Katy Gallagher (ACT, Australian Labor Party) Share this | Hansard source

The Competition and Consumer Amendment (Misuse of Market Power) Bill 2017, which is before us today, seeks to implement the so-called effects test, and it certainly will have an effect—an overwhelmingly negative one. It will have the effect of chilling competition and reducing innovation, and it will affect the prices that Australians pay for goods, in a very bad way. What the government is seeking to implement is bad law. It has not been thought out at all, and it will have a deleterious impact.

The Australian people should get no comfort from the fact that, according to leaks from the cabinet, the Prime Minister, the Treasurer, the Minister for Finance, the Attorney-General and the Minister for Revenue and Financial Services all think this is a bad idea. Given these names, how could this bill possibly have come forward? It's clear that they were rolled by the Deputy Prime Minister. It's a very bad thing for the nation when it's the Leader of the Nationals calling the shots in relation to competition policy in Australia.

What the proposed effects test means is that, instead of looking at the intention of a company with significant market power, you would look at the effects of their actions, particularly if the effect of their action is a substantial lessening of competition in any market. You could understand why this would look like something that should be done. I don't deny for a second that there are issues and problems which need to be addressed, and I will turn to Labor's alternative plan for doing that.

The fact of the matter is that these issues have been addressed, looked at and considered in Australia for a long time. Since the early 1970s, there've been 12 reviews of competition law in Australia, and 10 out of those 12 reviews recommended against an effects test. These have been reviews by serious people looking at this in a very considered fashion. The overwhelming majority have recommended against the implementation of an effects test. The 1976 Swanson committee recommended against an effects test on the basis that the section should only prohibit abuses by monopolists that involved a proscribed purpose. The Blunt review in 1979 recommended against it on the basis that it would 'give the section too wide an application, bringing within its ambit much legitimate business conduct'. The 1984 green paper recommended an effects test, one of only two of the last 12 competition reviews to do so. The 1989 Griffiths committee said that there was 'insufficient evidence to justify the introduction of an effects test'. The 1991 Cooney committee said that an effects test 'might unduly broaden the scope of conduct captured by section 46 and challenge the competitive process itself'. In 1993, the Hilmer committee recommended against an effects test, saying it 'would not adequately distinguish between socially detrimental and socially beneficial conduct'. In 1999, the Baird committee said that 'such a far-reaching change to the law may create much uncertainty in issues dealing with misuse of market power'. The 2001 Hawker committee recommended against an effects test and said it would 'await the outcome of further cases on section 46 before considering a change to the law'. The 2003 Dawson review said the addition of an effects test would 'increase the risk of regulatory error and render purpose ineffective as a means of distinguishing between procompetitive and anticompetitive conduct'. The 2004 competition inquiry by the Senate Economics References Committee said that, while the committee was sympathetic to some of the arguments, the difficulties with introducing it meant that the committee did not recommend the inclusion of an effects test.

It is a well-understood principal of competition law, and the law generally, that, if a business with market power intends to reduce competition for its own benefit, this should be dealt with. This is not acceptable behaviour, and it should be dealt with. Companies with substantial market power should not act to reduce competition for their own benefit. That should not be their intention. But it is a dangerous leap to change this principal and to disregard the intent of the company and, in effect, outlaw a company making life more difficult for their competitors simply because they are innovating or increasing their own competitiveness. It is a dangerous time for Australia when the National Party is dictating economic policy like this.

This has been through a Senate inquiry, and the critics of the bill were very clear in their views. The Business Council of Australia criticised this bill and opposes it very strongly. You have companies opposing this government, which claims to be probusiness and which lauds its probusiness credentials right around the country. These companies are going to the Senate inquiry and saying this is a bad idea, whether they be BlueScope or Woolworths. They are saying this not just because of the intent of the government in doing this and because he government is designing a system which would reduce the competitive juices in the economy, but also because of the way the government has gone about it. The way the government has gone about it creates uncertainty and a lawyer's picnic. The only people who will be happy with this will be competition lawyers. Despite the fact that they think this is bad policy, many lawyers in Australia will nevertheless see the commercial opportunities that will abound because of this government's ineptitude.

Another sign of the government's ineptitude in relation to this policy was the Treasurer at the last minute introducing amendments to the bill and briefing the media about it before the bill was finally dealt with in the House. What these amendments went to was to remove certain defences in the bill, the mandatory safeguards which were recommended to be put in by the Harper review. The Labor Party broadly believes the Harper review was very good; we obviously disagree on this effects test. It was recommended that these safeguards be put in. The government's amendments were described as an 'astonishing amendment from a supposed free market government'. These are not my words. They're not even the words of the shadow Treasurer or the shadow Assistant Treasurer. They are the words of the Business Council of Australia. That is what the group which the government goes around the country lauding for its support of the big company tax cuts thinks. Mr Grant King, the President of the Business Council, is quoted as saying in relation to this bill:

The Turnbull government seems intent on putting pressure on the household bills of every Australian … The proposed 'effects test' is so broad and ambiguous that companies risk being sued by their competitors merely for offering discount prices for consumers.

The government’s latest amendment removing ‘mandatory factors’ completely disregards Ian Harper's recommendation that safeguards are needed to protect against legitimate competitive conduct being captured.

The mandatory factors didn't provide nearly enough protection for legitimate business conduct, but the answer should have been to improve them, not to remove them altogether.

Mr King and the Business Council are right about these points.

On our side of politics we are not prone to agree with the Business Council on every occasion, but we call it as we see it and we will say when they are right—and they are right about this issue. We could've engaged in politics and supported the government and said that we would crack down on these nasty big businesses, but consumers would've paid the price for that and consumers will pay the price for that if the government succeeds in getting this legislation through the parliament.

The fact of the matter is that there are issues that need to be addressed. Labor is the party of competition reform. We're the ones who have always delivered serious reform. The first federal competition law in Australia, which was an issue with the Whitlam government, was the Trade Practices Act. That was the first serious national competition law that we had. Consumers affairs protection was included in that as well. Then there were the competition policy reforms of the Hawke and Keating years. The national competition policy was a key reform in leading to the 26 years of uninterrupted economic growth that we've had in this country and it improved the competitive juices of our economy. Then we had, coming together with the reform of the competition act, the criminalisation of cartel conduct and the harmonisation of consumer affairs laws across the country under the Rudd government.

So our side of the House is pro competition. We believe that the beneficiaries of competition are the people we are here to represent, people going about their business and wanting a good deal from the economy, because competition produces that good deal. But competition policy must be finely calibrated and carefully designed, not written on the back of a coaster in a hotel, as the Deputy Prime Minister likes to boast that he does from time to time—that he writes his ideas for competition policy reform down on the back of a coaster in the Birdsville Hotel.

The proposal put forward by the Labor Party and taken to the last election—and, indeed, passed by this chamber last week—is a much better solution to the challenges that small businesses face. Because some big businesses have deep pockets and armies of lawyers, the risk of a small business being overwhelmed and having to pay the big business's legal fees if they take on a competition action against a big business is very substantial, and it means that it doesn't happen as often as it should.

This is not just about the ACCC enforcing the law. That has its place and is an important part of it. But businesses can begin and bring their own actions as well. At the moment they're not doing that, for very understandable and legitimate reasons. They are concerned that the court case would be very expensive and that they may well have costs ordered against them and that that would drive them out of business.

Indeed, the policy which we enshrined in draft legislation and which passed this chamber last week sought to address that with our access to justice bill, the Competition and Consumer Legislation Amendment (Small Business Access to Justice) Bill 2017. I would urge the government to consider supporting that when it goes to the House and changing the position of their vote from last week. This access to justice reform has been welcomed by the Business Council of Australia and by the Australian Small Business and Family Enterprise Ombudsman, who also believed it was a practical way to assist small business in addressing the level playing field issue.

The access to justice reform was welcomed, as I said, by the Business Council of Australia, and it would be a sensible and practical support for small businesses around Australia—unlike this legislation, which was originally opposed by the Prime Minister, the Treasurer, the finance minister, the Attorney-General and the minister for revenue, but which was, apparently, supported by the Deputy Prime Minister and insisted upon by the Deputy Prime Minister as part of the coalition deal when the Prime Minister rolled the member for Warringah in the party room. That was the price for keeping the peace. And it is not the way to write economic policy in this country.

This will impact on the cost of living of Australians by putting upward pressure on prices. It stands to reason that if you have a big business or even a medium-sized business that has substantial market power in one particular market, they will talk about how they can improve their operation in that market, and they may say: 'Let's discount—let's go on a discounting process; let's reduce our prices; let's be more competitive,' but now there will be this effects test in the way, if this legislation passes, and they may have to say: 'But this might affect some of our competitors; some of them might actually go out of business if we're as competitive as we possibly can be. If our prices are as cheap as they possibly can be, some of them might actually be adversely reflected.'

Every boardroom and every manager will now have to consider that, and not just consider that in a national sense but consider their approach to smaller markets and their approach in any particular market segment. Even if their intent is not adverse, which in many cases it will not be, if the effect of their actions is adverse then they will be taken in by this piece of legislation. This is a fundamental change to the principles that have underpinned competition policy and competition law in Australia for many decades, certainly since Commonwealth control and Commonwealth authority in the 1970s.

This bill also contains amendments that would repeal the telecommunications-specific anticompetitive conduct provisions in part XIB of the Competition and Consumer Act. Currently, part XIB provides the ACCC with powers to take speedy action and better resolve disputes when anticompetitive conduct is suspected. This allows disputes to be resolved faster and more cheaply than by relying on general competition law. Given the concentrated nature of the telecommunications market, it remains appropriate to preserve this section. Labor considers that the stronger powers under part XIB remain necessary to deter misuse of market power. There is no good case for the repeal of this particular section of the act, and the government has not been able to put forward a single credible argument. It is a reckless approach to policymaking and sums up the incoherence of the Turnbull government. Labor will not support this repeal.

There is no way, given the weight of expert evidence from competition lawyers in Australia, that sensible commentators in the competition space think this is a good policy, because it's not. It should be resisted by sensible Senators opposite. As we know, it was resisted originally—to give them credit—by the Prime Minister, the Treasurer, the finance minister, the Attorney-General and the Minister for Revenue and Financial Services. You would think that that would be enough to maintain the position for sensible policy within the Cabinet. But, in another sign of this government's weakness, the Prime Minister, the Treasurer, the finance minister, the Attorney-General and the Minister for Revenue and Financial Services have been rolled on this important matter of economic policy.

On this side of the chamber we are of one mind. We stand for good policy, and this is not good policy—quite the contrary. This is very bad policy. As I have said, there have been 12 reviews of this since the 1970s and 10 have said that this is a very bad idea. It should be resisted and opposed here in the Senate. Thank you.