5 September 2016
Transcript - #2016115, 2016

Press conference, Sydney

SUBJECTS: Strengthening Australia’s competition law; Senator Dastyari; making superannuation more sustainable; Budget Savings (Omnibus) Bill.

TREASURER:

Well today is a good day for consumers and particularly small businesses as well, in our Australian economy. Because today is the day that we are releasing our exposure draft on the changes to competition law reforms that came forward from the Harper Review exposure draft of that legislation. Ensuring good and effective competition in our economy is in the best interests of all Australians and all businesses. It’s what drives innovation; it’s what drives more investment; it's what supports more competitive and higher wages, real wages; it's what ensures better customer service and ultimately delivers more competitive prices for customers. Competition is at the core of our successful functioning of our economy. And ensuring that our competition laws are keeping pace with the demands of a modern economy, a 21st century economy, an economy that is transitioning from the mining investment boom through a more diversified base, this is critical economic reforms that ensure Australia is set up for the growth and the jobs that we are seeking to drive through reforms just like these. Competition must also ensure, wherever possible, a level playing field. Because that's also in the best interests of Australians, of all businesses, and all customers and that's what these changes are designed to do. In November of last year the Government announced its response to the Competition Policy Review also known as the Harper Review, undertaken by Professor Harper. The Turnbull Government announced that in November and our response was set out in a competition agenda that will boost innovation and open up new markets and ultimately lead to increased choice and better service for consumers.

In March of this year, the Turnbull Government announced its response to the final outstanding recommendation from that review, and that was the recommendation to amend Section 46 of the Competition and Consumer Act, regarding the misuse of market power provisions. The Government accepted the recommendation of the Harper Review in full. The decision was made only after a consultation process following the release of the Government's response to all other Harper Review recommendations. Now, today, the Government has released for public consultation a comprehensive package of competition law reforms agreed as part of the response to the Harper Review. These include changes to Section 46. The ACCC has in tandem begun consultation on the guidelines it will use to enforce the new Section 46. Public consultation on the draft legislation will run for four weeks to 30 September. Once any required amendments to the legislation have been finalised, the Government must then consult with the States and Territories for up to 35 days before the Bill can be introduced into the Parliament.

Now, to go through some of these measures; firstly, on the misuse of market power in Section 46. Australia's current misuse of market power law is not reliably enforceable in the view of the Government and permits anti-competitive conduct. The review recommended that Section 46 be replaced by a new provision which is better able to deal with harm to competition in Australian markets.

Now, there are a number of key changes: removal of the take-advantage test, which is often used as a shield in a defence for particular practices and behaviour; changing ‘the purpose’ to ‘purpose, effect or likely effect’ of any practice and thirdly, changing the focus from damaging a competitor to substantially lessening competition. I particularly want to underscore this point, it's not about any individual competitor – it's about the customer. I've often been asked in the course of these changes: well, is this for small business or is it for big business? It's for the customer. It's for the Australian public that we have competition laws that actually service them in the economy, because the customer is always the focus in a competitive economy. So it's not about any one business – it's about the customer and the test that is used here is substantially lessening competition. There will be an inclusion of mandatory factors as suggested in the Harper Review to guide courts in relation to determining whether something was increasing competition, i.e. enhancing efficiency, innovation, product quality or price competitiveness, or lessening competition, which is about preventing, restricting or deterring potential for competitive conduct.

Now, the revised law prohibits a firm with a substantial degree of power in a market from engaging in conduct that has the purpose, effect or likely effect of substantially lessening competition. Section 46 will provide another tool for regulators to ensure Australian businesses can flourish, that new and innovative firms can enter new markets and expand, that new technologies can be introduced into

Australia and consumers can receive the best quality products at the lowest price.

Now, in addition to that there are a number of other changes which relate to price signalling and expanding Section 45 on the contract section to include, this is important, a prohibition on concerted practices that substantially lessen competition. Now, a concerted practice covers conduct that is jointly arranged, carried out or otherwise coordinated. One of the frustrations of the current provisions is that unless price signalling is caught up in a particular contractual arrangement, i.e. between petrol companies, oil companies or banks or retailers or whoever it might be, then it doesn't fall foul of the current provisions. This change provides for a doctrine of concerted practice, which looks at the practice and behaviour of firms in these areas and it provides another opportunity for the ACCC to ensure that there are enforceable laws for dealing with price signalling.

Now, there are other measures in the explanatory memorandum and the exposure draft we released today. There is a simplification of laws relating to cartel conduct. There is also changes in relation to increasing the penalties relating to secondary boycotts and industrial agreements and also changes recommended by the Productivity Commission on the national access regime arrangements, which enables third-party access to bottleneck infrastructure, where doing so would promote competition in markets that are dependent on access to that infrastructure and that this would increase economic efficiency.

So, what I'm announcing today are economic reforms that boost competition to support jobs and growth in the Australian economy. This is the Turnbull Government delivering on what we took to the election and getting on with the job.

QUESTION:

Treasurer, the Grattan Institute today is pretty overwhelming in support…

TREASURER:

Are there any questions on competition policy before we move into the other issuers of the day?

QUESTION:

Are these changes going to make it easier for the ACCC to take action on anti-competitive behaviour?

TREASURER:

We believe so. That's why we're doing it. This was the end point of a very deliberative and careful process that was initiated under the Harper Review by my predecessor Joe Hockey and I commend him for initiating this review. And the Turnbull Government has embraced the Harper Review. It was one of our first acts, the Prime Minister and I as Treasurer, together with responding to the Murray Review, to move forward on these recommendations. They will be tested and proved as we go forward but I am very optimistic that these changes will only spur competition, spur business growth and support competition and innovation in our economy.

QUESTION:

Treasurer, do you believe you have the support in Parliament to get these measures through?

TREASURER:

You raise a very good point, because the Labor party is opposed to the changes that we're making to Section 46. The Labor party wants to stay with the same rules that leave the ACCC powerless, whether it's on Section 46, where there have been no real successes in that area, and they have sided with those who want to stay in an anti-competitive environment. Now I'm surprised the Labor party is not supporting a level playing field on competition. I’m surprised the Labor party is not supporting legislation that actually would give arms to the ACCC, whether it's in relation to banks or retailers or petrol companies or anyone of that nature, to ensure that there was strong competition. What that exposes is when Bill Shorten gets up and bangs on about the banks, it's just political rhetoric. He's not trying to help Duane and Jenny, he has got no interest in Duane and Jenny other than to use them to pursue his own political objective.

Now, what we're doing on the banks, I've gone through at these sort of press conferences many times and you're familiar with those initiatives we're doing to actually help people in Duane and Jenny's situation. The new work we're doing to establish a new tribunal which can ensure that those sorts of cases can be heard and dealt with in a cost-effective way – that actually helps someone. The powers we are seeking to give the ACCC here in this legislation is actually helping the ACCC to be able to do something about difficult cases and anti-competitive conduct. The powers we've given to ASIC, the increased resources we've given to ASIC, they're actually doing things to help the Duane and Jennys. What Bill Shorten is doing is just pursuing a very negative, self-interested, political agenda. Now, that's not in the national interest.

QUESTION:

So, if there's no chance of Labor supporting this, you are going to have to negotiate with the crossbench, do you believe you will have their support on this?

TREASURER:

We'll take that through the Parliament and we will engage with them as I have set out. They are at the first hurdle that needs to be cleared, having first consulted with the states and territories, which you have to do on all competition law in this country. We have had no objections to the intent of these measures being put back to us by the states and territories. That legislation now goes out to the states and territories over this period as well as out for public consultation. That means by the time we bring it to the Parliament, that I believe we will have a set of measures as we've outlined them here today which enjoy the broad support of the Australian community and Bill Shorten should just drop his politics. He should get on and support these measures; just like he should support our efforts to arrest the debt, just like he should support all of the measures we're doing to make our economy stronger and more resilient.

QUESTION:

If I may just move on to some of the issues of the day, does the Government have any evidence that Senator Dastyari’s political donations have influenced his position on the South China Sea or other issues?

TREASURER:

I'm not making a comment on that, other than to say this: that Shanghai Sam has basically asked a Chinese company with links to the Chinese Government to pick up his own personal debt. Now, that's not a fact that's in dispute as far as I'm aware. I mean, that's simply what's happened. And I don't think he's disputing that as a fact either. And so the question for Bill Shorten is: is that appropriate for the Manager of Opposition Business in the Senate? Now, that's a very serious position in the Australian Parliament, to be Manager of Opposition Business in the Senate. It's one of the most senior Senatorial offices that any member of the opposition can occupy other than the Leader or Deputy Leader in the Senate. So, the question to Mr Shorten is: is that where he's going to set the bar? So, it really is on him. Now, I understand that he has ‘counselled’ him. Well, if that's where he's going to set the bar for his members, well, that's a matter for Mr Shorten, and I think the question to him is: where are his standards on this? Now, others have made commentary on the issue you've raised about the position that Senator Dastyari has taken at odds with his own party's policy it would seem on China. Now, that's also not a fact that's in dispute. So with those facts being out there, Mr Shorten's response has been to have a cup of tea. Now, if that's where he wants to set the standard for these things, well, that's a matter for Mr Shorten. At the end of the day, this is really about Mr Shorten's judgement. Shanghai Sam, we all know. We've seen him get involved in all sorts of stuff over the years. He's a colourful character. Paying off debts in the Labor party for the former member for Dobell ,Craig Thomson and all of those sorts of things, as I understand. He's been a busy boy in the New South Wales Labor party through not one of their greatest periods. But whatever this amounts to is really a question for Mr Shorten. I stress again: he is the Manager of Opposition Business in the Australian Senate. It's a very serious position.

QUESTION:

On super, the Grattan Institute has been pretty overwhelming in its support of the super changes. How are you tracking and garnering support amongst your own backbench?

TREASURER:

We've had a very good consultation process over recent weeks. The Minister for Revenue and Financial Services and I have engaged very extensively and I think the Grattan Report highlights a number of issues today which I think only goes to reinforce the action that we've taken in the Budget to ensure that our superannuation system is fairer and more sustainable. That's the real key, being more sustainable for the future. Obviously the contribution that that package makes to the job of arresting the debt is also important and these are all points not lost on my colleagues, and we've had a very good process up until now and that continues.

QUESTION:

Are you frustrated that it's been met with some resistance from members of your own backbench team?

TREASURER:

No, look, I'm never frustrated by democracy. I think it's a good thing. I think it's good that we have discussions and consultations on these issues and I thank my colleagues for the very good-faith nature in which they've engaged with this process. Government is about making difficult choices on difficult issues. We've made some difficult choices on this particular matter. We put it in the Budget. It is addressing a large number of very important challenges facing Australia. Most significantly the ageing of the population and with the ageing of the population, and the growing size of very large balances in superannuation which attract very concessional rates of tax, that's not a sustainable position to take out over the next 20 or 30 years. It's important that we make changes to make it more sustainable so it's there for future generations and is doing the job and the purpose which it's designed for.

Now, I stress also that in these consultations there's been very good feedback to the other changes we've made to superannuation to ensure that those on lower incomes can have the ability to access equally the sorts of tax concessions which those on higher incomes can access through the LISTO. The fact that we're making superannuation concessions more flexible for people who have disrupted work patterns, now that could be because they've been a carer, it could be that they've had children, it could be they've gone back to study for a while through a career transition and the opportunity for them to make catch-up contributions has been well received. The contractors provision – this is incredibly important. This is a provision which up until now meant if you were working in your own home-based business and you were working for a wage, you couldn't access superannuation tax deductions for the contributions you made out of your home-based business income or your contractor income. That's just patently not fair. So we've changed that and that costs around about a billion dollars to make that change. So, whether it's that or allowing contributions to be made up to the age of 75, all of this is making superannuation more flexible and more sustainable, and so look, I welcome those elements of the Grattan report that support those issues. We obviously have a different view about some things like making those who are working pay even higher rates of contribution tax than what we've already proposed but that's all part of the debate.

QUESTION:

Have you sat down to open up discussions with Labor about these proposed changes?

TREASURER:

Well, look, first, I'm working with my own colleagues. I think that's the first place. We're aware of the issue that Labor has raised in relation to these matters. They're on the record with that. We're continuing to work with them at the moment on the Omnibus Bill, which I introduced to the Parliament last week and we'll see how those discussions pan out in the week ahead or weeks ahead. Those measures do go to the heart of testing the mettle of this Parliament about whether they're serious about arresting the debt or not. That's a test that the Labor party has to pass if they're serious about arresting the debt. We're simply asking them to support things that they themselves supported in what they put in their costin gs before the election.

QUESTION:

What do you make of Moody's warnings today about the splintered Senate?

TREASURER:

Well, their comments are similar to what other agencies have mentioned. I met with S&P in Canberra last week. There's no doubt that the agencies are supportive of the trajectory that the Budget sets out to get the Budget back into balance and to arrest our debt. The question that they're asking is, will the Parliament support the Government in achieving that trajectory? Now, this is the question. I think it's the same question Australians are asking. People can commentate on the composition of the Senate and the House of Representatives and all of these sorts of things, but one thing is clear from the election - the Government was returned. Malcolm Turnbull was returned as Prime Minister. We set out a very clear agenda before the last election in the Budget. In fact, the first time in living memory when a Budget was put to the Australian people, before it was put to the Parliament. There is a clear plan that has been set out there for getting the Budget back to balance. So, the rest of the Senate has also been elected as have members of the opposition and the Australian people just expect the Parliament to get on with it, not to play games, not to engage in these sort of political stunts that we've been seeing but to just get on and do the work. That's certainly what the Government's doing and I look forward to having those very constructive engagements with the opposition and with the other Members of the Parliament.

Thank you very much for your time.