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Monday, 30 August 1999
Page: 7941

Senator BOSWELL (4:27 PM) —I would like to agree with Senator Murray regarding the leaking of the document today. I think it was not just a leak; it was a flood. It resulted in just about every recommendation being brought out. This is a report that has put the major retailers under the spotlight. The committee has scrutinised their behaviour. Whilst their behaviour at the top level is guarded by the CEOs, the committee found that practices at a lower level in the organisations were not entirely up to scratch.

So the committee's focusing on the major chains has been helpful. Mr Reitzer, CEO of Davids, was reported as saying, `There has been a change of attitude among the majors already'—and that was about halfway through the inquiry. There is a problem with the independent small business sector. They are getting hit from both ways. They are losing market share and their critical mass is being eroded to the point where they have some serious problems. Those small business sector representatives asked me to get a committee of inquiry up. I took this recommendation to the government and they agreed to it.

Through the inquiry the independents, through NARGA, have made a thorough and professional representation. (Extension of time granted) NARGA has pushed for the recommendation that:

. . . the retail share of the major chains be capped at 80 per cent, with a mandatory reduction to 75 per cent within five years, with each major controlling no more than 25 per cent of the total retail market.

The committee were presented with all the problems and we looked at a mandatory cap. We investigated it very thoroughly. The problems we came up with were that Woolworths stores would be reduced by a third and Coles stores reduced by 100. We faced many dilemmas with this. The main one was that if there was a cap it would have pressed down on and devalued the shares of the 340,000 Woolworths shareholders and, I think, more Coles shareholders. We would have been effectively depressing the prices of the shares of hundreds of thousands of small business people and share owners.

Professor Fels of the ACCC gave evidence as to how it would be hard to define and police a cap. We looked at the other OECD countries as part of our reference and took evidence from the US equivalent of the ACCC and we found that in no OECD country is there a market share cap. During the review it became clear—reinforced today—that the German company Aldi were to enter the Australian market and that Franklins had around 14 per cent of the market share and were expanding.

Senator Conroy —Another sell-out, Bos.

Senator BOSWELL —Your senators happen to agree with this finding, Senator Conroy, so don't sit there and be half-smart. Don't be smarmy. The unions came in here—

Senator Conroy —They came in for you, not for us.

Senator BOSWELL —No, the unions came in for the workers. If you want to defy the unions, get up and say so.

Senator Conroy —No, it's you. You are the ones who sold out, not us.

Senator BOSWELL —I find that absolutely offensive. If you want to get up and disagree with this report and take on the unions head-on, go and do it, but don't sit here and just have half-hits at us. Have a bit of guts, have a bit of courage, and stand up if you want to do that.

Senator Conroy —Courage in standing up coming from you, rollover, is pretty funny.

The ACTING DEPUTY PRESIDENT (Senator Knowles) —Senator Conroy, it would be helpful if you stopped interjecting, please.

Senator BOSWELL —We understand the need for there to be sufficient critical mass to support an independent sector. We were faced with a decision as to how a cap would work based on this wide range of evidence. In the end it was a very difficult decision. The committee gave great consideration to a broad range of NARGA recommendations and has come down with some strong recommendations to address the conduct complained of as we travelled around Australia. It was disturbing to hear of specific instances where the chains of major suppliers acted in predatory and unfair ways. We were presented with some very serious instances of the suffering of small business from the powerful position of the chains.

Increased competition is always an objective of free economies like Australia. Specific instances of undercutting a local competitor dollars below the price would not be sustainable on a statewide basis. That is the sort behaviour that we saw. In one town the majors were targeting they would, say, undercut a particular store but their statewide advertising was well and truly above that particular town. So it could be said that there was a form of predatory pricing there.

The inquiry found many areas in the retailing area that need to be addressed. Firstly, the ACCC should be able to bring representative actions on behalf of individual small business people with the award of damages. Presently uncompetitive conduct can be punished by a huge fine but without any compensation for the small business victim. The change to section 46 of the Trade Practices Act will allow the ACCC to take on representative actions. I think that is a very strong recommendation. So when there is obvious targeting of a particular store, as was the case in evidence given to the committee, that can be referred to the ACCC.

Small business do not have the long pockets to take on actions against Woolworths and Coles. Therefore, it has been very difficult to actually take some of these actions of predatory pricing or unconscionable conduct to court. But now the ACCC will be able to take action on behalf of the small business victims. Under our proposal the ACCC will fund and run the action with the possibility of damages being awarded to small business people. Similarly, we recommended that the limit for the other remedy of unconscionable conduct rise from a $1 million to a $3 million transaction level. Previously it was $1 million. That, I believe, was too small an amount.

The ACCC must also be advised of any acquisitions of an independent store and new store development, with the ACCC to consult with local authorities on the effects on local business. We were told, for example, in Bundaberg how the local council under their state planning laws could not stop further development of large shopping centres, despite detriment to existing small business. Creeping acquisitions posed a dilemma between the loss of critical mass for the independent wholesaler and the right to sell a business following, often, a lifetime's hard work.

The recommendation for a retail industry ombudsman will be the practical first point of call for small business people. The ombudsman will cover legitimate complaints outside the Trade Practices Act with a built-in procedure for resolving disputes quickly. The committee decided that the ombudsman should be funded by the government to achieve total fairness and objectivity and be nobody's real or perceived captive.

We have taken this parliamentary inquiry right across Australia, and we have seen many examples of what I believe is unconscionable conduct—predatory pricing. We have been to every state in Australia, and there were unquestionably problems for the retail sector. The problems have been addressed by this committee and we have gone as far as it is possible to redress the concerns. I know that the small business sector will be disappointed that a cap will not be applied, but I say again that the difficulty of doing so would have been very considerable. It was a parliamentary committee which received representations from all sectors of the community. (Time expired)

Question resolved in the affirmative.