TOM CONNELL:
Let’s bring in the Minister for Competition Andrew Leigh, right now, to talk more on this. So there’s an issue here with the size of some companies in some sectors. What are the sectors that you look at, you’ve experienced, that you’ve seen that you just think they have players that are simply too big, something needs to be done about them?
ANDREW LEIGH:
It’s a great question, Tom. And, really, if you look right across the Australian economy from banking to baby food to beer, you see too little choice and too few competitors. Australia’s economy is often characterised by being the land of the duopoly. We need to make sure that there’s more vibrant competition. That’s important for consumers because more competition puts downward pressure on prices. But it matters too for suppliers. It matters for our farmers. It matters for workers who need choices as to where they can work if they’re going to earn a wage that reflects their productivity.
So this reform review really is looking right across the Australian economy at opportunities to put in place the sorts of competition reforms that increased living standards by $5,000 per household under the Keating‑Hilmer reforms of the 1990s.
CONNELL:
So when this review was being sort of scoped with what it can do, how bold can it be? Is it free to say there might need to be government‑enforced demergers? And I’m thinking of those areas you mentioned – beer and banking just for a couple of them. Massive amounts of mergers have happened over the past, not so much few years, but the past couple of decades. Does the review need the power to say "We’ve got to actually split some of these companies up?"
LEIGH:
No, that’s not something that’s been a priority for us, Tom, but we are looking at merger reviews, as was brought to the government by the Australian Competition and Consumer Commission. Originally when it was headed by Rod Sims and then again by Gina Cass‑Gottlieb. And the Commission has a range of recommendations which the competition taskforce will consider.
We’re also open to bright ideas, whether they’re coming from states, territories, business, from the communities sector, from academic experts. We don’t believe we’ve got a monopoly over wisdom in this reform space. This is an area where we want to see a vibrant competition of ideas as we seek to deliver reforms that will in the short term help address the cost of living crisis and in the long term lay the foundations for productivity growth and living standards growth.
CONNELL:
So this review is only going to look at laws that happen in the future? It essentially won’t be free to say competition is so bad we might need demergers? It can’t go into that area? Is that what you’re saying?
LEIGH:
That hasn’t been a priority for us. We’re looking at things such as non‑compete clauses, which exist in one out of five workers’ employment agreements and impede many Australian workers from moving to a better job. Not just tech workers but early childhood workers and hairdressers have non‑compete agreements in their employment arrangements and that may be dampening wage growth.
We’re interested in working with states and territories on issues such as planning and zoning, particularly as that might affect grocery competition. We’re keen to work right across the Australian economy, as the Hilmer process did in the 1990s, to deliver those broader competition gains.
CONNELL:
Okay. Is it a sovereign risk issue that, you know, a bit like the joke about getting to Dublin – if you could go back you wouldn’t allow some of these mergers but now they’re in place, it would be a bit radical to split up companies? Is that why you don’t want to go into that area?
LEIGH:
Look, Tom, I appreciate that you’ve got an interest in this area, but I would say that what you’re focusing on is a fairly narrow part of the broad competition agenda. If you look at what agencies overseas like the FTC or the European competition regulators are doing, they’re looking right across the board at a suite of measures to deal with competition. In the digital space, we’ve now got large digital firms which are acting as gatekeepers to industries where increasingly their platform power is making it more difficult for small businesses to compete. In the area of farming, we’ve got farmers squeezed by concentrated suppliers and concentrated producers and retailers. So we need to look at competition in the interests of farmers. But it’s a big agenda. We’re open to reforms right across the economy.
CONNELL:
Are your arms a bit tied? You talked about the digital element there. You know, you talk about Facebook and all the acquisitions it’s made. It makes them internationally. If it’s looking to that in the future, is there a way for you to say, “Well, I appreciate you’ve bought the US arm," whatever it might be, “but in Australia that merger, if you like, can’t happen”? Is that possible to have that sort of regulation?
LEIGH:
Yeah, I think that’s a great question to ask, Tom. I mean, what would it have meant if Australia had blocked the Facebook/Instagram tie‑up, for example? Now, you’ve seen the British competition regulator being large enough that when it’s chosen to step in that has stopped a deal. But I think it does point to the need for the Australian regulator to work in more with its international counterparts to come at a common view across regulators in the interests of consumers in those countries.
We're in favour of tie‑ups which can boost overall productivity. The ones we have real concern about are when large firms seem to be swallowing smaller ones not because it’s going to add to their value but because it’s going to stymie a competitor. The so‑called strategy of building moats around your company. That’s not good for consumers.
CONNELL:
Yeah. Let’s get to a specific, because when I’ve asked you in the past about sort of future specifics you’ve said, you know, you can’t comment on that. But something that has happened – Qatar Airways wanted more access to Australian flights. The Labor government said no. I’ve just been struggling to see a coherent reason as to that. Can you explain why that decision wouldn’t have been good for competition?
LEIGH:
Well, the Aviation Minister Catherine King, made this decision in the national interest. It’s on national interest grounds based on a whole range of concerns. Look, I know people are focused on Qatar, but it is important to recognise there’s been an increase in the number of flights coming through from Emirates, Qantas, Cathay, that there’s potential applications in the pipelines from Vietnam Airlines, China and China Southern are on track to increase flights. We are aware of the importance of aviation competition, and that’s a key issue to be explored in the forthcoming aviation green paper.
CONNELL:
Okay. Because, yeah, you’ve got these international fares at 55 per cent on average, across some of the big routes, higher than pre-COVID. You said national interest, but then you listed although these other airlines that are going to increase their flights. Why is it outside of the national interest for Qatar to do it but all the others ‑ you seem to be welcoming the other airways?
LEIGH:
Well, we don’t have unlimited slots, Tom. Many of our airports are constrained in terms of the number of takeoffs and landings you can do. And so that limits our ability to say yes across the board. Australian carriers face the same challenge when they look to fly into other countries as well. But we’re keen to grow the tourism sector. We’re aware of the importance of aviation to the business sector. Certainly, it’s a key aspect of the productivity agenda that the government has.
CONNELL:
So it’s a slot shortage and Qatar is the least in our national interest? Is that what you’re saying?
LEIGH:
Well, the Aviation Minister has made the decision in the national interest weighing a whole lot of factors that are coming in. We’ve also, you know, got to think about aviation competition right across the board, which is why I gave you those examples of other airlines as well.
I can certainly understand Qatar’s frustration, but I can assure you that the Transport Minister, Catherine King, is keenly focused on the importance of competition, and that will be an issue to be explored in the forthcoming aviation green paper.
CONNELL:
We’ve been very keen to talk to her on the program. Perhaps the stars will align one day, but we always enjoy your company as well, Andrew Leigh. Thank you for your time today.
LEIGH:
Thanks, Tom. Good to chat.