Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

I seek leave to table an explanatory memorandum relating to the bill.

Leave granted.

I table an explanatory memorandum. I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

The Greens Competition and Consumer Amendment (Make Price Gouging Illegal) Bill 2024 amends section 46 of the Competition and Consumer Act 2010 (the Competition Act) to prohibit a corporation with substantial market power from abusing that power by charging an excessive price for a good or service, otherwise known as price gouging.

The Bill is based on recommendation 1.5 of the February 2024 Australian Council of Trade Unions (ACTU) Inquiry into Price Gouging led by former Australian Competition and Consumer Commission (ACCC) Chair Professor Allan Fels, and recommendation 2 of the May 2024 Senate Select Committee on Supermarket Prices, initiated by the Greens and chaired by Senator Nick McKim. Both reports recommended amending Section 46 of the Competition Act to make it illegal to charge excessive prices in terms similar to the European Union provisions.

Under the Bill, the ACCC will be able to apply to the Court for an order where it believes a corporation has abused its market power by price gouging. If a corporation is found to have illegally price gouged, the Court can then impose orders under section 76 of the Competition Act, which include a maximum civil penalty of $50 million.

Under section 87B of the Competition Act, the ACCC can also require enforceable undertakings by a corporation. The undertakings the ACCC may impose are sufficiently broad to allow the ACCC to require a corporation to lower the price of a product to the price it would cost if it was sold in a competitive market, for a specified period of time while guaranteeing supply of the product.

In effect, this means corporations that engage in illegal price gouging are not only liable for a significant civil penalty, but the ACCC and the courts can intervene to lower the price of a product, directly supporting people and communities who rely on that product.

To determine whether a price is excessive, the Bill requires the Court to consider the price of the product if the corporation did not have substantial market power.

The definition of an excessive price is deliberately kept broad to provide the courts the discretion to determine whether price gouging has occurred based on the circumstances of the case, noting that different industries will have different thresholds for what is considered an excessive price.

However, it is recommended that in making a determination, the courts consider:

The Bill also exempts small businesses, defined as a corporation or body corporate with less than $10 million annual turnover. It is unlikely a small business would meet the threshold for substantial market power under the Bill. However, as a precaution, small businesses have been made exempt from the contravention, as the aim of this Bill is to stop massive corporations from price gouging, not target small businesses.

This Bill responds to the urgent need to rein in corporate price gouging and profiteering to bring down the cost of goods and services across the economy.

Australia's economy is getting much less competitive as top firms hold a high and growing share of market power. Lack of competition allows corporations to take advantage of their dominant market power to hike prices above what would be required to meet increases in their input costs. Corporations are incentivised to price gouge as it boosts profits and the pay and bonuses of their executives. Yet price gouging drives up the cost of essential products, inflicting pain on everyday people and worsening inflation.

Reserve Bank Governor, Michelle Bullock, and economists across the world, including at the OECD, the IMF, the European Central Bank, the Bank of England, the Federal Reserve, and former ACCC Chair Professor Allan Fels, agree that some corporations are taking advantage of their market power and using the cover of inflation to push up prices.

Since the Labor Government came to power in 2022, the cost of food is up by 10.5%, rents have gone up by 31% and the average mortgage payment has gone up by $1,667 a month. Power bills, insurance costs and medical bills have all increased significantly. While costs of essentials have soared, wages have not kept up, making it even harder for millions of people to make ends meet.

Meanwhile, the country's biggest corporations are raking in massive profits off the back of the community's pain. Australia's biggest energy retailer, Origin, reported an almost one third jump in profit to $1.2 billion in the 2023-24 Financial Year. Supermarket giant, Coles, reported an 8% jump in profit to $1.1 billion. The country's biggest insurer, Insurance Australia Group, posted a $900 million profit, up 8% on the year before, off the back of rising premiums. While people's rents and mortgage repayments have skyrocketed, Commonwealth Bank raked in a whopping $9.48 billion profit.

The dollars extracted from price gouging consumers flow to corporate CEOs too. Recent analysis by the Australian Council of Superannuation Investors shows chief executives of Australia's largest corporations take home on average 50 times the pay of a typical worker. In the early 1990's, top bosses earned about 17 times average earnings. We know from the Senate Select Committee on Supermarket Prices that Woolworths CEO, Brad Banducci, received $8.65 million in 2023, around 127 times the full-time pay of a Woolies shop-floor worker.

The share of income going to big corporations has never been higher while the wages share of total income hasn't been this low since 1964. Wherever you look, massive corporations and their CEOs are profiteering from people's pain and making the cost-of-living crisis worse.

This has to end, which is exactly why the Greens have introduced a Bill to make price gouging illegal.

Banning price gouging should not be radical or controversial. The UK has banned price gouging since 1998. Canada amended its competition law late last year to specifically prohibit price gouging. The European Union has banned price gouging since 1958 through the Treaty on the Functioning of the European Union. Several states in the US prohibit price gouging during emergencies, and Vice-President, Kamala Harris has promised, if elected, to enact a federal law against supermarket price gouging.

Many jurisdictions have successfully used the price gouging provisions in their competition toolkit to crack down on corporate price gouging and protect people from unfair prices. For example, in 2020, the European Commission analysed the accounts of pharmaceutical giant, Aspen, and found Aspen had used its market dominance to impose an unjustified price increase of up to several hundred per cent on critical cancer medicines. The Commission ordered Aspen to reduce the net price of the cancer medicines by 73% for ten years, with guaranteed supply for 5 years. Italy's national competition authority also fined Aspen $5 million euros for abusing its market power by charging excessive prices.

Yet here in Australia, the Albanese Labor Government and the Liberals won't even admit corporations are price gouging, let alone do anything to stop them.

The ACTU Inquiry into Price Gouging led by Professor Allan Fels recommended amending section 46 of the Competition Act to make it illegal to charge excessive prices in terms similar to the European Union provisions.

The report states:

Despite the fact that the greatest concern of economists with monopoly or market power is harmful high prices, high and unfair prices are not prohibited by competition law [in Australia]. There has been an ideologically-driven resistance to competition law addressing this feature of monopoly behaviour in Australia and in North America.

It is clear there is a massive gap in Australia's competition law which allows corporations with market dominance to price gouge—unchecked. As long as the Labor and Liberal parties accept millions of dollars in political donations from their corporate mates each year, they will continue to put the interests of massive corporations ahead of everyday people and communities.

The Senate Select Committee on Supermarket Prices also recommended amending the Competition Act to prohibit the charging of excess prices.

The evidence in support of this Bill could not be clearer.

We urge the Albanese Labor Government and the Coalition to support this Bill as a critical part of the toolkit to crack down on corporations using their market power to gouge prices while raking in billions of dollars in profits.

I commend this Bill to the Senate.

I seek leave to continue my remarks later.

Leave granted; debate adjourned.