Stuart Robert (Fadden, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

It's wonderful to stand and speak on Treasury Laws Amendment (More Competition, Better Prices) Bill 2022. We love competition and we love lower prices, so the opposition will be supporting the legislation.

This bill includes important reforms to unfair contract terms that will better protect consumers and small businesses. These are important reforms to support small businesses and they were initiated by the former coalition government. I was the former small business minister and went through, as Assistant Treasurer, in 2018-19, when we started the unfair contract terms; this is like tranche 3 or 4 of them. This is a process that's been ongoing for almost a decade—to respond to the Minister for Small Business, across the table. This is part of the coalition's longstanding commitment to supporting small business. These amendments were put to the parliament before the last election, Minister across the table. It's good to see that they've been retained, building on the previous tranche of legislation that we'd put in progressively over the last nine years.

The reforms will make unfair contract terms unlawful, give courts the power to impose civil penalties, increase the small business eligibility threshold for protections from less than 20 employees to less than 100 employees and introduce an annual turnover threshold of more than $10 million as an alternative threshold for determining eligibility. It'll remove the requirement for the upfront price payable under a contract to be below a certain threshold in order for the contract to be covered by the protections of the ACL, and it'll increase the relevant threshold under the ASIC Act from $300,000 to $5 million. It'll provide more flexible remedies to a court when it declares a contract term unfair, including by clarifying the court's power to determine an appropriate remedy. It'll clarify that remedies available for non-party consumers also apply to non-party small businesses, and it will improve clarity around the definition of 'standard form contract' by providing further certainty on factors such as repeat usage of a contract template and whether the small business had an effective opportunity to negotiate the contract.

However—and there's always a 'however' with the Labor party—while the opposition will support the legislation for these reasons, it's important to note the costing blowout attached to the other section of the bill. Treasury costings confirm that there is a staggering $500 million black hole in this policy which Labor were relying on to offset their largest deficit. The first bill of the small business minister, who happens to be here in the House, which is pretty exciting, has got a $500 million black hole. I'm sure she's very proud of that! Prior to the election, Labor claimed that the policy to increase penalties under the Competition and Consumer Act would raise $557.7 million in its first four years. That would be the minister's pre-election costing, I'm sure—$557.7 million. It's in her pre-election costing document, so I think we can all safely assume that it is indeed the minister's number. But then Treasury, the grown-ups in the room, come along, and they cost the government's legislation—the minister's legislation. It'll actually raise $63 million in the first four years. That's not missing it by a little bit, is it—$557 million versus $63 million? That is missing it by a country mile.

The black hole in Labor's costing explains why Labor is looking to break its promise to support legislated tax relief. Labor was talking a big game before the election, but now it's clear that it doesn't add up. We saw that with electricity. Over 90 times, we heard that there would be $275 cut from consumers' electricity bills. What did we find out last night? No, they're going up by 57 per cent—another miss by a country mile. This will continue as we drill into the budget that came down last night. This budget fails families at a time when they really need a plan for cost-of-living pressures.

There's a $1 billion black hole in Labor's budget—a further one. At the election, Labor promised to crack down—to the tune of $1.9 billion over the next four years—on multinational tax avoidance by following up on some of the OECD work. It was hilarious. Labor criticised us for not doing it; we were the deputy chair of the OECD committee that recommended the work! But, again, the budget confirms Labor is big on rhetoric but not particularly good on the numbers. This measure is now expected to generate $950 million. That's another $1 billion black hole on top of the minister's half a billion dollars I announced before.

We also know that Labor has waved the veritable white flag on productivity. GDP growth has been downgraded significantly. Labor expect that GDP will be lower in the coming years. By their own admission, they do not believe that their spending will grow the economy. They can't even back their own plan. It's quite extraordinary.

This government has failed to provide a limit to taxes imposed on Australians. Under Labor, taxes paid by Australians will increase—on Labor's own budget papers—by $142 billion over the forward estimates. The coalition had a tax speed bump where we had receipts for taxation—or expenditure, if you like; the same side of the ledger—at 23.9 per cent of GDP. The Labor Party has no plan to reduce spending or to cap it at any level. Families facing cost-of-living pressures should be able to keep more of what they earn to deal with them.

This budget provides no certainty, none, for 10 million Australians on their legislated tax relief in 2024. The only new change to the tax system announced in this budget is a new tax on investments. Who would have thought! I must have missed that in the Treasurer's speech, but it's there in the budget papers. A sneaky new tax will slug Australians who invest their own savings and superannuation. Despite ruling out these changes before the election, Labor will hit investors and retirees with a new $555 million tax, depriving investors of franking credits which they have previously relied on. It's one of the many broken promises in this disappointing budget.

On cheaper energy, Labor's own budget numbers confirm electricity and gas prices will rise sharply over the next two years. Treasury has assumed retail electricity prices will rise by a staggering 50 per cent, and retail gas prices are up some 40 per cent in 2022 and 2023. Just so that the minister opposite knows where to look, it's page 57 of Budget Paper No. 1, old boy. Have a look there, and you'll see electricity prices going up 50 per cent, despite 91 iterations pre-election about a $275 saving. I'm looking for that $275. I can't find it. Is it there? Where is it? You said 91 times that it would be there. Budget Paper No. 1, page 57, says, 'It's not there; actually, your power price is going to go up by 57 per cent.' The broken promises and the chutzpah from this government are staggering.

Labor's forecasts reveal that real wages will fall over the coming years. But the Prime Minister promised—he promised that no-one would be left behind! The Prime Minister must have forgotten about the 150,000 Australians who will lose their jobs as unemployment goes up to 4.5 per cent. On bringing down the cost of living, there's not one measure in this budget that will help families struggling with the cost of living this year.

This year. Your child care doesn't start until 1 July next year, Minister for Small Business. Don't you even know the government's own policy? Unbelievable. There's not one measure in this budget that will help families struggling with the cost of living this year, and all the two ministers across the other side can do is smile gleefully. This budget shows inflation will be higher and will remain higher for longer and the cash rate—forecast at over 3.3 per cent—will be higher.

The test for the federal budget was for the government to build on the strong position it inherited from the coalition to address the cost-of-living crisis bearing down on Australians, and the jury is quite clear: Labor has failed this test. This budget does nothing for your budget, for family budgets. There is no credible plan to deal with the source of inflation or to help families deal with their immediate cost-of-living pressures. This budget confirms the following, and this is not in dispute: the cost of living is going up; your electricity and gas prices are going up; citizens' tax payments are going up; government spending is going up; employment, as the number of Australians who are employed, is going down; and real wages are forecast to go down, despite this government saying less than six months ago that this wouldn't happen, no-one would be left behind and the halcyon days were ahead. It's a high-taxing, fairly high-spending, typical Labor budget that does nothing to help everyday Australians. So what does it mean? Before the election the Prime Minister told Australians they would be better off under Labor. The facts are by Christmas the average Australian will be $2,000 worse off. I think the average Australian has got the right to ask for their money back, because they were 100 per cent duped at the last election. It is a disgrace. The budget is an extraordinary disappointment.

Julie Collins (Franklin, Australian Labor Party, Minister for Small Business) Share this | Link to this | Hansard source

I appreciate hearing those on the other side are supportive of the Treasury Laws Amendment (More Competition, Better Prices) Bill 2022, because, of course, we know small business owners more often than not do not have the deep pockets and the bargaining power to effectively review and negotiate terms in standard form contracts.

I am perplexed why the former government over there didn't actually deal with, given they were in government for nine years. I appreciate the former minister's spin on the fact that it was nine years of reform on this, but they did have nine years in office to deliver this.

I'm pleased and want to congratulate the assistant minister, Dr Andrew Leigh, for his diligent hard work on getting this legislation into the parliament and introducing it so early in our term. This is Labor delivering on our election commitment. We know existing laws haven't stopped the use of unfair terms, and, under almost a decade of neglect from the former government, the use of unfair contract terms against small business is widespread. Just this year, the Federal Court decided in favour of small businesses, bringing an end to an unfair contract terms battle waged for eight years.

Since November 2016, Fujifilm had entered into or renewed around 34,000 contracts, the vast majority of which were made using the standard form contracts at issue in the case. As of August this year, many of those contracts were still in force. We can't access the data on how many of these contracts were with small businesses, but the ACCC says it's likely they made up a substantial number. Speaking on the case, the ACCC said:

We continue to strongly advocate for law reform to prohibit unfair contract terms and enable the Court to impose penalties in cases where such terms are imposed and enforced against small businesses …

So I'm very pleased that our government, the Albanese Labor government, is introducing this legislation to strengthen unfair contract term protections for small businesses and consumers. As I said, I'm pleased to hear those opposite will be supporting it.

We're also increasing the number of small business contracts that will be afforded protection under this legislation. We're increasing the small business eligibility threshold for the protections from less than 20 employees up to less than 100 employees. And we're also introducing an annual turnover threshold of less than $10 million as an alternative threshold for determining eligibility under this legislation. We know this will go to helping improve small business confidence and allow our small business community to grow with confidence, because, unlike the previous government, the Albanese Labor government is serious about delivering on our better deal for small businesses. These reforms are a critical part of our plans to help small businesses. These changes will help improve the long-term resilience of Australia's small businesses and help them bounce back following significant challenges in recent years.

This is just the latest measure that the Albanese Labor government is taking to support small businesses. Of course, last night in the budget the Treasurer announced that we'll be providing more than $15 million to small business owners across Australia to access free mental health and financial counselling support, while $10.9 million in funding will go to the NewAccess for Small Business Owners program and $4 million to the Small Business Debt Helpline. The Albanese Labor government will also deliver energy efficiency grants to eligible small and medium businesses to help address rising costs. This new funding will build on measures put in place already by the Albanese government, including $18.6 million to help small businesses adapt and build resilience through digital technology.

Small businesses will also have access to new tax incentives to train and upskill employees and to improve their digital and tech capacity. That will be legislated by the Albanese government. Worth more than $1.5 billion, the technology investment boost and the skills and training boost will be backdated to 29 March so small business owners can receive the full benefits of this measure. We've updated the Commonwealth Procurement Rules, which means small businesses will get a bigger slice of the $70 billion in contracts that the Australian government spends every year. These measures sit alongside the Albanese government's wider agenda that will benefit small businesses.

We all know, of course, about the skills shortages. Australia's small businesses will benefit from an increase in the migration program to help address some of these shortages. We'll also deliver $36 million in additional funding to accelerate visa processing and help resolve some of the visa backlog. We'll provide one-off credit to older Australians, to give them the option to work and keep more of their money, immediately boosting the number of people in the workforce. And we'll accelerate the delivery of 465,000 additional fee-free TAFE places, with 180,000 to be delivered in 2023, to help get more skilled workers into the job market more quickly.

We've done this because we are the government that supports small business. Small businesses employ millions of Australians. They contribute more than $430 billion to our nation's economy each and every year. They were at the heart of our discussions at the Jobs and Skills Summit and in the roundtables in the weeks leading up to it. We know small businesses have been doing it tough, that they've stared down years of floods—and of course some of them are facing floods yet again—fires, a global pandemic and now a tight labour market and rising inflation. They need support that only a Labor government can and will deliver. The Albanese government knows small businesses are vital to Australia. They're at the centre of our communities right across the country and they'll always be at the centre of our government's decision-making. I commend the bill to the House.

David Coleman (Banks, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Treasury Laws Amendment (More Competition, Better Prices) Bill 2022. The opposition will be supporting this bill, which has some sensible provisions in relation to unfair contract terms. I will come to those in a moment, but perhaps the most significant thing to note, in the context of last night's budget, is the absolutely extraordinary failure of this bill to meet the government's forecast of how much it was going to raise. Let's have a look at that. Before the election—and this is a bit of a theme: before the election and after the election, we find very different things are said, and we've got a few examples we'll go through. But let's start with this bill. Before the election, the Labor Party said that its changes to the Competition and Consumer Act 2010 would raise $557 million in its first four years. That is quite a lot of money, and no doubt it would be adding to the budget revenue line. But now the budget has come out, and the thing about budgets is that Treasury has got go through numbers and it's got to make sure that the forecasts are accurate. It doesn't just accept press releases at face value. What does Treasury say? Well, Treasury says it's actually not $557 million, not $510 million, not $457 million, not $357 million, not $257 million and not $157 million. It's actually $63 million that this legislation will raise. So it was $557 million before the election and it is $63 million after the election. It doesn't take a graduate of MIT to realise that that's a lot less. It's $500 million, or about 89 per cent, less than the government forecast it would raise. That's pretty bad. The only worse example I can think of is the Rudd-Gillard government's miss on the mining tax revenue, which from memory was greater than 95 per cent. But 89 per cent is extremely bad, even though 95 per cent is even worse.

But it's not really surprising, because it comes in the context of very similar discrepancies between what the government said, as the opposition, before the election and then what has actually happened after the election. Of course, the most famous example of this is the solemn promise the opposition delivered so many times, and which was of such relevance to millions of people around Australia. This was a very compelling promise that the government took to the last election. That was that the average household would save $275 on electricity bills. That's a really significant thing for people—$275 for the average household. It was said 97 times. It was actually said as recently as a couple of days before the election, when now Prime Minister Albanese went to the National Press Club—and it's one of the real centrepieces of that speech to the National Press Club. He said, 'We will reduce electricity prices, energy prices, by $275 for the average household.' And he'd said it many times before. There is a very colourful YouTube video featuring the member for McMahon that goes back to December 2021, and there were 97 times in between—$275, not ambiguous, and it wasn't qualified. It wasn't like, 'Hey, maybe we'll do $275.' It was 'we will'. Very clear.

What did we learn last night? We learned last night that electricity prices are going to go up by 50 per cent or more. We learned that gas prices are going to go up by 40 per cent. These are extraordinary increases in what is, for most households, one of the very biggest elements of the household budget. So there is just an extraordinary discrepancy. This bill in relation to the competition law is of a piece with the government's record as it pertains to energy as well—just a shocking failure there.

Real wages was another one. You will recall before the election lots of discussion about how the then opposition and now government would get real wages moving. Real wages were going to go up. The member for Watson was very forward leaning in his comments about that. That's not going to happen. It's in their own budget. Don't take my word for it; it's in the budget. Real wages are going to go down under this government.

So let's get real here. We need to make a very clear distinction between things that were said before the election and things that were said afterwards. Again, the source is not me; the source is the now government of Australia. Real wages are going down under this government; energy prices are going up massively. Both of those are in complete contrast with what was said before the election.

The other one we need to talk about—and there are a few—is this very sneaky new tax for investors. Numerous people in my electorate raised this with me in recent weeks, because they saw this coming. We now see in the budget $555 million in additional taxes for people, and it's related to franking credits, but it's effectively a penalty tax for people who have saved—often older people, retirees, people who have worked hard and put some money aside for their retirement. What does this government do? Bang: $555 million, thanks very much. And, again, there was nothing about that before the election. In fact, to the contrary, before the election, what we heard was that there wouldn't be any disruption to taxes on investors and superannuation. Well, that's turned out not to be true, because there is in fact a new tax of some $555 million.

Another one—and they add up, one after the other—is that, before the election, the government said they were going to raise $1.9 billion through cracking down on multinational tax avoidance. I think the vast majority of people would support sensible measures that were supposed to be cracking down on tax avoidance. The problem is, once again, the election is over, and now it's reality. So Treasury go through and they get the talking points—maybe six or seven bullet points on a piece of paper; that's the usual way these things go for the Labor Party—and they say, 'Actually, we're going to have to do a bit more work on this.' When they do that, it's like, 'Oh, gee, sorry, it's not $1.9 billion; it's $950 million'—so pretty much exactly half, a billion dollars less than they said, and that's a billion dollars that Australia won't have that the government said they would have before the election.

Then we have the fact that spending is rising and tax is rising. The budget basically says there is an extra $142 billion in tax to be collected, and the cap that our government had in place in terms of tax as a proportion of the economy—that's gone. Any sort of notion about a constraint on how much tax there should be in the system is gone under this government. We're going to come back to that in a minute, because I suspect we're going to be hearing a lot more from this government about tax in the next budget, if not before.

We've also seen that all of the different changes that this government has presided over in terms of the cost of living are going to add up to about $2,000 in extra costs for the average family by Christmas. Going back to before the election, maybe I missed it, but I don't recall the now Prime Minister, the now Treasurer or, frankly, any member of the then opposition saying: 'You know what we're going to do? We're going to have $2,000 of additional costs for households by Christmas'. I suspect that would not have been particularly well received, which is probably why it wasn't said. But that's what's happening. How is it happening? It's happening because of the impact of rising inflation under this government, the impact of rising energy prices and the impact of rising interest rates, all of which this government said it would take action to address. It said interest rates would be lower under it, and that has not proven to be the case. It adds up to cost for average families. That's why management matters. What we've seen from the government is a whole bunch of things it was going to do before the election and then very different outcomes after the election.

I want to turn to the provisions of the bill. We do support it. We are very disappointed but not surprised that it raises 89 per cent less than they said it would, but there are important provisions around making unfair contract terms unlawful, giving the courts power to impose additional penalties, increasing some of the penalties that protect small businesses against unfair contract thresholds, and making remedies more flexible so that a court can impose remedies that are most suited to the particular situation. It also improves clarity around standard form contracts so that everyone who's going into a contractual situation—particularly small businesses, who are often at a disadvantage when negotiating with big businesses—is aware of what the standard form contract terms are, and that they willingly go into variations of those terms. These are sensible things and we will support them. It's just a shame that the financial impact of this is half a billion dollars worse than the Labor Party said it would be.

You've got to ask the question: if costs keep going up and up, if the spending of the government keeps going up, if deficits under this government go up—obviously, it's benefitting from the high commodity prices and other structural benefits provided by the previous government at the moment, but under this government they say deficits will go up and up towards the end of the four-year period—what are they going to do next? I'll give you a tip: more taxes. We've got another budget coming up in May. It is not that far away—six or seven months. You might have heard the Treasurer talking about the national conversation. He's big on conversations, this guy, and he wants to have a national conversation about the budget. It's probably not a bad thing. I think it's very important that represented in that national conversation are the millions of Australians who aren't going to get their $275 energy reduction. It's very important that represented in that national conversation are the millions of Australians who aren't going to get real-wage increases, despite being promised that by this government. And it's very important that also represented in this conversation are the very large number of Australians—anyone earning $45,000 or more—who benefit from the legislated stage 3 tax cuts.

We know what they're going to do, they're not going to stick to the legislated stage 3 tax cuts. They obviously contemplated getting rid of those in this budget, but I think it is a very fair assumption that there's going to be change there. Should that occur, it would be a massive broken promise. There's no precedent for it—except there is. It was in the 1990s when then Prime Minister Keating repealed tax reductions that were already l-a-w law, and that's precisely what this government is contemplating doing. I'm sure the Treasurer will get lots of photos of himself—one day he'll be jogging, one day he'll be staring in a contemplative fashion out the window. There'll be lots of interesting shots of the Treasurer as part of that national conversation. But the last sentence from the Treasurer in that national conversation is going to be, 'Here are your new taxes.' That's where this is headed. Should that occur, that will be a complete abrogation of responsibility and a complete backflip on what was promised before the election.

I think it's also quite likely not only that the government will move away from the legislated stage 3 tax cuts which they supported wholeheartedly before the election—going back to that theme of before the election and after the election, we're seeing a pattern here—but that it won't stop at the stage 3 tax cuts. I think we'll start to see more academic documents and think tanks calling for other taxes and other increases, and I'm sure that the government will create an environment which is very supportive of those sorts of calls for increased taxes, because that's what this government wants to do and it's what Labor always does, because it always gets the numbers wrong. That's why management matters. It matters to be competent. They get the numbers wrong every time and, as a consequence, what do they do? They say, 'Give us more money,' and they say that to the average Australian. That's wrong. We will always fight against that. We support this bill but are very concerned about the direction of this government.

Henry Pike (Bowman, Liberal National Party) Share this | Link to this | Hansard source

It is a pleasure to follow that very thoughtful contribution by the member for Banks. He's touched on many important aspects of last night's budget and the journey that our nation will take over the next few months as we head into the next federal budget. I will touch on some of those same themes as well a bit later in my remarks.

Firstly, I want to discuss the specifics of the Treasury Laws Amendment (More Competition, Better Prices) Bill 2022. This bill seeks to help improve competition across the private sector, and it does this through two schedules.

Schedule 1 amends the Competition and Consumer Act, the CCA, and the Australian Consumer Law, the ACL. It increases penalties on businesses for breaching anticompetition laws. Specifically, if the ACL is breached, the business will be fined whichever is the higher amount of either $50 million, three times the value of the benefit obtained, or 30 per cent of the body corporate's adjusted turnover during the breach turnover period. If the CCA is breached, the business will again be fined whichever is the greater of four options. For breaches under 21 days in length, it will be $50 million plus $1 million for each day that the contravention continued. For breaches over 21 days in length, it will be $71 million plus $3 million for each day that the contravention continued after the first 21. The other two options are matching the ACL breach punishment: three times the value of the benefit obtained, or 30 per cent of the body corporate's adjusted turnover during the breach turnover period. The maximum punishment for a person in breach that is not a body corporate is $2.5 million, a 400 per cent increase. That's all very technical and very complex but, to put it simply, it increases penalties for businesses acting in an illegal, anticompetitive way.

Schedule 2 amends the CCA and the ACL as well as the Australian Securities and Investments Commission Act. It increases penalties on businesses that impose unfair contract terms. The maximum penalty for an ASIC breach is the greatest value of 5,000 penalty units or three times the value of the benefit obtained or the detriment avoided. The maximum penalty for an ACL breach is $2.5 million.

The bill will better align Australia's penalty regime with equivalent jurisdictions, as determined by the OECD, on competition law worldwide. It is a crackdown on the exploitation of consumers and small businesses, and the coalition stands resolutely for these groups and will be supporting this important bill.

Healthy market competition is fundamental to a well-functioning economy. I think everyone in this chamber and, indeed, across this country would agree with that statement. Competition keeps prices low and the quality and choice of goods and services high. Competition is the not-so-secret ingredient that has ensured that our nation and similar nations with similar economies have prospered, while other world economies, without the same level of competition, have stagnated.

Australians are currently suffering under a rapidly worsening cost-of-living crisis. We're all aware of that, and there's been much talk of that in the course of this new parliament and, certainly, in the media's discussion of last night's federal budget. It is absolutely critical and it should be the No. 1 priority of this government and of all of us here in this chamber to ensure that we respond to that cost-of-living crisis as effectively as possible. It was disappointing that last night's federal budget didn't go anywhere near addressing the crisis. We had, essentially, just an adoption of the Labor Party's election promises and some bad news—laying the groundwork for tax increases that I'm sure will come in due course.

It was an abandonment of a number of critical elements of cost-of-living relief that we were promised ahead of the last election. Of course, the $275 energy price reduction guarantee from the Labor Party was essentially put to bed. Their commitment in relation to real wages has been abandoned in this budget, and, disappointingly, from my perspective as the member for Bowman, none of the projects that were promised for my electorate in the Redlands were explicitly outlined in the budget, and many of them were buried within an element of the budget that extends beyond the forward estimates, which I find quite remarkable.

As I make my way around the businesses and households of the Redlands, that cost-of-living and inflation pressure is absolutely biting, and people are raising it with me all the time. We've got local businesses who are struggling with the pressures of inflation and with supply chain concerns, and certainly I've had many stories raised with me by local businesses who have been doing terrific work—absolutely the right thing, in good faith, every step of the way—but have been hung out to dry by bad operators in the market who act without regard for others or concern for legal consequences.

According to the 2018 OECD report Pecuniary penalties for competition law, Australia lags behind other developed countries in the competition policy space, due to its relaxed laws. In fact, the base penalty for anticompetitive breaches in Australia has not changed in almost 30 years. I looked this up, and, as it turns out, I had just started primary school when some of the penalties were last updated. With rising inflation and a deepening cost-of-living crisis, a realignment of Australia's anticompetitive penalty regime is certainly necessary. This bill provides that realignment in the face of new pressures that are being felt across the economy. Last night's budget warned us, correctly, I think, that we've got more of that to come. That is going to be the challenge before this new government—to make sure that they do take the concrete action needed, not summits or national conversations, to address the economic challenges facing our country.

There is one aspect of the government's planning on this bill that leaves a lot to be desired. Prior to the election, Labor claimed that this policy to increase fines under the Competition and Consumer Act would raise, in its first four years, $557.7 million for the budget. But Treasury's costing of this legislation has found that it will actually raise a mere $63 million. So we've got a $500 million black hole here, and the question is: how did the government get that so wrong? Of course, I can understand that, being in opposition, you do not have the resources of the government to get these costings exactly right, but that is a significant black hole—a significant discrepancy between what was promised, in terms of revenue from this measure, and what we're actually going to see come through from these changes. You've got to imagine the sort of opportunity cost that $500 million would have—certainly, in all of the electorates represented in this place. You can think about how much difference $500 million would make to local infrastructure projects or local initiatives.

It goes to, I think, a fundamental problem with the projection of revenue from measures such as these. Too often I've seen rhetoric—this government is particularly guilty of it, unfortunately—about hitting the big end of town, hitting multinationals and achieving greater compliance, and big numbers are attributed to the additional revenue that these will actually bring in. But the simple fact is that that isn't a silver bullet for Australia's fiscal situation. It is not a silver bullet for our economic woes. That is not the revenue solution that's going to end up solving our fundamental structural deficit problems. So we've got a really serious concern there, and we need to make sure that, when measures like this are floated, we are very realistic about how much they're actually going to raise. We are supporting this bill and we support this measure, but certainly a $500 million black hole should be of deep concern to all in this chamber.

As a further concern, many contract negotiations are inherently unequal in nature. Large corporations quite regularly leverage their immense resources to tell consumers and small businesses to either take it or leave it, and this can lead to poor market outcomes and, in extreme cases, downright exploitation of those least able to defend their interests. Certainly, I've heard many stories in my electorate of businesses who've had to go through very difficult negotiations where the power imbalance between the parties was very significant. In today's commercial environment, and with dark clouds gathering across Australia, it becomes critically important that improved safeguards are provided both for consumers and for small businesses. This bill, by adding strong civil deterrent measures for unfair terms and in standard-form contracts, aims to do that.

This bill further protects the interests of Australian consumers and small businesses with no consequent increase in their compliance burden. This 'more competition, better prices' bill is both necessary and timely, in that it is one positive step, at least, to help mitigate the potentially devastating cost-of-living impacts that we've been warned about in last night's budget—impacts which will, of course, only be made worse by Labor Party policy elsewhere, including the abolition of the ABCC and Labor's reckless energy and climate policy, for a start.

It was the coalition that first commissioned a review of unfair contract terms protection for small business back in 2018. It was this discussion paper that found that our current penalties are not a sufficient deterrent for bad behaviour from big business. When the provisions of the bill were first considered by the former coalition government last year, aspects were discussed with key stakeholders across consumer groups, businesses, legal organisations and the telecommunications industry. From those stakeholders the coalition government received some 80 submissions. I hope that this Labor government is likewise committed to effective stakeholder engagement when it comes to applying the provisions and monitoring the consequences of this bill. The coalition commissioned and funded the findings which inform this bill, and now it is essential that this parliament puts these findings to good use by supporting this bill and the improved deterrence regime that this bill will provide for.

I note that the bill includes a requirement to review the reforms two years after commencement. I believe that's very good practice and a very good provision for such matters, and it's certainly something that I'd like to see in a lot more bills that we have in this place—that we have a locked-in, legislated review to determine how it's gone in practice, to determine how we can improve it, to re-engage stakeholders on how things have been implemented and how things could be improved, and to proceed on that basis. Unfortunately, too much legislation in this place is just 'set and forget'. We need to be a lot more flexible and nimble in the way that we pass bills in this place and how we review these and strive to get a better regulatory environment across the country. It's not just about more regulation; it's about better regulation. It's about reducing red tape and getting better results.

When it comes to good public policy, I understand the importance of bipartisanship, subject to the needs and views of my electorate, and, as such, I stand with my coalition colleagues in support of this bill. The coalition's support, of course, does not extend to a blank cheque. The coalition will not allow the government to take control of competition law reform and lead it in a strange direction. It is to this end that this bill includes a clear requirement to review all provisions two years after their commencement. I want to ensure that this review is thorough and timely and includes adequate consultation. I'll certainly be keeping an eye on how all that progresses and the feedback from relevant stakeholders, wherever possible.

The coalition stands where it has always stood: as a true champion of small business. I hope that this bill will go some way to making their life easier in this very difficult environment. It is open competition between businesses within the context of the free market that makes Australia great, and, at such a challenging time, it is entirely appropriate that the safeguards outlined in this bill are introduced promptly to protect them.

Almost every day I talk to good people at home in the Redlands. These are decent hardworking Queenslanders who are struggling to pay their rent or mortgage and put food on the table during this cost-of-living crisis. During this time, it is very difficult to run a small business in Australia. This bill—born, as it is, from the coalition—is at least one sound step in addressing this crisis. I commend the bill to the House.

Jenny Ware (Hughes, Liberal Party) Share this | Link to this | Hansard source

I rise to give support to the Treasury Laws Amendment (More Competition, Better Prices) Bill 2022. At the outset, I say it's a pleasure to follow the member for Bowman and I congratulate him on his considered and eloquent speech in this House today.

This bill seeks to increase the penalties for breaches of the Australian Consumer Law as well as the Competition and Consumer Act 2010. It is pleasing to see that many of the reforms proposed within this bill were as contained in the former coalition government's Treasury Laws Amendment (Enhancing Tax Integrity and Supporting Business Investment) Bill 2022.

We are lucky, in this country, to have strong protections for consumers. It is an important cornerstone in any modern economy for consumers to be confident in the goods and services for which they pay. In Australia, the Australian Consumer Law offers protections in significant areas, including unfair contract terms, consumer rights, product safety, door-to-door sales and telephone sales and lay-by agreements. The benefit of a strong Australian Consumer Law is to allow for these protections to be unified across Australia. We are a federated nation, and certainty for consumers in all states is only logical.

As part of this bill, body corporates can be fined a maximum of the greater of $50 million or three times the value of the offence, or 30 per cent of the adjusted turnover during the breach period. For persons other than a body corporate, the maximum fine will now be $2.5 million. These amendments will increase the severity of Australia's penalty regime for anticompetitive behaviour and facilitate the imposition of penalties that are more comparable with international jurisdictions.

Another important cornerstone of the Australian Consumer Law is the protections offered to small business in business-to-business transactions. Small business is the backbone of Australia. All small businesses rely upon a steady, consistent cash flow and simply cannot afford to absorb the costs of being the victim of unfair contract terms from larger entities. Large businesses often have legal teams at their dispose to challenge contracts and engage in litigation to resolve disputes. However, if the victim of unfair contract terms is a small business owner, he or she is prohibited, through both time and costs, from taking court proceedings against a much larger entity. The reforms proposed within this bill will discourage the use of unfair terms by reducing their prevalence in standard form contracts, helping protect small businesses. This will provide a lot of benefit for many of the small businesses located within my electorate.

The eligibility threshold for protections will be increased for small businesses with less than 20 employees to businesses with less than 100 employees. An alternative eligibility threshold will be included to allow businesses with an annual turnover of less than $10 million to be also eligible for unfair contract terms. There will no longer be a requirement for the upfront price payable under a contract to be below a certain threshold in order for the contract to be covered by the Australian Consumer Law. This will, of course, really improve the cash flow of many small businesses. Courts will also now be able to apply more flexible remedies when it declares a contract term unfair through clarifying the court's power to determine an appropriate remedy.

While I fully support these increased protections for consumers and small businesses, I must use this opportunity to challenge some of the costings announced by Labor in the lead-up to the May election and last night. During the election Labor claimed its policy to increase these penalties would raise $557 million in is first four years. However, the latest Treasury costings show that it will really merely raise $63 million. This is a $500 million blackhole. This is a significant discrepancy between the amount that Labor costed would come through from its penalty regime and the reality. This blackhole is one more example we saw of Labor's inability to properly cost, which we saw last night in their higher spending, higher taxing budget delivered in this House.

The test for the federal budget last night was for the government to build on the strong position it inherited from the coalition to address the cost of living particularly bearing down on Australians. When the Labor party announced this bill, it said that this would have a direct impact on the cost of living for Australians. However, Labor failed this test. We saw this last night. Just before the election the Prime Minister told Australians that they will all be better off under a Labor government. In reality, by Christmas, the typical Australian family be will at least $2,000 worse off.

As we emerge from the pandemic, the fundamentals of the Australian economy were strong. Our jobs growth was better and our debt was lower than any other advanced economy. Every nation in the world is facing challenges borne from the pandemic and amplified by global economic headwinds. We approached these challenges in a stronger position than any other nation. Despite this advantage, Labor's first budget fails to deliver for Australian families, for Australian businesses and for Australians overall. This budget fails Australian families at a time when they really need a plan to address cost-of-living pressures. Everybody that I've spoke to in my electorate of Hughes is struggling at the moment with the increased cost of living. This budget does nothing to assist their family budgets or other family budgets throughout our country. There is no credible plan to deal with the source of inflation or to help families deal with immediate cost-of-living pressures. Instead, there is an aspirational promise to build one million homes, starting in 2024, with a lack of detail about how this will occur. This is a budget heavy on partisan politics but lacking in overall economic plan.

What we do know is that the cost of living for all Australians is going up. Power prices are going up, and, instead of the $275 reduction that we were promised in the election campaign, we heard last night that it's anticipated everybody's power prices will be up by more than 50 per cent. Gas prices are also going up by more than 40 per cent. We heard this last night. Also taxes are also going up—$142 billion more than was anticipated or spoken about in the election campaign. In addition, we've got unemployment forecast to increase; interest rates have increased significantly this year and are forecast to continue to increase next year; and real wages, promised, during the election campaign, to increase under Labor, are instead forecast to decrease. This is again a high-taxing and high-spending budget that does nothing to help Australian families or Australian businesses.

If we turn to some of the tax reforms that were announced last night, the Albanese government has again failed to limit the taxes imposed on Australians. Under Labor, as I've just said, the tax paid by Australians will increase by $142 billion over the forward estimates. The tax cap of 23.9 per cent of GDP has been abandoned. Families facing cost-of-living pressures should be able to keep more of what they earn. This budget delivers no certainty for the 10 million Australians on their legislated tax relief which is due next year. The only new change to the tax system announced in this budget is a new tax on investments. I have many self-funded retirees within the electorate of Hughes. This sneaky new tax will slug people who invest their own savings and superannuation—people who have worked very hard throughout their lives, don't want to rely on government and instead are now being punished through higher taxes.

There was an opportunity squandered last night. The Albanese government inherited an enviable set of economic circumstances from the former coalition government. In just one year under the coalition, between 2020-21 and 2021-22, the budget position improved by over $100 billion, the largest budget turnaround since Federation. The coalition wants Australians to do well, but we are hampered by a new government with no real economic plan for the future. Australians deserve better from a government that promised so much during the election campaign but, in its first economic test last night, delivered very little.

This is also a breach of trust. It's a breach of trust with the Australian people. It's also a missed opportunity. On 97 separate occasions before the election and during the campaign, Labor promised a $275 cut in power prices. This budget confirms an increase of more than 50 per cent for Australian families, Australian individuals and Australian businesses. Labor promised to increase real wages. This budget, however, demonstrates real wages are going backwards. Before May, the Labor Party promised no new tax changes. This budget dumps the tax cut and delivers instead a new tax on investors and self-funded retirees.

To conclude, whilst I commend the bill to the House, it still demonstrates Labor's inability to properly calculate costings that will come out from this bill. There is a $500 million black hole within the legislation, confirmed by Treasury, and this $500 million black hole is just one example of some of the bad economic measures that were introduced last night. Whilst the government is to be congratulated for implementing overall the coalition government's protections for consumers and small business in this bill, Labor said its competition policy was all about reducing the cost of living. The high-taxing budget of last night clearly demonstrated that the government is not committed to reducing, or is unable to reduce, the cost of living for most Australians.

Aaron Violi (Casey, Liberal Party) Share this | Link to this | Hansard source

I rise to speak in support of the Treasury Laws Amendment (More Competition, Better Prices) Bill 2022. This bill significantly increases the fines and penalties that can be imposed upon Australian businesses for breaches of competition and consumer law and, most importantly, it protects small business.

My electorate of Casey is home to many small businesses across various industries. These small businesses are the engine room of the economy. It is these small and medium businesses that are often the ones driving innovation and economic growth, bringing new ideas to the marketplace and creating new jobs. Small business provides 4.7 million jobs in our nation. Small-business owners have risked their financial security to chase their dream but, because of their size, they are vulnerable to the coerciveness of big business. I worked in the small-business environment for 15 years and I saw, directly and indirectly, the pressure that small business faces when working with bigger players. These are negotiations and conversations that you don't forget. When owners know that it's their house and their mortgage on the line, and they're negotiating with a business with significant cash reserves, it's an unfair balance. So we need to protect small business, and this legislation goes towards that.

But small business isn't just about the economic benefits. Small business truly is the heart of the community, especially where I live in Casey. Small business supports community groups like the CFA, sporting clubs and charities. In our time of need, it is small business that is connected to the community and has the agility and the will to support the community. I see this every day in my electorate and living in my community, but I saw it last week when I was at Mount Evelyn IGA to celebrate the Ingpen family owning that business for 50 years. They really are pillars of the community. It was amazing to see the number of members of the community who came, including Rick, from the Mount Evelyn CFA. At that celebration, Tony, the owner, presented him with a cheque for financial support that the IGA provides every month to the CFA. Normally Tony does that in private and doesn't make a big show of it, but it was a great occasion to celebrate. When you hear Rick, who is a CFA captain, talk about the importance of that money to their organisation and to protecting our community, it's just another reminder of the importance of small business and protecting it. Rick also talked about how, in times of emergency—whether it's fire or flood, as we're experiencing at the moment—Tony and the team open their doors and provide any supplies that the CFA need, with not a question asked and no bill run up. Straightaway the doors are open. That's what small businesses do. They support our community, and we need to support them.

We saw this also during COVID. The IGA were talking about how they could support our communities, making sure those most vulnerable got the support they needed, whether it was food or toilet paper. They had the agility and the ability to adapt and provide our community with those vital resources that they needed. That's why the previous coalition government recognised the importance of small business to the economy when we committed to JobKeeper, to the cash flow boost payments and to 50 per cent wage subsidies for apprentices. We supported around one million businesses and four million jobs. I'm proud of the things the coalition did during their time in government to allow small business to flourish. During the campaign, as a new candidate, and since being elected as the member for Casey, I've had had many businesses thank me for the previous government's support to get them through COVID. Again, they talked about how it wasn't just about their business; it was about their family and being able to put food on the table for their children.

This bill will help to further support and protect those small businesses, by sending a clear message that unfair trading will be penalised. As I said in my first speech, we must acknowledge and recognise that big business will naturally support regulation and red tape which stifles small business, to the detriment of competition. As a Liberal, I instinctively support free markets and the benefits they bring to the economy and the nation. However, we have to acknowledge the risk of having dominant players in a market, a risk that I saw firsthand working in the food industry. For Australia to continue to prosper as a nation, we need to ensure our legislation supports the growth of small business in every way.

These reforms will better protect small business and consumers, by increasing penalties for anticompetitive behaviour. This will ensure that the price of misconduct is high and will bring our penalties in line with those in other countries. As I said, this is so important, because small-business owners are risking their homes; big businesses do not have that risk.

The changes brought about in this bill are similar to the previous coalition government's proposal under the Treasury Laws Amendment (Enhancing Tax Integrity and Supporting Business Investment) Bill 2022. We supported the amendment to existing unfair contract term provisions and the introduction of a civil penalty regime. There is also bipartisan support for the expansion of a class of contracts covered by the unfair contract provisions.

The 2018 report by the Organisation for Economic Co-operation and Development found that Australia's maximum penalties for anticompetitive conduct were lower than those in the UK, the US and the European Union. At the moment, the maximum penalty for breaches of competition laws in Australia is $10 million or 10 per cent of annual turnover, whichever is greater. This bill will take those maximum penalties from $10 million to $50 million, adding a significant deterrent to big business. Businesses can also be fined 30 per cent of their turnover during the offending period for engaging in anticompetitive behaviour, with maximum penalties for breaching civil penalty provisions jumping from $500,000 to $2.5 million.

The bill will amend three pieces of legislation—the Competition and Consumer Act, the Australian Consumer Law and the ASIC Act—to strengthen the existing protections from unfair contract terms in consumer and small business standard-form contracts. It will introduce a new civil penalty regime for those small businesses that use and rely on unfair contract terms in standard form contracts. Unfair contract terms are those that disadvantage one party but are not necessary to protect the interests of the other. Examples of unfair terms are excessive exit fees, automatic renewal terms, unreasonable termination terms, or price increases affecting only one party. Another example is reserving the right to vary the contract at any time and removing liability for interruptions in supply. And, again, this is a challenge for small business, because many big businesses have the legal support within their organisation to make sure they can review contracts with a fine toothcomb. Small business does not have the ability to spend hundreds of thousands of dollars on lawyers so are at another disadvantage—not just size, but the resources from a legal perspective.

For small businesses, which often have a lower bargaining power, these clauses bring about a lot of risk. As I mentioned, I've seen this firsthand in my career. You need to understand this threat and what it means to a business. I've been in these conversations with an owner of a business dealing with multinationals. You know that business represents over 50 per cent of your revenue, and one phone call overnight could close your business. And it's not just closing the business for you; it's not allowing you to put food on the table for your family. It's for those employees that took a risk to join your business. And that can be shut down overnight when a big business has a significant part of your revenue. That's the reality that we have in Australia. One example is the food industry. Two major players, Woolworths and Coles, are a significant part of that industry. If you want to grow your business within the food industry, you need to work with Woolworths and you need to work with Coles. But they have and use significant power in those negotiations.

It's so important that we continue to protect small business so they can innovate. All the new food products that we get to enjoy come from the small businesses that are looking to create a unique niche in the market. Whether it's food, technology or any industry, if they don't have that ability, we lose that innovation and we lose our advantage as a nation, so we need to continue to protect those small businesses. Protections against unfair contracts currently apply to small-business contracts where at least one of the contracting businesses employs fewer than 20 people. This bill will increase the scope of these protections by increasing them to businesses that employ fewer than 100 employees and turn over less than $10 million. This is such an important change because in the current environment, at any time, 100 employees is not a large business. A hundred employees is a small business; their cashflow is still exposed.

We also want to encourage and incentivise businesses that have got 15 employees to grow to 50 employees and not feel that, by moving over a threshold, they lose some of the protections that they have. I can tell you firsthand that I worked in an amazing company called Yarra Valley Snack Foods, and when I joined that company we were at 70 employees, and when I left we were at over 130. But even at that time we were still a small business, we were still exposed and we did not have cash reserves. We were investing that back into the business so we could employ more locals and support the farmers who were growing the organic products that we sold. What we need to do is protect those businesses so they can go from being a small business to a larger business.

This change from 20 to 100 employees is significant. I think it's something we need to continue to review, to make sure we get that number right, because even with 150 to 200 employees a lot of those businesses don't have the market power and they don't have the cashflow. And that's the important part: it's the cashflow; it's the ability to go to the lawyers if you need it. It's also not allowing a supplier to be a significant part of your business. And we need to acknowledge the size of our markets in Australia. Whether it's the banking industry, financial services, the food industry, there will always be large players within our market. That's just the nature of our country and our economy, and that's why it's our obligation in this House to continue to protect those small businesses that are risking it all to provide so much for our country.

Consumers and businesses can apply to the courts to have certain unfair terms deemed void. However, this has not been enough to deter some businesses from including unfair contract terms in their standard form, and this is because those big businesses know that small businesses doesn't have the resources to go to court. They don't have the lawyers to review the contracts, and, in many cases, they don't have the time to negotiate on those long form contracts. That's why it's so important that we give the courts new powers to determine an appropriate penalty, such as an injunction order. So, if they do go to court and invest that time, they can continue to operate while that decision is being made.

By strengthening penalties, Australia will be promoting competition and setting standards for corporate behaviour. Increased competition means prices are kept in check, and there is more choice for Australian families. With the current cost of living soaring, the last thing small-business owners need is the headache of navigating dodgy business contracts. It is vital that we support small business to thrive. They've survived two years of COVID and state-imposed restrictions on their trading. They are currently going through significant rising costs with energy and with labour shortages. It has never been tougher to be in small business.

For Australia to continue to prosper, we must ensure our legislation supports the growth of all businesses. These new offences and higher penalties will make business think twice before including unfair terms in their contracts. Larger fines for anticompetitive behaviour will ensure a more level playing field for business. I will always support small business; it's in my blood, and that is why I am supporting this bill today.

James Stevens (Sturt, Liberal Party) Share this | Link to this | Hansard source

I rise to speak in support of the Treasury Laws Amendment (More Competition, Better Prices) Bill 2022, which, as has been outlined, has two core elements: one is to do with increasing fines and the other is to expand the protections around unfair contract terms. My understanding is the OECD had undertaken a good body of work around the consequences of anticompetitive behaviour in different regimes within the OECD. The outcome of that was that, in this country, we have not been putting in place sufficient fines.

You would hope there was a disincentive, from a moral point of view, for people not to engage in uncompetitive behaviour in our economy. But, of course, we need safeguards in place, and the OECD—which probably reflects on the value of that organisation—to be able to give us this sort of comparative policy analysis and advise this jurisdiction that we are at the lower end of the sorts of penalties that are put in place within other similar OECD nations, particularly the United States and the United Kingdom. The first element of this really dramatically increases the penalties that can be put in place within our competition framework, and that's a really important thing. As a proud free market capitalist, I'm equally very conscious of the importance of having a very robust framework in place to ensure that we have free, fair and open markets and free and fair competition within our economy. The framework that we've got in place, and organisations like the ACCC, do an excellent job in making sure they're protecting consumers, but we're clearly always going to need to be vigilant in looking at opportunities to make sure the protections are in place at the appropriate level to ensure that we have free and fair competition.

In this country, we haven't had a really concerning history of major anticompetitive examples. Some jurisdictions—like the United States—talk about antitrust, which is the same sort of principle. In fact, if ever we have had anticompetitive issues, it has always been because of government enterprises that have had the ability to compete with the strength of government in what should be a free and fair market. It's a great commendation to people like Bob Hawke and Paul Keating, who recognised that maybe the private sector could run airlines in our economy, rather than government running one and stifling competition in a sensible market like that, which should be free and open for private sector to compete with each other in and, hopefully, achieve good outcomes for consumers in that market, through that competition, with the lowest possible price being achieved.

We welcome the upgrade to penalties, but I make the same point that other coalition speakers have made, which is that it's humiliating how the costings have ended up on this. When the Labor Party announced this in the campaign, they were expecting a dramatic revenue dividend from these measures, but the forecast, as part of the legislation and the budget indicate, is that that's going to be dramatically lower. It's probably a good lesson for people to learn about assumptions and applying multipliers et cetera to these kinds of policy initiatives that are, effectively, always going to be in the hands of the courts. Despite suggestions that you can predict and just provide some kind of multiplier to decisions that the courts are going to make, it seems, based on a more sober reflection, that nowhere near the expected revenue is going to be achieved from the measures. That doesn't change the importance of the measure, but I make that point on the record—as others have—because it's not insignificant when people try these sorts of things on in election campaigns and election costings into the future to have important examples like this to point to.

The second element within this legislation is the issue of unfair contract terms. This is really important, and I think everyone in this chamber would agree—I don't mind being very honest about this—that when you've got the choice of spending your money with a small business versus a big business, we'd all choose the small business. Everyone in here would have superannuation and investments in major corporations, and good luck to major corporations, but we all back our small businesses at every opportunity in our communities and anywhere in our economy. Small businesses are the absolute lifeblood and backbone of our economy and also our communities. They are the biggest employer. We've got so many people that own and operate small businesses in our electorates—all of us would have, on average, more than 10,000 small businesses. These unfair contracts are nothing short of absolute bullying. They are absolute bullying and deception from people that are wilfully seeking to take advantage of a particular party. So they're coming from a position of strength and they are attempting to effectively engage in what I will say is deceptive conduct—that is, trickery, tricking someone into entering into agreements when there's an imbalance between the two parties. One party has drafted the contract with extreme complexity and without feeling any obligation to bring to the attention of the other party the specifics that they should be aware of. Of course, the other party shouldn't be expected to apply the kinds of resources that would be necessary to fully understand what they might be committing to by entering into that contract. That is absolutely something that we need to provide protections over, and that's obviously what occurs in this element of the bill.

If you're a really big business, you probably have in-house counsel, an in-house legal team. When you're the author of contract, you draft a contract for another party. Even if you purport that it is a completely standard agreement that you have with a whole range of other suppliers or customers—or whatever you might be claiming—all contracts are complicated. When I get a mobile phone, I don't mind admitting that I don't sit there and read all seven pages of the eight-point font that comes after the bit that's helpfully got the 'sign here' tag. Frankly, I think a lot of us probably think, 'What exactly am I going to do to dispute this anyway?' These are standard contracts from Telstra, Optus or whoever. So all contracts are complicated. All contracts require legal capacity and training to fully understand what their full consequences might be.

There's no doubt and there's clear evidence—and we probably all have specific experience of this with constituents—that people are tricked and lulled into committing to things without fully understanding the consequences of doing that. When that is blatantly the objective and when that sort of trickery and bullying is engaged in, we should stand up for the people who are victims of it. They didn't wilfully sign a contract knowing what they were committing to then changed their mind later or tried to weasel out of something that was fair and reasonable and that they were fully aware of at the time. This is really talking about circumstances where people haven't been fully aware of the consequences of what they've committed to.

People have also quite consistently made the point that the barriers for a small business undertaking a civil contract dispute against a big business are enormous. If you are a small business taking on one of the big players, you know that their first objective in any of these disputes is just to bleed you dry of money through legal costs so that you'll never even get your day in court. You'll have so many costs before ever even seeing the inside of a courtroom; it's almost never going to be worth your while, depending on the scale of the contract. As members, we would also know of businesses that have had terrible experiences in taking on a party that's had significant financial capability to litigate against them. We all understand and know that the legal system provides opportunities for parties to drag these things out significantly, and that puts a lot of cost on the party that's seeking justice. There are undoubtedly cases where both individuals and businesses are in a circumstance where they probably feel very confident that they are an aggrieved party and that they deserve justice, but they can't afford it. Those people have got to make that appalling decision that they shouldn't have to, which is that, even though they could rectify that situation through the courts, the cost to them and the risk to them and the time that it would take to achieve that justice means that it's simply not worth their while. That's not fair.

What we're doing here is giving people that are in that circumstance a lot more support, giving people like the ACCC and our consumer laws the ability to stand up for those people, so those people don't have to do it all by themselves and the bigger, powerful, bullying party isn't in the position where they can simply say, 'I'm not frightened of any consequence of taking advantage of you here because I'll just bleed you out before you ever get the chance to seek the justice that you deserve.' I think, again, that element of this legislation is very meritorious, and on that basis I'm very pleased that we appear to have a consensus to support these reforms.

We thank the OECD and the other processes that put us in a position to become aware of the need to improve and update the way in which we protect consumers, small businesses and individuals in our economy. A strong free market, like the one we've got in this country, is always going to need those very important protections for consumers and for fair competition in our economy. On the basis of that, I commend the bill to the House.

Andrew Leigh (Fenner, Australian Labor Party, Assistant Minister for Competition, Charities and Treasury) Share this | Link to this | Hansard source

My thanks to the members who have contributed to this debate. I acknowledge the work of both Small Business Minister Julie Collins and Assistant Treasurer Stephen Jones on this bill. This bill delivers on an election commitment to protect Australian households and small businesses by banning unfair contract terms and increasing penalties for anticompetitive behaviour.

The Australian Labor Party has a long history of economic reform that builds a fairer and more resilient economy. Competition is an essential part of that for three key reasons. First, competition is about fairness. Without government action, monopolists can wield their power to rig the game in their favour rather than compete on even terms. Second, competition deals with cost-of-living pressures and makes our supply chains more resilient. Competition means businesses offer Australians the best prices they can. A diverse and dynamic economy, a resilient economy, helps to absorb, adapt and solve the challenges of an uncertain world. Third, competition is about jobs and skills. Competition helps to ensure that the most innovative, creative and savvy businesses are the ones that thrive. Those are the businesses that are best placed to offer jobs that are stable, secure and well paid. Competition also gives workers more options, empowering employees to negotiate pay and conditions that reflect their true value.

This side of the House has a long record of supporting competition. It was Labor Attorney-General Lionel Murphy who introduced the Trade Practices Act 1974, which outlawed businesses colluding at the expense of Australian consumers. It was Paul Keating in the 1990s who recognised that competition eased cost-of-living pressures by lifting wages and lowering prices. Working with Fred Hilmer, he backed it up by implementing reforms that transformed swathes of Australian regulation for the better and helped deliver the 1990s productivity surge. National competition policy was far-reaching. Government businesses were restructured and made more efficient. A competitive National Electricity Market was established. Barriers to the free trading of gas across state and territory boundaries were removed. Before national competition policy, bakers in New South Wales could only bake bread at certain times of the day. Families across the nation had to do their grocery shopping in a mad, crazy rush on Saturday morning before shops closed for the weekend.

As a result of national competition policy, the Productivity Commission has estimated that the size of Australia's economy was permanently increased by 2.5 per cent. Today, that equates to some $5,000 per household. But productivity growth has slowed in Australia since the mid-2000s. From its peak of 2.5 per cent in the late 1990s, average productivity growth in the past 20 years was 1.2 per cent. Weak productivity hits real wages and the cost of living. By hitting national incomes, it stifles our ability to invest in infrastructure, to plan for the future and to lift up those who need support.

The productivity slowdown has been driven, at least in part, by a decline in dynamism. When workers move to more productive firms, they earn higher wages, and the economy benefits. Yet job switching has slowed in recent years, which can account for about a quarter of the recent productivity slowdown. Creating more opportunities for job switching through competition is crucial to reverse this trend.

Another crucial measure of the health of the economy is the startup rate. How many new companies, which employ people, are created every year? We can think of this as the business equivalent of the birth rate. That measure is in decline. Since the 2000s, there's been a downward trend in the rate at which new businesses enter the market. More than ever we need settings that allow startups to enter the market and challenge the old guard on even terms, and that means reversing the trend of market power concentrating in a smaller number of firms. When power is concentrated, monopolists can shift away from competing to instead focus on trying to dig moats that keep the competition out. Monopolists awash in cash simply buy out new rivals and, much like the Borg in Star Trek, assimilate those rivals to take their strengths as their own.

One way of analysing market power is to look at industry concentration. Since 2000, those figures show the market share of the largest firms in each industry has trended upwards. From baby food to beer, the largest firms hold a high and growing share of the market. For Australian consumers, that means higher prices, because businesses that dominate the market tend to impose on consumers bigger mark-ups. According to recent estimates, mark-ups—the gap between prices and production costs—increased by six per cent over the past two decades. Australians cannot afford for the trend in declining competitive pressures to continue.

That need for change to our competition laws is something that the Council of Small Business Organisations Australia has noted. In May this year, CEO Alexi Boyd said:

Reforming competition policy is crucial to ensure Australia remains a place where small businesses can grow and thrive …

The Australian Small Business and Family Enterprise Ombudsman, Bruce Billson, welcomed the introduction of this legislation. As he noted, rebalancing relationships between small and large enterprises has an important role to play in promoting economic growth. Mr Billson also said that penalties for anticompetitive behaviour 'need to be more meaningful and not just an easily absorbable cost of doing business'.

Schedule 1 of this bill seeks to do just that—to increase the maximum penalty available for breaches of competition and consumer laws to ensure the price of misconduct is high enough to deter unfair activity and to ensure consumers retain a robust level of protection. By strengthening penalties, Australia will be promoting competition and better corporate behaviour. Greater competition means better prices and more choice for Australian households.

Australia's competition laws have long needed an update. It's been close to 30 years since the maximum penalty for anticompetitive behaviour was increased. As a result, we've fallen behind our international peers. In 2018, the OECD found that the average and maximum competition penalties in Australia are substantially lower than in comparable jurisdictions. The amendments in schedule 1 will increase maximum penalties for corporations that engage in anticompetitive behaviour from $10 million to $50 million and from 10 per cent of annual turnover to 30 per cent of annual turnover for the period the breach took place. The maximum penalty for individuals who engage in anticompetitive conduct will increase from $500,000 to $2.5 million. This will bring Australia into line with comparable international jurisdictions and will ensure that fines have a meaningful deterrent effect.

It's been noted by the Parliamentary Joint Committee on Human Rights that the increases in penalties are substantial enough to warrant considering whether a criminal standard ought to be considered rather than a civil standard of balance of probabilities. I have great respect for the Parliamentary Joint Committee on Human Rights, ably chaired by the member for Macnamara, and I thank the committee for bringing this issue to the parliament's attention. However, the Albanese government believes the use of the civil standard is appropriate and proportionate.

As I have noted, Australia's fines are presently substantially lower than in equivalent jurisdictions. This bill seeks to ensure we do not fall behind and risk those penalties being treated as just a cost of doing business. Increases to penalties are necessary for effective deterrence. The bill also provides discretion to the courts on how these penalties are enforced. While the maximum penalty is being raised, judges will continue to use their discretion and apply maximum penalties only to the most egregious cases. I appreciate the Parliamentary Joint Committee on Human Rights raising this important point, and I am confident that protecting the courts' right to discretion will ensure that all are treated fairly.

Schedule 2 to this bill will better protect consumers and small businesses from unfair contract terms by strengthening the existing protections against unfair terms in standard-form contracts. Standard contract terms are a commonly used and cost-effective option for businesses, as they avoid costs associated with negotiated contracts. An unfair contract term is one that's one sided and excessive and isn't necessary to protect one party's interests but causes detriment to the other party. Protections were first introduced in 2010 for consumer contracts and in 2016 for small-business contracts, to deal with terms that caused significant imbalance in the parties' rights and obligations. However, consultation with stakeholders suggested that unfair terms are still prevalent. While courts presently have the power to void unfair contract terms, what has become clear is that it is necessary to introduce strong deterrents. That's partly because consumers and small businesses generally lack the bargaining power to effectively review and negotiate terms when entering into contracts with larger parties. The hallmark of effective legislation is that it has a deterrent effect on the behaviour it seeks to regulate. It is unfortunately evident that unfair contract terms remain a significant problem.

What do we mean by 'unfair contract terms'? Let me take the House through some examples. In one case, the ACCC raised concerns about contracts between farmers and milk processors in the dairy industry. The contracts allowed milk processors to unilaterally change basic supply terms, such as the price they paid, without giving farmers the option to terminate the contract. The contracts also required that farmers comply with lengthy notice periods before terminating the contract, while giving milk processors much greater flexibility to terminate the contract.

In another case, a contract between a potato wholesaler and potato growers included terms that allowed the wholesaler to unilaterally determine or vary the price it paid farmers for potatoes; unilaterally vary other contract terms; declare potatoes as wastage without a mechanism for proper review; and prevent farmers from selling potatoes to alternative purchasers. In another case, the ACCC noted that chicken growers were being locked into contracts with meat processors that allowed processors to force growers to upgrade their facilities to fit with the needs and preferences of the processors.

The ACCC has also raised concerns about a supplier of serviced office space that was imposing on tenants terms that allowed the supplier to automatically renew contracts unless the customer opted out; unilaterally increase the contract price; and unilaterally terminate a contract. There was even a contract term that allowed the supplier to keep a customer's security deposit if the customer failed to request its return. In another case, the ACCC raised the issue of a company which leases photocopiers, scanners and printers to thousands of small businesses. Its contracts contained unfair terms such as automatic renewal that meant contracts were automatically renewed unless the customer cancelled a certain number of days before the end of the contract; termination payment terms that required customers to pay excessive exit fees when they cancelled their contract; and unfair payment terms that required customers to pay for software licences as part of the agreement even when they had not received the software.

Contract law can be complicated, but the principle is simple: big and powerful firms must stop putting unfair terms into their contracts with consumers and small business.

This bill will introduce stronger deterrents by prohibiting, through civil penalty provisions, the use of and reliance on unfair terms in standard form contracts. It will also provide a 12-month transition period that will allow businesses time to prepare. The bill will also expand the class of contracts that are covered, to ensure that a larger number of small business contracts are afforded protection. The government's expectation is that regulators will continue to take a reasonable and proportionate approach to enforcing these protections. These amendments will ensure customers and small businesses get a fair go when entering into standard-form contracts with larger partners.

Since at least the days of Adam Smith, economists have recognised the central role of competition in driving growth and productivity. If we are to increase living standards and deliver for consumers, the Australian economy needs a dose of competition reform. By strengthening the deterrents against bad behaviour by monopolists, we make our economy fairer, more dynamic and more competitive. I commend this bill to the House.

Question agreed to.

Bill read a second time.