1 April 2015
Transcript - #2015039, 2015

Interview with Justin Smith, 2UE Drive, Sydney

SUBJECTS: Harper Competition Policy Review - Uber, taxi industry, pharmacies, penalty rates, South Australia’s template enterprise agreement

JUSTIN SMITH:

Minister for Small Business Bruce Billson is on the line, hello Minister!

MINISTER BILLSON:

G’day Justin, how are you and your listeners and Warne particularly?  Well done.

JUSTIN SMITH:

Shane Warne haha…

MINISTER BILLSON:

Can you count that in your ratings?  Does that go to your ratings?

JUSTIN SMITH:

I wish we could, he’s got about 38 million followers, is that right?  I think at last count…

MINISTER BILLSON:

It could really boost your ratings.  This is new technology isn’t it? 

And that’s one of the discussions we have about how that is changing up the landscape in so many areas of our economy and maybe that is one coming your way as well.

JUSTIN SMITH:

We might start with that Minister- the taxi.  We have talked a fair bit over the last couple of weeks about Uber and I note with interest that I think Uber is actually out-doing the taxis in New York at the moment so it is a fad that is not a fad. 

That type of ride sharing thing is not going to go away in a hurry. 

What does Professor Ian Harper say about it and what do you think about it?

MINISTER BILLSON:

He basically said that at the end of the day the customers are sovereign. 

What we are seeing with Uber is passengers that might not choose to have or feel that their needs are not being met by traditional taxi services are using this platform that matches people who have a travel requirement with someone who is actually in a position to carry them in a ride sharing model. 

What Professor Harper is saying is that all of this is happening anyway and you can’t really hold back the tide of new entrants and innovation and we need to think twice about the way we regulate and make sure there is minimum standards of quality and security and insurance and things like that if people are going to be involved in carrying other passengers for an income.

That is what he said.  Can’t really hold that to the old days and expect nothing to change, but really needing to turn our mind to how can we make sure there is consumer protections in a changing space where technology is shaking up the game.

JUSTIN SMITH:

Do you think that these kind of industries – these traditional sorts of industries like taxis – do you think they need a shake up once every few years, once every couple of decades?

MINISTER BILLSON:

I do. I do believe that is the case because at the end of the day it is all about the sovereignty of consumers.  People putting their hard earned money into what they feel is best value for them. 

Even recently there has been some comparison between the traditional taxi model and Uber and I think what has happened is the traditional taxi model has actually pulled its sock up. 

It has been trying to introduce new ideas such as locating and communicating using apps about where the cab is that is coming their way, a chance for feedback and quality services. 

Even with Uber if you pay the higher rate you can have your preferred coffee when you get picked up and that is what people are responding to. 

You are actually seeing these new innovations lifting the standard of all the service providers. 

The thing that Professor Harper is saying is that if fundamental issues such as safety, vehicles that are fit for purpose, proper insurance and things of that kind really go to essential consumer protections- How do we make sure we can deliver that without standing in the road of the kind of innovation that consumers want and are putting their hard earned money in to.

JUSTIN SMITH:

Have we seen the focus moving away from consumers too much?  I mean, does this review help bring that back?

MINISTER BILLSON:

I think it does because to be honest with you, and I am sorry for the jargon, we are used to having what are known as intermediaries. 

That is someone who sits between me or you as a consumer, or your listeners as consumers, and then somebody that actually does what it is you want – there is usually these people in between. 

In some cases they might be those with taxi licences or even your kennel for instance.  I ducked away for a few days and our little dog Lucy, who is 17; we needed to make sure we could care for her while she was away. 

She does not want to go into a kennel, but you can get an app that actually identifies a neighbour in our area that is dog friendly and can give the kind of care and attention that we would hope for.

JUSTIN SMITH:

And you did that?

MINISTER BILLSON:

Well we didn’t this time, we took her with us but we weighed up the other option to be honest with you but we ended up taking her on a road trip.  Anyway that is what you get for an adventure for a 17 year old shih tzu -cross. 

JUSTIN SMITH:

Is there not a special shih tzu minding service for Ministers of the Crown?

MINISTER BILLSON:

Look there may be but if it is south of Sydney that is quite a commute if I am going to central Victoria. 

But it is a classic example where the middle person that acts almost as a dating agent between a customer and someone who has a requirement. 

That used to be what gets regulated and that intermediary was the one we had a licence and rules and government bureaucracies all trying to make sure it all went okay. 

Now that is being set to one side as new technology means consumers are going straight to the source of the service or goods they are looking for and they do not necessarily need to go through those traditional channels. 

JUSTIN SMITH:

Retail trading hours is probably going to be a big discussion point out of this review.  What is the suggestion here from the Professor and what do you want?

MINISTER BILLSON:

A couple of things.  One, the Professor’s report has got 56 recommendations and to be absolutely frank with you Justin I do not own all of those recommendations, neither does the Commonwealth. 

There is a range of different levels of Government involved.  What we are trying to do is say well what is ‘gumming up’ the economy?  What is blocking innovation and productivity?  Where are the old ways of doing things that are standing in the road of customers getting the best value?

One of the things that they identified was shop trading hours.  Now, you have got a degree of liberation in New South Wales around shop trading hours. 

It is a bit more restrictive in South Australia and Western Australia but Professor Harper makes the point that if your listeners have got some hard earned dollars and they want to buy a good or service and they cannot actually get through the door because it is shut, they will meet their needs some other way. 

He was making the point that…

JUSTIN SMITH:

Oh if you don’t mind Bruce, I was making that point before. 

I gave that scenario you would have heard, that if a retail shop that sells suits or t-shirts for example, the retail outlet, and most of my customers about the demographic that I am after tend to walk past my shop at 1am on a Saturday after they have been to the pub.  So I want to open up. 

Would you think that if we could lift restrictions, do you think that it is a good idea that a person can do that?

MINISTER BILLSON:

Look I do actually and I can go by my own experience.  My wife and I had our own retail business in a tourist destination and frankly we were flat out on weekends. 

Now, what we did is we did not open on a Monday because you could fire a cannon down the main street on a Monday and there is no point in us having that cost. 

So we shaped our opening hours to respond to our customers’ needs.  On a nice balmy sunny night on the Mornington Peninsula in Victoria we would stay open a bit later because there were lots of people promenading down the Riviera of Melbourne.  That is fantastic but that is where we were responding to that need.

What Professor Harper is saying is there is no substitute for customers and if customers want to access your service at a particular time then they should. 

The flip side of that though is a number of small businesses are in major shopping centres and they are sort of hand cuffed to the opening hours that the shopping centre demands, even if it is not economically sensible for them to be open. 

This is where you get the yin and the yang.  What is it that is reasonable and allows small business to respond to what customers need without being fitted up with burdens of opening when there is no point opening and they have got all the costs in doing so.

JUSTIN SMITH:

I guess you have got the penalty rates as well; it would have cost you more to hire staff when you close on a Monday and open on a weekend, it would have cost you a hell of a lot more to hire that staff. 

We have got to change that too you believe?

MINISTER BILLSON:

The issues there were around flexibility and you have seen some examples for instance in South Australia, and it is not for everybody, that is the thing; there are different arrangements for different businesses. 

But in South Australia the shoppies union have worked out some pro-forma agreement with Business South Australia where they bulk up the average standard hourly rate and in return get a flatter rate on the weekends so that there is that flexibility.

JUSTIN SMITH:

It changes the world doesn’t it?  That would change the world because you’ve got, say an 18 year old and you say hey listen we want you to work in our clothes shop but we’ll be open 1am Saturday and we expect you to be here.

MINISTER BILLSON:

The other thing too is, particularly for smaller businesses and the workplace relation regime; quite a number of small businesses are paying over the award rate anyway to attract the talent that they want and to respond to market demands.

In talking about penalty rates- the penalty rates do not actually apply to the business that is already paying over the award rate.  It actually applies to the award rate. 

So there are some businesses that are paying too much for their penalty rates and where people are already paying over the standard hour award rate you can lay off some of those extra payments for the regular hours, against the penalty rate for those after-hours work hours. 

That is the sort of thing that gets negotiated in the workplace. 

It is not for everybody.  Some businesses might find that attractive but the base hourly rate under the South Australian template agreement lifts the hourly rate to a higher standard rate but then sees the penalty rate area not quite as expensive as it once was. 

So that businesses could respond to their customers and profitable businesses mean people get employed, and if they are not profitable… well, nobody wins. 

JUSTIN SMITH:

One last section, there’s plenty in this and I urge people to have a look at it because it is an interesting read but Minister the pharmacies perhaps opening in supermarkets… what is the recommendation?

MINISTER BILLSON:

There are some rules that are called the location and ownership rules Justin and they have been around for a while.  What they aim to do is constrain the number of pharmacies that are around the place so that you do not end up with 25 of them in a square block at Paddington because it is a deliciously attractive place to open a pharmacy and then none out in the outback in New South Wales. 

What it is designed to do is make sure there is a pharmacy presence generally across this vast continent so that the pharmacy can then be a part of our primary health system and deliver pharmaceuticals through the PBS and services to keep people well. 

That rule limits the flexibility and is arguably anti-competitive but it has also got a public policy goal to try and make sure we do not have a whole bunch of pharmacies in one part of town where it is a great place to be and then others do not get any availability of that service.

What Harper has said is think carefully about these rules, is there a net benefit to consumers? 

Is the public policy justification of restricting competition one that has a net benefit?  If so well so be it, if not, change it! 

They are not convinced that it currently works well but then it says you need to think carefully about how you get pharmacies in areas where the free market might not see pharmacies established, but where there are people who need that channel of health services and primary health care that actually is beyond a pharmacy as a retailer – it is actually part of the primary health infrastructure of the country.

JUSTIN SMITH:

It has been a long day for you I would imagine, I shall leave you to your shih tzu……

MINISTER:

Thank you.   Got to get the diction right, and you can go and tweet some more.

JUSTIN SMITH:

Minister though one last question, when is the Government going to respond to this?

MINISTER BILLSON:

I have announced an eight week period where we are consulting with states and territories. 

Going back to that earlier point that I spoke around, the Commonwealth does not own all of this area of work and frankly this is not a report by the Commonwealth, it is a report to the Commonwealth from an independent panel that we have made sure have had clear air. 

More than 1,000 submissions, lots of objective assessment and now I have to liaise with my colleagues, the states and territories and local government attracts it for a mention. 

JUSTIN SMITH:

Oh geez haha!

MINISTER BILLSON:

They are basically saying…

JUSTIN SMITH:

Then may the Lord have mercy on your soul!

MINISTER BILLSON:

You can imagine what a character building experience that will be, so we are engaging for about eight weeks to shape up an action plan and then I will get a sense of what is doable and what the way forward might look like.

JUSTIN SMITH:

It’s great to chat to you again, thank you Bruce.

MINISTER BILLSON:

Thanks Justin, thank you.

JUSTIN SMITH:

Bruce Billson, the Minister for Small Business, and a darn good one.