House debates

Monday, 27 March 2017

Bills

Competition and Consumer Amendment (Misuse of Market Power) Bill 2016; Second Reading

6:03 pm

Photo of Graham PerrettGraham Perrett (Moreton, Australian Labor Party) Share this | Hansard source

Is it $11? I will take that interjection from the member for Griffith. There is no doubt that if this bill is passed and the new test becomes law then consumers will pay more for their everyday living expenses, as I said, at a time when wages growth is flat to negative and inequality is at its highest level since World War II—not a great combination. There is no way around that. Reducing competition means higher prices.

So the effects test has been floating around as a policy idea for many, many decades. Since as far back as 1974, we have had various inquiries which have considered an effects test. In fact, 10 inquiries since 1974 have looked at an effects test. And all of them have rejected it, apart from the Harper review. That is the only inquiry that has ever actually recommended an effects test.

Let us look at some of the evidence the Harper review received. Some said that it was legally unworkable, something that would chill competition and something that would create uncertainty for business. These are not the sorts of conditions that the Liberal Party should be championing. These are not the sorts of conditions that will promote investment. These are not conditions that will create jobs at all. They will just create more unnecessary red tape and be a barrier to business development.

Liberal members, especially those who have spoken on those red tape celebration days, have also, in the past, been critical of the effects test. Let us have a look at them. There is the former Minister for Trade and Investment, Andrew Robb; he knows a little bit about competition; he opposed the test. The former Treasurer, Joe Hockey, also opposed the test. Craig Kelly, the member for Hughes, has said:

It is not an effects test; its effect is to substantially lessen competition. It is not what you think it is … it is a Trojan Horse.

I am sure that Mr Kelly, a man of his word, will vote against this piece of legislation! Like any Liberal member, he is able to make up his mind every time he votes, so I am sure he will cross the floor on this and be true to his own words! In fact, current cabinet members Senators George Brandis and Mathias Cormann, from the other place, have been reported as being against the effects test. Even the Prime Minister himself has previously been critical of the effects test.

So this is yet another example of a Turnbull government backflip when it comes to saving the Prime Minister's job. This crazy harbourside-hillbilly alliance will actually do damage to the country. It is not a policy that is being driven by the good of the economy; it is a policy that is being driven solely to satisfy the unrest in the coalition government.

Well, what is the alternative? Labor has a policy that will encourage competition and be good for small business—the sensible middle way. We know that jobs and growth actually, fair dinkum, come from small businesses. So Labor's plan is to encourage private litigation under part IV of the Competition and Consumer Act, where cases are in the public interest. This policy will allow private litigants who can demonstrate the merits of their claims against anti-competitive behaviour to access the courts without the risk of liability if their claim fails.

Labor will also boost the funding to the small business ombudsman. The small business ombudsman will be able to assess the merits of a litigant's case so that businesses will have a better understanding of the likelihood of their claims' success.

Labor has a good record on pro-consumer and pro-competition policy. In fact, before the 2016 election, the Labor Party introduced a suite of policies, including an increase in the civil penalties under the Australian Consumer Law from $1.1 million up to $10 million, bringing penalties in line with the competition provisions of the Competition and Consumer Act. We adopted the EU's penalty system for anti-competitive conduct, which is based on 30 per cent of the annual sales of the relevant product or service, multiplied by the number of years the infringement took place, limited to the greater amount of 10 per cent of annual turnover or $10 million—so, a bigger stick.

We would use some of the revenues from increased penalties to increase the ACCC's litigation budget from its current level of $24.5 million to a maximum of twice that level, at $49 million. We would amend the Competition and Consumer Act 2010 to give a 'market studies' function to the ACCC so that it can explore public interest issues such as pricing discrepancies and increased market concentration. We would amend section 76 of the Competition and Consumer Act to allow the court to apply higher penalties for conduct that targets or disproportionately impacts disadvantaged Australians. We would include a requirement in the Competition and Consumer Act that the ACCC prioritise investigations of conduct that targets or disproportionately impacts disadvantaged Australians.

The Labor Party is happy to bring positive ideas to the table. The Labor Party would task government to investigate the impacts of increased market concentration on income inequality in Australia and produce policy recommendations on how the negative effects of market concentration can be mitigated. We would encourage states and territories to include competition principles in planning and zoning legislation, as recommended by the Harper review, with a specific focus on shortfalls of appropriately-zoned land for key services in disadvantaged communities. We all know that, if you do not have an effective market when it comes to landlords, in terms of Coles and Woolies, that can actually increase the rents and increase the prices that consumers pay. The Labor Party is fair dinkum about protecting competition and, obviously, if you have competition, that is good for consumers.

When I go for a morning walk around Canberra, I see the most animated Liberal in Canberra—that is, Bob Menzies' statue. He actually believed in markets; now we are seeing the people opposite, the party of government, bring in red tape and more cost for consumers. We know that healthy competition is important, that consumer confidence is important and, more importantly, that business investment is important. Labor understands this and Labor's policies will promote all three of these outcomes. The government's policy will do the opposite; it is designed to stifle competition, which will have a negative effect on business investment. As an illustration of how crucial these economic components are, I will read an extract from a letter dated 10 March 2017 from the Institute of Public Affairs. They label themselves as the premier free-market think tank, 'dedicated to preserving and strengthening the foundations of economic and political freedom'. This might be the last time that I ever quote the IPA, but their letter says: 'Business investment as a percentage of GDP is now below Whitlam-era levels, and it is forecast to fall further. This is a key factor undermining labour productivity and wage growth, which is currently at a record low.' When the 'premier free-market think tank' is concerned that business investment is too low and falling further and the Turnbull government is advocating for a policy that will deter business investment, you know that there is something wrong.

The Turnbull government have failed at the very task that they set for themselves: to create jobs and growth and to get rid of red tape. They set the standard and they have failed their own test. Employment conditions have deteriorated so much that they are now worse than at any time since the peak of the global financial crisis. This policy before the chamber will only make things worse. It is a dangerous economic policy at a time when we should be very careful about the direction that the ship of state is taking. As I said, this policy is not going to be good for consumers at a time when they are really under the hammer; wages growth is low and economic conditions are not ready for this legislation.

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