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Competition and Consumer Amendment Bill 2013
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Thursday, 27 June 2013
Senator RYAN (Victoria) (15:45): I rise to speak on behalf of the opposition in a somewhat truncated debate in support of the Competition and Consumer Amendment Bill 2013. The coalition are pleased to support this bill. We are always keen to support legislation that eases the regulatory burden on small business. We believe that in this case the government are a little late coming to the party, but they have at least turned up, finally. They are not bearing a gift that is necessarily remarkable, but they have brought something that is of some value to the small business community. What they have presented is this legislation and, while I have said that it is a bit late, we believe it is a positive piece of legislation as it cuts the regulatory burden for restaurant and cafe owners in the hospitality industry without adversely affecting the customer's right to pricing integrity and information.
We should all make sure in this place that we do all we can to support the small business community, and there are many reasons for this. Families run small businesses and small business people are often leaders in our communities. When you walk around our towns, cities and suburbs, and when you look around the suburban football ground, or around the local netball fields or soccer fields, you do not see names, necessarily, of larger companies. What you often see are the names of the local newsagent, the local panel beater or the local pharmacy. These small businesses are not just the economic driver for our community; they are so often the glue that makes our communities the places we want to live, bring up a family and share times with friends and family.
Often the leaders of our local community organisations or also small business people. Again, they can be the local pharmacist who runs the CFA, the local newsagent or the local parent, who might be a mechanic, who runs the school P&C and supports the local football club, or is the coach for the school footy or netball team. These are the things that are not always taken into account by economic statistics, but they are so important to the communities that we live in. When I say that small business people are the glue of our communities, I do not mean to disregard those who might work for other companies. I have worked for one of the world's largest companies.
One of the benefits and privileges of a parliamentary role is the ability to see so many different parts of Australia. Whether I am travelling around my home state of Victoria, through my home city of Melbourne, or through regional Australia and other states, I see that the role small business people play is very important to every community that I visit. It is important in the good times when things are going well, when local footy clubs and netball teams are winning flags, and it is also particularly important in the tough times. Australia has seen too many tough times with natural disasters in the last few years. In my home state of Victoria we had the tragedy of the Black Saturday bushfires and in Queensland we had the tragedy of the great floods. In both cases, when you looked at the local SES, you saw that it was the people that ran or worked in small businesses who were often the first to put up their hands to do something.
This bill particularly impacts the 38,000 restaurants and cafes in Australia that generate about $29 billion per year in turnover. That is not an insignificant amount. Restaurants and cafes have another critical role, often, in providing first jobs for people. How many people got their first job as a waiter or washing dishes? Whether you were a uni student or still at high school you might have got a job at a local cafe, restaurant, reception centre or something like that. The hospitality sector is so important for that entry point into the labour market. Sometimes, in the grand scheme of things in this place and with all the policy apparatus that politicians and government have at their fingertips, we often forget really basic and important points. Someone's first job is not usually their last, and the point at which someone enters the labour market is not always where they stay as they usually climb up the ladder fairly quickly, but you have to provide those entry points. That is also true for re-entry points for those who may have been unemployed for a period of time.
The hospitality sector is relatively unique in that it is overwhelmingly a small-business sector. These are businesses, often not even companies, that do not have different departments. Their legal, compliance, advertising and human resources departments are on various parts of the kitchen table at home on various nights of the week. They are mum-and-dad businesses, who put up their own capital and often risk their own home. They wear multiple hats and they do everything for the business. They might be the person who acts as the cook, or the person who acts as the cleaner, and they are often the person who does both. They go to the markets to buy supplies, they meet with the accountant, they do the tax form, they fill out the BAS and they have to take care of employing people. As I said, it is these local businesses that support our local sporting clubs and community organisations.
This bill addresses an issue that I will turn to in a minute, but it specifically addresses a burden of the law that is substantial in this sector of the small business community—the hospitality sector. That is why the coalition support this particular legislation. For the context of the problem that this legislation deals with we have to go back to 2009 to understand the purpose of this bill. In 2009 a detailed provision was added to what used to be called the Trade Practices Act and is now the Competition and Consumer Act—but I will probably make the mistake of calling it the Trade Practices Act again, as many do. The 2009 change added a so-called component pricing provision which introduced a requirement for restaurants and cafes to detail any additional surcharges into the actual prices listed on menus. This ensured that costs linked to weekends, after hours or public holidays, usually labour rates and penalty rates, were made clear to customers. To some it seemed reasonable at the time. The problem, however, was again with this government's implementation of this regulation. A cafe was not allowed to put an asterisk or a statement at the bottom of a menu that indicated a surcharge for an extra cost, for example, on a weekend or on public holidays. Restaurants were not regarded as compliant if they had explanations of additional costs on the menus. The requirements were so detailed that, in order to comply, restaurants and cafes had to design, produce, print and maintain additional menus that outlined all the extra surcharge costs that were included in their pricing arrangements. To comply with this, not only would the menus have to be replaced—if it were, for example, a Sunday surcharge—but, if there were a blackboard upon which someone wrote the specials, it would have to have a sheet hung over it or it would have to be rewritten every day that there was going to be a surcharge.
There was, not surprisingly, much debate and furore over this new regulation and its implementation. The restaurant and cafe owners, often families who run small businesses around the country, were already dealing with supply chain issues, staffing rosters, changes to workplace relations, tax, accounts and cash flow at the same time as trying to increase job opportunities and grow their businesses. This new impost that required them to print and maintain multiple menus, in some cases for businesses that were already levying a surcharge, was just a step too far.
The costs, while they might sound insignificant, were actually not. The Restaurant and Catering Industry Association of Australia estimated they averaged between $8,000 and $10,000 for each restaurant. That is, $8,000 or $10,000 straight off the bottom line that a restaurant has to spend to comply with this new rule if they already applied a public holiday or weekend surcharge or, in fact, if they wished to. Anyone who knows this sector knows that it operates on very slim margins. When we look at the cost pressures that this sector has faced due to the changes—in many cases, due to this government; for example, the carbon tax forcing up energy costs, which is a significant input for restaurants and catering small businesses—we can see that this is not a trivial amount of money.
In 2010, the Productivity Commission's Annual review of regulatory burdens on business: business and consumer services recommended that the government amend what was then the Trade Practices Act to have restaurant and cafe menu surcharges for specific days placed outside the scope of the pricing provisions of the legislation. This would mean that cafes and restaurants would no longer be required to detail surcharges for specific days in the same way—with a separate menu, by rubbing out the specials board or by hanging a sheet over it on the day they had a surcharge. The Productivity Commission's Annual review of regulatory burdens on business 2010 recommended:
The Australian Government should amend the Trade Practices Act 1974 to have restaurant and cafÃ© menu surcharges for specific days placed outside the scope of the component pricing provision of that legislation.
The Competition and Consumer Amendment Bill 2013 directly addresses the issue. It puts into law this Productivity Commission recommendation. It recommends the now Competition and Consumer Act 2010 has a regulation-making power inserted to enable the government to make regulations to exempt certain representations from the component pricing requirement in Australian consumer law. This exemption will ensure restaurants and cafes no longer need to provide a separate menu for days when they apply a surcharge. However, I will note that we do not yet have the specifics regarding the requirements that restaurants, cafes and the catering industry will need to fulfil. The government has said that this will come in the future with regulation. Again, the parliament is being asked to take this government at trust. We support the legislation. We have learnt to not necessarily trust the government's implementation of it.
With those concerns noted, this bill has been well received by all in the industry sector who have been affected. Industry groups such as the Australian Hotels Association, the Chamber of Commerce and Industry Queensland, Clubs Australia and the National Tourism Alliance have all endorsed this piece of legislation. We will, to this extent, trust that a good balance for consumers and a good balance for business will be reached when the government promulgates the regulation to put this into effect. We hope that the government will learn this lesson and provide a solution that carefully weighs up consumer interests with the costs of doing business.
At this point, the bill amends the relatively recently passed Competition and Consumer Act. This raises a number of issues that the opposition has highlighted. We believe strongly that competition law has an important role to play in achieving positive outcomes for consumers and businesses. Competition is the essence of our market system. Competition is the essence to a productive and efficient economy. In fact, over the last 30 to 40 years, this country has implemented a form of competition policy that, I would suggest with respect—more than anything the government claims credit for—protected Australia from the global economic recession by ensuring our economy was more responsive and more efficient. However, it has been more than 20 years since Professor Hilmer undertook his landmark work that examined our competition framework and recommended a range of legislative and policy reforms that underpin today's competition laws, procedures and philosophy. Much has happened in the Australian economy since the Hilmer review.
I will give a few examples that will be familiar to most in the community. There has been a significant consolidation in our financial sector. What were once four banks, two insurance houses, plus a great number of regional and state banks is now effectively a four-bank, four-pillar system. In the supermarket and food retailing industry, we have seen quite significant growth of the two major supermarket chains, Woolworths and Coles. We have also seen consolidation with the loss of a player like Franklins and, since the days when I was pushing trolleys around an independent supermarket in Essendon, we have seen the consolidation of a number of state based independent wholesalers into Metcash. Only in the last few years we have seen the entry of more globally based competition, such as through Aldi, which in only a few short years has managed to open about 300 stores, I understand.
It is important to note that there have been swings and roundabouts in these two developments. In some cases, consumers have demonstrably benefited and in other cases a case can be put that the competition benefits have not flown strongly through to the consumer, at least in an immediately obvious way. Some markets—and I will use an example here: the pricing of credit cards—are stickier. By 'stickier' I mean that you do not often see significant price changes. People do not tend to move products that often. Health insurance is another example, as are markets such as credit cards, where competition is defined by things other than price. In that case, you will have the interest rate, the price of money, and the competition might be defined by things like interest-free days, Frequent Flyer points or the lack of surcharges at certain places. So, while there is competition, the transparency of it is not as immediately obvious to the consumer.
There are areas in supermarkets where there has been a demonstrable benefit to consumers. Food price deflation over the last couple of years has, unarguably, left consumers better off, because greater competition in the market between the two major chains has led to food price deflation.
However, we do also know that there have been significant changes in the way larger corporations operate. So we have the issue of land development. We have had the issue of how to move customers of one particular channel into another channel. The classic case is supermarkets using discounts from supermarket cash registers to drive people to buy petrol. But effectively the aim is to drive people through the supermarket cash registers.
The coalition is well aware of the difficulties smaller retailers face competing against larger businesses in the retail market and how smaller businesses do not necessarily have meaningful access to all the legal rights that the Competition and Consumer Act might on paper grant them. The coalition, as part of its commitment to a root-and-branch review of competition law, wants such a review to look at the changes in the economy since the Hilmer review and to look at how the eternal values of competition need to respond to changing market circumstances.
I will give the most extreme example. Twenty years ago the internet was something that a few people at Melbourne uni probably logged onto to look at a black screen where they could punch a few keys a minute. The internet was not a meaningful presence in people's lives 15 years ago. In many ways it was not that meaningful in commerce even a decade ago. But it is clearly now becoming a much more important competitive aspect, including, I might add, in areas where people did not expect it, like supermarkets. I know people who now order things online. They do not walk into a supermarket but, at seven o'clock on a Thursday night, boxes turn up at their home.
Another important aspect of this that the opposition highlighted is the issue of unfair contracts. Consumers have access to unfair contract provisions under the Competition and Consumer Act. The opposition made a commitment at the last election—and we will make that commitment again—to enabling small business access to unfair contract provisions when they are dealing with big businesses. The reason this is so important is that a law is not a very good law if it is not enforceable. The opportunity for a mum-and-dad partnership that might run a cafe or a small retail store to take meaningful legal action against a larger player is, in reality, very limited. I know that a standard significant case that might be brought under the Competition and Consumer Act on abuse of market power or unconscionable conduct can cost in the millions. That is not a meaningful way for smaller businesses to access the competition law and the protections which they are currently legally entitled to. So the opposition believes that unfair contract provisions give small business that meaningful access to the law that underpins and protects competition in Australian markets.
The associated issue of compliance with competition law is something to consider as well. If it is costing millions and millions of dollars to take court action, is there something about the law that means it is too complex? This is a new area of law. It is not centuries-old property law or contract law. It is an evolving area of law. But we cannot sit by while millions and millions of dollars are spent on legal costs, ensuring that smaller businesses cannot access the provisions in the act that are meant to protect them.
So our root-and-branch review will focus on all these aspects of competition law in order to ensure that it meets the goals that were set in 1990 when Professor Hilmer published his report and which underpinned those reforms but was conscious of the fact that the world has changed. We have the internet, we have privatised utilities in many states, we have larger financial institutions and we have larger retail institutions. We need to make sure that the law responds to that changed environment, just as it did in 1990.
I will cease my comments there. The coalition supports the bill. We hope that the government takes note of its previous errors when it promulgates this regulation. We hope it does it quickly in order to give small businesses this flexibility they do not currently have and to respond to the rising costs in some cases that this government has imposed on them and make their businesses more viable, but we will be supporting the bill.