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Wednesday, 24 June 2009
Page: 4175

Senator JOYCE (Leader of the Nationals in the Senate) (3:52 PM) —I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

Small business in this nation has been under a sustained and carefully orchestrated attack for years, where larger, often retail giants, put ever increasing pressure to bear on smaller independents—who are mostly “mum and dad” businesses. These mum and dad businesses are the lifeblood of the community, especially in rural and regional Australia. They are the forgotten people considered to be dispensable by the free marketeers.

This pressure is exerted in two ways.

Big business will engage in relentless predatory practices where they deliberately under cut the price of the small business so that over time one of them is driven out of business.

Such an example is the petrol retailer Marie El-Khoury located in the western Sydney suburb of Blacktown, where Marie must pay a terminal gate price for her fuel which is higher than that sold at the retail level by the larger company owned service stations. The oil companies and the major supermarket chains can sell fuel at a retail price which is often below terminal gate price at which petrol is sold by the oil companies to independents.

Such a practice ultimately leads to the demise of full competition and that leads to higher prices to consumers and the market is taken over by retail giants. This anti-competitive practice does not serve the interest of small business or consumers such as motorists. But it does allow the retail giants to profiteer over time.

Through the efforts of Senator Nick Xenophon and myself, the phenomenon known as Geographic price discrimination is widely recognised as a further pressure tactic used to diminish competition between independents and retail giants.

This occurs where big business charges a lower price where competition from independents exists in a given area, but charge higher prices in adjacent areas where there is no independent operator. Over time, geographic price discrimination will lead to the demise of competition and the independent operator, allowing the retail giant to then set prices without any competitive pressure from those independents. The inevitable result is that consumers pay more once the independents are driven from the market.

It is a courageous step indeed when new independent operators seek to enter the geographical area, marketing lower prices and heralding the return of competition. However, the retail giants simply return to the practice of geographic price discrimination—squeezing the cash flow of the new independent business and driving them from the market. This creates an entrepreneurial wasteland—rarely will an independent be willing to suffer such losses and worse the banks are unwilling to support those willing to take the risk.

Therefore, irrespective of whether it is predatory practices or geographic price discrimination that is applied against small independent operators, the result will be the same, no competition, a bad deal for consumers and a greater opportunity for the big business to profiteer at the expense of consumers.

I am therefore rising today to co-sponsor the Trade Practices Amendment (Guaranteed Lower Prices-Blacktown Amendment) Bill 2009. This is known as the Blacktown Amendment, in reference to not only the suffering of Marie El-Khoury in Blacktown, Sydney, but all long suffering small businesses across this country.

The Blacktown Amendment is designed to curb the anti-competitive practice of geographic price discrimination. The Blacktown Amendment proposes to ensure that big businesses will charge the same price for the same product in the same geographic region, which is within 35km radius of adjacent retail outlets operated under the same trading name by a corporation or related entity. Same price includes any offer based on a discount, rebate, credit or allowance offered to customers.

By way of example, the oil company owned service stations must charge the same price in a geographical area, stopping the practice of targeting the independents to drive them out of business so that the oil company or the retail giants can then control the retail market in that area to the detriment of motorists.

This will encourage competition, where consumers can win by getting the benefit of lower prices across the same geographic area.

Those who are sceptical of the success of this Bill should note that there are exemptions to accommodate perishable goods, end of line or “deleted” items and of course franchised operations where the franchisee operates 5 outlets or less with the 35km radius.

The Blacktown Amendment will send a strong message to the oil companies and the retail giants that they must not play games or take consumers and small businesses for granted.

Senator JOYCE —I seek leave to continue my remarks later.

Leave granted; debate adjourned.