1 September 2015
Transcript - #2015100, 2015

Interview with Jon Faine, Mornings, ABC 774, Melbourne

SUBJECTS: Harper recommendations, 7-Eleven, Cabinet leaks, ABC and Fairfax

JON FAINE:

Bruce Billson is the Minister for Small Business in the Abbott Federal Liberal Government. He is the Member for the seat of Dunkley, which is centred around Frankston and surrounding areas. Mr Billson, good morning to you.

MINISTER BILLSON:

Good morning to you Jon and to your listeners.

JON FAINE:

We will come to the 7-Eleven story from Four Corners and Fairfax papers in just a moment and also your Cabinet submission in relation to competition law in just a moment as well.

But I notice much speculation about Malcolm Turnbull being the next Treasurer instead of Joe Hockey, or Julie Bishop or ScoMo [sic]. How come they do not mention you?

MINISTER BILLSON:

Oh, look, maybe I am not handsome enough to be in WHO Magazine where that sort of chatter and scuttlebutt deserves to be located. It is a team effort. We have lots to do.

We are making some good gains but we have to keep working on our action agenda – build jobs, grow the economy, make sure people are secure and lay the foundations for our future.

That is my focus and if that does not get me in the frame of those conversations, well alas, I will just have to cope with that Jon.

JON FAINE:

You are copping a bit of flak from people even within your own party over your determination to introduce changes to some of the legal definitions and tests in competition law which means that well; at least it is better than having no business before Cabinet, having some contentious business before Cabinet.

MINISTER BILLSON:

You know me. You occasionally ring me looking for the skinny and the inside info and sadly I disappoint you and give you nothing and I will probably do the same today. Cabinet has got a busy agenda; I won’t go through specific items that are on it.

What we have had before us and will continue to in the weeks ahead is my recommendation to respond to the Harper Review.

Jon, you and your listeners might remember we took an election commitment that we would have an objective, sober, analytical examination of competition policy framework, how the law it working, how institutions are functioning.

We have done that. We had an expert and an eminent panel do that work, nearly a thousand submissions later, two reports, thoughtful recommendations – all 56 of them.

In addition to being the Minister for Small Business I am responsible for competition policy and consumer affairs and accordingly I am crafting a submission that Cabinet will consider in due season about the Government’s response to those 56 recommendations.

JON FAINE:

I understand the whole point of getting submissions and calling for input from different stakeholders is to try to come up with something everybody is happy with, but you failed here because the business council, amongst others, are still prosecuting their case against these changes.

They have had a go through the review process. They have failed. They are now having a go publically, calling on the Government not to proceed. What is your response?

MINISTER BILLSON:

The business council are a very important lobby, they advocate on behalf of the hundred or so largest corporations in our economy.

I guess my focus is on what is good for the economy overall and will deliver durable benefits for consumers and one of the things that is at the heart of that is the opportunity for new contestants, new competitors, new products, new services to have the opportunity to compete in our market and get the chance to delight customers. If they compete well, they will do well.

One of the problems we have got now with the current misuse of market power laws is that it does not actually work. It does allow dominant firms to essentially fortify their position, if I could use that term Jon, where they can engage in exclusionary conduct that sort of freezes out other competitors and new offerings.

Frankly, that is not in the economy’s best interests and it is no good for consumers. We need to bring this law up to date so it at least is comparable with what is in other advanced economies.

But to be honest with you, we should count our blessings that the case the Europeans and the Americans took against Microsoft in the early and middle 2000s to stop it using its dominant operating system to bundle in web browsers and media players to the exclusion of others.

Thank goodness those cases were taken in Europe and in Australia, had they been taken here, you would not have seen a successful outcome. You would not have seen Google, you would not have seen a whole lot of new products – YouTube and the like – find their way into the market.

JON FAINE:

Those are now some of the greatest exploiters of market power. So you cannot have it both ways can you?

MINISTER BILLSON:

No, no, I am not having it both ways, I am explaining a simple fact, that where people use a dominant market position to exclude the opportunities for others to compete, then that is something that is captured and dealt with in other economies but not in ours.

I would have thought, given we are a fairly concentrated economy, almost the land of the duopoly, that we would want at least as strong misuse of market power laws as you see in other economies.

Our business people, they are as smart as anyone else in the world. I am sure they can work out what is going to substantially lessen competition and what will not.

That happens in other economies and those Australian business people working in other international markets – they also need to make sure that they are not overplaying their dominant market position to the detriment of the economy and consumers.

That is what Harper has recommended in its report and recommendations to the Government.

JON FAINE:

Speaking of which, Myer shares this morning have been put in a trading halt as they announce a 70% reduction in full year profit, down to a mere $30 million.

MINISTER BILLSON:

Yeah well there is lots going on isn’t there? There are disrupters in the economy and it is not my place to give a commentary on the challenges that Myer is facing. You can ask Mr Brookes about that.

JON FAINE:

But it is hardly, here is what used to be a dominant player in a market facing competition. Their shares, their profit is down 70% year on year.

MINISTER BILLSON:

And ultimately it is the consumers that are empowered about where to put their dollar and my view of a healthy vibrant economy is that what consumers have the opportunity to do. A challenge for those operating in the economy is to delight customers, win their patronage and win their hard earned dollars.

What we are focused on is making sure the law ensures that everyone has that opportunity to grow and prosper and that a dominant business does not use its economic might to freeze out other participants in the economy that could well add something that would delight your listeners and help build strength and prosperity in the Australian economy.

JON FAINE:

I will suggest to you that we do not actually need to change the law, what we need to change is the way it is enforced. Have a look at the 7-Eleven disclosures on Four Corners and Fairfax newspapers in the last 24 hours, Minister.

All you need is to enforce existing laws properly, rather than fiddle around with what the laws might be.

MINISTER BILLSON:

No, I think that is a misread Jon. Even learned jurists have lamented the fact that our law has inherent limitations because it is unique and quaint to our economy. And interestingly, the New Zealand competition regulator thinks it needs to be changed and they have pointed to deficiencies in the black letter law when there has been action to enforce it.

You look at cases where the court has found that there has been both purpose and effect of substantially lessening competition. But we have this novel idea of take advantage embedded in our law that does not appear elsewhere.

For your listener’s benefit, that is simply a case that if a business, even if it is dominant, even if it does have a detrimental effect on the economy through its conduct, if it can point to the kind of conduct it was engaged in – possibly being done by a business with no market power – then they are off the hook.

That is a unique characteristic. So quite different there…

JON FAINE:

But if you wanted to level the playing field, at the moment what you have got – and the 7-Eleven expose shows it – you have sets of rules and a lot of suburban milk bars and the like have been pushed out of business by the growth of the franchise model of 7-Elevens…

MINISTER BILLSON:

…I understand where you are going with your question…

JON FAINE:

…and the argument is that the 7-Elevens are competing by exploiting students from overseas who are here on temporary visas who are being required to work double the hours they are paid for and that is their business model.

It is not just a rort and no one is regulating, no one is checking and there is no one that students can complain to if they are being exploited.

MINISTER BILLSON:

Yeah, no, no, I am not disagreeing…

JON FAINE:

And that is pushing local businesses and suburban milk bars out of business all over Australia.

MINISTER BILLSON:

Jon, I am not disagreeing with your analysis on the 7-Eleven case, I am just saying it is unwise and inaccurate to conflate the two.

The misuse of market power…

JON FAINE:

...well okay, I will say the same…

MINISTER BILLSON:

…let me finish my answer. So there is the separate issue of misuse of market power and there are some proposals to strengthen that law. Coming to the 7-Eleven case, there is appropriate action being taken by the Fair Work Ombudsman. There is no place…

JON FAINE:

…because of media exposure?

MINISTER BILLSON:

No, that is not right. There was, as I understand it, there has been some investigations into 7-Eleven predating the excellent expose on ABC last night. It was a good piece of work by the Fairfax journalists and by Four Corners and they are to be commended for it.

JON FAINE:

Okay Minister I will extend it. If the market power of Bunnings and their competitor Masters now have killed hardware shops throughout the suburbs of Australia in exactly the same way. They abuse their market power. You do not need to change the law, you just need to enforce the existing law.

MINISTER BILLSON:

No, Jon, at the risk of repeating myself – that is not correct. The existing law is a hunting dog that will not leave the porch. It does not work.

So if your ambition of having the law implemented to curtail the misuse of market power by dominant businesses needs the law with teeth to be able to achieve that. That is what the discussion is about in the Harper Review.

Coming back to the 7-Eleven case, the issue there is it appears franchisees have done the wrong thing and the franchise system which handles its payroll arrangements, which has quite appropriately stepped up and said they have got a role to play in fixing this.

There is no place, no place for people not to meet their legal obligations. Being in a franchise does not make you immune from the lawful obligations that any business faces and where people have done the wrong thing, they need to be held to account – and they are.

That is a separate issue from getting our competition tool kit right so it actually supports efficient businesses – big and small – thriving and prospering. You should not conflate the two. I think you can make some strong points without falling into that trap.

JON FAINE:

Interesting that you are singing the praises of the ABC and Fairfax on the 7-Eleven story, while your colleague, the Minister for Immigration Peter Dutton, has accused the ABC and Fairfax of trying to bring the Government down. Word for word.

MINISTER BILLSON:

I am a merit matters most kind of guy, Jon. I can look at a good piece of journalism, wherever it has come from, and consider it on its merits.

JON FAINE:

…So Peter Dutton…

MINISTER BILLSON:

I even praise you for your work some days Jon.

JON FAINE:

That must be hard – through gritted teeth. So Peter Dutton is wrong is he?

MINISTER BILLSON:

No, I think Peter was making the point that there is a great appetite for perpetuating malicious gossip and that is of not great interest to the Australian economy and the interests of your listeners.

He can make that point. I will make my point, I look at each piece of journalism as I find it and some of it is good on the ABC, some of it I wonder why it has not had a more rounded examination of the issues at play.

In some cases it is opinion masquerading as fair commentary. I can see, well I hope I can see the difference for that and I can respect good journalism wherever I find it and the piece on the ABC on Four Corners, supported by Fairfax, was a good piece of work.

JON FAINE:

When I heard Mr Dutton say that, I thought well gee, we do not have to do much because it seems most of the work bringing the Government undone seems to come from the Government more than anywhere else Mr Billson.

MINISTER BILLSON:

Cunning observation Jon. Cunning observation and I have said, as going back to that earlier point when you or any of your other media colleagues ring up looking for a bit of skinny information off the record – you know I do not do off the record interviews.

I take my Cabinet responsibilities very seriously and that is, I work with great discipline, focus and purpose and that is what we all should do. If people cannot live by that discipline and by those accountabilities, they should pardon themselves from the Cabinet room or they should be punted. It is quite straight forward in my eyes.

JON FAINE:

So you agree with Arthur Sinodinos and others do you?

MINISTER BILLSON:

I agree with myself and I have just given you a fresh quote, Jon. I would have thought that was brand new. You can use that one.

JON FAINE:

Well we will tweet it out. It is a sign though, it is a sign any fair observer can see, is what you are criticising your predecessors over is where you have ended up yourselves. A government squabbling with itself and arguing over the stuff that does not matter rather than the stuff that voters think do matter.

MINISTER BILLSON:

Jon, I will take that as a comment. It did not sound like a question to me.

JON FAINE:

You criticised the Labor Party for precisely the same things as you, yourselves, are now doing.

MINISTER BILLSON:

I criticised the Labor Party for losing half a million jobs in small business and driving enterprising men and women into the ground. That is what I criticise them about and that is what I focus on trying to turn around and we are.

We have seen jobs growth in small business, record numbers of small businesses being created, a great budget package being a catalyst for entrepreneurial men and women to create their own opportunities and those in our economy and our communities and that is my focus.

JON FAINE:

Thank you indeed for your time on all of those issues this morning, as always.

MINISTER BILLSON:

Thanks Jon, take care and best wishes to your listeners.

JON FAINE:

Bruce Billson, the Member for Dunkley, based around Frankston, Minister for Small Business in the Abbott Federal Liberal Government and a regular on Raf Epstein’s program where you hear him frequently debating the Shadow Attorney General Mark Dreyfus.