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Thursday, 15 August 1974
Page: 970

Senator GIETZELT (New South Wales) -I bring up the report of the Joint Committee on Prices relating to the price of household soaps and detergents together with a statement relating to the report.

Ordered that the report be printed.

Senator GIETZELT - The report on the price of household soaps and detergents which has just been tabled is the first report of the Joint Committee on Prices established by the 29th Parliament. The report will be tabled in the other place by the Chairman of the Committee, Mr C. J. Hurford, M.P. at the commencement of the Budget sitting. On behalf of the Chairman of the Committee I wish to outline the salient features of the report. The inquiry on which the report is based was conducted by the Committee established by the 28th Parliament. The views, conclusions and recommendations, however, are those of the present Committee. I pay a tribute to the members of the Committee, who reached complete agreement on the compilation of this report. Briefly, the report underlines the value of price investigations that encompass an industry rather than the individual companies that constitute that industry. Thus, the industry examination shows that the starting point for analysis is the domination of the market by 2 major manufacturers who between them control over 80 per cent of the market. Interestingly enough, where their market power is reduced, as it is in the dishwashing or liquid detergent part of the marketwhere they control less than 45 per cent- cost increases have been absorbed with the result that the rate of price increase has been less frequent than in other sections of the market.

With the above exception, the Committee has found that this industry exhibits an absence of real or effective competition. Incidentally, this conclusion is not very different to the one arrived at by the United Kingdom Monopolies Commission that examined the household detergents industry in that country. The absence of real or effective competition has been reflected in; firstly, the absence of price competition, with the exception of dishwashing detergents referred to previously; secondly, the unnecessary proliferation of brands; thirdly, an excessive amount of advertising, which also misleads the consumer; and fourthly, unduly high profits. It is against this background that the Committee drew up its recommendations. The first 2 recommendations deal with reducing the level of advertising by the 2 major manufacturers. The Committee has asked the Attorney-General (Senator Murphy) to inform the major manufacturers of the Committee's wish to see them enter into a voluntary agreement to reduce the amount of advertising so that the consumer could benefit from lower retail prices. The Committee is convinced that such an agreement would confer a specific and substantial benefit to the public which would not be available without that agreement- see Section 90( 5 ) Trade Practices Bill 1 974.

The Committee also asks the Australian Government to invite the Prices Justification Tribunal to examine the question of excessive advertising in this industry. This would be particularly appropriate if the major manufacturers are reluctant to enter into a voluntary agreement. The other recommendations could be divided mainly into 2 sections. The first deals with the establishment of standards and the testing of products against these standards. These recommendations are made to the Minister for Science (Mr Morrison) who is responsible for the Interim Commission on Consumer Standards. The second set of recommendations directly benefit the consumer. The Committee has recommended that some financial assistance be given to consumer organisations to assist them publicise the results of the tests. In another recommendation the Committee has asked the Minister for Science to assist consumers to draw up questionnaires that would ask manufacturers and others to substantiate the claims made in their advertising. These recommendations could assist the consumer to make a more informed choice by reducing consumer exposure to meaningless messages such as 'whiter than white' and also by increasing consumer awareness of the quality of competing products. This in turn could lead to greater purchases of good quality, lower priced products and thereby hopefully permit price competition rather than competition based mostly on advertising and brands.

Finally, once again as a means of encouraging competition in the domestic market, the Committee has recommended that the question of the level of protection given to the industry be referred to the Industries Assistance Commission. To sum up then, the view of the Committee is that the adoption of these various recommendations would have a twofold impact. Firstly, there would be a reduction in retail prices if the level of advertising were reduced. This would constitute visible benefits to the consumer. Secondly, the other recommendations could increase the efficiency of the industry by stimulating a more meaningful type of competition. This would result in prices being at a lower level than they would otherwise be and would accrue to the consumer in the longer term. This is the fifth report by the Joint Committee on Prices. It is clear that as a result of the Committee's investigations into price abuses in the market place, it is fulfilling a very important role of exposure of the excesses which are taking place there. I commend the report to the Senate. I move:

That the Senate take note of the report.

I seek leave to continue my remarks on the resumption of the debate.

Leave granted.

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