STEPHEN CENATIEMPO:
Time to talk federal politics with the Assistant Minister for Competition, Charities and Treasury and Member for Fenner, Andrew Leigh. Good morning, Andrew.
ANDREW LEIGH:
Good morning, Stephen, great to be with you.
CENATIEMPO:
I’m not going to talk to you about upgrades because I imagine in your position you probably don’t fly that much so it probably doesn’t affect you, but I do want to talk about the Queensland election. What lessons are there from that for the federal government?
LEIGH:
Well certainly cost of living was a big issue and we’re very aware that we need to be doing as much as possible on cost of living. Of course we had the energy bill rebates, tax cuts and the childcare package. But we’re always looking to do more, particularly around the competition space. The work we’ve been doing in grocery competition really is focussed on ensuring Australians get a good deal and that we pay as little as possible for the groceries we need at the check‑out.
CENATIEMPO:
Yeah, but I mean the lesson though is if you look at the Labor campaign in the lead up to the Queensland election, it was throwing money out left, right and centre – free lunches, effectively free public transport. Those hand‑outs didn’t get him across the line. Is that enough?
LEIGH:
A lot of those policies were supported by the other side. The public transport policy, for example. So, you know, I don’t think that’s a major determinant. Obviously there’s a bit of a regional city divide. In fact, I’m not sure I’ve ever seen it quite that big. Some of these double‑digit swings in the regional areas and then only about a 2 per cent swing against the Miles government in Brisbane. So clearly, you know, the dynamics of Queensland are different from a lot of the rest of Australia. And you remember of course, you know, Campbell Newman reducing Labor to a team small enough to ride in a Tarago and then losing office at the next election.
CENATIEMPO:
Yeah, okay. And some would say that might be happening at a federal level, but still a long way to go there. Now something that you and I do agree on is that we need to get farmers a better deal, particularly when it comes to the major supermarkets. You’re going to be giving a speech about market competition particularly with its impact on farmers. Tell us about this.
LEIGH:
I’ve always been fascinated by farming, ever since I went to an agricultural high school, and the squeeze that farmers get in competition really is brutal. If you look upstream the big 4 fertiliser firms control two‑thirds of the market. The big 4 building suppliers control half the market. And then when farmers are looking to sell their product, then they’re selling to a meat processing industry where the big 4 control half the market. They’re using transport firms where just the big 2 have two‑thirds of the market, or shipping firms where there’s just a duopoly. And then of course there’s the supermarket duopoly. So farmers cop this squeeze. They pay too much for their inputs and they’re getting too little for their outputs as a result of a lack of market competition.
CENATIEMPO:
So how do we change that though? Because I think back to my time in farming, I lived in a small town in South Australia where the local co‑op was the packing shed for certain types of fruit. They own the local outlet for fertilisers and equipment, et cetera, they owned the local hardware store, and they also effectively operated a little bit like a bank to certain extents. That co‑op has now gone. It’s gone broke and major companies have taken over all of those roles. Isn’t this as simple as just propping up small business?
LEIGH:
Well part of it is about looking after small business and making sure they’ve got the supports they need – everything from cyber security supports, mental health, to having a Small Business Ombudsman. Part of it is also about ensuring that the competition watchdog has the resources it needs to enforce laws. So we’ve been doing that, particularly in the case of the supermarkets. The competition watchdog has been concerned about wine processing being concentrated, about the beef auction industry. We’ve banned unfair contract terms which helps a lot in this regard because sometimes those contracts between the farmers and the people they’re buying from or supplying to can be pretty unfair. So, you know, competition reform is not one answer. It’s a whole lot of work which in the end produces better outcomes for farmers and families.
CENATIEMPO:
But if you look at all of those problems that you just talked about, over decades every single one of them has been caused by the bigger organisation swallowing up smaller ones. When you look at the supermarkets, you know, I think back to a kid, when I was a kid in Sydney we had probably 6 or 7 different options for a supermarket. Now there’s 2, well, you know, kind of 3. When we look at, you know, things like, as you say, hardware stores. There were small hardware stores everywhere. Now there’s 2 or 3 major players in that business. And this is not just affecting the farming industry, this is right across competition. But how do you stop that, I guess, absorption of smaller businesses?
LEIGH:
Part of it’s about having good merger laws. So Australia’s merger laws have been lagging behind other countries and that’s why we’ve just put in place the biggest merger shake up in 50 years. That will make sure that we don’t have 3 different pathways to merger reform but a single administrative pathway. The low‑risk mergers get approved quicker. We get more transparency in the system and the competition watchdog can focus all of its attention on the high‑risk mergers. We haven’t had a merger system that’s fit for a modern economy and the one we’ve just introduced into parliament, which I hope will get support from all political parties, is really going to make a difference to merger scrutiny.
CENATIEMPO:
I want to talk about, you talk about the competition watchdog, the ACCC, and since the ACCC was instituted, and I’ve seen every government since then say, ‘Oh, we’re giving them extra resources to do this, that and the other’. What are they actually resourced to do if you’ve got to keep giving them resources to do what most people think their job is?
LEIGH:
Well the work’s growing. I mean they’re an agency which has been I think very successful in working to regulate a whole lot of complicated markets. The work that they’ve done in digital markets has been not only Australia leading, but world leading. So it’s appropriate that as we ask them to do more we do fund them for that additional work. Right now there’s probably between 1,400 and 1,500 mergers every year. The competition watchdog is only seeing about 300 of those. So 3 out of 4 mergers just aren’t even being seen by the competition watchdog. If we want them to scrutinise those additional mergers, Stephen, I think it’s only fair that we tool them up to be able to do that job in the interests of Australian consumers.
CENATIEMPO:
Yeah, no, look, I’ve got no problem with having the resources that they need to do the job but, you know, when you think that the ACCC’s job is to, you know, have a look at competition, yeah, I mean you’ve only got one job effectively, whilst it might be a very complex one. Andrew, always good to talk to you, I appreciate your time. We’ll catch up in a couple of weeks.
LEIGH:
Likewise, Stephen, thank you.