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Thursday, 11 November 1976
Page: 2604

Mr HOWARD(Bennelong-Minister for

Business and Consumer Affairs) (2.20)- I move:

That the Bill be now read a second time.

This Bill is designed to give effect to the Government 's decision, which I announced in my statement on 16 September, to alter the operations of the Prices Justification Tribunal. In that statement I referred to the extensive consultations which had taken place with the trade union movement, business organisations and other sections of the community.

The changes contained in this Bill reflect the decision of the Government to retain the Prices Justification Tribunal but in a substantially modified form. The cumulative purpose of the changes is to bring about a very significant reduction in the number of companies which must notify the Tribunal of their price increases, with a view to the Tribunal's principal function being that of price surveillance rather than price approval.

Experience with the operations of the Tribunal over the last 3 years clearly shows that the bulk of the very large number of price notifications have been approved on the basis originally notified to the Tribunal. While this has shown that there is a high level of price responsibility on the part of Australian business, the need for companies to service the requirements of the Tribunal has been at a very significant cost to business generally. This Bill will significantly reduce these costs without affecting the capacity of the Tribunal to act in appropriate cases. In other words, the Tribunalwill have a greater capacity to use its resources to investigate those areas where there is evidence of price abuse. Thus, while the notification procedures and other key features of the legislation are retained, the obligation to notify price increases will apply only to companies in the over $30m turnover class and to those subsidiaries of prescribed companies which have annual turnovers above $5m. It will, however, remain within the discretion of the Tribunal, or as required by the Government, to inquire into and report on prices charged by companies irrespective of their turnover.

I estimate that the combined effect of these 2 changes alone will relieve about half of the companies presently notifying their prices to the Tribunal from the requirement to do so. The Tribunal has already taken action to exempt companies with annual turnovers between $20m and $30m, pending these amendments. The further exclusion of subsidiary companies with a turnover of less than$5m annually will remove a large group of firms which have little, if any, control over the markets in which they operate and which are caught up in the notification provisions solely by virtue of their relationship to a holding company.

The Bill contains a positive requirement that the Tribunal in dealing with notifications pay due regard to the need for companies to achieve levels of profitability sufficient to maintain adequate levels of investment and employment. As foreshadowed in my statement of 16 September the existing exemption provisions of the Act will be substantially broadened. Whilst the Tribunal will retain a discretion regarding the granting of exemptions it will in terms of the amendments now before the House be required to address its mind to certain specific matters in the process of determining whether or not an exemption should be granted to a company normally required to notify price increases.

The specific criteria to be inserted into the Act are not meant to be exhaustive of the matters to be considered by the Tribunal in deciding upon exemptions but to indicate the view of the Government that some legislative indication is required of the type of matters which should be taken into account by the Tribunal with respect to exemptions. Therefore the Bill provides that in exercising its discretion regarding exemptions the Tribunal should at least consider the following: Firstly, whether or not the company or companies concerned are in a position substantially to control a market for goods and services; and, secondly, the reasonableness of the pricing behaviour of a company or companies over a period of time.

In respect of the first of these elements the Bill in effect copies the monopoly provision of the trade practices legislation. This will promote a greater consistency of approach between the deliberations of the Tribunal and the Trade Practices Commission regarding the nature and structure of markets. In addition, the amendments specifically allow exemptions to be granted in respect of the whole or any part of the range of goods and /or services produced or provided by a company.

The Government intends that the effect of the new exemption procedures will be to significantly increase the ability of companies normally required to notify price increases to obtain exemptions. The Government expects that in most cases exemptions will not be subject to reporting conditions. Exemptions will only be revoked if the Tribunal is satisfied that the clr.o " .cumstances by reason of which the exemption was granted no longer exist, or that there has been a material change in those circumstances. Revocation of an exemption will be subject to the company receiving not less than 14 days notice. The thrust of these changes is to ensure that exemptions are of real benefit to companies in that they do not have associated with them the onerous reporting conditions attaching to the notification procedures.

Experience with the appointment of Associate Commissioners to the Industries Assistance Commission indicates that there will be considerable advantage in having associate members of the Prices Justification Tribunal. Associate members will be appointed for either extended periods or for specific inquiries and will allow for the appointment of persons- including experienced representatives of the trade union movement as well as experienced businessmen- having expertise in a particular area to serve on the Tribunal as occasion arises.

I turn now to a number of other provisions that are of lesser policy significance. Some of these will assist in the better functioning of the Tribunal. Other changes incorporate machinery and formal amendments to the Act. The Act provides that where a company does not implement an approved price increase within 30 days, it must re-notify the Tribunal should it wish to apply the increase at a later time. This time limitation has the effect of forcing up prices unnecessarily quickly and imposing re-notification costs on companies where price increases cannot be passed on within 30 days. The Bill extends this time limit to 90 days. Provision is made for the Tribunal to report each half year on the most significant increases in prices in each industry, and the principal reasons for these increases.

It has been decided that the Act should provide for only one Deputy Chairman. This will bring it into line with the Trade Practices Act which has provision for one Deputy Chairman and the Industries Assistance Commission Act which provides for a Commissioner to be appointed the Executive Commissioner to assist the Chairman in the performance of his duties and the exercise of his powers. Changes have also been made to the quorum provisions for meetings of the Tribunal to accommodate difficulties which have arisen in the past. Provision is also included for the Chairman to be an ex officio member of all divisions of the Tribunal, and for simplification of certain inquiry procedures.

The Government's view is that this Bill will alter the function of the Tribunal from that of a price approval body to one of price surveillance. In this form it will more effectively complement the activities of the Trade Practices -Commission and the Industries Assistance Commission. The Government will be closely monitoring the effects of the Tribunal's operations during the next 9 to 12 months to ensure that the Government's objectives are being met. The changes the Government is making to the Tribunal will play a part in ensuring that there are not unreasonable administrative restraints placed upon economic recovery. I commend the Bill to the House.

Debate (on motion by Mr Morris) adjourned.

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