27 March 2014
Transcript - #2014015, 2014

Competition Review Panel Press Conference, Parliament House, Canberra

SUBJECT: Competition Review Panel

Good morning.  Thanks, everyone, for coming along.  Today is an important day.  I am very pleased to be able to announce the expert panel appointed by the Government to run our 'root and branch' review of competition policy.

As the Prime Minister and I indicated late last year, a key election commitment of the Abbott Government was to put in place a broad and far-reaching review of Australia's competition policy to drive innovation and lower the cost of living.

Today I will be releasing the final terms of reference and announcing the expert panel that will undertake this work.

It's been more than 20 years since an analysis of this kind has been undertaken and the economy has transformed significantly.  Consumers have changed their behaviour and the way in which businesses interact within our markets, both domestically and internationally.

The Hilmer review was a landmark piece of work.  It was catalytic to microeconomic reform that had a very distinct bearing on so many sectors of the Australian economy, produced a boost to GDP and improved outcomes for consumers.

It also set up our nation to be competitive and more productive for the decade that followed and now is the time to do that work again.  It's been some 22 years since a comprehensive analysis of this kind has been undertaken yet the economy has transformed dramatically.  We now have Apps, we have different technologies, we have changes in consumer behaviour and in the way in which businesses engage with consumers and apply their commercial strategies to their goal of success, profitability and opportunity.

We've got to make sure that these competition laws are fit for purpose for today's economy and the one that is emerging so that we can secure durable consumer benefits for all Australia citizens.  So we can support big and small businesses that are efficient in their plight to create wealth and opportunity, and so we can support their enterprise so they feel confident that competition will be based on merit and not on muscle.

We want to make sure that the learnings from the last 20 years are applied and to help bring about microeconomic reform, to improve our productivity and to support our competitiveness as a nation and as an economy.

Today, the terms of reference that I am releasing are pretty much the same as the draft that was released before Christmas.

We've been very encouraged by the overwhelming positive response that has come from states and territories and other stakeholders about the comprehensive nature of the terms of reference that we have released.

We have taken on board some wise counsel from the Prime Minister's Business Advisory Council to recognise that we are now part of a global economy and we need to make sure that our laws are world's best practice.

We need to ensure where other jurisdictions have seen and acquired insights that perhaps aren't embraced in our own policy approach, that we at least make sure we are world's best practice.

We need to ensure that we as a government are doing our best to set the framework in place where businesses big and small can thrive and prosper in a fair and competitive environment.

The terms of reference will look at the black letter law as we have it today, to see what experience, jurisprudence, decisions and actions within the regulators and our courts tell us about whether the laws are behaving in the way that was anticipated, when they were first drafted.

We'll also identify gaps in the law.  You'll be aware the Coalition has been particularly interested in  anti-competitive pricing and a number of other areas of reform, where the laws have been tested and in some respects, found wanting, as the economy's changed and the commercial tactics have adapted to a changing opportunity and environment.

We're also looking to see whether the regulators are behaving in a way that supports the competitive environment that we are seeking to achieve.  Do they have the tools that they need?  Are their systems efficient and effective?  Is the interface between the economy and the regulator one that's cost effective, reliable and dependable?  Are there provisions in the law that promised much but perhaps haven't lived up to their billing?

There are a number of provisions that have been there for many years that have never been exercised.  Are they poorly drafted?  Are they superfluous?  Do they miss the point?  These are the insights and the deliberations that we are tasking the expert panel to examine.

There has also been a growth in the use of codes.  Whilst the law might give you black letter guidance on what's unlawful – we know that alone isn't enough to support a fair, competitive environment that gives opportunity for efficient businesses big and small to thrive and prosper.

These industry codes have emerged in a number of key sectors where the normal competitive pressures may not be enough to ensure all parties have a reasonable opportunity and certainty to invest, innovate and to make that decision to recruit and expand their business, mindful of the environment they are operating in.

Those codes need to be examined to make sure that they are effective and are properly supported by the broader framework the law offers.

There's also another key point – it's not just about the competition law, it's also about the competitive environment.  The panel has been tasked to look at choke points in our economy.  Are there examples of where entering a new marketplace is more expensive and complicated than it needs to be?  Where old provisions for example, in the area of coastal liner shipping or even conditional discount arrangements, are an impediment to competition.

There may be other examples in the economy, where government involvement is unnecessary and represents a needless impost or constraint on competition and opportunity in our economy.

So it is a broad piece of work and includes the law itself, how it is operating, what insights we can gain from our experience.  What we can learn from international best practice.  What we can do to make sure our law is world's best practice and fit for purpose for today's economy and the economy that is emerging.

There is also the broader aspect of looking at micro economic reform opportunities to remove choke points and unnecessary impediments in our economy that are disadvantaging our nation in terms of productivity, competitiveness, employment prospects and the general welfare of our citizens.

The panel that I am announcing today will be led by Professor Ian Harper.  There has been some speculation in the media, many names have been brought forward but I am pleased to announce and confirm that Ian Harper will be leading this work.  He is highly respected and a distinguished individual.  He brings an approach that will ensure all parties are welcome and get a fair and objective hearing on the arguments and advocacy that they bring to this process.

He has a keen eye on common sense, he looks for practical policy solutions and he understands the legitimate role and influence of government interacting with a competitive economy to ensure the welfare of our Australian citizens is advanced by further change.

He will be supported by a very competent team including Peter Anderson, former CEO of the Australian Chamber of Commerce and Industry.  Peter brings extraordinary insights including a career as champion of businesses of all sizes.  He also understands that we need to operate in a world class environment to secure opportunities for ourselves and the nation.  He also understands where microeconomic reform opportunities exist, and can bring those insights to the panel's work.

Su McCluskey will be a further panel member.  She is currently the inaugural CEO of the Regional Australia Institute and also a beef cattle farmer in Yass.

Su previously worked as General Manager of Policy at the National Farmers' Federation and Director of Tax and Trade Policy at the Business Council of Australia. She was also Executive Director of the Office of Best Practice Regulation.

Finally, we know that much of the debate about this area is about the competition law itself. We've gone for an outstanding Senior Counsel from the Victorian Bar and that is Michael O'Bryan.  He brings great expertise and insight as an expert lawyer in the area of competition law as barrister.  He has also been past chairman of the Trade Practices Committee of the Law Council of Australia.

We are looking forward to that team making a very substantial contribution to this important body of work.

Consultation will be key.  We've already started that engagement with our state and territory colleagues, recognising this is a co-regulated area of our economy.  We have also reached out to key stakeholders to make sure our terms of reference are responsive, comprehensive and address particular areas of need.

As the review proceeds, we will release a discussion paper and will invite input from all Australians, industry organisations and business.

This will be an ongoing, engaging process over the next twelve months.  It's a crucial piece of work about ensuring that our nation and our economy has the best prospects, the best policy environment, supports efficient businesses big and small with their opportunity to thrive and prosper.  It provides investment certainty and encouragement for productivity improvement, growth and jobs in our economy but above all, delivers durable benefits for Australian consumers.  It improves the welfare of our citizens.

It's an important piece of work, and I encourage all stakeholders big and small and consumers to engage in this process.  It's an important opportunity to get these policy settings right, right for today and right for into the future.


When do you anticipate the discussion paper will be released?


Within one month there will be a discussion paper circulated.  Preparatory work is well advanced on that through the secretariat team that has been formed within Treasury.  We are keen for the panel to engage itself fully in that.  They've already had their feet under the table, so in the coming weeks that will be released and that will stimulate the kind of input, debate and discussion we think is crucial to this root and branch review achieving the potential that it offers.


Bruce you said one of the focuses of this must be the consumer.  There seems to be a conflict of what's best for the consumer and what's best for competition given duopolies, in some cases, produce cheaper prices, squeezing out the little guys.


There is nothing straightforward about these policy settings.  There are competing and at times, conflicted interests.  You've touched on one and that's why we have made it clear to the panel that we are looking for policy settings and recommendations that reflect the durable interests of consumers.

Not just perhaps a nice price point today – but what does that mean for the longer term?  What does that mean about choice, for future investment of participants in that market segment?  Are they inclined to develop new products, develop their businesses, employ more, invest and engage in new opportunities?  That environment is important.

It goes to the durable benefits of consumers and weighing those considerations against other interests is a crucial part of the work.  That is why I am so pleased Professor Harper is bringing his expertise to the table.




We are saying the broader considerations are about the welfare of the Australian community in the longer term and also about the strength and competitiveness and productivity of our economy.  There may be some processes that recognise what might happen today or tomorrow, but it can be argued that the long term consequences may be detrimental.

This is an objective evidence based process where different points of view can be brought to the table and we can make sure those policy settings and then how they are reflected in the law itself, properly reflect those interests that you were describing.


Even with those broader concerns, would it be fair to say that ultimately the price the consumer gets has got to be the main concern?


Price is important but so is value more broadly as well as choice, the opportunity for new products and innovation and the preparedness of other participants in the economy – particularly businesses – to invest and innovate.

So price today, is an important consideration but it's not the only issue.  If we can nurture a pro-competitive environment and competition that in the longer term encourages investment and innovation, choice, variety, value and responsiveness to consumers - I think the economy and consumers will be the winners and the national interest is a winner.


Bruce, section 3.4.1 seems to be suggesting that the inquiry should look at how to make it easier for the ACCC to approve mergers.  Why do we need more mergers?  Why does it need to be easier for companies to merge?


We are posing to the panel the task of examining those processes that exist right now. There are three avenues through which a merger and acquisition proposal can go through.  One is a formal process where all the cards are on the table and all stakeholders, whether they are related to the transaction or more broadly, can engage in the discussion and decision framework about whether that proposition is a good idea.  That formal process has never been used.  Now does that suggest it is not ideal and is structured poorly? I think it's obviously not living up to its potential because no one is exercising it.

The informal process is something that is a little less clear and is done through engagement and interaction behind closed doors with the commission and parties that have been identified as relevant.  Now if you feel you're relevant, but you haven't been brought into that discussion, you could well feel aggrieved.

The last avenue is through the Competition Tribunal and we have only had one starter in that respect and that hasn't been concluded.

So we're asking – what is it about the processes that encourage applicants to use one of those three streams and if people want to challenge the conclusion or the determination, that's a very difficult and expensive process to go down.

So we are also asking is there a better way of having the arguments tested, weighed and other factors brought to bear from a broader range of stakeholders in a merger and acquisition process.  How can we do that in a responsive way and one that is not excessively expensive?


Minister a couple of weeks ago, Fred Hilmer and others spoke at the Australian National University on the Hilmer review.  One of the big themes was that there is a lot of unfinished business in competition reform at a broader economic level and that one of the lessons of the last six years is politicians have to lead and bring the community with them, in terms of the need for reform.  Do you take that kind of message on-board as you begin this?


Not only do I take it on-board, I've lived that from the very beginning.  The Coalition has been advocating the need for this root and branch review for three and a half years.  The previous government rejected any suggestion that there was any opportunity to improve the competition laws that were in place leading up to the last election.

Now there is contested view out there about what changes are most appropriate and most helpful.  There seems to be only one school of thought that nothing needs to be examined and that's the Labor school of thought.  The only thing that people can agree on is that suggesting there is no need for this work is completely misguided.

So those differing points of view that you're describing, the imbedded inculcated view that microeconomic reform is important to grow and develop our economy, improve our growth and productivity prospects – we accept that.  That's why we view this important work as part of our microeconomic reform agenda.

The discussions the other day which Professor Hilmer contributed were very useful.  We have ensured Professor Hilmer is kept updated and I am hopeful many wise individuals that have made substantial and meaningful contributions in this space, participate in this process.

That is one of the reasons we will be forming a reference group, which can interact effectively with the panel and draw those broader insights into this important body of work.


The Hilmer review included exposing government enterprises to competition and there are still now a lot of Government enterprises that could be subject to greater competition.  It also cleared the way for a lot of privatisations and here's what Fred Hilmer, the father of these reforms, said the other week.

Fred Hilmer: Privatisation is the unfinished business and everything feasible should be privatised.

What's your response to that?


Well my response is captured in the terms of reference which would make me Fred Hilmer's lovechild. There are express mentions of those very points in the terms of reference.


Australia Post?


We have said to them have a look where government involves itself and test the argument.  Is it justified?  Is it necessary?  I'm not going to get into the business of pre-empting conclusions.  We've announced the panel today and they have twelve months to do their work.  If people have views about those sorts of things, bring them forward.

Professor Hilmer is right to reflect that his work some 22 years ago hasn't been fully implemented either and now is an opportunity to revisit those recommendations and see what work we need to do for the future of our economy and the welfare of our citizens.


If there is a recommendation that you wish to adopt, is there potential for anything to be done for the next election or will you take everything to the 2016 election as a mandate issue or does that just depend on the gravity of what you want to do?


We made it clear that we already have some election commitments that we are implementing including the extension of unfair contract term protections, currently available to consumers but not available to small businesses, even though they have no more market power when dealing with some take it or leave it contracts from big businesses.  That work is underway – I will have more to say about that in the coming weeks.

We've got some very specific work going on around the Franchise Code and I will have more to say on that in the coming weeks.


Minister it looks like a bloody big job, the terms of reference seem to cover a lot of ground and there are a lot of stakeholders.  Are you going to be flexible with the 12 month deadline?


Well I've said to the panel 12 months is the timeframe because as an earlier question suggested, some of these issues have been floating around for quite a while.  If the panel comes back to me saying we've got very important work to do and we may not conclude in that timeframe, I am open to that.

But we have also tasked them with a prioritisation process and asked them to concentrate on where the greatest gains are likely to be found. They need to focus on those things and if there is a 'to do' list that end up being available after that work, well that may be pursued separately.  We've said go for the 12 months, that's our commitment.  We think it can be done in that window, our process facilitates that, and I am encouraging Professor Harper to work within the parameters that the Government has determined.


Could I ask a follow up on a previous question.  Obviously there is unfair contracts, there's franchise code etc.  There could be findings from this report a year from now that you might want to implement in the 2015 calendar year.  Are you saying that you can do that or you are going to hold off until after the election?


Let's have a look at the recommendations and lets not pre-empt things. There are areas where we are very settled and convinced and absolutely clear on what policy action is required.  As you would know there are many competing views.  We thought was important to have an objective and sober evaluation of those arguments to weigh the strength of the case and to come up on a basis of analysis, not one of amplification and repetition of argument as to what the next action steps should be.

There is also current activity going on within the ACCC that is of interest and will also be instructive and thankfully, the Abbott Government's supplemented the resources of the commission, which if left in the state it was that I inherited from Labor, we would have run out of cash next month.


Minister do you have a personal view on the proposed changes to the RDA?


Could we come back to that?


Sorry just one last question - is there the potential when you're trying to strike/find this balance between what is good for the consumer and the durability etc that this could lead to the imposition on more red tape?


The disposition of this government is a deregulatory one amongst the terms of reference.  It tasks the panel to examine those opportunities.  So we've put that parameter in front of the panel and said our position is a deregulatory one, think carefully about that, and when you are weighing your recommendations that should be an influence and have bearing on what you conclude.


Could I follow up on that – a couple of years ago there was an argument that red tape was preventing Aldi competing with Coles and Woolies due to planning laws stopping Aldi from setting up stores.  Do you see in that retail market now, continuing examples of that kind of red tape that stops a competitor coming in?




And can you give me any examples of what you see?


You gave a good one and that's partly why we have engaged the States and Territories to identify choke points and impediments that are unhelpful to competition and durable benefits to consumers.

I suspect some recommendations or some submissions will come forward that aren't specifically within the powers of the Commonwealth.  Now that's why we have engaged the States and Territories.  We've provided quite a considerable period of time for their input over the Christmas break and have received very positive responses recognising that this is a space where it's not just the Commonwealth that has responsibilities.  We will keep that engagement going.


My question was do you have a personal view on the proposed changes to the RDA?


I have a Cabinet view and that has been well expressed.  I know many others have views and there is a website where those views can be contributed and I encourage people to contribute.


I don't think the website is actually running yet and I was asking for your personal view rather than your Cabinet view.


I am a Cabinet Minister and my view is Cabinet's view.  I bring my insights and perspective to those discussions and hope they are influential.  It will be a real test for the Australian community and the political stakeholders, whether this important issue can be discussed in sober, measured terms.

This is too important to have a battle of screaming banshees – there needs to be engagement and that's what I would encourage.


Minister where you surprised by the Knights and Dames announcement the other day?


I am never surprised. I am an overweight guy who grew up in a housing commission estate in Frankston and became a Cabinet Minister of our nation. Nothing surprises me much but thank you for that observation.