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Monday, 16 June 2003
Page: 16439


Mr HARTSUYKER (5:47 PM) —I wish to speak today about the business environment which is confronting a sector that is one of the major economic drivers of the Australian economy. Small business is very much at the heart and soul of the national economy, and that is particularly so in rural and regional Australia. Roughly 30 per cent of Australia's gross domestic product is generated by the 1.1 million small businesses which employ 3.3 million Australians. The latest statistics indicate that least 35 per cent of all small businesses reside in rural and regional areas. That represents a crucial part of the economic and social fabric of our regional communities.

Since being elected to government in 1996, the federal coalition has had a proud record of removing many of the barriers which held up jobs growth and led to Paul Keating's `recession we had to have'. This government recognises that if the incentives are put in place then more businesspeople will be willing to invest and that will have positive outcomes across the nation. That focus is one of the main reasons that Australia's unemployment rate is down to six per cent and more than 1.2 million jobs have been created since 1996. It is also why this government continues to pursue reforms to the unfair dismissal legislation for small business—which, I note, continues to be opposed by members of the opposition.

We, the government, recognise that, by allowing small business to improve its productivity, efficiency and overall competitiveness, there are real results for business, employees, local communities and the nation as a whole. But, in creating a fair and productive business environment, it is important that, as a government, we respond to the ever changing dynamics of the commercial sector. In that sense, we need to ensure that small business is protected from the predatory pricing and unconscionable conduct which is carried out by some large multinational companies.

In the past, there has been a belief that the existence of section 46 of the Trade Practices Act provided sufficient protection for small businesses that were subjected to unethical and bullyboy tactics from big business. The adoption of such strategies as selling goods below production cost is not good for our economy in the long term. It is important that we have in place settings which encourage investment and that all stakeholders conduct their business with the long-term interests of the market and consumers in mind. Any intention by corporations to exercise their market power to eliminate a small competitor and therefore increase their market share once that competitor disappears must be a cause for concern for consumers, employees and therefore government.

Section 46 of the Trade Practices Act was intended to protect those small businesses from such anticompetitive behaviour. Section 46 does provide that a corporation that has a substantial degree of power in any market may not take advantage of that power for the purpose of: eliminating or substantially damaging a competitor of the corporation or of a body corporate that is related to the corporation in that or any other market; preventing the entry of a person into that or any other market; or deterring or preventing a person from engaging in competitive conduct in that or any other market.

The object of the Trade Practices Act is to enhance the welfare of Australians through the promotion of competition and fair trading and the provision of consumer protection. Essentially, section 46 was meant to ensure this occurred by restricting big business from either forcing small operators out of the marketplace or making it unviable for new competitors to enter the market. Recently I have received a number of representations with regard to this section of the act. There are numerous cases of small businesses, or the Australian Consumer and Competition Commission on behalf of small business, failing to successfully demonstrate to the courts that big business has used its market position to eliminate a small competitor from the market.

We should never immediately assume that any such legal claim of small business is fact. However, there is widespread concern that the courts have consistently ruled in favour of corporations because of the inability of appellants to prove the purpose of the actions of big business. Of course that is understandable given that all businesses must be able to compete against any rival. However, there are those in the community who take the view that section 46 has become benign given the Boral decision earlier this year which effectively ruled that 30 per cent of a particular market was not deemed a large enough share for a large company to be viewed as taking advantage of its market position. The Boral decision has caused some concern among small business operators and raises the question: what percentage of a particular market represents an unacceptable dominance which results in an unfair advantage?

To the small business person, the courts are sending a message which says that if you are going to take on a big corporation and that big corporation has only 30 per cent of the market then you would be unlikely to succeed. A business environment where predatory and unfair practices occur has the potential to have a huge impact on smaller businesses, particularly in regional Australia, where innovation and a strong work ethic has the potential to rejuvenate many local communities. If eliminating a competitor simply comes down to either buying them out or making it impossible for them to remain viable then the implications for our nation are extensive. It is essential that we encourage strong competition so we can get new products on to the market and so that those products can be delivered to the benefit of consumers and the wider community. Ongoing jobs growth in regional areas depends on the viability of small business, but if they are to be run out of town by large corporations then regional Australia will be the loser. Instead of buying out their competitors or bullying them into submission, big business should look at investing in new technology and improved equipment, and using the more attractive business environment in which they now operate to compete on a fair and equitable basis.

My colleagues in the National Party, a party which represents many small business constituents, have been at pains to point out in the past that competition drives the economy and that without competition our economy stagnates. Any benefit to the consumer as a result of predatory pricing only produces a short-term improvement for the consumer. After the competition is eliminated from the marketplace, prices will rapidly increase again and perhaps the quality of products will be jeopardised. I believe we need to consider the current effectiveness of section 46 of the Trade Practices Act, with a view to ensuring that it is fulfilling the intention for which it was originally drafted.

Another area of concern in my electorate and in many coastal areas in New South Wales is the decision by the Dairy Farmers Cooperative to reduce the price paid to farmers by 3c per litre, or approximately nine per cent. This decision is causing great pain to our dairy farming families. These farmers have been through deregulation and drought and now are having to deal with this substantial drop in income at a time when they can least afford a reduction. Whilst the cooperative blames poor international prices and the rising dollar, there seems little future in prices at the farm gate that are unsustainable even in the medium term. Farming families desperately need a better deal with regard to farm gate prices, to maintain a stable milk supply to the processor and to continue to contribute commercially to the communities in which they operate.


The DEPUTY SPEAKER (Ms Corcoran)—Order! The time for the grievance debate has expired. The debate is interrupted and I put the question:

That grievances be noted.

Question agreed to.