Patrick Dodson (WA, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Competition and Consumer Amendment (Competition Policy Review) Bill 2017. I will detail why Labor will oppose schedule 6 of this bill. Our proposed amendment is to remove that schedule. We are willing to support the remaining 13 schedules of the bill.

In 2014, the government commissioned the panel led by Professor Ian Harper to review Australia's competition laws, policies and institutions. That review reported in March 2015. Two and a half years later, the Turnbull government has brought to parliament a bill containing 14 schedules amending the Competition and Consumer Act 2010 to implement some of the recommendations from the Harper review. Labor supports 13 of the 14 schedules; they're largely uncontroversial. Indeed, we would have been happy to support them in 2015, when the Harper review finished its work. However, schedule 6 of the bill proposes to increase the maximum penalty for breaches of the secondary boycott provisions, also known as the sympathy strikes, from $750,000 to $10 million. Labor will not support that measure, for reasons I will detail later.

Labor is the party of competition. Competition means lower prices, higher wages, and better quality products for Australian families. It means a more productive and more innovative economy, with more jobs and higher standards of living. Strengthening competition is about defeating vested interest. It is about promoting a fair and equal society. More than anything else, promoting competition is about supporting the interests of Australian consumers over the interests of rent-seeking monopolists. It was Labor that introduced the Trade Practices Act 1974. Prior to that time, this was no act of parliament dedicated to competition matters. This original act, now known as the Competition and Consumer Act 2010, remains the backbone of competition law in Australia.

Under Prime Minister Keating, Professor Fred Hilmer was commissioned to chair a comprehensive review into competition policy. His report, known as the Hilmer report, set the agenda for competition policy in Australia for the two decades that followed. The Productivity Commission found that reforms implemented as a result of the report led to a significant and permanent increase in Australia's productive capacity. Likewise, the Grattan Institute has found that National Competition Policy is one of the 10 big reforms that led to 24 years of uninterrupted economic growth in Australia.

Under the Rudd and Gillard governments, further important changes were made to competition and consumer policy settings. In 2011, the Australian Consumer Law, or ACL, was introduced. The ACL was a cooperative reform between the states and the territories and the Commonwealth government. It created a consistent, national approach across a range of consumer issues, such as unfair contract terms, consumer rights and product safety.

Labor went to the last election with a suite of policies to strengthen the Competition and Consumer Act. Labor committed to increase the penalties for anticompetitive and anticonsumer conduct and to use some of the revenues to increase the ACCC's litigation budget from $24.5 million to a maximum of twice that level. We welcome the government's announcement that it will align the Australian Consumer Law penalties with the rest of the act but urge it to adopt Labor's other policies that are in line with international best practice. Labor has also committed to giving the ACCC a completely independent market-studies function—something it has been begging for, for years now, to help it to identify competition challenges before they become systemic.

Labor will support measures that boost competition, because Labor is the party of competition. It was the Labor Party that criminalised cartels back in 2009. Cartel conduct is a form of white-collar crime where businesses come together to fix prices against the interests of consumers. It was a civil offence prior to 2009. This was inconsistent with international best practice and meant that the appropriate disincentives were not in place to deter such conduct. Under Labor, cartel conduct was criminalised, bringing Australia into line with international best practice and meaning that offenders could face jail if caught fixing prices with their competitors.

Labor has long recognised that effective competition policy is at the heart of productivity and a well-functioning economy. But it's also at the heart of a fair society that protects the interests of consumers over those of rent-seeking monopolists. Our record could not be any stronger.

Labor also understands that well-functioning economies are a means to an end, and, for Labor, the development of competition policy will always be seen through this lens. For Labor, competition remains a vehicle to not just deliver lower prices to consumers and families but spread opportunity throughout the community. Lower barriers to entry lead to more competition and therefore greater participation. Labor believes in the need for government intervention when markets fail in consumer protection, to ensure that markets work for Australian consumers. Competition policy should not be used as an excuse for blind, ideological or prejudiced cuts to and privatisations of important human services.

The people who lose out from cartels are Australian consumers and other Australian businesses, particularly small businesses, which are playing by the rules. Cartel conduct is widely regarded as the most serious and harmful violation of competition law. We have consulted widely to ensure that this bill does not water down cartel provisions. We don't want legitimate joint ventures to be unintentionally prohibited by the cartel provisions under the act. The bill broadens the exemption so it covers not just contracts but agreements and understandings. The bill also extends the joint venture exemptions to include provisions that are for the purposes of, and reasonably necessary for, undertaking the joint venture and to extend the exemptions to the acquisition of goods and services not just the production of goods and services.

Another measure worthy of special consideration was the introduction of a 'reasonable search' defence. We have consulted widely to ensure this measure would not allow companies and individuals under investigation to use this defence in refusing or failing to comply with a compulsory information request by the ACCC under section 155. Section 155 is the foundation of the ACCC's ability to investigate alleged breaches of the act. The government's effects test bill is a separate bill but from the same review. Let's contrast this with the passage of the effects test. 'Effects test' is shorthand for the test introduced under section 46 of the Competition and Consumer Act, which looks at whether conduct engaged in by a firm with a substantial degree of market power has the purpose, effect or likely effect of substantially lessening competition. This is dangerous economic policy. The effects test will make businesses afraid to compete, which ultimately hurts consumers. This will create a legal risk every time a business seeks to lower prices for their consumers. Consumers are the losers here.

Labor welcomes strong competition policy but it must be informed and enforced—the government's package is neither. What we saw in the parliament earlier this year was the passing of dangerous legislative proposals without addressing the resources of the ACCC or making it easier for small businesses to litigate in their own private capacity. In the words of Peter Costello, the so-called effects test protects competitors, especially the less efficient ones, from competition. Since 1974, at least 10 inquiries into Australia's competition laws have considered the proposal of an effects test and rejected it. Apart from Professor Harper's review, only one other inquiry has ever recommended it. In submissions to the Harper review, the effects test has been described as 'legally unworkable, something that will chill competition and something that will create uncertainty for business'. These changes will deter job-creating investment in Australia by adding to a new layer of red tape and barriers to investment that has already been imposed by the Liberal-National government.

As a majority of the schedules in this bill are technical and uncontroversial, I don't think it's necessary to detail each section for the Senate. But I will articulate Labor's position on schedule 6, which increases the maximum penalty on secondary boycotts. In doing so, I wish to reaffirm Labor's support for the remainder of the bill and assure all parties in this place that we will support the bill should our amendment to remove schedule 6 be agreed to.

In 1974, the Trade Practices Act was introduced by the Whitlam government. When Malcolm Fraser's coalition government came into power, it was inspired by John Howard to introduce sections 45D and, later, 45E. These sections outlawing secondary boycotts particularly targeted trade unions. The Hawke government attempted to repeal sections 45D and 45E in 1984. However, the legislation was defeated in the Senate. This was based on the view that industrial relations matters are best resolved in specialist industrial courts or tribunals rather than through competition law or by the competition regulator. This repeal attempt was defeated by the Senate, and another attempt in 1987 was ultimately dropped.

In 1993, the Keating government repealed the secondary boycott provisions that had operated since 1977 within the Trade Practices Act 1974. The government modified section 45D and depleted section 45E. The effect of the amendments to section 45D was that the prohibition covering secondary boycotts to the TPA was restricted to boycotts involving a substantial lessening of competition. The secondary boycott provisions were then reintroduced in a much modified form into the Industrial Relations Act 1988. This change limited the operations of the provisions on secondary boycott actions and made relief available, and conciliation on dispute was first attempted through the commission. The effect of this was that, if an employer wanted to commence legal action in respect of a secondary boycott, it had to go through the conciliation and arbitration process first.

In 1996, the Howard government introduced Workplace Relations and Other Legislation Amendment Act 1996, which reformed enterprise bargaining. The secondary boycott provisions were removed from the industrial relations legislation and returned to the TPA in 1974. This was on the basis that stronger protection could be provided under this act.

Secondary boycott involves persons, in concert with another person, engaging in conduct that hinders or prevents a third person supplying or acquiring goods or services from a fourth person. Schedule 6 increases the penalties for breaching these provisions from $750,000 to $10 million. The International Labour Organization convention No. 87 permits sympathy strikes, provided the original industrial action was lawful. The International Labour Organization has noted the prohibition of secondary boycotts in Australian law as beyond what it regards as permissible prohibitions. Under international law, the ILO convention No. 87 sympathy strikes are permitted provided the original strike was lawful. Higher penalties would move Australia further away from international best practice.

As benefits this government's agenda, secondary boycott laws are typically against trade unions that are engaged in sympathy strikes. Secondary boycotts are not as prevalent as in the past, which undermines the policy case to recommend higher penalties. There has been one instance of the ACCC undertaking action on secondary boycotts in the last decade. The proposed changes are inconsistent with Labor policy to have higher penalties for anticompetitive and anticonsumer conduct in line with international best practice.

For more than 40 years, Labor has held the view that secondary boycotts are primarily an industrial matter rather than a competition issue. As I detailed before, it was the Fraser government in 1977 that introduced secondary boycotts into the Trade Practices Act, with the intention of targeting trade unions. In the 1980s, the Hawke government sought to remove these provisions from the Trade Practices Act, but the Senate defeated the attempt. The Keating government in 1993 moved some secondary boycott provisions into the Industrial Relations Act, only for the Howard government to return them to the Trade Practices Act in 1996.

For comparison, unprotected industrial relations activity under the Fair Work Act 2009 is subject to far less penalties, a maximum of 60 penalty units—that is, $12,600. If enacted, the maximum penalties for a secondary boycott would be nearly 800 times the maximum penalty for unprotected industrial action. Compare this to the proposed penalty of 20 penalty units or $4,200 for noncompliance with a section 155 order.

The government remains steadfast in its support of cutting penalty rates for up to 700,000 Australians in the retail, hospitality, fast-food and pharmacy sectors. The government wants to push ahead with its budget for millionaires and multinationals, including a $65 billion tax cut for banks and multinationals.

In conclusion, as I've said, Labor supports the majority of this bill. We do not seek to be obstructionist, but we do not believe a policy case has been made for the changes to secondary boycotts. We urge senators to support our amendment to remove schedule 6. If the amendment is carried then Labor will vote for the bill, ensuring its speedy passage.

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

I rise on behalf of the Australian Greens to speak on the Competition and Consumer Amendment (Competition Policy Review) Bill 2017. The Greens, like Labor, will also be supporting this bill today, subject to an amendment that essentially removes the provision for secondary boycotts from this bill. The 13 or so other issues that are dealt with in this bill are essentially coupled to the effects test, as part of legislation that was passed by this place only a few weeks ago. In a sense, they enable an effects test to come into law and come into practice. I'm grateful that Labor have come to their senses and supported the legislation that's necessary for an effects test, and I'm grateful also for the amendment on secondary boycotts they have put up to have that removed from the bill.

The issue of secondary boycotts really has nothing to do with an effects test. As with the effects test, it was recommended by the Harper review, but it's an entirely different matter. I did urge the government to remove it from the bill before they brought it to this place, so that it could be debated in a separate piece of legislation and so as not to necessarily complicate matters on the effects test. I congratulate the government for working with the Greens and the crossbench to pass an effects test. I know this is something that the National Party were very keen on, and it is something that the Greens have campaigned on now for many, many years, starting with Christine Milne prior to my taking over the competition portfolio.

An effects test is going to be one of the biggest reforms to competition policy that Australia has seen in nearly a decade. Essentially, it will make it much easier for small businesses and farmers and aggrieved parties to tackle the power of monopolies and cartels. It is interesting that Senator Dodson said that Labor want to stand up to monopolies and cartels, and yet they have thumbed their noses at an effects test primarily because vested interests within the Labor Party—the shoppies union primarily—are big donors to the Labor Party and they are in bed with big companies like Coles and Woolworths. Nevertheless, what we have here today is the enabling legislation for an effects test. It's high time that we got on with this. This is something that I know the rural community in my home state of Tasmania has been campaigning on for some time, and we are very, very close.

I have a couple of things to say about secondary boycotts. The Greens don't believe that the chamber should be supporting this provision. We see this as simply an attack on the rights of workers and their right to strike. We do believe, like Labor, that this is an industrial matter; it's not a competition issue. Cases of prosecutions for secondary boycotts are very rare. The penalties issued by courts, as opposed to settlements, don't go anywhere near the current $750,000 limit, let alone the $10 million limit that would be set by this bill if it were to pass unamended.

The ACCC, in their submission to the Senate inquiry—an inquiry that I initiated into penalties for white-collar crime—didn't raise the issue of secondary boycotts as a matter of concern or urgency for them. I also note that when Mr Peter Costello, when he was Treasurer of this country, reviewed competition penalties in the Howard government's final term—when, incidentally, the Liberal government had the numbers in this place—he didn't seek to equalise penalties for secondary boycotts, like this legislation recommends, when he introduced the penalties that are currently in place, including $10 million penalties for other compensation-related penalties.

We do believe that unions are not-for-profit organisations—they serve a very important purpose representing workers—and that there is a very good case to be mounted as to why they should be treated differently to profit-seeking corporations. We feel that this is yet another attempt by this government to hold up a paper and say that they've taken on the union movement in this country. It unnecessarily complicates what is essentially really important legislation that passes an effects test into law and makes it a lot easier for farmers and small businesses in this country to tackle the strength and the power of big corporations—especially in the case of farmers—who have exercised that market power in the past in what certainly looks to small businesses and farmers to be unconscionable conduct and anticompetitive behaviour. There is a very good reason why Professor Harper recommended an effects test. It makes it a lot easier for them to prosecute a case. All they need to do is prove that the effects of anticompetitive behaviour are there, rather than the intent and purpose.

Anyway, I spoke at length on the effects test when the legislation passed. There is no more to say about that except to say that it is good legislation that is very important for small businesses and farmers in this country and I look forward to supporting Labor's amendment on the secondary boycotts. I hope that the government in the other place supports the amended legislation and passes an effects test into law.

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

I would like to thank all of those senators who have contributed to this debate. This bill contains a significant package of reforms to the Competition and Consumer Act 2010. These reforms are designed to simplify the law and address anticompetitive conduct while encouraging procompetitive behaviour. These reforms will strengthen Australia's competition laws and will deliver benefits to consumers, businesses and the economy.

The bill implements a substantial number of the competition law reforms recommended by the independent Harper Competition policy review and agreed to by the government in its response to the review. It also implements the recommendations made by the Productivity Commission in the 2013 inquiry into the National access regime, which the government accepted in its Harper review response. I commend this bill to the Senate.

Question agreed to.

Bill read a second time.