David Bradbury (Lindsay, Australian Labor Party, Assistant Treasurer ) Share this | Hansard source

I appreciate the opportunity to contribute to this debate and thank the member for Kennedy for bringing this important matter of public importance before the parliament. I know that the member for Kennedy is a very passionate advocate of people in his part of the world. Certainly much of the passion that we have come to see from him in the past was evident in that contribution today.

I would like to address the issue that underlies the matter of public importance today. I begin by saying that, whilst I think there is a general acknowledgement of some of the concerns that are raised in relation to the use of market power generally across various markets in this country from time to time, it is the government's position that the existing competition framework is adequate to deal with many of these challenges. Certainly we stand ready to consider any evidence that might suggest that there are other alternatives, more appropriate means, through which better outcomes can be achieved. When we ask the question about what those better outcomes might be, we must bear in mind the question, obviously, of the interests of producers, but ultimately we need to ensure that we have an efficient and productive economy and one that is giving consumers a fair go and a fair deal. That is ultimately at the heart of our approach to competition policy.

When you look at the major supermarket chains and the supermarket sector, you see that upon coming to office this government directed the ACCC to undertake a specific inquiry into the major supermarket chains and the retail sector. There were a number of findings that came out of that review.

In particular, that review found that there was workable competition within the supermarket sector. The review did indicate that, in particular, smaller players like ALDI were playing an important role in introducing competition into this sector. It is worth noting that ALDI represents a very small part of the overall market, as do some of the other independent operators and some of the smaller players, like IGA. I think it is worth noting the respective market shares of the major supermarket chains. Here I am citing data from the IbisWorld Supermarkets and Other Grocery Stores in Australia report, which indicates that Woolworths has approximately a 40 per cent market share and Coles has approximately a 31 per cent market share.

Inherent in this matter of public importance that has been brought forward is the clear suggestion that there should be some divestiture of the market share that those players currently hold. What is unclear, and what is a difficult question for proponents of divestiture to answer, is what might be an appropriate threshold for market share to be set at. Indeed, just as difficult a question to ask and to answer is how one might determine and define that market share. One of the things the ACCC's inquiry into the retail sector showed was that for an overwhelming majority of consumers—in particular in metropolitan areas, where it was more than 90 per cent of consumers—most of their shopping is done within five kilometres of where they live. This gives rise to the very question of market definition: what is the market? If the test here is one of market size or market penetration, then obviously one needs to go through that exercise of defining what the market is.

More broadly, the approach this government has brought to competition policy—which is consistent with approaches that have previously been taken—has been to say that market share, on its own, is not determinative of whether or not a competitive framework exists. You need to have a look at the full range of factors. People talk about monopolies, but clearly we do not have a monopoly. I am not trying to be technical about it, but we do not have a monopoly. There are people who call it a duopoly, but we do not have a duopoly. We have a market in which two major supermarket chains have very significant market shares; there is no question about that. But I will make this observation: it would be fair to say that in recent times we have seen more robust competition in the grocery sector than we have seen for a very long time. This is feedback that I get in my community, and I know many others get it elsewhere. The very vigorous competition that is currently in play in our major supermarket chains is on display for all to see. I would not entirely attribute the current price deflation to that competition, but I think anyone who brought any serious analysis to the price deflation that has been experienced in recent times would have to acknowledge that the aggressive competition that has been occurring between Coles and Woolworths has contributed in part.

That leads to all sorts of debates. One of the debates we have had before committees and in the public more generally has been around milk prices. Two parliamentary committees have looked at this. The first parliamentary committee looked at it because milk prices were too high; the second parliamentary committee looked at it because prices were too low. That raises all sorts of very serious questions about what we are hoping to get out of these inquiries and, ultimately, what type of marketplace we are looking to operate within. The government takes the view that competition policy is always about a balance. It is about ensuring that we have a set of rules and a framework in place that allows serious competition to exist between competitors but, at the same time, makes sure that ultimately the best outcomes are being generated for consumers.

Mr Katter interjecting—

See this speech in context