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Thursday, 6 April 2000
Page: 15419

Mr RUDD (12:06 PM) —Included on every government member's compulsory reading list for the next three months leading up to 1 July this year, I believe, should be this publication here: the ACCC's March 2000 guidelines, entitled `Price exploitation and the new tax system'. If the ANTS package itself and its 1,000-plus amendments were volume 1 of the nightmare on main street, what we have in this publication, without question, is volume 2. Volume 1—that is, the ANTS package itself—effectively quintuples the compliance burden for Australian small business in relation to its taxation responsibilities. But with volume 2, the ACCC guidelines, what we have is the open threat to bankrupt those who do not understand this complex regime that has been imposed upon them. What we have here with the ACCC regime and these guidelines is, in fact, a sequel to the nightmare on main streetwhich has already gone through this House. I am sure that this document will be so popular among government members that, come 1 July or in the weeks leading up to it, they will ensure that every small business in their electorate has a copy of this document. Or perhaps on 1 July, when they all host their `welcome the GST' barbecues in their electorates, they will have a good pile on hand to make sure that everyone gets hold of a copy.

The ACCC guidelines have multiple core problems, and I will mention just three of them today. The first is this minor matter of constitutionality about which the Deputy Leader of the Opposition spoke before. I will not repeat his arguments but simply make this quite sober prediction: subsequent to the re Wakim judgment, when the ACCC initiates its first substantive action against a retail major in this country, it will be challenged and the ACCC will quite probably go down. So, as a consequence, what you will have is the collapse of the entire pack of cards—the entire farce and facade and fig leaf, which constitutes this government's purported consumer protection regime. In fact, that has already been threatened directly by the BCA. David Buckingham said recently, through the Financial Review:

... anything that constitutes a de facto price cap that will cause an erosion in business margins is utterly unacceptable. In those circumstances, some of the companies involved have said they would consider a high court challenge to the Federal Government's constitutional power to impose a price control regime.

That is not the ALP but the Business Council of Australia speaking—not, I think all members would agree, a front organisation for the ALP.

The second fundamental problem in relation to this whole scheme of the ACCC is its simple workability. Business does not believe it is workable; the BCA does not think it is; the ACCI does not think it is; and the Australian Retailers Association has reservations, as does the Food and Grocery Council—again, not exactly all front organisations for the ALP. They all oppose these guidelines. To quote Mr Buckingham again, he describes them as a process which is both `onerous and unnecessarily costly'. He goes on to say:

... the ACCC's role was essentially a response to the difficult political challenge of convincing the public the tax package would deliver benefits for consumers and taxpayers ... the tax changes would not present business with any new opportunities to exercise market power ...Yet the entire business community is now saddled with an absurd and costly price monitoring regime which is set to operate for 27 more months.

I would simply advance the argument that, if you do not have business on the cart with this entire new regime which the ACCC is supposed to implement, how are you going to make it work?

Let us go to just one of the methodological problems which arise as a consequence of this set of guidelines. That is the very simple but complex question: how do you quarantine out GST related factors in the calculation of the price delivered by a particular retailer post 1 July from any other non-GST related factors? I am sure that those who have put the scheme together would argue that we turn, for example, to guidelines 1.37 and 1.38, which relate to `upstream and downstream markets'. They state:

Whilst a key focus for the ACCC will be consumer markets, there will also be active monitoring of businesses in upstream markets.

Some upstream market prices are traditionally tied to world prices, for example some base metals. The ACCC recognises that these prices will continue to fluctuate in line with world prices, independent of the effect of the New Tax System ...

That is terrific. How do you methodologically propose to separate them out? They then say, turning to section 2.55, that there may be `exceptional circumstances in this entire regime which the ACCC will need to take into account in terms of justifying a particular price increase by a particular business'. The bottom line is that, methodologically, I would dearly love to see the working papers which, the ACCC would advance, would constitute an effective methodology to separate out those things which come from the tax and those which do not.

My final point goes to the matter adequately and eloquently already made by the Deputy Leader of the Opposition, and that is the resources of the ACCC. How many extra competition coppers are Felsie and the ACCC going to get to try to enforce this regime? Seventy-four nationwide. How many in the state of Queensland? Two. How many in the state of my colleague from South Australia? One or two, but I cannot remember which now. But the bottom line is that it is simply unworkable. There are already, we understand from the public record, some 7,500 complaints in the pipeline with the ACCC. But the ACCC with its existing staff base cannot cope with the rest of its regulatory burden already imposed upon it by the rest of Australian competition law. So how are these 74 going to cope with this extra burden imposed upon them, with something like 100 million economic transactions each day across the entire economy? They simply will not. It underlines why this exercise is a farce, why it is window-dressing and why it does not constitute any substantial addition to consumer protection, given the introduction of this new tax package.