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Monday, 26 June 1995
Page: 1760

Senator SPINDLER (5.11 p.m.) —Mr Acting Deputy President, the Senate is debating the Competition Policy Reform Bill 1995. This bill will radically change the way public services are delivered to the public. It also involves major institutional changes to the enforcement of the Trade Practices Act and the Prices Surveillance Authority with the establishment of a merged Australian Competition and Consumer Commission and the National Competition Council.

  In my home state of Victoria, we are already well aware of what happens to service delivery under reforms driven by very narrow reactionary economics. It is actually a misnomer to call these changes `reforms'. An example is the way the Kennett government has treated local government and has treated the services supplied to country Victoria. Under competition policy, the Victorian experiment could rapidly become the national benchmark.

  Up to six million Australians—pensioners and those in rural communities in particular—could be direct losers as a result of this bill. When government agencies start behaving like private businesses, can we expect them to keep offering concessions to the 2.7 million Australians who hold a pensioner card, not to mention their 700,000 dependants? Many of these people will rely on the special concessions they get on phone bills, electricity tariffs and public transport in order to maintain a decent standard of living. Where are the safeguards in this bill to ensure that profit-driven government enterprises continue to meet these community service obligations?

  We have all seen what banking deregulation has done to low income earners. The banks have simply whacked on huge account fees because they do not want to do business with pensioners and social security recipients. There just is not enough money in it for them. The fees imposed by the government's part-privatised Commonwealth Bank are amongst the highest and meanest.

  The other big group that stands to lose is the nearly three million Australians who live outside the big cities. Cross-subsidisation is likely to be an early victim of competition policy. Cross-subsidisation within public services—where the profitable parts of a service subsidise the unprofitable parts—has been a fundamental part of the economic pact between metropolitan and regional Australia. The most obvious example of cross-subsidisation is the standard postage rate across the country for letters. Such standard rates will increasingly be a thing of the past as agencies are forced to pay their way and compete in their profitable activities. Current cross-subsidies are likely to disappear in a competitive environment, so country people could lose out not only in postal services but also in air services, electricity, gas and water prices, public transport, with the closure of railway lines—as we have already seen in Victoria—and in access to telecommunications.

  This bill is about accelerating the corporatisation of public enterprise. Corporatised state public transport has seen rail services to country areas cut, stations closed down, staff put off and sometimes even track pulled up. The Hilmer reforms are about more of the same. They are about taking the same principles and applying them across the board.

  Deregulated competitive market forces favour big players over small players, and that means the city over the bush. When banks are deregulated, lots of country towns see their branches close down or turned into `service centres'. Instead of having a local bank manager who knew their business, farmers and rural businesses have their loan applications sent off for `processing' by head office bean counters. The 15 to 20 cents petrol price difference between city and country is another scary example of what people in the bush can expect from competitive outcomes. Profit-making oil companies are not concerned about fairness; just about the profits they make.

  In all the service areas provided by public enterprise—Australia Post, Telecom, the utilities, airports, intrastate bus services and so on—the long-run impact will be either higher charges for rural users or serious cutbacks. The Hilmer policy calls for the replacement of these cross-subsidies with direct budget funding to continue support to the subsidised groups. We all know that these so-called `community service obligations' will be underfunded to begin with and eroded over time as governments sacrifice fairness in order to appease financial markets with shonky budget surpluses.

  The competition package will require government businesses to operate on a competitively neutral basis: that is, any advantage that they may have as a government entity will have to be destroyed to allow the private sector to adequately compete. But the burdens that a government business has which a private sector business does not have—notably public accountability requirements and transparency—will remain. So really, competitive neutrality means a playing field tilted inadvertently to the private sector. Worse still, it could mean that the accountability measures of a public service delivery start to be fritted down. We have already seen that happen in the Commonwealth sector with the Commonwealth ombudsman complaining that she is unable to deal with complaints on services which have been contracted out, and with the government's continuing refusal to agree to allow the Auditor-General to conduct performance audits of government business enterprises.

  That is not to say that competition policy reform is completely negative. Opening up some elements of government activity to competition would improve efficiency and may improve service delivery. But let us debate both sides: the upside and the downside. So far the government has failed to acknowledge that these changes have a downside, and this is to be condemned.

  I also want to speak briefly about the proposed composition of the commission and the National Competition Council. As part of the deal at COAG the federal government has agreed to give the states an effective veto over appointments to the commission and to the council. The majority of states and the Commonwealth have to agree to an appointment before it can be made. This has been criticised by most major public interest groups, including the ACTU, ACOSS, the consumer lobby and the ACF. In brief, there is little faith in the ability of the states to agree to the broad, community based, public interest oriented representation that is needed at the commission and council level to ensure that the upside and the downside of any change is considered.

  It is significant that local government, which is a party to COAG and which is expected to implement competition policy, will not be consulted or even considered in the appointments to these bodies. It is also significant that the government has refused to agree to a dedicated consumer representative on the council, although there will be one on the commission.

  The Australian Democrats will be watching the appointments process with great interest. We are aware that many big business representatives are not at all happy with the current activist membership of the Trade Practices Commission and are lobbying the states to ensure that more compliant appointments are made to the commission and to the council. These appointments will be a key test of the commitment of this government to ensuring that the interests of consumers, local government, the regions, and the environment are relevant and vital in the implementation of competition policy.

  We would have preferred to see the states consulted, but for them not to hold a veto over appointments. This would ensure that the membership could be balanced and could represent the national interest rather than sectional interests. We will be moving an amendment to that effect at the committee stage.

  I will be moving a number of other amendments and I wish to foreshadow some of those to the Senate today. They refer to the provisions of unconscionable conduct in the Trade Practices Act. I welcome the minister's answer today during question time when he said that the government is positively disposed towards reforms in this area. But he also stated that there are some big business sectors who are not quite as ready to accept the need for changes in this particular area. I have circulated a set of proposed amendments to the Trade Practices Act which I will be moving during the committee stage of the bill and I would suggest that, in view of his agreement in principle, the minister gives favourable consideration to these amendments.

  One of these amendments provides that a corporation must not, in trade or commerce, engage in conduct that amounts to economic duress, within the meaning of the unwritten law of the states and territories. Presently, the common law remedy for unconscionable conduct is too limited to enable its application to all but a minuscule number of business transactions. In the Democrats' view the remedy should be extended to include the equitable remedy of economic duress. While this would not be a huge change, it would open the remedy just enough to make it effective in those cases where large businesses use their economic power to take away the bargaining capacity of small business.

  The second amendment seeks to introduce the possibility for recovery of damages under section 51AA. The amendment simply amends section 82 so that a person who suffers loss or damage by virtue of the unconscionable conduct provision may also take action to recover the amount of loss or damage caused by the contravention of the act. Presently section 82 of the Trade Practices Act provides that if conduct contravening part IV, restrictive trade practices, or part V, consumer protection, causes loss or damage, those persons affected may recover the amount of that loss or damage by taking action against the person or persons involved in the contravention. This amendment rectifies what appears to have been a legislative oversight by adding damage suffered as a result of unconscionable conduct.

  The third amendment seeks to adds part IV, restrictive trade practices, into section 87(1B), a provision that allows representative actions to be taken on the basis that contraventions of part IVA, unconscionable conduct, or part V, consumer protection, have occurred.

  For many years the Trade Practices Act has had the power to take representative action on behalf of consumers but, through what appears to be another legislative oversight, representative action to recover loss or damage from price fixing or monopoly practices has not been available. Typically, only big business has the resources to take private action. There is a strong case for the Trade Practices Commission also to have the ability to take representative action for conduct in breach of the rules regulating restrictive trade practices in part IV of the Trade Practices Act.

  The Australian Law Reform Commission has already recognised this need in its report on remedies under the TPC Act. The government has more recently accepted it when it promised in the Justice Statement:

The government will remove current restrictions on the Trade Practices Commission's ability to take representative actions under the Trade Practices Act.

As I have outlined, most of these amendments simply correct legislative oversights and have been accepted by the government in principle. There is absolutely no reason why these amendments cannot now be supported by the government and passed by the Senate, pending some further, more detailed reforms by the government in future.