Wednesday, 5 December 2018
Treasury Laws Amendment (Prohibiting Energy Market Misconduct) Bill 2018; Second Reading
I rise to support the Treasury Laws Amendment (Prohibiting Energy Market Misconduct) Bill 2018. My erstwhile colleague and friend, the former senator Nick Xenophon, has been championing the much-needed divestiture powers for the ACCC for some time. I am so proud to be standing in this place to see the beginnings of his visions being achieved. Jurisdictions comparable to Australia have the power to break up monopolies or oligopolies where this is in the interest of free and fair competition. This is not the radical power that some make it out to be. We only need to look to the United States or, indeed, the UK to see this sort of legislation at work.
It is a crucial power that the government needs to wield in the best interests of consumers, and I applaud the government's recognition that the time for this idea has finally come in Australia. Centre Alliance believes that the Australian Competition and Consumer Commission should be granted such powers across all market types, not just energy markets. For example, the abuse of market power by supermarkets upon their suppliers, especially upon agricultural suppliers, would be much more self-regulated if the supermarket monsters, as they are so aptly described in Malcolm Knox's book of the same title, knew that divestiture powers hung over their heads as a remedy of last resort. The supermarkets have been squeezing our farmers to the point of threatening the viability and sustainability of entire farming communities. I cannot think of any farmer across the country who would disagree with me that divestiture powers in the supermarket and agricultural supply chain industries would be much welcomed.
To give proper due and credit for his foresight, I now quote former Senator Xenophon's additional comments to the Senate inquiry into the Competition and Consumer Amendment (Misuse of Market Power) Bill 2016:
As it currently stands, in rare situations where a market power abuse finding has been made by a Court, the Court can order the company be restrained and also impose a large fine against the company. This is problematic for two reasons:
(a) No amount of restraint or fine will bring back to life the hundreds of small businesses that have been wiped out by a large company's misuse of their market power. Once small businesses have failed the market dominance of the big business is entrenched forever. I have witnessed this happen across the Australian business landscape in the grocery, fuel, hardware and liquor sectors.
(b) The perpetrators of market abuse can be so large that the fine may well be considered by the offending company as simply a cost of business. A monetary fine does not constrain dominant companies from misusing their market power, because they know they will rarely be caught and, if they are, the short term penalty will not be more than the longer term benefit they have obtained.
Senator Xenophon continued by proposing that divestiture legislation should be 'a remedy of last resort' and should also be something where the court, not a minister, has the final say. Again, to quote my former colleague:
It makes sense that a Court should have a remedy in its tool kit that makes it impossible for a serious or repeat big business offender to offend again.
Divesture would enable the Courts to break up serious or repeat big business offenders who have grown so large their conduct is not sufficiently influenced by Australia's Competition Laws.
Former Senator Nick Xenophon had the vision, and the government is finally acting. He understood that the powers needed to reside with the courts and not with the executive. I am pleased to see that, with the bill before us, the government has been persuaded to agree. This is not to say that I don't believe we should have a NEG; I think we should have more than just this power in the parliament. However, this is a very important step. I hope that this is the first step towards a broad set of divestiture power arrangements for the government to act against companies who abuse their market share and abuse Australian consumers. Centre Alliance reserves its substantive position on this bill in the Senate, but, on my rapid and preliminary reading of this bill, I commend the bill and its intent to the House.