Senator CHERRY (2:57 PM) —My question is to the Minister representing the Treasurer, Senator Minchin. Does the minister believe it is appropriate for the National Competition Council to fine Queensland, New South Wales, Western Australia and South Australia $27 million for failing to deregulate liquor retailing? Wouldn't further deregulation allow the retail giants to dominate the liquor retailing industry in much the same way as they have with food retailing? Will the government allow the NCC to continue to push for deregulation of pharmacy ownership as well and support further supermarket dominance? Does the minister agree with the New South Wales Treasurer, Mr Michael Egan, that the National Competition Council has `basically done its job' and should be shut down? Does the minister acknowledge that 10 years of the national competition policy has seen the destruction of large numbers of independent butchers, greengrocers and supermarkets, and now threatens liquor, petrol and pharmacy small businesses as well?

Senator MINCHIN (Minister for Finance and Administration) —I thank the Democrat leader for his question.

Senator Sherry —Leader?

Senator MINCHIN —Sorry—Senator Cherry. My apologies; I did not realise where the question had come from. I am pleased to promote you to the position.

Senator Faulkner —Is that the latest deal you've done?

The PRESIDENT —Thank you, Senator Faulkner. Order! The Senate will come to order.

Senator MINCHIN —I would remind the Senate that the current competition policy arrangements were put in place by the Keating Labor government, with the support of the states. That was something we supported. Indeed, the great and extraordinary economic success of this country over the last eight years can in part be attributed to national competition policy, which has made this country much more competitive—much more able to compete internationally and much more competitive domestically, which has helped increase real wages, keep prices down and put Australians into jobs. It has been very good for the economy overall.

The original agreement has reached its use-by date. That is why we have referred the matter to the Productivity Commission. The Productivity Commission is fully examining it and will report to the government on future arrangements that it recommends for national competition policy in this country. Whether or not there will be an NCC under any future arrangements remains to be seen. It will be a function of what the Productivity Commission puts back to the government and the government's response to that. We think that is a healthy process. What the New South Wales government have put in the ring is their submission to the Productivity Commission for this review, commissioned by the government, of national competition arrangements.

One of the furphies, of course, is the proposition that states are penalised. That was never the proposition put by the Keating government. What in fact occurs is that states receive bonus payments from the federal government when they undertake measures that are in accord with national competition arrangements. If they choose not to take those measures then they do not receive the bonus payments. It is quite wrong for them to be characterised as penalties. As the Keating Labor government quite properly put in place—and as the Labor Party well understands, and as I hope the Democrats would understand—it is a question of whether the states receive bonus payments for undertaking action consistent with the original agreement between the Commonwealth and the states. We welcome the Productivity Commission inquiry into this matter. We welcome the submissions made by the states. We look forward to the report.

Senator CHERRY —Mr President, I ask a supplementary question. I am interested in the minister's view that these penalties are not in fact penalties. I notice that my state of Queensland will have a penalty of $7.3 million this year, and potentially $51 million next year, for failing to deregulate industries. Isn't it the case that deregulation of industries and ownership, particularly of pharmacies and liquor stores, will result in more market dominance by the two major retail chains? Isn't it the case that in the longer run that will result in less competition? What work is the government doing to ensure that the longer term effects of concentration of ownership are in fact taken into account in competition policy?

Senator MINCHIN (Minister for Finance and Administration) —I repeat that these are bonus payments which states can forgo if they choose not to deregulate in the way recommended by the NCC. It is entirely a matter for the sovereign states to decide whether or not they want to deregulate or change the laws according to the recommendations made by the NCC. If they choose not to, which is their right, then they do not receive the bonus payments. On the other matters, Australia does have a very robust competition framework through the Trade Practices Act, which ensures fair competition and that consumer interests are protected by ensuring competition that produces fair outcomes for consumers.

Senator Hill —Mr President, I ask that further questions be placed on the Notice Paper.