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Wednesday, 11 February 2009
Page: 918


Mr KATTER (1:00 PM) —I rise to speak on the Trade Practices Amendment (Cartel Conduct and Other Measures) Bill 2008. It never ceases to amaze me how facile and superficial the approach in this place is on issue after issue. There is no depth of understanding. There is no effort made to even come remotely close to the situation that exists. People have been watching too much television. They want to run around all the time and find some bloke with his hands in the cookie jar. That is not the way it works. The way it works is that, if you own 85 per cent of the marketplace, you can do what you like. There is a lovely name for it. It is not called ‘collusion’; it is called ‘conscious parallelism’. If Woolworths know that Coles are charging 293c a dozen for eggs, they would be bloody mugs if they charged 291c a dozen for eggs, because that might just touch off a bit of a price war, mightn’t it?

One of my relatives owned a very big supermarket, and he said: ‘They never compete against us on price, but their lady comes down every morning and checks out our prices. She just walks in with a notebook and jots down all our prices. So long as we are not being naughty, if they want a price war, of course they’ll blow us clean out of the water, but they don’t work that way; it doesn’t suit them to work that way. They know that in the end we will go under and they will prosper.’ I do not like using people’s names without their permission, but in the particular town to which I am referring they did eventually go under and were bought out, luckily for them, by Coles. So now we have Woolworths, Coles and nobody else, whereas 15 years ago we had three locally owned supermarkets.

What this means in a town the size of, for example, my home town of Charters Towers is that when we wanted a professional rugby league player I took one block, another person took another block and a third person took another block, and we would come back with enough money to pay the salary for a rugby league player for that year, which was about $50,000. We would have no trouble in raising that. If we did that now in Charters Towers, we would not be able to raise $2,000. None of those businesses are left. They have all gone. The business all resides in the Woolworths and Coles that sit in Charters Towers.

Successive governments are responsible. I am not blaming the current government—they have only been there for 12 months—but the Labor government of Mr Keating have got plenty to answer for. He was the architect of economic rationalism. He was the architect, founder and father of it all. Let us have a quick look at his handiwork—and, I must say, the last government continued his work magnificently well. The story starts in 1991, when Woolworths and Coles had 50.5 per cent of the Australian market. That is all they had. At that point in time they were not powerful enough to take the government on. We can say that it will be a pretty courageous government that will take them on now.

There are four faces up on Mount Rushmore. There are George Washington, Thomas Jefferson and Abraham Lincoln, of course. But the fourth one was not one of the founding fathers, nor did he abolish slavery and keep together the United States. No. What was he up there for? I will tell you what he was up there for: because he took on Rockefeller. He blasted Standard Oil of New Jersey into 23 separate companies. The man had most extraordinary courage, tenacity and belief in morality. He had made his name as a crime fighter in New York. He was Theodore Roosevelt. Amongst his many other attributes, he was one of the few people in history to stand up to the big corporations.


Mr Champion —He was a trust buster.


Mr KATTER —It was called trust-busting legislation, and it broke Standard Oil of New Jersey up into 23 companies. Fifteen of those companies were still amongst the top 20 companies in the world in size; that will give you some idea of the dominance.

But in Australia this place had an inquiry. The ALP were on that inquiry; it was obviously dominated by the Liberal Party, who were in government then. The Democrats and, of course, the National Party were on that inquiry. Do you know what the inquiry came up with? It was that there was a bit of a problem. I do not think anyone will question what I am saying here. Fair market or market failure? is the name of the report, often referred to as the Baird report. It says, ‘There is a bit of a problem here and we can address it by doing certain things.’ Most of them involved hitting Woolworths and Coles over the wrists with a piece of wet lettuce. They were laughable.

They cannot be excused, because that very interesting document lays out the situation in other countries. I have just come in from the floods, so I have not had time to refresh my memory on this, but, if my memory serves me correctly, the nearest country to us in centrality and concentration of ownership was the United Kingdom. Three companies there had 25 per cent of the market. At the time this report was released, two companies had 68 per cent of the market in Australia. In no other country did the big two have even 15 per cent of the market, even in America, with Wal-Mart. So there was no excuse for those people. Their names will be remembered in the history of this nation with contempt, and so will the names of every person who served in this parliament then. Unfortunately, one of them happened to be me, but at least I will go down on the record as saying that this is wrong. There is no small business left in this country. They want everything. They have taken the florists. They have taken the butchers’ shops. They are after the newsagencies, and they have half got the newsagencies. They are after the chemists’ shops. There is nothing left. There is no room for anybody else in this society.

We have the hypocrisy of the people sitting on the opposition benches, coming in here over the last 12 years and preaching about how they look after small business. They presided over the death of small business in this country. Much worse still—and the chickens are coming home to roost now—they presided over the death of the farmers in this country. Whilst we can say that the supreme architect of all of this was Mr Keating, Mr Costello was his child—in every philosophical sense of the word—and it would be a disgrace if he were brought back into this place with his reputation.

But let me be very, very specific. In 1992, before the deregulation of the egg industry, consumers paid 185c a dozen for eggs. By 2002, the price had risen to 293c a dozen. Does that speak of a free market system? I do not think so. Whilst the price for consumers had gone up nearly 100 per cent, the price to the farmers did not go up at all—it actually went down. There are those in this place who would say, ‘CPI rose in that period.’ Well, it did not rise for the poor farmers; it went down for them. So the people in the middle—and I am not saying that Woolworths and Coles got all of it—picked up an extra $300 million a year. People ask, ‘Where’s all this coming from?’ And I say, ‘Follow the money trail; that will tell you where it came from.’

They deregulated sugar. They deregulated us. In 1994-96, before the deregulation, consumers paid $201 a tonne. After deregulation, consumers paid $232 a tonne in 2001-02. By the way, these are average figures and I am not cherry-picking dates. These are average figures for a two- or three-year period. Did the price to the farmers go up 20 per cent? No, it dropped from $498 a tonne down to $279 a tonne. So the price to the farmers dropped in half, and another $350 million a year was picked up by Mr Piggy-in-the-Middle—and ‘piggy’ is probably the right word to use.

Now let me come to milk. The last speaker praised Mr Samuel. Well, well, well, praise for Mr Samuel. There would not be a small business man or a farmer in this country who would not spit on Mr Samuel. If I use strong language, I always say that the good Lord took to the moneychangers in the temple with a stick. These would make the moneychangers in the temple look like kindergarten teachers. But I will come back to milk. Prior to deregulation, the farmers got 53c a litre in New South Wales and Queensland. In Victoria, it happened over a longer period of time; it was a much more complex happening—and it was worse in Western Australia. So for New South Wales and Queensland—which is more than half of the Australian market—the price to the farmers dropped from 53c a litre down to 34c a litre. One of the reasons that the honourable member sitting beside me here secured 65 per cent of the votes is that he had the guts to stand up and say, ‘Mr National Party, you have betrayed us and you have betrayed my industry and my people.’ Whilst the price to the farmer dropped from 53c down to 34c, at the same time the price to the consumer rose 41c—from 115.5c a litre to 156.5c a litre. In the dairy industry, that was a figure of over $1,000 million a year.

So piggy-in-the-middle, with the great deregulation that was going to help the consumers of Australia, picked up nearly $2,000 million a year. I cannot remember what the CEO got as a bonus, because the shares went up as they were making all this extra money. There is not a decent person in this country whose nostrils are not violated by the smell that comes from what is taking place here. And we have this piece of rubbish that we are dealing with here today. If you think that you are going to find anyone with a smoking gun, good luck to you, son, but I am sure it will not be Mr ACCC Samuel that will be looking for any smoking gun. He will be out there putting the smoke up so we cannot find the gun.

In fairness to the new government, one of the first things the Prime Minister did was take them on. It was pretty courageous—he took them on before the election. I want to praise him for that. It is the first time that I have heard anyone in this place take a stick to Woolworths and Coles. They took a big stick back to him—and good on him for standing his ground. We had an inquiry but, unfortunately, it was carried out by the ACCC. What a joke! A staffer of mine and I spent a week of our lives preparing, but I knew—in fact, I put out a press release about it—it was an absolute waste of time. What a farce it was! Mr Samuel came out and told us that there was no problem with the milk deregulation. I have just given you the figures—$1,000 million a year of extra profit went into the pockets of two or three people. And he says that there is no problem! But that is a story for another day.

When the report came out and said there was no problem, I went down to the local supermarket. The nearest one to us here at Parliament House is a Coles supermarket, and the price for eggs was $4.85 a dozen. The farmer got $1.40. I have been into egg plants. It does not cost a lot of money to transport and sell eggs. They are put in a little box and then put on the shelf. There is no cost there in transportation and storage, but there is a mark-up of about 300 per cent. We worked in clothing, and sometimes my aunty, who I love very much, would put the price up 70 per cent. I would say, ‘When daddy comes home he will not be pleased!’ But she would say, ‘Oh, Bobby—these are fashion goods.’ We would argue and fight about a 70 per cent mark-up. But the mark-up in the supermarket was not on fashionable clothing. This was a mark-up on foodstuffs—of 270 per cent! That is nearly a 300 per cent mark-up—and we are sitting here talking about ‘finding a smoking gun’. There is a nuclear explosion taking place out there; you do not need to go looking for a smoking gun. So, on eggs, there is nearly a 300 per cent difference. On potatoes, the farmers get 62c and the potatoes sell for $2.46. That is 400 per cent higher, so, again, a 300 per cent margin.

Here I must pay tribute to the Sunrise program and David Koch because he interviewed me, with all these figures, and then he interviewed Mr Samuel. Mr Samuel said, ‘You don’t understand that it is a very costly transfer from the farm gate to the shelves,’ and Kochie focused the camera on a bunch of potatoes! I mean, how much does it cost to take a bunch of potatoes—a lot of them grown only a couple of hundred kilometres from Sydney—down to Sydney and put them on the shelves? Potatoes do not go bad; they are not a perishable commodity. But, for anyone who watched it, the Australian people owe a great debt of gratitude to Mr Koch and the program because you could not have watched it without laughing. Mr Samuel just seemed to keep making a bigger and bigger fool of himself. He kept saying, ‘I am not a spokesman for Woolworths and Coles, you know.’ And, every time he said it, Shakespeare’s words seemed to leap out on the screen: methinks he protests too much!

With sugar, the farmers and the processors combined get 39c—about 32c goes to the farmers and about 7c to the processors—yet the price on the shelves is $1.35. Need I tell you that is a 300 per cent mark-up? With milk, it is 65c—51c to the farmer and about 5c for packaging—and the price on the shelves is $1.99. Again, that is 300 per cent higher.

In the fashion trade, in clothing stores, there is a reason for such a mark-up: after a year you have to get everything off the shelves because it is all out of fashion. But 40 or 50 per cent were the sorts of margins that we were working with, so one nearly dies of shock when one comes to the margins that one finds here. One just has to recoil in shock.

I did not cherry-pick those items. I also had bread and steak. If you think about it, they are six commodities that every Australian would buy. They are also the major items in the basket of goods which is the CPI. There are 24 items in the CPI; those are the six major ones. I could not get the figures on the beef and bread, for reasons I will not bore the House with—it is much too complicated. But this is very interesting: three of those items are under statutory marketing arrangements or ‘orderly marketing’, if you like. ‘Orderly’ is a good word for it because in North Queensland, where a million Australians live, we send half of our milk down to Brisbane and half the milk that we consume is brought up from Brisbane! If that is not madness, I do not know what is. But that is the way that it is. So three of those items were under orderly statutory marketing arrangements. When they were under orderly marketing arrangements, the mark-up was not between 200 per cent and 300 per cent; the mark-up averaged 80 per cent. When people sat down and said, ‘What is a fair thing for the retailer to charge?’— (Time expired)