a SLC test will remove the causal connection between market power and conduct or that amending section 46 would impose an unreasonable burden on large business. He then deals with mandatory factors, which are the key arguments we have heard from Labor today.

Obviously, the Labor Party missed the appendix to the submission by the ACCC, but it sets it all out in easy-to-understand detail. Labor found some examples of where an effects test under a new section 46 of this new legislation, if it gets up, would be different from the existing section 46. They talk about anticompetitive conduct like land banking, locking up supplies, restricting supplies of essential materials, retaliatory threats by big business, joint marketing fees, freezing out competing suppliers from retail display and demonstration opportunities, targeting price discounting strategies by an incumbent designed to dissuade new entrants in a region and tying up customers in long-term contracts with anticompetitive clauses. I once again thoroughly recommend senators read this simple, easy-to-understand table because it sets out these overly simplistic and misleading arguments provided by the Labor Party today as to why they are not opposing this regulation.

A lot has been written about and discussed in the public debate about the supermarket duopoly. Believe me, they are a stark example of the misuse of market power in this country. There is the perception—and the reality—that many farmers and small businesses have been squeezed by their ferocious war for market share over the last few years. We have the most concentrated grocery market in the world. Up to 70 per cent of the grocery market and in some cases, I have heard, up to 80 per cent including the now take-away liquor market is controlled by the duopoly. These big supermarkets have cornered nearly 50 per cent of Australia's petrol market by using their size and their muscle. They are amongst the top 20 retailers in the world. Of course, they appeal to customers by suppressing prices, by discounting and by campaigning as price suppressors. But, at the same time, they have massively increased profits. You might scratch your head. Any first-year economics student might say, 'Wait a second. That does not sound right, Senator. How have they managed to get away with it?' They have got away with it by transferring over $2.5 billion in profit from the food producing and the food manufacturing side of Australia—so think of farmers, out struggling to make a living; small businesses struggling to provide distribution, provide food and also compete with them on a retail level—to the retail side of the business over the last seven years. So the question you would ask is: what is the future for food producers and how can they keep going if they are continually being squeezed and driven towards being unprofitable? That is the other side of this debate.

The Greens, as I said earlier today, are proud to have been campaigning on this issue now for a long time with farmers and with small business. We have some amendments which I will deal with when we go in committee, and I will certainly talk about Senator Xenophon's amendments and any other amendments we may see.

Let me get to the politics side of this now. I am going to talk about politics on both sides of this chamber today, Labor and Liberal. I put a motion to the Senate, just by coincidence, nearly two years ago for an effects test to stand with farmers and small business. Much to my surprise that day, my Green colleagues and I were joined on this side of the chamber by the National Party. The entire National Party Senate team crossed the floor to vote with the Greens on our motion on the effects test. I'm not going to divulge confidences, but I did say to those senators, 'Thank you for standing with farmers and small businesses today.' They thought that was quite funny. They said, 'No, Senator, thank you. Today we are negotiating with Mr Malcolm Turnbull on forming a new government.' That's right—it was the same day that Mr Malcolm Turnbull knifed Mr Tony Abbott in the back and took the leadership of the Liberal Party. Perhaps, as these strange coincidences occur, the politics is that the Liberal Party had done a deal with the National Party to bring in an effects test, and that was what helped underwrite Mr Turnbull's leadership as Prime Minister of this country.

I only say this not because it's a bad thing but because I am worried that there are senators on the other side of this chamber who fundamentally and philosophically disagree with an effects test that makes life harder for big business. I hope that they are going to stick this legislation through and not put any poison pills into this or any future legislation that could help unwind this very important piece of legislation today.

I was very surprised when I heard that the Labor Party weren't going to support an effects test. I didn't know why. I scratched my head like a number of other people did. That decision was obviously made a long time ago. We heard from Senator McKim, and I read some transcripts from media articles on the power that the shoppies union has over the Labor Party. The only conclusion I can draw is that Labor, through their relationship with the shoppies, are in bed with big business. They were in here spouting on about the Business Council for nearly 15 minutes and supporting big business. At least they acknowledged that wasn't a normal thing for them. If it wasn't a normal thing, what's so special about this particular legislation?

We know that the donations to the Labor Party through the shoppies and the connection to Coles, Woolworths and Wesfarmers are black and white. I suspect that Labor voting against this bill today, regardless of the faux arguments they put up for not supporting an effects test, because of their donations. If that is true, that is rotten to the core. If they are voting against good legislation that helps improve our competitive landscape and helps make it easier for farmers and small business because this is going to impact their support and donations, I think that's not going to go well for them with small businesses and farmers in this country who expect us all, without fear and favour, to look at these things in the cold, hard light of day and take every opportunity for reform that we can when we see it.

I say to any farmers, small-business people or groups out there who are looking at this debate, it's important I put on record today that this is not a silver bullet for fixing all your problems in the competition space. This will certainly make it a lot easier for the ACCC to prosecute cases of misuse of market power. I gave some examples where the ACCC has stepped out and why an effects test in section 46 will make it easier, but it isn't a silver bullet. It's not necessarily going to stop a new supermarket opening in their area. It's not necessarily going to stop aggressive price discounting. But it will make life a lot easier.

But it's not just a supermarket duopoly. It's big business everywhere that should be worried about an effects test being introduced if they are conducting anticompetitive behaviour. That's what we want. We want the right tools in the toolbox for Mr Sims at the ACCC to be able to conduct his job in the most efficient and effective manner possible.

My example that I would like to talk about today in the few minutes I have left is King Island off Western—off North West Tasmania. It kind of is of Western Australia, in a way—I don't think I can spin my way out of that one too easily. I went to King Island and the farmers there used to have an abattoir and they used to have their own brand: King Island Beef. It was arguably the best brand in the country.

JBS—a big, aggressive company, which Senator Heffernan had lots to say about when he was in this place—came in, bought the abattoir and shut it down. What then happened to the farmers was that they didn't have their own abattoir so they had to put their cattle on boats, which was terrible for the cattle. It was not only cruel for the cattle but it also affected the quality, the MSA, of their beef. The farmers have essentially now lost their brand and have to sell their cattle to other producers on mainland Tasmania.

I went over there and I thought: 'That's a bit unfair. Why don't we see if we can buy this land off JBS?' They had an entire abattoir set up, including a $5 million facility paid for by the Australian taxpayer for treating effluent to allow the abattoir to keep going and to modernise it. They refused to sell the abattoir or any of the equipment or the land to the farmers who wanted to buy it back and control their own destiny.

I was interested because I not only wanted to help these small businesses and these farmers but I also didn't want to see the cattle to be put on these boats in one of the roughest stretches of water in the world. I wrote to the ACCC and they wrote back to me and said, 'Unfortunately, unless you can prove intent, unless you can prove that JBS bought that abattoir to shut it down to consolidate their market power in the cattle market, you've got no chance. So, no, we're not going to investigate it.' Guess what? Unfortunately, this legislation is not retrospective, but I reckon, under these laws now, we could mount a pretty good case that that company did have a marked effect on the profitability of those farmers on King Island. That's a real example of where I have participated in this debate and tried to work with stakeholders—local farmers and small businesses—to help them out.

The way competition law is now under section 46 makes it next to impossible to succeed. That is something we can fix. We can fix this today. We can make life easier for the ACCC. We can make really clear-cut cases of anticompetitive behaviour. We can cut them out, and we can stand up for small business and small farmers. It's not often we get to see legislation where we can actually make a difference. I will argue here today—and strongly urge senators to look at this piece of legislation—that it's not a silver bullet. Farmers shouldn't be relying on this to solve all their problems, nor should small business, but it does go a long way to improving competition policy. Please don't let politics and the power ruin this chance to actually fix this.

Let's go back to my quote on the power and the passion in this place. I would argue that the Labor Party only putting up one speaker on this bill, this really important piece of competition legislation, suggests that there is no passion in the Labor Party for this piece of legislation; no passion for opposing it and no passion for supporting it. I was really surprised that Labor only put up one speaker here today. I sense that they would like this to pass quickly and that they would like it to go away. And that's a real shame, because this is something my party has campaigned on for nearly five years. It's a rare opportunity to help fix the competitive landscape in this country. It's a rare opportunity to stand up for small business and farmers in this country and say: 'We did our bit. We'll continue to work with you on what else needs to be fixed.' This is an opportunity to support the ACCC chairman and CEO. Get out there—help Rod Sims prosecute the case against what we know is anticompetitive behaviour, misuse of market power and market concentration solely to underwrite the fat margins of big business at the expense of farmers and small business in this country. Let's pass this legislation.

Senator Di Natale interjecting—

Stephen Parry (President) Share this | Link to this | Hansard source

Senator Di Natale, we're almost at 2 pm—

Senator Bernardi interjecting—

I won't entertain a point of order, Senator Bernardi, on that. Senator Brandis, I gather there are no ministerial announcements that you need to worry about?

George Brandis (Queensland, Liberal Party, Attorney-General) Share this | Link to this | Hansard source

No, I don't have any ministerial announcements for you, I'm sorry, Mr President. So I'm afraid there won't be an opportunity to keep the time going until two o'clock.

Stephen Parry (President) Share this | Link to this | Hansard source

That is fine. It now being 2 pm, we now proceed to questions without notice.