Misuse of Market Power - Terri Butler MP, Labor for Griffith

Creating an effects test won't deliver for small business.

"When we heard the 'jobs and growth' slogan during the last federal election, who knew ... that what the Prime Minister was really talking about was jobs for lawyers and growth in litigation? That is what the Competition and Consumer Amendment (Misuse of Market Power) Bill 2016 delivers."

Read my speech below.

Ms BUTLER (Griffith) (18:18):  When we heard the 'jobs and growth' slogan during the last federal election, who knew the real meaning of it? Who knew that what the Prime Minister was really talking about was jobs for lawyers and growth in litigation? That is what the Competition and Consumer Amendment (Misuse of Market Power) Bill 2016 delivers. I guess in that strange, perverse way, this legislation is delivering on the jobs and growth slogan that the government repeated ad nauseam—almost to the point where people in Australia were ready to stick their fingers in their ears to avoid having to hear that phrase one more time—during the federal election. What have they actually delivered when it comes to jobs and growth? Not very much. Underemployment is at record levels. We have been keeping records since 1978, and underemployment is at record levels for that period, with 1.1 million Australians who cannot get enough work. This bill will not do anything for those Australians and nor will it do anything for those Australians who are presently on the unemployment line—about 750,000 of them.

Nor will it do anything for growth; in fact, if anything, it is at risk of putting a handbrake on growth, because of course growth will depend on increases in productivity and increases in innovation, both in big and small firms. If you are looking over your shoulder every time you are thinking about an innovation, it makes it much harder to innovate. If you are looking over your shoulder wondering whether a regulator or an individual is going to bring proceedings against you, because the effect of the innovation making your firm better able to compete against its competitors could possibly be to substantially lessen competition by making it harder for others to compete against you—in other words, if your innovation is going to make your firm amazing and leave other firms being just average—if you are worried about whether or not that is going to get you sued, then of course that is going to be something that will make you think twice before deciding whether to invest in that innovation and before deciding whether to pursue that innovation. A test that focuses on the effect of conduct rather than the intention behind it has every risk of putting people in a position where, through no malicious intent, through no attempt to try to crush their competitors—other than through the ordinary ways in which everybody wants to make a profit and make their own firm the best it can be—through no malice at all, they have to be worried about the unintended effect of substantially lessening competition in a market.

I should say that I have a lot of sympathy for people who are concerned about whether the purpose test is adequate. I understand the difficulties that people have in proving the purpose or intention of someone else in legal proceedings. I certainly do not dismiss those concerns whatsoever. I understand that when you are trying to prove that somebody else had an intention to substantially lessen competition, if that was the purpose of their conduct, that can be a very difficult thing for regulators or private litigants to have to prove, and I certainly do not think that anybody would claim that the current legislation is perfect. For that reason, I certainly understand the concerns of the Council of Small Businesses and, particularly, of Peter Strong, who is the CEO of the Council of Small Businesses. He is a remarkable advocate for small business in this country and he is just tireless; he works very hard and he is always persuasive.

I certainly understand the concern that he and his members have in relation to the difficulties facing small business. They are seeking to make sure that anti-competitive behaviour is not engaged in by others to their detriment. But that does not mean we should supplement a purpose based test with a test like the one being proposed now by the coalition government. It will put a handbrake on innovation, a handbrake on productivity improvements and, very possibly, a handbrake on growth.

Instead, we should be making it easier for small businesses to be empowered and making life easier for small businesses. Quite clearly, the bipartisan view in this place is to make life easier for small business. For example, it is why Labor have been so clear that we are committed to tax cuts for small businesses. It is why Wayne Swan introduced the instant asset write-off provisions for small businesses that, unfortunately, the government decided to scrap when they came to office. When they finally—and quite rightly—reinstated the instant asset write-off, it was a tacit admission of the foolhardiness of the decision to scrap it in the first place. But I think there is, by and large, a very clear bipartisanship in relation to making life easier for small business.

Most people in this place will have worked in small business, will have been proprietors of small business or will have had connection with small business. For example, my mum started her own small business when I was still at school. I still remember what it was like after school—going down to the new shop, getting it painted and getting the signage organised. It was a family effort. My father was working at the post office at the time, so he fitted in getting the business up and running around his paid employment. It was a really exciting time for our family, and it was building on a family tradition of small business. My grandparents had opened a newsagent and had then gone on to open a really successful plan-printing business. My mum's sister—my aunt—and her husband started a refrigeration business. My other aunt—mum's other sister—started a business in body corporate management much later on. Our family is very much a small-business family. So I really understand some of the challenges for small business—how hard it can be and how difficult it can be to understand, or just to get the time to think about, all of the different things you have to do. There are all of the challenges—marketing and making sure your employees are doing what they should be doing, while at the same time making sure you comply with legislation, pay the tax on time and all of those things.

I certainly do not stand here in any way dismissing or rejecting the concerns that small business have about the possibility of big players misusing market power in order to substantially lessen competition. But that does not necessitate the conclusion that we should introduce an additional layer of complexity. People have called it red tape, but it is really an additional layer of complexity in our competition laws that will create a whole new set of jurisprudence that is foreign to Australian jurisprudence. It will also create a new level of risk aversion in Australian business, with people being very concerned about the unintended but potentially very real effects of decisions that they make.

As a Labor person, I want to see greater competition. I think that the effects test idea has the real risk of actually lessening competition, of making it less likely that firms will take innovative steps and seek to improve their productivity because of the possible risk of inadvertently running foul of these laws. I also want to see innovation. Labor took to the federal election a comprehensive suite of strong innovation policies aimed at fostering the start-up sector, the start-up ecosystem, in this country. We took to the election our policies for tax relief for angel and early-stage investment, for promoting venture capital in this country and for making sure that people could get the talent they needed by reforming immigration laws and visas and by making sure that all of the start-ups in this country had a real voice and real opportunities to grow, to scale up and to become global. That was the passion behind the innovation policy that Labor took to the federal election. It is something that I am very concerned about too. We want to see a strongly innovative nation, not just in the high-growth start-up sector and in tech firms but also in big firms that want to innovate, that want to make their processes better and that want to do better.

A really good example comes to mind. I had the benefit of chatting to someone from Swisse, who have been doing a lot of work in advanced manufacturing in Australia because of the quality and the reputation that we have as Australians. As a consequence of their innovation and high-quality standards, they are able to create real jobs here in Australia because of the exporting that they are doing now—to China, in particular. I do not want big firms like that having to worry about whether the steps they are taking to scale up their enterprises—even very big enterprises scaling up beyond our borders and becoming global firms—will inadvertently breach Australia's competition laws if the effect of their becoming better is to substantially lessen competition in the market. I certainly do not want high-growth start-ups, in the context of thinking about scaling up, having to worry about whether they might inadvertently breach an effects test.

As I was saying a little earlier, those sorts of highly innovative firms are the firms we are going to be turning to really innovate and find ways for Australian businesses to become more productive. That is the last thing we should be doing right now, at a time when, globally, economists are saying, 'Where is productivity going to come from?' We are in a low-growth world. The recovery from the global financial crisis has been slower than people predicted at the time. We are looking around for sources of innovation and productivity improvement. The last thing we should be doing is implementing any sort of legislation that might put a handbrake on innovation, that might put a handbrake on productivity improvements. It is not just Australia; the whole developed world is finding it really difficult to see where additional productivity improvements and economic growth are going to come from.

In the face of that challenge, we as a parliament should be working together to think about what we can do to set the right conditions so that firms can innovate. There are all manner of things that we should be talking about rather than this effects test.

For example, one of the committees of the parliament heard recently from representatives of the creative arts and the creative industries about the importance of injecting creativity into our national economic debate, in relation to both supporting existing firms and to partnering with universities, start-ups, incubators and accelerators to make sure that the nation's creative talents are being harnessed and tapped, with a view to improving the benefits that we get from blending creativity with, for example, technological skills or business skills. That would be a much better use of the parliament's time than debating the effects test.

Similarly, we are about to hear, over the coming months, about where the start-up sector is in this country—where the ecosystem is. There have been calls for things like, for example, copyright reform. There are some really thorny, difficult issues in relation to copyright reform that would benefit from further debate, discussion and elucidation in this place. That would actually contribute, or could have the potential to contribute, to innovation and productivity to a much greater extent than this potentially harmful legislation we are talking about here today.

We should also be not just considering how we get more productivity enhancements and how we increase innovation in our economy but also thinking about the impact on our economy of legislation that could potentially have an impact on consumption. One of the key criticisms that Labor has made of this bill is that could potentially put up consumer prices, especially for everyday consumer goods. Labor has been very concerned that an unintended consequence of this bill—although it was perhaps anticipated, given the Deputy Prime Minister's comments about the price of milk that the member for Moreton talked about previously—would be to push up consumer prices. Because, when we talk about competition policy, the whole purpose of making sure that we have a good, strong competition policy—or at least the Labor purpose, and you will remember that it was really Labor that drove the early days of competition policy in this country—is to favour the interests of consumers. So if this bill was to put up consumer prices, particularly for everyday goods, that would be an adverse outcome of the legislation for consumers. But it would also, unfortunately, have the effect that they might be a bit less likely to consume, or they might consume a little bit less, and that is the last thing that we want to be promoting at this point.

I mentioned the Deputy Prime Minister before. I really think that this bill is a great example, if one were to be needed, of just how beholden this government is to the National Party economic agenda. This bill suggests that it is the Deputy Prime Minister who is running the economic policy for the government, not, for example, the Prime Minister or the Treasurer. This is very much a measure that is pursued by the National Party. It is something that the Prime Minister himself has not supported in the past. It is something that almost every major review into competition law has opposed in the past. The government might want to reflect on the success or otherwise of having the National Party driving the agenda for this government; it certainly has not worked out well for them in other areas. If you let the Deputy Prime Minister run the show then you end up moving probably every government agency to his electorate, with each move having a benefit-cost ratio of less than one. You would end up having someone who cannot work out the difference between regional Victoria and inner-city Brisbane running the economic policy. I am not sure how well that would go for the nation. I do not think that turning to the Deputy Prime Minister for your economic policy is the right way to go. (Time expired)

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