Mr KATTER I think it bears asking here: what happens when you have no competition when you have two people with around 90 per cent of the market? This is what happened in the dairy industry. This is a quote from the letter sent by the dairy factory to the dairy farmers in North Queensland: ‘Currently, suppliers receive 58.9c a litre. From 1 July 2000, the price to North Queensland farmers will be 41.5c.’ So we went from 60c down to 40c in one day. Clearly, there is an oligopoly operating in the food market in Australia. There was a 20c drop in one day. Who was responsible for that? This place. This place passed the National Competition Policy legislation, which resulted in the dairy farmers of Australia being, in the main, completely destroyed. More than half of the 15,000 dairy farmers are gone—bankrupted, shot themselves or walked off their farms after five or six generations. In my area, they cleared scrub that you just could not believe anyone could have.
Why did this happen? I always say: follow the money trail. If a farmer has $500 million less and the consumer has paid $400 million or $500 million more, who got the $1,000 million? Woolworths and Coles got the $1,000 million, of course. To be exact, it is $1,130 million each year. Didn’t they get a good reward from the deregulation and smashing of the dairy industry in Australia? They say: ‘We’re still getting milk. There’s still dairy farmers out there.’ Yes, but the blow nationally was the loss of the export market. We went from $2½ billion down to $1½ billion—a loss of a $1,000 million.
With the sugar industry, it was $311 million. The producer was getting $191 per tonne less and the consumer was paying $115 per tonne more. Since 1,000 million tonnes was the average annual home consumption in 2002, the government had delivered to piggy in the middle—we all know who piggy in the middle is—$311 million of extra profit per year. They got one $1½ billion. Was that enough for them? No. We had to deregulate the egg industry as well. In the egg industry, egg deregulation saw consumers paying over 50 per cent more than they paid pre-deregulation and producers getting paid 10 per cent less. Since more than 240 million eggs are sold each year in Australia, the retailers and other middlemen—piggies in the middle—got an extra $300 million a year. Woolworths and Coles said: ‘Thank you, parliament of Australia. Thank you, Mr LNP. Thank you, Mr ALP. We have nearly $2,000 million a year extra in our coffers because of your stupidity, cupidity and utter, callous disregard for the farmers of Australia and the consumers of Australia.’
So more power to the minister. After being in this place for 25 years, there is now a minister with a little bit of courage and integrity. I personally would attribute, somewhat, to his deep Christian belief system that he feels a responsibility to do something about this dreadful situation. I do not know how many operators have gone out of business. I had 240 dairy farmers; I now have 38 dairy farmers. A lot of these people exited the industry in the most tragic manner possible. This is a matter of public record—the piggies in the middle, Woolworths and Coles, walked away from the table with nearly $2,000 million extra in their pockets as a result of the egg marketing board being abolished, the sugar marketing board being abolished and the deregulation of the dairy industry.
I return to the bill itself. (Extension of time granted) We want the existing act to stay. Even I, with all the time I had put in on this, did not fully understand that under the existing Competition and Consumer Act we did have an ability to act. In subsection 46(1) there is a purpose, and the ACCC argue that they can never prove purpose. Woolworths and Coles suddenly decided to have huge sale prices when the IGA opened at Mount Isa, but they could not prove purpose; it was too difficult. But subsection 46(7) uses the words ‘may be taken to have taken advantage of its power’. In fact the IGA in Mt Isa that came under tremendous competition, which destroyed them, could have acted under section 46 subsections (1) and (7). The purpose can be inferred.
Let us take the second case—Garbutt, in Townsville. The IGA owner in Garbutt was sent broke by his competitors, namely the big two. People will argue that it was not entirely due to that, but I would argue that it entirely was. Under the existing act, Garbutt could have taken an action. But of course the owner of the IGA is broke, so he did not have money to take an action. All the same, there was power delivered to us by section 46 subsections (1) and (7). There was the power to act in both cases. The effects test strengthens dramatically our power to act in Mt Isa. Clearly the loss of one of the three big supermarkets with only two or three other outlets was a huge blow to competition in Mount Isa. So the new section is wonderful for us—we love it and we enthusiastically support it.
Let me get back to Garbutt. If Garbutt IGA in Townsville is closed, so what? It is a big city, of 200,000 people, and there are probably 100 food outlets, after hours stores and everything else—there are many other independent stores in Townsville, so there is no substantial lessening of competition. If we eliminate subsection 46(1), and we only have this new section 46, we have no power to act in the case of Garbutt or in relation to any store in any other big city in Australia. The closure of a single supermarket in Ryde in Sydney is not going to significantly lessen competition. So if we remove the old section we have no ability to fight the battle inside the big cities of Australia. That explains why Woolworths and Coles for once have remained silent and let this proceed. One thing this has done is bring to our attention that there is power under section 46 subsections (1) and (7), read together—we can infer purpose. I thank very greatly the people I have discussed this with and who have brought this to my attention.
In summary, with Garbutt we have no powers under the new act unless we preserve the old section 46 as well as introducing the new section 46. We plead to keep the old section 46 as well, because under the old section we did have some powers in the cities but now we have no powers in the city situation. The elimination of smaller independents will never have the effect of lessening competition. I repeat: if we just rely upon the new act and ignore the old act, the elimination of smaller independents will never have the effect of lessening competition. (Extension of time granted) I think I have got across the messages I need to get across—the difference between the city situation and the country situation. The new act is very good for the country situation, but then only about 10 per cent of the population live in the country these days, with 90 per cent living in the cities. The new legislation will not cover us in the cities because there will be no ‘substantial lessening of competition’ provision. The old act does give us some powers that even I did not realise we had until this debate. I once again thank the minister, because I would not have known about the powers that exist if it had not been for him introducing what has been the first effort to overcome the giant power of the two oligopolists in Australia that completely dominate the market.
The SPEAKER: The question is that the amendments be agreed to. There being more than one voice calling for a division, in accordance with standing order 133 the division is deferred until after the discussion of the matter of public importance. Debate adjourned.
HOUSE OF REPRESENTATIVES BILLS Competition and Consumer Amendment (Misuse of Market Power) Bill 2016 Consideration in Detail SPEECH 2017