Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Hansard source

Let me start by putting it on the record that the Greens will be supporting this legislation. In fact, the Greens have campaigned for an effects test in section 46 for nearly five years. Prior to my entrance to the Senate, Christine Milne had campaigned on this. She was from a farming background and worked very closely with and was very popular with Tasmanian farmers. She understood the pressures on supermarket supply chains over a number of years, and she had seen the dairy industry reduced to nearly a quarter of its size from numerous pressures, including being squeezed by the big supermarket chains. This is something my party has long campaigned on because we support small businesses, rural communities and our farmers. Let me also make it very clear and be up-front that there is the policy aspect of this and then there is the political aspect. I think it helps to cover off on, to quote Peter Garrett, 'the power and the passion' behind any particular piece of important legislation when it comes to parliament and goes through the political process to become legislation and, hopefully, ultimately, law. I will make some brief comments on that.

Let's start with the policy. Competition policy in this country is reasonably complex. There are a large number of components to competition. The one that has caused the most controversy over time is section 46. Section 46 is designed to prevent the misuse and abuse of market power or market concentration. Essentially, it is unworkable—section 46 in its current form is unworkable. This is something I talked about last week when Labor brought their private member's bill into this place. I quoted the ACCC. Mr Sims, who we all think does a really good job with the war chest he has available, has been making it clear that section 46 is unworkable. The Harper review, instituted by the government, also recommended that section 46 be changed, to introduce an effects test.

Probably the best analogy I have read, which simplifies what is fairly technical and complex detail, is that it is similar to the difference between a manslaughter charge and a murder charge. Currently, the way section 46 is set out, for any death you would need to prove motivation for murder. We have all grown up watching detective shows—Law and Order and those kinds of things on TV—and we know that a manslaughter charge is different to a murder charge. It has a lower burden of proof. The comparison is a really good one with the misuse of market power under section 46. The way section 46 is structured at the moment, you have to prove murder. You have to prove intent; that anticompetitive behaviour is designed to stamp out your competition. The reason it has been unworkable is that it has been almost impossible to prove intent. However, if you look at the effects of the action of a company that does stamp out competition, and that can be proven, then you have your manslaughter. You have your lower burden of proof. It is actually a really interesting and easy to understand comparison. The way that competition law is set out at the moment, it is virtually the same as trying to prove a murder charge where a much higher level of proof is required, and you have to prove motivation and intent. Whereas, over time, we see that markets fail and there are important roles for regulators to play and very tough regulations and laws to prevent, for example, market concentration, where monopolies and duopolies exist and crush competition. Lack of competition is not just bad for consumers, it is also bad for those who provide the inputs into the supply chain, like farmers and distributors. It is actually a really important debate.

Section 46 is not workable. Don't take my word for it. Let's hear what the ACCC have to say. In their submission to the Senate Economics Legislation Committee, Mr Rod Sims in his submission said:

The ACCC continues to strongly endorse the proposed, simplified reformulation of the misuse of market power provision of the Competition and Consumer Act 2010 (CCA) (section 46).

They go on—and, senators, it is well worth reading this if you have not read it—to talk about a number of objections to the adoption of a lessening of competition which is called an SLC, and a test in section 46 of the CCA. In this submission, they debunk the myths that have been put out there by those who oppose an effects test. No guesses who the power is behind this debate when we are talking about the power and the passion. It is big business. As we heard from Senator McKim, I think quite surprisingly to most Australians, behind that big business is also a big union—the SDAs, who we call the 'shoppies'—and the deal they have done with big business.

Mr Sims goes through, talks about the purpose of an effects test and refutes, one by one, the arguments that have been put in place; for example, that an SLC test is novel or uncertain. On the contrary, he says that it is a 'well understood test that is applied in the majority of the other competition provisions of the CCA, including anticompetitive agreements, mergers and acquisitions.' But there is more. He then goes on to talk about arguments that adopting a SLC test will prevent or deter competition. He says:

The adoption of an SLC test will not restrain large businesses from competing on their merits, reduce productivity, chill investment or lead to higher prices.

And he sets out all the reasons why. Labor's key argument here today is that somehow this is going to lead to higher prices. Mr Sims also refutes arguments that a SLC test will remove the causal connection between market power and conduct or that amending section 46 would impose an unreasonable burden on large business. He then deals with mandatory factors, which are the key arguments we have heard from Labor today.

Obviously, the Labor Party missed the appendix to the submission by the ACCC, but it sets it all out in easy-to-understand detail. Labor found some examples of where an effects test under a new section 46 of this new legislation, if it gets up, would be different from the existing section 46. They talk about anticompetitive conduct like land banking, locking up supplies, restricting supplies of essential materials, retaliatory threats by big business, joint marketing fees, freezing out competing suppliers from retail display and demonstration opportunities, targeting price discounting strategies by an incumbent designed to dissuade new entrants in a region and tying up customers in long-term contracts with anticompetitive clauses. I once again thoroughly recommend senators read this simple, easy-to-understand table because it sets out these overly simplistic and misleading arguments provided by the Labor Party today as to why they are not opposing this regulation.

A lot has been written about and discussed in the public debate about the supermarket duopoly. Believe me, they are a stark example of the misuse of market power in this country. There is the perception—and the reality—that many farmers and small businesses have been squeezed by their ferocious war for market share over the last few years. We have the most concentrated grocery market in the world. Up to 70 per cent of the grocery market and in some cases, I have heard, up to 80 per cent including the now take-away liquor market is controlled by the duopoly. These big supermarkets have cornered nearly 50 per cent of Australia's petrol market by using their size and their muscle. They are amongst the top 20 retailers in the world. Of course, they appeal to customers by suppressing prices, by discounting and by campaigning as price suppressors. But, at the same time, they have massively increased profits. You might scratch your head. Any first-year economics student might say, 'Wait a second. That does not sound right, Senator. How have they managed to get away with it?' They have got away with it by transferring over $2.5 billion in profit from the food producing and the food manufacturing side of Australia—so think of farmers, out struggling to make a living; small businesses struggling to provide distribution, provide food and also compete with them on a retail level—to the retail side of the business over the last seven years. So the question you would ask is: what is the future for food producers and how can they keep going if they are continually being squeezed and driven towards being unprofitable? That is the other side of this debate.

The Greens, as I said earlier today, are proud to have been campaigning on this issue now for a long time with farmers and with small business. We have some amendments which I will deal with when we go in committee, and I will certainly talk about Senator Xenophon's amendments and any other amendments we may see.

Let me get to the politics side of this now. I am going to talk about politics on both sides of this chamber today, Labor and Liberal. I put a motion to the Senate, just by coincidence, nearly two years ago for an effects test to stand with farmers and small business. Much to my surprise that day, my Green colleagues and I were joined on this side of the chamber by the National Party. The entire National Party Senate team crossed the floor to vote with the Greens on our motion on the effects test. I'm not going to divulge confidences, but I did say to those senators, 'Thank you for standing with farmers and small businesses today.' They thought that was quite funny. They said, 'No, Senator, thank you. Today we are negotiating with Mr Malcolm Turnbull on forming a new government.' That's right—it was the same day that Mr Malcolm Turnbull knifed Mr Tony Abbott in the back and took the leadership of the Liberal Party. Perhaps, as these strange coincidences occur, the politics is that the Liberal Party had done a deal with the National Party to bring in an effects test, and that was what helped underwrite Mr Turnbull's leadership as Prime Minister of this country.

I only say this not because it's a bad thing but because I am worried that there are senators on the other side of this chamber who fundamentally and philosophically disagree with an effects test that makes life harder for big business. I hope that they are going to stick this legislation through and not put any poison pills into this or any future legislation that could help unwind this very important piece of legislation today.

I was very surprised when I heard that the Labor Party weren't going to support an effects test. I didn't know why. I scratched my head like a number of other people did. That decision was obviously made a long time ago. We heard from Senator McKim, and I read some transcripts from media articles on the power that the shoppies union has over the Labor Party. The only conclusion I can draw is that Labor, through their relationship with the shoppies, are in bed with big business. They were in here spouting on about the Business Council for nearly 15 minutes and supporting big business. At least they acknowledged that wasn't a normal thing for them. If it wasn't a normal thing, what's so special about this particular legislation?

We know that the donations to the Labor Party through the shoppies and the connection to Coles, Woolworths and Wesfarmers are black and white. I suspect that Labor voting against this bill today, regardless of the faux arguments they put up for not supporting an effects test, because of their donations. If that is true, that is rotten to the core. If they are voting against good legislation that helps improve our competitive landscape and helps make it easier for farmers and small business because this is going to impact their support and donations, I think that's not going to go well for them with small businesses and farmers in this country who expect us all, without fear and favour, to look at these things in the cold, hard light of day and take every opportunity for reform that we can when we see it.

I say to any farmers, small-business people or groups out there who are looking at this debate, it's important I put on record today that this is not a silver bullet for fixing all your problems in the competition space. This will certainly make it a lot easier for the ACCC to prosecute cases of misuse of market power. I gave some examples where the ACCC has stepped out and why an effects test in section 46 will make it easier, but it isn't a silver bullet. It's not necessarily going to stop a new supermarket opening in their area. It's not necessarily going to stop aggressive price discounting. But it will make life a lot easier.

But it's not just a supermarket duopoly. It's big business everywhere that should be worried about an effects test being introduced if they are conducting anticompetitive behaviour. That's what we want. We want the right tools in the toolbox for Mr Sims at the ACCC to be able to conduct his job in the most efficient and effective manner possible.

My example that I would like to talk about today in the few minutes I have left is King Island off Western—off North West Tasmania. It kind of is of Western Australia, in a way—I don't think I can spin my way out of that one too easily. I went to King Island and the farmers there used to have an abattoir and they used to have their own brand: King Island Beef. It was arguably the best brand in the country.

JBS—a big, aggressive company, which Senator Heffernan had lots to say about when he was in this place—came in, bought the abattoir and shut it down. What then happened to the farmers was that they didn't have their own abattoir so they had to put their cattle on boats, which was terrible for the cattle. It was not only cruel for the cattle but it also affected the quality, the MSA, of their beef. The farmers have essentially now lost their brand and have to sell their cattle to other producers on mainland Tasmania.

I went over there and I thought: 'That's a bit unfair. Why don't we see if we can buy this land off JBS?' They had an entire abattoir set up, including a $5 million facility paid for by the Australian taxpayer for treating effluent to allow the abattoir to keep going and to modernise it. They refused to sell the abattoir or any of the equipment or the land to the farmers who wanted to buy it back and control their own destiny.

I was interested because I not only wanted to help these small businesses and these farmers but I also didn't want to see the cattle to be put on these boats in one of the roughest stretches of water in the world. I wrote to the ACCC and they wrote back to me and said, 'Unfortunately, unless you can prove intent, unless you can prove that JBS bought that abattoir to shut it down to consolidate their market power in the cattle market, you've got no chance. So, no, we're not going to investigate it.' Guess what? Unfortunately, this legislation is not retrospective, but I reckon, under these laws now, we could mount a pretty good case that that company did have a marked effect on the profitability of those farmers on King Island. That's a real example of where I have participated in this debate and tried to work with stakeholders—local farmers and small businesses—to help them out.

The way competition law is now under section 46 makes it next to impossible to succeed. That is something we can fix. We can fix this today. We can make life easier for the ACCC. We can make really clear-cut cases of anticompetitive behaviour. We can cut them out, and we can stand up for small business and small farmers. It's not often we get to see legislation where we can actually make a difference. I will argue here today—and strongly urge senators to look at this piece of legislation—that it's not a silver bullet. Farmers shouldn't be relying on this to solve all their problems, nor should small business, but it does go a long way to improving competition policy. Please don't let politics and the power ruin this chance to actually fix this.

Let's go back to my quote on the power and the passion in this place. I would argue that the Labor Party only putting up one speaker on this bill, this really important piece of competition legislation, suggests that there is no passion in the Labor Party for this piece of legislation; no passion for opposing it and no passion for supporting it. I was really surprised that Labor only put up one speaker here today. I sense that they would like this to pass quickly and that they would like it to go away. And that's a real shame, because this is something my party has campaigned on for nearly five years. It's a rare opportunity to help fix the competitive landscape in this country. It's a rare opportunity to stand up for small business and farmers in this country and say: 'We did our bit. We'll continue to work with you on what else needs to be fixed.' This is an opportunity to support the ACCC chairman and CEO. Get out there—help Rod Sims prosecute the case against what we know is anticompetitive behaviour, misuse of market power and market concentration solely to underwrite the fat margins of big business at the expense of farmers and small business in this country. Let's pass this legislation.

Senator Di Natale interjecting—