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Wednesday, 15 August 2012
Page: 8744


Mr JOHN COBB (Calare) (16:02): I rise to speak on the very important issue of supermarket power. While I do not support the member for Kennedy's remedy for the current situation, I am concerned—indeed the whole coalition of the National Party and the Liberal Party is concerned—about the capacity of the current situation to nurture a healthy competition. The one thing that without doubt is true is that a productive and efficient economy does need competition—fair competition. The market should be a dynamic system both domestically and internationally. However, the two systems are different. I think we are constantly challenged as politicians and as businesses by different sectors of the marketplace to get that fair and balanced system. However, quite obviously the Assistant Treasurer and the member for Blair believe otherwise.

There are pressures in the economy that are testing the capacity of current laws to support and nurture healthy competition. These pressures include the fact that there is a growing market concentration in key areas, the impact of dominant players on supply chains, the responsiveness of current laws or systems to deal with abuses of market power, and the effectiveness of mandatory codes. The horticultural code was mentioned earlier by the shadow minister. I have met with representatives recently and some of the people worried about that are from the member for Kennedy's own electorate. There is the accessibility and effectiveness of sanctions and remedies, and also the suitability of infrastructure access regimes, particularly for export orientated industries but actually more for domestic ones. It has become increasingly evident in the last couple of years that there is a lack of confidence in the system to provide balanced outcomes but, as you have already heard, the Labor government—in particular the Assistant Treasurer and member for Blair—do not believe that that is so.

It has been 20 years since there has been an objective, evidenced based assessment of how well our competition framework works. As has already been mentioned, obviously Professor Hilmer did not or could not contemplate that 20 years down the track there would be almost a doubling of the major supermarkets' market share. I guess he could not have anticipated that. In 1993, who might have anticipated that what were thought to be broad and inclusive prohibitions, such as those in section 46, on misuse of market power, would be read down and rendered almost useless when faced with practical examples of the muscle-flexing of a big business against a small business that occurs in our economy?

In the last two years there has been a very significant increase in traffic of processors and growers coming through my office door to highlight these issues and how hard it is for them to do business. Since then the $1 a litre milk price campaign has been introduced and retail prices are back to what has not been seen for 15 or 20 years. That has underlined that the system does need some rebalancing and, as the shadow minister has already said, we are committed to a review of what used to be the Trade Practices Act.

Dairy farmers, like the rest of the agricultural industries, have rightly highlighted that farmers are price takers in the economy and cannot pass any cost increases through to consumers. But, once again, the Labor Party do not seem, at the prime ministerial or ministerial level, to understand that farmers do not pass on cost increases, whether it is the carbon tax or anything else. The carbon tax highlighted their ignorance about processors and farmers. Minister Combet just last month claimed on ABC radio that farmers are entitled to pass on the cost increases of carbon pricing. His words were, 'But where there are costs incurred, it is valid to pass it through.' Is he that naive? Certainly the Prime Minister is. Twelve months before, when discussing the costs of the carbon tax on the dairy industry, she said on Adelaide radio, 'You will pass any additional costs through.' That highlights her ignorance. She said the same thing when it was mentioned to her that the carbon tax was being passed straight onto the cost of aviation fuel. When she was asked how those who muster and crop dust would be able to avoid it, she said, 'They'll pass it on, like everybody else.' This highlights the compound nature of the problem and the ignorance of the government to deal with it.

The coalition has promised a review of the Competition and Consumer Act, and that is something we will follow through. The current market has thrown up some interesting and surprising circumstances. You would expect, for example, that some of our agricultural industries production is dominated by a couple of big players and that that would give them more market power, but it has had the reverse effect. As there are only two supermarkets servicing 80 per cent of the market, some producers are too big to be able to sell to anyone except those two supermarkets. Whether it is tomatoes, mushrooms, eggs or dairy, they do not have any choice of competition beyond those two supermarkets, simply because they are too big for any other market.

Another issue not envisaged is the home brand issue, where supermarkets have the power to get superior shelf space. This is pertinent when dealing with the ability of a branded product to compete with a product of the supermarket itself. Nothing demonstrates the problem more than when you consider that broadacre industries like grain and meat, which are basically export based, do not have anything like the same problem that intensive domestic industries like horticulture and others have in dealing with supermarkets, because their market is really only within Australia. They have awful problems in dealing with the power of the big buyer, whereas the export based industries do not have to sell domestically; they have a far greater ability to go elsewhere.

There are some things we can do. In America, any significant movement of agricultural produce has to be reported, as to quantity and price, to the Department of Agriculture. There are penalties if that is not done. Whereas this in itself does not threaten the buyers or the consumer and it is in-confidence, it does give government power to know if there are competition issues involved.

We have committed to a review of the system. When industries, be they agriculture or otherwise, have to go up against far bigger markets, government has to make sure that competition is fair and equal. I respect the fact that the member for Kennedy has seriously and genuinely brought this issue before parliament. It is one that the coalition is dedicated to looking at. I do not agree with his solution but I do believe it is one we have to look at. I am sorry, as he is, that the current government is not willing to do that. We certainly acknowledge the problem and we are dedicated to dealing with it.