Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard   

Previous Fragment    Next Fragment
Thursday, 29 June 1995
Page: 2217

Senator MARGETTS (8.38 p.m.) —I rise to make some final comments with regard to the Competition Policy Reform Bill. I believe that what has been done in this legislation is shameful and will not benefit the community, the general public, at all. I believe the objective of this bill is to cut up power, water and other utilities and force the states to sell them off according to a federal agenda to sell off large airports, increase costs for remote communities, and eventually close down or lead to a reduction of airports, post office agencies, train stations, medical services and schools.

  Part of the agenda is deregulation, where regulation is so-called anti-competitive. The Industry Commission called for all sorts of deregulation, all the way to cutting out requirements for minimum width for footpaths. You tell me what kind of competitive barrier regulations on footpath width represent. Yet the Industry Commission identifies this as an area for reform.

  I think we will see a lot of this sort of thing, without consultation and with very little consideration and probably without much sense but a lot of dry right bureaucrats will be busy. Of more concern are the perennial targets. I am sure regulations on trading hours will be the first to go. We will encourage the United States style shopping with a few big chains opening 24 hours a day, employing juniors to keep costs down. You can bet such a push will be accompanied by pressure to eliminate any overtime regulations based on unsociable hours. You can bet it will put a lot of family businesses, corner delis and such out of business. Their major niche was the after-hours trade. So much for competition.

  Coles, Woolworths and maybe a franchise deli chain like 7-Eleven will survive. It could mean death to thousands of small businesses. Competition is about survival of the fittest: the biggest with the most economic muscle. The name `competition policy' is misleading. This is not about consumer choice but about privatisation and deregulation. Concerns about privatisation and the potential impact on consumers, the community and the environment are being overruled.

  Privatisation will lead to private sector monopolies or oligopolies with consequent higher prices for many people and a reduction in the ability to pursue issues in the public interest. Yet we are told that the Trade Practices Act will allow anti-competitive private sector business behaviour to be taken to court.

  This does not correspond with the general view of the current actions of the Trade Practices Act in relation to the private sector. For example, the oil companies have for some time been recognised as being an effective oligopoly that engages in price fixing and generally recognises the market share of other players. The pricing of CDs in Australia has also been noted as being significantly higher than in other countries for no apparent reason. Monopoly arrangements on book supplies have also attracted criticism for decades: in part because of the substantially higher prices that result and in part because of issues of simple availability.

  Recently, government went so far as to join with other governments to re-establish the effective cartel of aluminium companies. This has been broken by the introduction of Russian aluminium. The government has established a minimum price for the protection of industries. These are industries assumed to take risks and, as a consequence, all profits from this intergovernmental action flow to the industries and their stockholders—not to the public and not to the governments concerned. The companies are not taking risks. Governments are helping them to form cartels to increase prices and guarantee them higher profits. There is no doubt that the move results in higher consumer prices on a global basis. It affects inputs in a range of industries and they will also end up raising their prices.

  This is not competition that government seems to be interested in. It is the use of so-called competition policy to justify a range of social cutbacks in the name of economic efficiency. It has been used to drive dismemberment of public sector activities and a radical change in federal-state powers.

  I would like to call the attention of honourable senators to the proposed operation of section 51(1) which used to create exemptions from trade practices for activities specified by law or regulation. Any authorised legislation is still exempt, but to be authorised under section 51(1B)(a) a law must explicitly refer to the Competition Policy Reform Act. This effectively means that we start out with no legislation or regulation exempt. Any attempt to create exempt legislation must be approved by the commission and the minister. Government amendment No. 5 will further extend this to conduct under licenses. These are mentioned and are now subject to section 51(1B)(a) and they must refer to the Competition Policy Reform Act to be exempt, and are therefore not exempt.

  I would like it noted that in the whole process it appears that the minister has absolute veto. The state ministers can inform the commission, and the commission, with the council, holds an investigation and reaches a conclusion. This is passed on to the minister who considers the issue and decides. If she or he decides in contradiction to the commission, the commission accepts it. This is the chain of power. Read the act carefully.

  This bill will create an organisation of considerable power; a vehicle to examine almost any aspect of government at almost any level—federal, state or local; a vehicle which can accept or reject decisions of parliament; a vehicle which will examine and approve or reject laws; a vehicle which will examine the private sector, the public sector and the service or community sectors; a vehicle which can effectively pass judgment on the department stores and businesses of this country; and a vehicle which can create offences by regulation and prosecute them through its own tribunal. It can examine prices and it can set prices.

  We are asked to create this immensely powerful vehicle for executive action; action which makes parliaments subsidiary and sets itself above them in judgment. It is a far more radical arrangement of power than almost any suggestion on constitutional change in relation to the republic debate.

  We will set up this very powerful vehicle operating in relative autonomy but answerable to a minister. As Senator Boswell pointed out, it is a vehicle that will act by regulation. It is the ultimate vehicle that acts by regulation. It comes with its own think-tank, its own tribunal. It need not ever converse with parliamentarians. It will communicate by edict—by acceptance or rejection of the efforts of poor representative democracy. It is the wave of the future.

  State government has been told to write an agenda for reform and, as an afterthought, to include what they will do for safeguards. It can bring this back in a year. By this time, the ACCC should be up and can pass judgment on what the states have put forward. I hope that makes the situation clear. The states' agenda is conditional. The final agenda will be decided by the commission. It will then be approved by the federal minister. All those access agreements must pass the least restrictive to competition test. This is the sort of thing the World Trade Organisation applied in relation to various regulations.

  Government makes decisions to protect and maximise its revenue. So we have it moving to a coordinated buying policy which will see virtually a third of computer goods bought from single sources. What is competitive about this? Nothing. Government does not pursue competition. It pursues short-term budget balancing and cost cutting. The point of privatisation is to generate short-term revenue. It is one-off revenue. At the same time, it eliminates income streams and the efficiency of potential integration of objectives and cooperation between departments. It will entail a massive regulatory effort to replace the natural oversight of a government agency. Either that, or there will not be regulation or consumer protection.

  In competition, people cut corners. This might save costs, but there are prices to pay. They usually do not come due until those that have made the cuts have gone. It is possible to cut corners by doing things like putting in lower standard steel piping for water mains. The savings or profits are made immediately. The cost does not appear for over a decade, but by then the cost is considerable. Another form of efficiency is gained when a water provider does not need to be concerned about downstream issues or long-term management. All the record keeping, labour and expertise becomes unnecessary. Lots of money is saved when the activities stop, but no management generally means mismanagement with a cost later. Of course, that cost is considered a natural disaster and a social cost.

  These types of approaches might provide short-term, narrow focus economic gains, but they are not efficient socially or from the perspective of overall economics or outcomes. Efficiency properly means doing more with less. The thing those keen on competition seem certain we need less of is labour. While there may be inefficiencies in some hypothetical instances, what often seems to have occurred in the last 10 years is that retrenchments have meant doing less with less.

  We see moves for efficiency in hospitals. When an economist sees a worker in an emergency ward who is not busy stitching up someone, that economist sees inefficiency: obviously there are too many staff. The ideal situation from an economics standpoint is when the staff are always flat out. They are flat out on a calm night, they will have people waiting for urgent treatment on an average night and people waiting longer on a heavy night. They will be stressed and rushing like competing track stars. Is it efficient?

  When a medical administrator sees an emergency room without enough staff to cope with a normal heavy night in a timely way, she or he sees a different sort of inefficiency—one that might lead to death or permanent injury—rather than a large outlay figure. Efficiency in medical terms is having enough staff to deal with the injured in a timely way on most normal nights, whether they are heavy nights, average nights or calm nights. This means that if you have enough to cope on a heavy night, you might be less than flat out on an average night. You may be able to relax a bit on a calm night. The test of efficiency is in the functional outcome—whether people get the treatment they need.

  People tend to see hospital services like the hospital administrator does. They see having to wait as inefficient. They call for efficiency and the economists step in and cut staff. Services are theoretically cheaper, although you might die waiting for them, or be in a lot of pain, and the cheaper treatment usually takes the form of less government outlay rather than actual savings for consumers.

  Is this paranoid fantasy? Not long ago an administrator at Woden hospital complained of exactly this, stating that he was quitting and that staff levels could not cope with an average night. He outlined the consequences of a real emergency, a bus crash or similar accident. Yet this is what we are told is efficient medical treatment.

  Is it efficient to eliminate rural clinics and centralise resources in big hospitals? Is it efficient for all the people who have further—sometimes very much further—to go, often for quite basic treatment? Is it economically efficient? Does it lower your hospital bills? No. It probably increases the cost of transport and time lost. But the argument is that it lowers the government hospital bills and Medicare payments. Of course, the ultimate in efficiency is where government has no costs and people pay for all the services they use themselves. It is very efficient because it reduces demand. It reduces demand because many people cannot afford treatment.

  A less horrific example of doing less with less—one that makes a different but related point—is of public transport. If a route is not frequently used and the bus is not fully loaded, it is less efficient. The economists would argue that you should reduce the number of times the bus passes. Loading per trip will be greater, but the less frequently the bus comes by, the less efficient it is for the users and the more they will look for other options. If bus use continues to be poor, an alternative is to increase charges to recover costs. Those people living in Western Australia would probably recall that when the new train service was put on for the northern rail line there were twice as many trains to cope with the northern service. In fact, the payback time became much faster than was expected because more people wanted to use the service.

  The ultimate result of economic efficiency measures designed to reduce expenditure is that a bus may run only once a day and a ticket costs twice or three times the cost of petrol for a private car. Only those who are entirely dependent on public transport are likely to use the bus at this stage. This happens far more often than it should and there are bus routes in Perth in exactly this state. Virtually everyone who can has given up and gone by car. At this point the transport company is liable to cut out the service altogether as unnecessary.

  When a response to service costs is to cut services, at some point services are cut to such a degree that they become pointless. What exactly is the point of having security guards in Parliament House where senators can reach under a desk and push a distress button, then ask the same senators to walk around the building alone in the dark at midnight? Anyone wanting to attack a senator—gosh, who would?—would only have to wait outside in a car, jump out and drive away. So what is the point? When services are cut back far enough, there is little point in having them at all. It is reductio ad absurdum in practice.

  The Greens (WA) would not oppose competition. It has its place, but it is not the supreme place, and certainly not the only place. This bill is a formula to hand over public functions to a handful of big players who are pursuing their own profit with little concern for the public. I see nothing in this bill that leads me to think that this bill provides provision for public welfare or well-being. When the agendas and safeguards and CSOs are in and spelled out, I might change my mind. But they are not, and we are passing this without them. The Greens (WA), therefore, completely oppose and condemn this bill.