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Wednesday, 13 February 2013
Page: 1239

Mr CRAIG KELLY (Hughes) (18:03): It is good to be given an opportunity to discuss this important and critical issue of dumping, to provide an update on some of the prevailing issues and to consider their relevance to the establishment of an independent agency with the responsibility for monitoring and combating dumping in Australia, as this bill seeks to do.

Dumping is an important issue of concern across many sectors in the Australian economy. That is reflected by the fact that this House has considered some five tranches of legislative improvements over the term of this parliament. However, I must state that this piece of legislation before us today is certainly somewhat better than the piecemeal approach contained in the previous tranches of legislation this parliament has dealt with over the past 48 months.

What we see before us in this legislation is a bill to give effect to the establishment of an Australian anti-dumping commission, with funding of $24.4 million over the forward estimates. However, there remains the question of the source of this money, and I am yet to hear a clear indication from any government speaker about how this will be funded. Hopefully, the minister will enlighten those listening to this debate when he makes his speech in reply.

I feel compelled to note my surprise at this move, the most coherent and direct of this Labor government's attempts to deal with the issue of dumping, to establish a dedicated agency to deal with the problem. Of course, the former minister responsible criticised this very policy when the coalition announced a very similar policy last year, with the coalition's anti-dumping task force. So the government seems to have achieved a degree of clarity in this fundamental policy area, which is good, albeit piggybacking on a previously announced coalition plan. Once again, we see the coalition taking the lead from opposition.

The government certainly must feel embarrassed following their relentless negativity and hysterical response to the coalition's anti-dumping policy, which they now seek to copy. Indeed, at the very height of their shrill response to its release, the minister for trade, in a performance comparable to his off-key singing, said the coalition's policy indicated a 'willingness to breach the world trading rules and tear up trade agreements with neighbouring Asian countries'. Now Labor seek to adopt almost that very policy for themselves. Quite an embarrassment indeed.

Another point that is interesting to note was the necessity for the Labor government to hire an old Labor mate to draw up these recommendations. It is just another example of Labor waste, but you have to ask how Mr Brumby earned his pay cheque. It was not hard because he could have got this entire policy by downloading it from the Liberal Party website.

We might ask ourselves: why has the government decided to finally copy many parts of the coalition's policy? Perhaps it has something to do with other government policies that have made Australian manufacturing uncompetitive, such as the government's carbon tax. By imposing a carbon tax on Australian manufacturers when such a tax is not levied upon our foreign competitors, we are simply putting our Australian businesses at a competitive disadvantage. It is natural that many of these companies with all these high costs of producing goods onshore in Australia are seeing goods produced offshore flooding into the country at prices lower than they can manufacture them at. It is not because they are doing anything wrong or because their business models are uncompetitive; it is simply because this Labor government is burdening them with taxes and extra expenses that they have to pay but overseas competitors do not. Is it any wonder that we have seen hundreds of thousands of job losses in the manufacturing sector under this Labor government?

I would like to correct something that the good member for Throsby said. He mentioned that dumping is selling below cost. That is not correct. According to the World Trade Organization's definition, dumping is not simply selling goods below cost and nor is it selling them for an anticompetitive purpose. The World Trade Organization's definition of dumping includes merely selling a good at a lower price in a foreign market than what is charged for that same good in the exporter's domestic market. Effectively, anti-dumping legislation attempts to ensure that a company makes the same levels of profit in the export market as it does in the domestic market.

We need to be careful that this legislation does not set off trade disputes with other countries. There is hardly an exporter in Australia also selling their goods on the local market that does not go in with a slightly sharper pencil when competing in more competitive overseas markets. Under World Trade Organization rules, that could be deemed as dumping.

When it is all boiled down, dumping is merely geographic price discrimination on an international basis—selling the same good in different markets, segmenting those markets by international boundaries and charging different prices.

If speaker after speaker on both sides of this parliament comes in here and condemns international geographic price discrimination, we also must condemn geographic price discrimination when it occurs within our borders, especially when it causes or threatens to cause material injury to an Australian business. If we fail to do so, if we fail to include geographic price discrimination in our own laws, we are nothing more than hypocrites. For while it is important to have an effective law to deal with geographic price discrimination when it occurs across political boundaries and internationally, it is equally important to have such a law when it occurs within Australia’s regional boundaries.

In the home of free-market capitalism, the USA, the Robinson-Patman Act has a specific provision to deal with geographic price discrimination within America. That act says in part:

It shall be unlawful for any person engaged in commerce, in the course of such commerce … to sell, or contract to sell, goods in any part of the United States at prices lower than those exacted by said person elsewhere in the United States for the purpose of destroying competition, or eliminating a competitor.

These competition laws simply do not exist in Australia. Where we experience geographic price discrimination within our boundaries, affecting regional parts of Australia, we simply have no provisions to deal with that, but there are provisions in place for goods that come from overseas. We need to address both issues.

We should not be concerned only about goods being sold substantially below cost or below the cost at which they are sold in international markets. Another issue this parliament should be addressing is the reverse of international geographic price discrimination; it is what you could almost call international price gouging. One only has to look at the higher prices paid by consumers and businesses in Australia for goods that are available much more cheaply overseas. I will give a couple of examples.

In the Adelaide Advertiser today is an article titled 'The great Aussie pricing disparity'. Under the heading 'Highway robbery' were listed several items that Australian consumers pay higher prices for because firms are engaging in international geographic price discrimination against Australia, charging much higher prices in the Australian market. A stunning example is Levi's 501 jeans. News Limited analysis is that Levi's 501 jeans in Australia sell for $109.95, yet those same jeans are available in the USA for $62.18. So Australian consumers are paying almost 50 per cent more. We need to ask: what is the cause of this higher price? Is it the manufacturer overseas? Is it Levi's engaging in international geographic price discrimination? Or is it a lack of competition in the Australian market? These are the issues we should be looking at in this parliament. Another example is Colgate toothpaste. While consumers in America pay a little over $2, it is $3.15 in Australian supermarkets—again 50 per cent higher. Again we should be asking: what is the cause of this discrepancy?

It does not stop with those products. A two-litre bottle of Coca-Cola sells for $3.79 in Australian supermarkets. That Coke is made using the same method around the world in highly efficient automated plants. Yet last year, when I was on a delegation to Taiwan, at a small 7/11 supermarket that same two-litre bottle of Coke was selling for the equivalent of $1. You only have to look online and you can see that same two-litre bottle of Coke being sold in the USA today for around $1 to $1.20—yet it sells in Australia for $3.79. So we need to ask ourselves: is Coca Cola engaging in international geographic price discrimination against Australia? Or is it a lack of competition in the Australian market?

A few other examples of geographic price discrimination, or reverse dumping, in Australia are in our tech sector, for IT products. A few examples have been drawn to my attention of how Australians are paying much higher prices. It is not only Australian consumers; it is Australian businesses as well, which puts those businesses at a competitive disadvantage. For example, for Creative Cloud, from Adobe—which is something you actually buy online, so there are no additional distribution costs whether they are selling it here or in the USA—Australian consumers pay $62.99 whereas in the USA they only pay $50. A worse example is Adobe CS6 Master Collection, again something you can buy online, so there is no additional costs of distribution—we cannot argue about any different cost in freight. If I were a US citizen I could buy it for $2,599. But if I am based here in Australia, and I download exactly the same item, Adobe will charge me $4,344. That is almost 50 to 60 per cent higher in price.

The same goes for Microsoft. An example: Microsoft Windows 7 Home Premium to Professional upgrade—again, a product that can be downloaded, so there are no different costs to Microsoft in whichever market they sell. As a citizen of the US I could download that and pay $89.95. But downloading that in Australia I pay $104.99—more than 20 per cent more.

These are some of the issues we need to look at. If we are going to look at international geographic price discrimination, where goods are being sold too cheaply in Australia, we should also look at the complete reverse—where Australian consumers and Australian businesses are paying higher prices, because that makes us uncompetitive.

In my few remaining minutes, I would also like to draw the attention of the House to how some of the anti-dumping regulations can actually be used against consumers and against industry and be ineffective. The example I would like to give is bedroom furniture, and the dumping regulations that were applied in the USA from Chinese bedroom furniture manufacturers. Since 2004 the US Department of Commerce imposed strict anti-dumping penalties on wooden bedroom furniture that was imported from China, deeming that those products had been dumped into the US market for less than their fair value. These products had an additional tariff on them from one per cent to more than 200 per cent of the import value. But this did not save the US furniture manufacturing sector. Despite these dumping duties the US have seen a massive decline in jobs in the furniture industry, a massive decline in the number of local sales and imports take up to 80 per cent of the market—a complete reversal. So we need to be very careful and not overplay these anti-dumping regulations, because sometimes they can be used against our industries. Also, there are many Australian companies that rely on components in their production chain, that produce those goods here in Australia. We have to be careful that, as these anti-dumping regulations come in, they are not adversely affected and there are not delays or additional costs put on those companies— (Time expired)

Debate adjourned.