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

I rise to continue my comments on the Competition and Consumer Amendment (Divestiture Powers) Bill 2024. Before I was, sadly, interrupted last time we were speaking on this, I was talking about examples of the impact that the current model with the supermarket duopoly is having on our farmers, who feed and clothe this nation. Watermelon farmers are selling their produce for only $1.50 each and then walking into the supermarket and seeing them being sold for $5 or $6. That's only gone up in the intervening period.

Since then we've seen the belated announcement by this government to make the voluntary Food and Grocery Code of Conduct mandatory. While we welcome that, when the Nationals first offered a hand of friendship to the government in December 2022 and said that we would work with the government to make that code of conduct mandatory, we were fobbed off by this government. They have belatedly come to the realisation that the supermarket duopoly are not acting in good faith against that voluntary code of conduct. They've belatedly come to the realisation that the code of conduct should be mandatory, and we welcome that.

I also want to make the point that it is high time the supermarkets treated farmers fairly. It is high time that supermarkets honoured their contracts with farmers. If they say to a farmer, 'We need 10,000 heads of lettuce,' and the farmers then plant enough to ensure that they can produce 10,000 heads of quality lettuce to the standards the supermarkets insist upon, then the supermarkets should buy 10,000 heads of lettuce, not turn around after harvest and say, 'I'm only taking 5,000,' and only pay for 5,000.

But, in doing this, this government is claiming that, through this mandatory code of conduct, it's going to fix the cost-of-living crisis. What a furphy! What it will do is help fix some of our supply chain issues, some of the issues between farmers and the supermarket duopoly. It will not fix the cost-of-living crisis, and it is high time this government took the cost-of-living crisis seriously and actually took action to address rising inflation, rising interest rates, higher electricity bills, higher insurance premiums and failing infrastructure in the regions. Start doing your job, government.

On this particular bill, the Nationals absolutely support divestment powers, but I have always said, from the outset of my comments on this bill, that we need to get it right. We can't rush. We can't have a kneejerk reaction. At this point in time, the legislation that the Greens have drafted is not getting it right.

Louise Pratt (WA, Australian Labor Party) Share this | Link to this | Hansard source

Our government, the Labor government, has moved consistently and quickly to address the pressures that consumers are facing in our nation. It was only back in February of this year that the Labor Party announced its ACCC inquiry, as well as the Emerson review into the cost-of-living crisis in supermarkets. That review has resulted in announcements just this week that a mandatory code of conduct will be enforced.

We know Australia's supermarket sector is among the most concentrated in the world. We know Woolworths, Coles and Aldi collectively have a 75 per cent market share, which is—as acknowledged by the proponents of this bill, the Competition and Consumer Amendment (Divestiture Powers) Bill 2024—a much higher share than exists in many other advanced countries, which is why the Labor Party has appropriately scrutinised this. It has absolutely been a high priority for our government. We saw just last week the results of the CHOICE quarterly price-monitoring exercise which was funded by the Commonwealth government. We funded CHOICE to the tune of $1.1 million to carry out quarterly price monitoring in every state and territory. Consumers should rightly have been alarmed at the significant price differences across jurisdictions and between supermarkets. It showed that in the jurisdictions where Aldi doesn't operate—Tasmania and the Northern Territory—shoppers are paying higher prices for their groceries. It showed the magnitude of gaps between the different supermarkets.

What's notable about this in the context of this legislation is that in a divestment situation, if you were to look at who would be in a position to take over stores should, for example Coles and Woolies be forced to divest themselves of their stores, in many cases the competing store is already there next door and is already offering higher prices. So, in fact, forcing Coles, for example, to divest itself of my local Coles supermarket and sell it to a competing store is not necessarily going to result in increased competition. It may actually decrease competition. That is one of the findings of analysis done by Minister Leigh and other academics. Notably, even though Aldi has considerably lower prices and you can see those price point differences, Aldi themselves said to our supermarkets inquiry that they don't support divestment powers. So, we've had to get on with looking very carefully at how we can make a difference to both consumers and farmers. Our ACCC inquiry has looked at issues such as loyalty card discounts. One of the biggest impacts of concentration is indeed on consumers, so the ACCC, in looking at things like loyalty discounts, is there to ensure that shoppers are able to get a fairer deal.

One of the significant stories we heard during the course of our Senate inquiry was the devastating impact on many suppliers, in particular suppliers of fresh fruit and vegetables and other fresh goods, as well as nursery suppliers to Bunnings. The key issue here regarding their bargaining power, in that they are just price takers, is the fact that their produce is fresh and has a short shelf-life. And it was absolutely alarming to see, time and time again, that farmers and producers did not feel comfortable talking openly to our inquiry for fear of retaliation and backlash from Coles and Woolworths. Often they did not feel able to tell us what was really going on. But we did have a few brave souls step forward who were able to explain to us the kinds of practices displayed by Coles and Woolworths. They said they are at the mercy of Coles and Woolworths as price takers and that it has created enormous difficulty for them.

We recognise that we've heard too many of these troubling tales, even despite the fact it has been difficult for them to come forward, about suppliers to the major supermarkets not getting a fair crack. Those suppliers have been unwilling to make complaints because of fear of reprisals, fear that they simply won't get a contract the next time. However, under the former government, the Food and Grocery Code of Conduct was set up as a voluntary code, without the appropriate penalties to see appropriate powers given to producers inside that code. In effect, many producers were simply unwilling to use it.

The leader of the National Party was harping on previously, saying, 'Oh, dear: why didn't the government move to make it mandatory?' Well, that's why we are doing that. We are doing what the last government failed to do in nine long years of government. They simply didn't do the work to support the primary producers they purport to stand up for. Not only did the coalition set it up as a voluntary code, but also they had held a review on it. And the former government decided after their review that it should be a voluntary code. So, when those opposite say, as Senator Davey did, that they support divestiture powers, I tend to think it's a fair bit of hot air on their part.

If we really thought divestiture powers were the way to go on this front—and those opposite did think that—then there are a great many other things that need to come first as part of the suite of things we do to keep prices down. I don't think the work's been done on divestiture powers and whether they would indeed make a difference in our nation. But we have been getting on with the things we know will make a difference—that is, a mandatory Food and Grocery Code of Conduct. That follows extensive review by Craig Emerson. Dr Emerson held 65 bilateral meetings and four roundtables, looked at 68 submissions and ultimately made 11 recommendations, and the government accepts them all. The most important of those recommendations is that the Food and Grocery Code be made mandatory. But we are also looking at the scope of the code. Right now it covers: Woolworths, with an estimated revenue of $50 billion in 2024; Coles, with an estimated revenue of $38 billion; Aldi, $11 billion; and Metcash, $9 billion. Hopefully it will soon apply to Costco, with a revenue of $4.6 billion.

Australians spend a great deal of money on their day-to-day necessities at these stores. That is why the review recommended that our code place a greater emphasis on addressing the fear of retribution by including protection against retribution in the purpose of the code and requiring that any incentive schemes and payments that apply to supermarkets' buying teams and category managers are consistent with the purpose of the code. It also sees that we have an anonymous complaints mechanism established to enable suppliers and any other market—

Sorry, Deputy President: I seem to have a large amount of chatter going on to the left of me while speaking; it's a little bit distracting.

Bridget McKenzie (Victoria, National Party, Shadow Minister for Infrastructure, Transport and Regional Development) Share this | Link to this | Hansard source

It's the Greens.

Louise Pratt (WA, Australian Labor Party) Share this | Link to this | Hansard source

I meant to the right of me, sorry.

Andrew McLachlan (SA, Deputy-President) Share this | Link to this | Hansard source

Can the chamber come to order.

Louise Pratt (WA, Australian Labor Party) Share this | Link to this | Hansard source

Thank you. I do love my comrades on the left, but not so much on the right this morning! What's important is that we have a complaints mechanism that will enable protection from retribution, requiring incentive schemes and payments that apply to a supermarket's buying streams and category managers. We need to make sure they are consistent with the purpose of the code.

In the evidence to our inquiry on supermarket prices it was very clear that those practices were not consistent with the existing voluntary code of practice. It was almost as if the code did not exist. You could be told you were going to get one price for your products and you would nominate and commit to supplying a certain amount at a certain price, and then the day that you took those goods in to sell to Coles or Woolies for them to sell on their shop floor the contract would change. It's simply not sustainable for our Australian producers.

It's very clear when you look at the record price differences between Coles and Woolworths and, below that, Aldi. So, where are the dollars of Australian families are going? We have a cost-of-living issue in Australia. We need to keep downward pressure on grocery prices. This is something the Labor Party and the Labor government take very seriously, which is why we have done the work. We don't have a pie in the sky announcement about divestiture, nor do we have a flimsy code of conduct that we refuse to fix in government. We are doing the work. We've been doing the work consistently and carefully in partnership with consumer organisations like CHOICE, the Food and Grocery Council and producer organisations. It's time that we got on with real reform, rather than these sidelines as proposed by Senator McKim.

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

I support divestiture powers and I support the Competition and Consumer Amendment (Divestiture Powers) Bill 2024. I support this bill because it fixes a huge gap that exists in our competition laws—a gap which limits the competitive pressures that exist in our economy and which, ultimately, leads to poorer outcomes for all players in the supply chain, consumers of products of all different types and suppliers to those companies that have significant market power in our economy.

I think it's very important to start by highlighting that Australia is an outlier in the developed world when it comes to the powers that exist in our competition laws to take action against companies that misuse their market power. We would never—and this bill does not—seek to impose penalties to split up companies in the absence of misuse of market power. This bill, and other laws around the world like it, don't apply to companies just because they're big; they apply if they are big and then cause harm to other parties in the marketplace.

We have laws against big companies doing harmful things. Section 46 of our Competition and Consumer Act is the main provision. There are others, but I'll focus on section 46 because it's relevant to this bill. It's titled 'Misuse of market power', and it only applies to those companies which have a significant or dominant position in the market and which then do things that cause harm to other players in the market. There are of course, in our current laws, penalties that can apply to companies that contravene section 46. But, unlike other countries, we do not have this ultimate penalty that provides that, if this behaviour is particularly egregious and if this behaviour continues, then the company can be split up to create the long-term competitive pressures that have been allowed to thrive in other countries.

I heard the Prime Minister, a few months ago, make the remarkable suggestion that Senator Nick McKim—my friend and colleague over there—is bringing forward a communist proposal. I think he mentioned it being a Marxist or communist proposal. Divestiture powers are apparently something that was brewed up in Marxist theory classes, which Senator McKim probably attended. At university, I sometimes engaged in those discussions. But it shows the complete lack of understanding by the Prime Minister of this very serious problem.

Australians are suffering from a lack of competition in our supermarkets, banks and airlines. They're suffering poor outcomes in all of those industries. Our farmers are suffering from abusive conduct by our major supermarkets, which I might get to later, yet the Prime Minister has not even the most basic understanding of competition law, and the different types of competition laws around. You can mount a reasonable argument against divestiture powers. You could mount a serious and reasonable argument against them, but claiming they are somehow inspired by Bolshevik regimes is absolutely absurd. I say that because, back in the 1980s, the United States used their divestiture powers in their Sherman and Clayton acts that have been on their books for well over a hundred years now to break up a company called AT&T into what became known as the nine Baby Bells. The company was split up into regional telephone companies across the United States. This divestiture action was overseen by that noted communist President Ronald Reagan! It's the position of the Prime Minister that these divestiture powers are somehow communist inspired, yet President Ronald Reagan, perhaps the greatest known defender of free markets and capitalism in modern times, was happy to preside over such a divestiture. I don't know all the details of the AT&T case, but clearly the case was made in the courts that AT&T's conduct was abusive and was causing poor outcomes for telecommunications consumers in the US, and that company got split up. It's very rarely used.

Another famous example in the US was Standard Oil. Standard Oil was split up much earlier, at the beginning of the 20th century. It was a huge company. The actions and conduct of the likes of John Rockefeller contributed to the Clayton and Sherman acts, which were eventually used to split up this very large conglomerate into a bunch of different companies that persist to this day with the likes of Chevron and ExxonMobil. They're all the sons and daughters of that particular split. It didn't hurt those companies; they're pretty successful companies. I think Chevron was, at different times last year, the biggest company in the world. So it hasn't hurt their shareholders and it's been good for competition.

In both those cases—particularly the telecommunications case—we were told that somehow if we were to take this action, if we were to put in the ultimate sanction and split up a company, it would be terrible for the economy and cause investors to flee; it would hurt our productivity. There were different types of claims made about how terrible this would be. Yet, after the 1980s split up of AT&T, the greatest increase in telecommunication innovation and productivity that the world has ever seen was unleashed. I'm not necessarily claiming that the split up of AT&T was the cause of those developments, but they occurred subsequent to that split up and were, effectively, a precursor to the information age which we now know: the development of the internet, mobile phones, personal computers and graphical user interface operating systems. All of these things came after the split up of AT&T, which didn't hurt that industry or that economy. Clearly, investors didn't rush away. They rushed in, in a way, and there was competition—surprise, surprise! As I said, it was not necessarily the cause of it, but it probably helped to have that extra competition in telecommunication services and encouraged those countries that were hungry to go after new markets that were emerging in mobile phones and internet et cetera.

Likewise with the oil industry—I won't go through all of that. The development of the oil industry didn't slow down in the early 20th century when Standard Oil was split up. Instead, the split up led to much better outcomes for consumers, much greater competition, and massive expansion of automobile transport in the US and around the world.

It's not just in the United States. These laws exist in Europe, in Canada and in many other countries; they've had long experience with these laws. It's not something new or innovative. What is here before us today is something in the great tradition of English common law countries, which do seek to sometimes codify particular penalties like this in their laws and build on the experience of like-minded countries that have had success with such laws. Clearly these laws have been very successful in those other countries. They've persisted through multiple different political administrations. They have been used sparingly but used to great success, as I've outlined. They are being used again to look at the likes of Facebook and Google. While many of those actions haven't been successful through the courts, they clearly have had a role in reining in the likes of Facebook and Google, where we of course have issues.

So this is very sensible, and I don't quite understand the controversy here in this country. Maybe it's because our large businesses have a very large influence over this place. We are often accused of being motivated by other means. There are a lot of good lobbyists from those companies, and they seem to be able to confuse us here—we who are a long way away from those other countries that have had great experience with these laws.

I want to come to specific examples of misconduct, about why these laws are needed so much. As I said, these laws would build on the great tradition of English common law countries if they were adopted here, and no doubt they would be properly applied by our courts. In recent times there has been particularly egregious conduct by our major supermarkets, in particular. We've had banking royal commissions that have exposed similar conduct. People have been shocked by the actions of corporations who seemingly feel they are unrestrained by basic ethical conduct requirements.

There was a case brought by the ACCC around 13 years ago, in 2011—well, the conduct was in 2011 but the case was brought many years later, so it's around 10 years old. Back then, the ACCC did some great work and was able to subpoena a bunch of documents from both Coles and Woolworths, but I'm going to concentrate on Coles in the limited I have. The ACCC uncovered that Coles had these events with their managers which they called 'profit days'. Apparently, after a few months or almost a year of looking at their clients, if they were making enough profit on a particular line item, they would have a day when all their managers would go out and try to get more money from their suppliers. It was no more complicated than that.

I'll highlight one particular case where Coles managers decided they had a profit gap with a company called Oates. Many people would have bought bins or brooms with the Oates brand name on them. They reckoned they had a profit gap of $326,590 with Oates. To be clear, this was the gap between what Coles expected to make on Oates products and what they actually made. It was their mistake. They found that gap. They then wrote to Oates and asked them to pay $326,590. They were as bold as that, 'Just give us that money; we need that money.' Oates, as you would expect, inquired: 'Why are you asking us to pay that? What contractual term gives rise to this particular invoice you've levied for hundreds of thousands of dollars?' Coles gave no explanation under the contract about why they were demanding this money, apart from the fact that, on 24 June 2011, Coles managers wrote in an email to Oates that Coles, and I quote, 'Was not prepared to work collaboratively with Oates for the next year if Oates did not rectify the Oates purported profit gap.'

This is blackmail. It's got to be called out for what it is. It is blackmail. It is the most unethical, egregious corporate conduct you could ever consider that a small company like Oates would be stood over by a large company and told: 'Hey, look, we think we need another $300,000 from you. You've got a nice business here. It would be a shame if something happened to it. Give us some money.' Eventually, Oates did cough up. A number of emails went back and forth and eventually they offered to make a payment of $224,000. I think they eventually negotiated to raise it to $246,400 to keep their business alive. That was found by the Federal Court to be unconscionable conduct. The problem was that Coles was fined a grand total of $10 million for that infraction. This company has a turnover of many billions of dollars and it was fined $10 million. Justice Gordon actually said, 'The current maximum penalties are arguably inadequate for a corporation the size of Coles'. That's somewhat of an understatement, but everyone would agree that it was a massively inadequate fine.

We need a bigger stick here. We need something that responds to such egregious misconduct with at least the threat of something happening that is much more significant because clearly our corporations do not feel restrained right now by the current laws to stop them from engaging in that kind of conduct. I have highlighted one but this occurred to multiple companies. Woolworths engaged in very similar conduct as well. It only came to light because the ACCC went through a rigorous process of demanding these documents under the information powers we have given them. We can't have a system that relies on the ACCC going around to every business, trying to check every email or communication on a year-by-year basis.

We have to have a better structure in place that incentivises good ethical conduct from our major businesses. That's why this is so important. Section 46 is not used very often. The idea that these laws would make huge changes to the Australian economy is just not held up by the fact that in the first 30 years of section 46, only 15 cases were brought to the Federal or High Courts. Over the last few years, the National Party made some changes with the effects test. That's been hugely successful. There have been six cases in the first four years of its operation. I don't have data post 2021. I haven't been able to find it. In the first four years of those changes, six were brought after 15 and 30 and five of those six were private actions and weren't brought by the ACCC. That's great. That's exactly what we wanted to encourage—private litigation—so that we can get better resolution for businesses. This is a very, very sensible change that I'm happy to support and get behind. It's long past time that we do this as a nation.

We can see there's a bit of heat and light at the moment—a bit of pressure on Coles and Woolworths—and they're obviously trying to show that they're giving discounts to the Australian people. But do you know how they're giving a lot of those discounts? They're buying food from other countries. They're screwing over our farmers behind the scenes while people can't see. We know that's happening right now. Then they have the temerity to offer and take credit for the discounts, when the discounts you're getting are being paid for by our farmers. Let's back our farmers. Let's back our consumers. Let's join the rest of the world and have a decent competition act that has reasonable penalties for poor behaviour.

Maria Kovacic (NSW, Liberal Party) Share this | Link to this | Hansard source

In relation to divestiture and the current supermarket sector in our country, there are a lot of competing issues here. The coalition senators' dissenting report of the Senate Select Committee on Supermarket Prices, of which I was a member, said:

Australia's supermarket sector remains dominated by two large players for a variety of reasons ranging from competition policy, investment settings, planning laws, transport, energy and industrial relations costs, and economies of scale. It is important that those companies do not abuse that market position and that appropriate safeguards are put in place to ensure the disincentives are substantial should they treat their producers or consumers unfairly. It is important Australia's competition regulator be empowered to act where this occurs, and for producers to have access to reasonable, affordable, and fair dispute mechanisms without fear or the threat of reprisals.

We heard some very broad evidence throughout that inquiry about a lot of the practical problems that we have in this sector. Some of the things that I want to talk about specifically relate to small business growers and farmers.

The coalition first called for a statutory review of the Food and Grocery Code of Conduct to be brought forward in late 2022. The government didn't act until January 2024. The statutory review of the food and grocery code was scheduled to commence in October 2023, three years after the commencement of the previous reforms to the code, but it took the government almost a hundred days to appoint a reviewer, in January 2024. In November 2023, the coalition also called for the ACCC to undertake a price inquiry, armed with tough powers, into meat and fresh produce, to investigate the supermarkets and to deal with the spiralling cost-of-living crisis in this country. That crisis was being felt by Australians not just with their mortgage repayments and not just with their rent but also at the supermarket checkout. Under section 95 of the Competition and Consumer Act, the Treasurer has legislated power to direct the ACCC and give it strong powers to compel information. But it wasn't until 25 January 2024 that the government directed the ACCC to conduct an inquiry into Australia's supermarket sector, including the pricing practices of the supermarkets and the relationship between wholesale—including farmgate—and retail prices. Again the government was slow to act.

What did the committee find out? The committee heard substantial evidence about the disparity of relationships between growers, suppliers and the supermarkets and its harmful impact particularly on the horticultural sector. We heard examples of Dutch auctions with no capacity to bargain on price, inconsistent and non-uniform product standards being used, risk and cost being passed down the supply chain, extended payment timeframes of up to 184 days, informal contracting arrangements that leave producers with excess product and give supermarkets an ability to set the price, and the lack of alternative markets particularly for fresh produce to sell surplus product to. But one thing that I was disappointed about was that we didn't get a proper opportunity to challenge the large multinationals and investigate what effects they have on supermarket prices. For some reason, they didn't have to come in front of the inquiry in the same way that Woolworths, Coles and Aldi did. I don't think that's particularly reasonable, given the scale of the cost-of-living issues that Australians are facing in this country. The question we need to ask ourselves is: does divestiture actually solve this problem, and how?

On 6 February 2024, Professor Allan Fels AO released his final report of an inquiry into price gouging and unfair pricing practices. During the inquiry I asked him a number of questions, including about his views on divestiture. I want to share comments from his independent report. It says, 'If forced divestiture resulted in a supermarket selling some of its stores to another large incumbent supermarket chain, the result could easily be greater concentration.' That's not more players in the market; that's greater concentration. If large incumbent supermarket chains were prohibited from buying the divested stores, that would leave only smaller supermarket chains and foreign supermarkets as potential buyers. Further, if these smaller chains were not interested or were not in a position to buy, the stores would be forced to close. This would be at the cost of the jobs of the workers in those stores and of inconvenience to local shoppers, who would need to go somewhere else to buy their groceries. If any business is forced to divest or get rid of part of its business, it's quite likely that the parts they will get rid of are the bits that aren't profitable. It is likely that the stores that are less profitable for large supermarket chains are those where they have greater difficulty getting to and from the store and where they have fewer customers. Those stores would primarily be in our remote and regional communities. A potential unintended consequence could well be that forcing divestiture powers into this sector without proper consideration could end up harming the people that we are attempting to protect, particularly in remote and regional communities, where they already pay more for their groceries than their metropolitan counterparts. We could create an environment where groceries become even more expensive, so that's something we really need to have a think about.

The government delivered an interim report of the Independent Review of the Food and Grocery Code of Conduct in the middle of the supermarkets inquiry. Despite it making clear recommendations, there was no indication from witnesses, including the ACCC, that there was an immediate urgency to act on this. The government needs to act faster to strengthen the food and grocery code and respond to the serious concerns of our horticultural sector, as delegated legislation to make the code mandatory does not require legislation to pass parliament but rather requires the political will of Treasury. To ensure complete supply chain protection, the Food and Grocery Code of Conduct must seamlessly intersect with the horticulture and dairy codes of conduct. This should occur by having the horticulture and dairy codes as schedules of the Food and Grocery Code of Conduct, and that was included in our recommendations. We also recommended that price transparency policy should be carefully designed to ensure maximum benefit to consumers, with a minimum compliance burden on companies, and delivered through the ACCC rather than through new bodies. We don't need additional layers of regulation when we already have the ACCC. We have to enable the ACCC to do their job. The government should create clearer pathways for small producers and growers to apply for ACCC exemptions to share information. That was another one of our recommendations in this report.

The committee heard a lot of evidence about the need for more competition in this sector. What we didn't hear was a lot of evidence about the need for divestiture. Aldi was one of the witnesses, and, as a relatively new entrant into the supermarket sector, it didn't consider divestiture to be a part of a solution to the problems being faced. In the line of questioning with Aldi, when asked what their greatest barriers to entry were, it wasn't their competitors; it was land and planning and the ability to find suitable sites to open their supermarkets.

Last week CHOICE released a survey result about the price of a basket of groceries, and it discovered that the basic bundle is about $18 cheaper at Aldi than it was at Coles and Woolworths. That tells us that Aldi, as a market entrant who now holds around 10 per cent of the market share of the supermarkets, is delivering the competition that the market needs. This is what we need; we need broader competition. Divestiture in itself doesn't guarantee greater competition; what divestiture does is provide a blunt tool in relation to misconduct. The challenge that we have is that it takes a very long time to enforce. And, in the current cost-of-living crisis in which Australians are suffering significantly with their mortgage repayments, rent and energy prices, and at the checkout, the solution is to ensure that competitive practices are in place that will give us more choice, as Aldi has provided literally and figuratively through the CHOICE survey—not by throwing in another layer of legal and procedural obligations.

If a regulator found that a supermarket had, in fact, breached its obligations, there would be legal proceedings, there would be challenges to legal proceedings, there would be an enforcement order in relation to divestiture and there would be a period of time for that enforcement to take place. During evidence in the supermarket inquiry, Professor Fels made the comment that that would take years; we all know that that would take years. These aren't problems that are going to be simply solved. If you have a legal proceeding in the supermarket sector that takes years and years, there is a cost attached to that. Who will bear the cost? That cost will flow on to the consumer. That is the very thing that we are trying to avoid—what has been called price gouging: that is, prices that are too high and unfair practices. Putting in a layer that isn't properly formed of divestiture could make those prices even higher.

In the same report, the recommendation that we made in relation to divestiture is that we didn't believe that the committee persuasively found that divestiture would work in this case, but we didn't say that they shouldn't be pursued at all. They should be targeted to sectors of concern with appropriate safeguards for regional jobs and services, and they must meet a clear public benefit test. That is the big problem. There needs to be clear guidance on how and when it can be applied, and it must have appropriate safeguards in place, which this bill doesn't have. That is our particular concern: it doesn't do what it should do in terms of meeting those concerns.

Nobody wants to see Australians pay more at the supermarket than they need to pay. Nobody wants to see small growers and suppliers suffer because of power imbalances. Australians are already struggling enough in a cost-of-living crisis, but we cannot put mechanisms in place that don't solve the particular problem at hand, and unfortunately, this bill doesn't solve the problem. This bill doesn't create fair and reasonable protections. What it does do is use a blunt tool to address a broader problem.

It is a crucial first step that the government's merger reforms create an adequate regime to counter the issue of creeping acquisitions and land banking. That was another part of our recommendations, and that is something that hasn't been addressed to date and that we need to look at. We need to understand that having new market entrants, more competition, is the most effective way to bring down prices. Recent new market entrants have helped support competition in the sector, and that is what is needed to lower grocery prices. New entrants have adopted different approaches for dealing with suppliers, leveraging opportunities and streamlining business models to deliver mutual benefits for both customers and suppliers.

Dorinda Cox (WA, Australian Greens) Share this | Link to this | Hansard source

I move:

That the question be now put.

Sue Lines (President) Share this | Link to this | Hansard source

The question is that the closure motion, as moved by Senator Cox, be agreed to.

Sue Lines (President) Share this | Link to this | Hansard source

The question now is that the bill be read a second time.