Thursday, 11 May 2017
Competition and Consumer Legislation Amendment (Small Business Access to Justice) Bill 2017; Second Reading
I will take that interjection. Senator Fierravanti-Wells wants to know whether the fact that my parents own a knife store is what has made me so effective in the New South Wales Labor Party. I remind the senator that the art of using a knife is knowing when not to use one, not knowing when to use one.
There are two separate debates that we are going to have. There is going to be the debate around the effects test. I think the Labor Party position on that has been quite clear. We do not believe the evidence is there and we do not believe that it is the right approach, but there are others who support the view. I have heard a lot of arguments about the effects test. I think it is an important debate to have. It is not mutually exclusive from this bill and it is not mutually exclusive from the debate we are having. They are two separate pieces of legislation. I believe access to justice in fact is a far more important principle than what we are looking at. Frankly, the idea that larger businesses are able to use the threat of the costs that may be incurred from legal action to prevent people from using their rights under the law is a highly concerning one. Let us not kid ourselves: it is a tactic that has been used, not just in business cases. Those of us involved in politics have seen these kinds of intimidatory tactics used, especially around defamation and other areas. But a tactic of big businesses with big pockets is to tie up and make the legal process so difficult and expensive for a smaller business as to prevent them from being able to get the legal remedy that they may seek, to prevent them from being able to get the outcome they may want.
When you as a smaller business are dealing with larger institutions that have their own army of lawyers, that have the sunk cost of in-house counsel—let us deal with a hypothetical: the type of situation where there may be a dispute over a brand or a site or a location of a business. The idea that some small business with a handful of staff is really going to be able to compete at a legal level with the enormity of the legal representation that is presented by some of these companies creates an unfair playing field. While the legislation itself, and how it is written, may not be the problem—the legislation itself presents everyone as being equal before the law—we all know and have seen used time and time again the tactic of having lawyers and access to justice as the vehicle for preventing equity and preventing justice from being carried out.
This bill looks at restoring that balance. It will never be perfect. We are never going to have a system that will perfectly give equal opportunity before the law, but this bill looks at how much of that gap can be closed. It is about making sure our competition laws are better enforced by giving small business a level of access to justice that they do not have.
Businesses have the legal right to take action if a competitor is engaging in anticompetitive conduct. However, it is so hard for businesses to do that even when there is a breach of competition laws, as the justice level between them is so stretched. I think the Australian Competition and Consumer Commission, the ACCC—who we will have before our estimates in the next few weeks and we will have an opportunity to go further into the conversation we have with them—have highlighted their concern at the idea that the access to justice is not really there. This bill will address the difficulties small business face in getting that justice, because it does two really important things.
Firstly, it allows the Federal Court to waive liability for costs to smaller business private litigants bringing these cases. Senator Xenophon presented a figure from his life experiences as being those who have a strong case and a good case, but you are never sure before the law, nor should you be—there is always a risk involved when there is a lawyer. A good lawyer may advise that they have an 80 to 90 per cent chance, but that 10 per cent chance of having costs awarded against them may be so significant that they are unable to pursue that action. Secondly, businesses will be able to go to the ombudsman to get early assistance to find out whether they should consider going for these new non-adverse cost orders. In fact, there will be an independent procedure for them to be able to get the information that they need to determine whether they should or should not pursue this.
This is an important equity measure, an important step to be taken for equity. Senator Macdonald spent the whole of his 20-minute speech talking at length about the small business contribution and the small business relationship between the Adani coalmine in northern Queensland—sorry, I will be fair, the proposed Adani mine in northern Queensland—and its impact on small business. The point he was making was about the flow-on effects that a project like that will present to small businesses. I believe that if we are talking about small businesses and we are talking about equity and fairness, then the big issue of fairness that we need to address—and this bill goes in part to start doing that—is the inequity between larger corporations and how they pay their tax and how small businesses, which do not have those legal structures, do not have those opportunities.
Senator Macdonald went on at length about Adani and about their supposed record of being great corporate citizens. I feel that it would be only fair to make a contrast with a company like Chevron, that we have had the opportunity to hear from recently. At the end of April the new managing director of Chevron Australia, Nigel Hearne, fronted a Senate inquiry about corporate tax avoidance held in Perth in Western Australia. This whole notion of inequity between small business and big business was really brought to light for me by seeing a situation where you have a company the size, nature and structure of Chevron that has paid no corporate tax last year, will pay no corporate tax this year, paid no PRRT—petroleum resource rent tax—last year, paid no PRRT this year and will likely not be paying it for many, many years into the future.
When we talk about justice and equity for small business we have to ask ourselves: where is the justice and equity when the small businesses of Australia are paying their taxes, paying their fair share, and the larger corporations are able to structure themselves in ways that allow them not to do so? My issue with the structures of companies like Chevron is not that what they are doing is illegal, as I do not believe what they are doing is illegal. My concern is that in many, many cases what they have done has been legal; what they have done has been allowed under our laws. Sure, there have been some shark tactics—there are matters before the Federal Court at the moment. There are issues that are being challenged by the tax office, and I give the tax office credit for doing that. But these are the real issues—these are the equity issues that have to be addressed.
At the moment, the oil price is $50 a barrel. At today's price, Chevron and other multinational corporations will not pay PRRT, petroleum resource rent tax, for the whole life of the projects. We are giving away this entire resource without getting back the tax that is meant to be there for us to be able to recoup something. How is that fair for small businesses, when they do not have those opportunities? How is that equitable?
We heard from the CEO of Chevron himself, Mr Nigel Hearne. He was previously the CEO of Chevron Appalachia, and under his watch there was an explosion at a Chevron-owned oil well in Pennsylvania that killed a 27-year-old contractor who was working on the site. It also forced nearby residents to be evacuated. Five days after the explosion, when the fire was still smouldering, Chevron sent letters to local residents who might have been impacted and offered them a voucher for a large pizza and a two-litre soft drink. After this incident, the state of Pennsylvania's Department of Environmental Protection issued Chevron with one of the largest fines it has ever levied. The parents of the killed worker reached a $5 million settlement with the company after the state confirmed the site was not properly supervised.
Before that role, from 2011 to 2013 Mr Hearne was the general manager of Chevron's refinery in Richmond, California. This is one of Chevron's largest refineries, and, under Mr Hearne's watch, a fire at the refinery nearly killed 19 workers and caused 15,000 people to seek hospital treatment. According to a report by the US Chemical Safety Board, a federal government agency, a pipe rupture released flammable high-temperature light gas oil, which then partially vaporised into a large opaque vapour cloud that engulfed 19 Chevron employees. The cloud ignited, and the explosion caused a large plume of vapour, particulates and black smoke, which travelled across the surrounding area. There was an emergency warning for three nearby cities in the following weeks, and approximately 15,000 people sought medical treatment at nearby medical facilities, for ailments including breathing problems, chest pains, shortness of breath, sore throat and headaches. California's Attorney-General and the local District Attorney brought criminal charges against Chevron for the incident. Chevron pleaded no contest to six charges, agreeing to increase oversight by state agencies and pay $2 million in fines and remediation costs. Separately, the state's occupational safety and health regulator fined Chevron $782,000 and issued six 'serious' and nine 'wilful' violations for the incident. Less than three weeks after the incident, health and safety inspectors were back at the refinery and issued five 'serious' and two new 'wilful' violations, with fines of over $173,000. This is the track record of the CEO of Chevron in Australia.
We are debating here how it is that there is one set of rules for larger corporations, one set of standards for the big multinationals, and yet, when it comes to small business wanting access to justice, access to decency, access to fairness, that is not present. There is a huge gulf between the ways in which different groups of people, different groups of businesses, are treated in our society. Especially when it comes to justice—and I believe justice relates to tax justice as well as legal justice—we should be asking ourselves: why is it not fair; why do these gulfs exist; why is there this gap?
The bill that we have before us is not going to fix all these problems. The bill that we have before us is not going to fix the huge inequity between small and big business in Australia. No one piece of legislation will. But it goes a step in the right direction towards providing justice. It goes a step in the right direction towards creating a fair, more equitable, more even playing field insofar as it relates to being able to get court access and court justice. This is a bill that represents a commitment that the Labor Party took to the last election. It was developed by wide consultation with a lot of businesses, many of whom said that, at a practical level, the theoretical structure of the law, as important as that is—and everyone believes that is important—it is the practical reality of how it is implemented on the ground that really affects the day-to-day lives of different businesses and that really affects the day-to-day lives of business operators. Where we need to be looking at is not just having the perfect laws in theory passed through our parliaments but making sure that everyone has equal access to that.
Equity in business does not just stop here. There is a huge equity issue. I note that Senator Scullion from the Northern Territory is here and he can talk at length about the challenges of inequity when it comes to, particularly, Indigenous Australians and others. I think we in this parliament do a very good job in many instances in framing laws that we believe are fair and equitable, and that are fair and equitable. But the challenge always is at a delivery level when we leave a chamber like this or a place like parliament. Let us not kid ourselves; we are all very privileged to be here and we are privileged people. Having that same kind of access on the ground on a day-to-day basis and having that same kind of representation before the law—that is always a really big challenge that we struggle with.
In conclusion—and I note I have used up my time—this is a bill that is about making sure competition laws are better by giving a little bit of a leg up to small businesses in the unfair fights that they have to face. Businesses who have a right to access and go laws often do not do so because of the fear of the costs that are associated with it. Even when small businesses have a strong case, they have to be very careful about the fact that larger players have a lot of money and a far greater capacity to fight these cases.
There is a worry that if they lose their case they could face large bills and be driven out of business. They do not have the same kind of risk profile that larger businesses, especially those that have huge in-house legal teams that are already sunk costs, are able to deal with. I note that the ACCC has been very strong on this issue. I note that other consumer groups have been very strong on this issue. I note that the small business lobby has been very strong on this issue.
I commend this bill. I believe it is a bill that should be supported by the Australian Senate.