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Tuesday, 22 February 1977


Mr JACOBI (Hawker) -Before I speak about the trade practices legislation let me make a few brief observations on the speech made by the honourable member for St George (Mr Neil). All that I have heard tonight in this debate from honourable members on the tory benches has been one long litany of union bashing. Let me say to the honourable member for St George that I can understand, admire and respect the Government seeking to put the trade union movement of this country in a legal legislative straightjacket if the Government demonstrates some semblance of equity and justice by applying the same legislative straightjacket to companies, stock exchanges, banks, insurance companies and all companies -


Mr Howard - We do.


Mr JACOBI - I am pleased to hear the interjection. It would seem from a perusal of what is envisaged in this piece of legislation that the Government does not intend to do that. It proposes to drop section 73A from the Act. I will come to that later. The Government ought to deal with this son of legislation with equity and justice. Today I asked a question of the Minister for Business and Consumer Affairs (Mr Howard). I thought it was a very sensible question. I asked, in view of the fact that there will be an escalation of oil imports into this country, what was the Government intending to do about setting up an agency to monitor the prices? More importantly, I asked whether it would allocate sufficient funds for the Royal Commission on Petroleum to complete the collation and assessment of the vast amount of evidence presented to it on transfer prices? The Minister's response was nothing more than a long retort about section 45D and how it would overcome the problem. Let us assume for a moment that the Government does what it proposes with section 4SD. That will not solve the problem ultimately of protection for the consumer.

The Government must do 2 things. We failed to do them. First, it must make a complete assessment of the transfer prices. Second, it should set up in this country a proper agency to monitor prices. The Minister must admit that we do not have such a structure. The criteria used by the Trade Practices Tribunal to fix a certain area of oil prices is limited. The criteria used by the people in Adelaide to fix petrol prices in Australia are posted prices. The Minister knows as well as I do that posted prices are nothing more than a tax rake-off for the producing countries particularly those in the Middle East. I think that in this debate we ought to be a bit constructive as to where we are going. I have very few attributes to be a politician but one is persistence. The Minister can take it from me that I will persist with those 2 matters. If they are riot dealt with there is no question at all that the consumers throughout this country will be taken to the cleaners. The Minister knows that as well as I do.

The dilemma for this tory Government is that it is under intense pressure from the oil companies and the finance corporations. That is why section 73A has been deleted and, if I am any judge, the Government will not re-introduce it. The same pressure comes from bankers. Those are the sorts of people whom honourable members opposite really represent. I respect that and I understand it. As I recall it, in 1975 honourable members opposite totally opposed the trade practices legislation which we initiated.


Mr Howard - No.


Mr JACOBI -Yes, you did. As I recall it, honourable members opposite intended to emasculate that legislation in order to give private enterprise the freedom it chose. They have woken up to the fact that that was not the ball game. They will be under very intense pressure to ensure the desired final result. Two issues are involved in this whole question of trade practices. One- the downstream effect- is the protection of the consumer. The important factor beyond any doubt is the belief that the Government espouses as the cardinal principle behind its philosophy, that is, freedom of competition. I put it to honourable members opposite that the provisions of section 49, which they are emasculating, section 47- there the Government is not putting in the provisions required for price discrimination particularly in the retail section of the oil industry- and section 73A, the link provisions, are .being ignored because the Government will be obliged to do so.

Despite what the honourable member for Parramatta (Mr Ruddock) has said, I have received many representations from small business people in my area. It is their assessment that the more insidious amendment which the Government is making is undoubtedly the repeal of section 49. That was recommended by the Swanson Committee report. Whom does it represent? If we come to grips with the situation, we understand that it represents big business. The Committee was appointed by the present Government. With due deference to the Minister and to the honourable member for Parramatta, I would say that this matter is of great importance to a fragmented section of industry like small business which lacks all the resources of the legal fraternity, the medical fraternity, big business or the Australian Retail Association. It does not have the resources. One would have assumed that before the Swanson Committee made an assessment it would have at least undertaken one or two surveys. Am I right, Mr Minister, in assuming that it never did undertake surveys? No surveys were undertaken, as I understand it, by the Swanson Committee. Why not? Irrespective of the call for submissions, why were surveys not undertaken?


Mr Howard - I will reply to you later.


Mr JACOBI - I will be delighted to hear your reply and I think small industry will be, too. In that context it is hardy surprising that small business would want to amend section 49. To the small business people throughout the country section 49 is the cornerstone of survival. The purpose of the section is to put competition between small business and large concerns such as the chain stores at least on an equal footing. Before the Act was introduced small businessmen in the retail trade were often unable to get the same discount as a chain store even if both stores bought the same quantities of an item and traded next door to each other. As I understand it, in South Australia many of the small businesses cannot get access to the only wholesale monopoly in South Australia because they have not got the economies of scale to do so. Section 49 provides the opportunity for a small businessman to obtain the same discount as his competitor when he buys the same quantity of goods. Despite what the Minister may say later, there are undoubtedly more stringent provisions and they have existed in the United States since 1914. With all due respect to the honourable member for Parramatta, I have studied the Act in the United States and I believe it has had a constructive effect in the area it was structured to cover. It is not a good Act. It is not as good as it ought to be.


Mr Shipton - Which Act is that?


Mr JACOBI -It is the Robinson Patman Act. I commend it to the honourable member. He ought to study it. The Swanson Committee in recommending the repeal of section 49 noted that only one submission had called for the retention of section 49 in its present form. I think we ought to put this in its proper perspective. The third term of reference specifically asked the Committee to report on the effect of the Act on small business and to assess whether small business could and should be accorded special treatment by the Act. At least one major retail association assumed that this automatically precluded the repeal of section 49. Consequently it did not make a submission to the Committee on that section. The 2 federal retail bodies which represent the vast majority of the small food retailers throughout Australia, namely, the Confectionery and Mixed Business Association and the National Association of Retail Grocers, both strongly oppose the repeal of section 49. You admit that, do you, Mr Minister? They believe that section 49 has in many instances prevented unfair discrimination and that it has been a major factor in the survival of small business.

For what it is worth I will cite one case. I think most probably the Trade Practices Commission was correct. The case was raised in South Australia. It portrays the problem faced by small business people:

We presented a case to the Trade Practices Commission. We are a mixed business in Adelaide purchasing about S40 worth of cake per day from a leading cake manufacturer.


Mr Howard - A chain store.


Mr JACOBI -Yes. It goes on:

The chain store next door to us was purchasing around $13 worth of cake from the same manufacturer. The small man was permitted a discount off suggested retail price of 20 per cent, the goods being charged at retail price less discount. The chain store with smaller purchases was given a 30 per cent discount.

The Commission dismissed the complaint, stating that the manufacturer claimed he was meeting competition as provided for in section 49 (2) (b). It was felt that if the party against whom the manufacturer had to compete was offering a special discount then he must have originally contravened the Act. I would have assumed that to be correct. In this type of case the Act does not give the assistance to small businesses that they had hoped for and that they felt confident they would receive from the original piece of legislation.

Let me cite another case. It is not strictly pertinent to this section but it is an indication of the business ethics that those who sit on the other side of this House support. I have an interest in oil. I took note of a particular company report last October. The report was issued by Marrickville Margarine Pty Ltd. The company was most impressed that the quotas on polyunsaturated margarine had been lifted throughout Australia following a move initiated by the Labor Government in South Australia. However, the company did indicate in its annual report that it was concerned that profits had been reduced because of the price cutting structure within the large chain stores. I noted that. Three weeks ago I decided to do a survey. The remarkable thing is that no longer does there exist any variation between the prices of polyunsaturated margarine and butter. I would like that case sent to the Commission for investigation. I assume that there has been a levelling up of prices.


Mr Shipton -Write a letter.


Mr JACOBI - Do you call that business ethics? The only person who suffers in that instance is, of course, the consumer. Then there is the matter of beef prices. Mr Minister, I would be grateful if this matter too, were referred to the Commission. Beef prices have been extremely low, as I recall it, for the last 18 months. But anybody in the leather industry will confirm that in the last 2 months the price of leather has risen by \5Vi per cent. Yet beef producers in the last 18 months have been going bankrupt.


Mr Shipton - Tell us about the industrial disputes.


Mr JACOBI -Never mind that. I am sticking to something a little more constructive. Mr Minister, I would be grateful if both of those matters could be investigated.


Mr Shipton - I would welcome that.


Mr JACOBI -So would I. The Automobile Chamber of Commerce, which represents the majority of petrol retailers, has asked for a strengthening of section 49. The Trade Practices Commission itself, after studying the report of the review committee recommended that section 49 be retained. Am I correct or not, Mr Minister? The Royal Commission on Petroleum recommended after an extensive study of petroleum marketing and a close observation of the effects of price discrimination that section 49 be strengthened along the lines of the Clayton Act in the United States. I suggest to the Minister that when he finally gets down to making an assessment of the oil pricing mechanism and structure in this country he will be obliged to adopt similar legislation. You concede that, do you, Mr Minister? I am delighted. On the other hand, the Australian Retailers Association, which is dominated largely by the food chains and large retail interests, is opposed to section 49. 1 wonder, Mr Minister, whether you have received a submission from that august body in support of the retention of section 49, or has it sat on the fence? I assume that it has done the latter. It is not surprising, to me at any rate, that the Government is obliged to back big business. That is part of the political game, regrettably. If this section is repealed the result will be a return to the law of the jungle. The retail chains will increase their holding of the present food market from 60 per cent to 80 or 90 per cent because of the pressures they can exert on suppliers. No member of this chamber would have to travel more than 200 yards from where he lives to see what the large monopolistic retail chains have done to the small corner shop that honourable members opposite seek to protect. If the Government eliminates section 49, that is precisely what it will escalate.


Mr Sainsbury - Where do you buy your groceries?


Mr JACOBI - I return to the earlier 2 cases. What does the Government mean by inflation? The Government talked a lot about it in the period up to 1975, when the housewife went to the local chain store and found that prices escalated week after week. If the Government allows the sort of practice that goes on with polyunsaturated margarine and if that is escalated along the line, who pays the price? What does inflation mean to the ordinary housewife? It means that she pays higher prices. That is what inflation means to the ordinary housewife. The Government will destroy the mechanism by which that process can be pulled or clawed back if it destroys section 49. But the Government r/ill do what it is told to do, as it will with section 73A. I put 14 questions on the notice paper to the Minister for Business and Consumer Affairs (Mr Howard) regarding this matter.

I refer to the article which appeared in the Financial Review. The only difference between the Minister and myself is that I followed it up. I will be very interested to hear a reply from the Minister on what he will do with that section which was contained in the old Act. He has now taken it out of the legislation. As I said earlier, if section 73A is removed, any sense of meaningful competition will cease. All international oil companies will continue to discriminate on prices to the detriment of their own lessee dealers. This will escalate in the oil industry. The consumer will again be on the receiving end of what is loosely but appropriately termed collusive and manipulated business transactions.

The point is that preferential discounts must be paid for somehow. Somewhere down along the line somebody pays for them. It is the consumer. The easiest way is to charge small business a fictitiously high wholesale price. Once any market is dominated by a few major organisations, as will occur in the retail field if section 49 is abolished and mergers are allowed to continue with takeover provisions, past experience has shown that the poor consumer will be the last to receive any consideration. I put to the Minister that I am firmly convinced that the abolition of section 49 will certainly lead to the death knell of so many small businesses throughout this country, businesses which this Government hypocritically and sycophantically espouses. I do not think there is any doubt at all that there will be 3 deficiencies, apart from proposed section 45D, in the amendments. My colleagues have done a magnificent job with regard to section 45D this evening. I regret to say that I do not think there will be any constructive movements in section 49, section 47 or section 73. It is in those 3 areas that so much depends, particularly for small business in this country. It is to that extent and with regard to the other 2 issues which are raised that I can assure the Minister that I will persist throughout this debate and subsequent debates.







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