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Monday, 17 June 2013
Page: 5749


Mr OAKESHOTT (Lyne) (10:41): I present the Competition and Consumer Amendment (Strengthening Rules About Misuse of Market Power) Bill 2013 and the explanatory memorandum.

This is the bill that puts to the House sensible extensions of our existing competition and consumer laws to give real results to all industry and business concerned about their ability to compete with the two major supermarkets that have more than 80 per cent of the grocery market in Australia. It is strengthening and empowering competition and consumer laws in Australia, as opposed to attacking them. I was a member of the New South Wales parliament when dairy deregulation occurred at the start of this millennium. I did not like it at the time due to a number of issues, including the loss of the all milk levy and one of the quirks of that meant that we lost the best TV ads going around promoting fresh milk. But, as well, and more importantly, the pressure that deregulation placed on many smaller dairies in regions such as the one that I represent has, nearly 15 years later, seen a large exodus from the industry by many people with generations of commitment to the dairy industry. Those days have now passed.

We are now more than 15 years beyond that and since deregulation, I have been approached by farmers continually concerned about their ability to participate still in the fresh milk market. Never have these concerns been more grave in recent times than when the major supermarkets decided to enter into a price war for one litre of milk, slashing the cost and selling it and $1 a litre, which from a consumer point of view, is less than the cost of the bottled water appearing on the very same shelves at the very same time. There has been an inquiry by ASIC, an inquiry by the Senate, a private member's bill for re-regulation of the dairy industry from a colleague and widespread condemnation of the actions of the major supermarkets over this in a loss leader strategy to try to get people in the door to buy the cheap milk as an essential and not realise that other products have gone up on the back shelves, and really prices have not changed at all. It is a nice marketing gimmick that has impacts on the supply chain and on the dairy industry.

There have not been sensible regulations that do not impose inflexible rules on a flexible market.

In my electorate, I still have a large number of dairy farmers. I have proactive entrepreneurial dairy farmers in my region, dairy farmers who were understandably concerned about the prices on offer—a price war that has not ended and that they now believe is impacting on milk contract prices about to be renegotiated.

Farmers from my electorate have joined a new organisation called Dairy Connect. At the beginning of the year, some of these local farmers came to see me. I was impressed that they did not come to me asking for a return to protectionist measures. They wanted real measures to look through deals taking place between supermarkets and large processors and right through the supply chain and the market that they believed was having an impact on their ability to farm.

The ACCC under current legislation looks at negotiations between large supermarkets and large processors. There is equity in bargaining power. The consumer certainly wins in the short term. But there remains genuine concern that in the long term farmers will leave the market; competition among them will be destroyed; and the result for consumers will be higher prices. These concerns echo concerns that have come up before—for example, with petrol discounting. The consumer wins in the short term. But, if too many smaller petrol stations leave the market, will this lessening of competition lead to higher prices in the future? Evidence over the last decade seems to suggest the answer is yes. Another example is supermarkets diversifying their business and causing concern about how their power in the grocery market will affect the new markets they are entering. Now, at a retail level in the grab for market share in many communities, the major players are going into anything and everything at a retail level, from video shops to clothing, you name it, the small retail operator is certainly now being directly challenged. There is also own-brand labelling and the drive for all produce to go to larger processors who can label with own-brand; again there are short-term benefits for consumers but a lack of a conversation around the long-term implications for consumers and community.

I have always been a big believer in the power of the market, wherever possible, to help itself, but the market always needs rules that work. I am excited about the market in dairy—for example, in my electorate a group of farmers have taken the initiative and collectively bargained with Woolworths. Norco—dairy farmer owned and operated—which sources milk from the Manning Valley, has come to a supply agreement with Coles. That is great proof that, for all markets concerned about duopolies, there are genuine market solutions that do not require a blunt legislative instrument all the time. But—and I do emphasise this 'but'—that is the point of this legislation: Genuine bargaining assumes a level playing field which we definitely do not have. There is still at the very least the perception of inequity and anticompetitive behaviour.

These changes to the competition and consumer legislation are about: (1) making sure that tests to be caught by the anticompetitive behaviour clauses in current laws extend to both broader market impacts and future consequences with a 'reasonably likely' test; (2) ensuring that the ACCC can compel the holders of the documentary evidence—that is, the supermarkets themselves—to produce all relevant documents, not just the end stage contracts, and this has been a issue in competition law in the courts for some time; (3) trying to get around what are real issues and what are perception issues by compelling the creation of a supply chain impact statement from those seeking greater market power.

I see these as sensible regulatory changes under current law. They do not interfere with markets. They do open up the mystery around contracting and providing opportunity for the big players, if they truly have nothing to hide, to change perceptions. I am putting the broader issue now to both the government and the opposition and certainly look for support in those regards. As well, alongside and in parallel with this legislation, we need broader trade in international market work on behalf of dairy farmers. More work needs to be done at the grassroots level to ensure ways to get our fresh produce, including beef and dairy, into the emerging markets of middle-class Asia, and I think governments across the board can do more on that front.

We do need that development of the code that has been talked about for some time, with appropriate ACCC oversight and a broader use of the Produce and Grocery Ombudsman. We do need to look at the use of existing primary production R&D levies and government contributions to ensure development of markets is receiving its fair share of revenue and reviewing the operation of bodies funded by compulsory levies. We do need development assistance programs for primary producers that help them to do what some small groups of dairy farmers have done, and that is explore market solutions to recognise problems. The challenge has been that primary producers are recognised as being absolutely stretched in the operation of their on-the-ground businesses and do not always have the skills, the resources or the capacity to negotiate with the big end of town.

So I put before the House this sensible bill that extends the role of the ACCC. Most think they already have the powers to do this when in reality they do not. As a consequence, in the long-term consumers are being let down. I would hope that this 43rd parliament—which has passed so much legislation and a lot of legislation in a bipartisan manner—can look at this legislation, see the sense in opening up these relationships and make this another piece of legislation in the interests of consumers, farmers and suppliers and strengthen our existing competition laws. I commend this bill to the House.

Bill read a first time.

The DEPUTY SPEAKER: In accordance with standing order 41(c), the second reading will be made an order of the day for the next sitting.