1 October 2014

Address to the Australian Food and Grocery Council Industry Leader's Forum, Canberra


Check against delivery

It is great to be with you. Thank you for the invitation and may I thank you all for your effort and your enterprise in a crucial area of our economy, which in my eyes offer delicious possibilities - delicious possibilities - but in this season of sporting triumph and challenge they are possibilities that won’t land in our lap. They will not be gifted to us.

We need to work hard and earn those opportunities and part of my work is working tirelessly to ensure this is the best place to grow and start a business.

And we are not that at the moment.

I travel and I engage and I do - I think – what is called comparative research. Which is the nice way of saying ‘looking at ideas that have worked elsewhere and see what we can pinch’ but also keeping an eye on our competitors at a governance level, at a governing level, about what other jurisdictions are doing because we want you to continue to invest in this country, and its future and add to the jobs and growth agendas that the Government is pursuing.

I said 12 months ago I had quite a bit on my plate for the coming 12 months and it’s important for me to be accountable to you all for an update on progress and what we are doing to build that strong and prosperous economy.

You know there is a lot of chatter around this building about the Budget, and about our Economic Action Strategy in dealing with the debt and deficit circumstances we have inherited.

That is just part of a broader picture of ensuring that we, as a nation can be our very best and that your very best is supported by an entrepreneurial eco-system - if you will - that is encouraging of your investment and your initiative.

We’ve got a bit of work to do and we know there are signs of how we are travelling.

I am accused by the Prime Minister of being a bit evangelical about my work and often called ‘Pastor Bruce’, but for the purposes of this morning let’s be ‘Pasteurised Bruce’ and we’ll all feel at home.

I’ll give you an example. We look at that entrepreneurial eco-system and we think, well what’s going on? What is Government involving itself in?

There’s been a lot of argument about just how gummed up our economy is with regulation and red tape. There’s been some disagreement across the Parliament about how best to measure that. Originally it was a ‘one in, one out’ conversation and that wasn’t thought to be a good metric under the previous government. Then a bit of a stocktake, a bit of a count and that proved to be not that helpful either with the 21,000 new and amended regulations.

But I was really interested to track how the international community sees us. I mean the World Economic Forum has Australia’s economy ranked at 128th in the world in terms of the compliance and regulatory burden imposed by Government - 128th.

Now you might think, only 127 other economies where there’s less of a drag on your enterprise than here. That’s not too bad. Well no, that is horrendous. That is terrible. And in this season of footy championships and the great equaliser of draft picks, just imagine how many draft picks you’d get if you were 128th on the ladder! You’d be expecting all sorts of help but this isn’t an economy, a global contest, where someone gives us draft picks.

We’ve got to lift our game and that is why this billion dollar red tape reduction strategy is such a central part of that and I want to thank you all for your contribution to it.

It is only one example though of what we’ve got to do to make sure Government is providing world class governance, so that all of you can do world class things in your business. Knowing that every day you need to be world class because someone else will butter your bread for you. This is becoming increasingly important - not just for what we deal in everyday, but our longer term national interest.

If we’re to sustain the growth in national incomes as a country that has enabled us to feel extremely positive about the quality of life and living standards, we need to do some spectacular improving in our levels of productivity.

When I was a lad in the early 70s there were seven people in the workforce for every one retiree – today it’s five. By mid-century it will be less than three.

To maintain that average 2.3% growth in our national income, we’re going to have to find productivity improvement year-on-year of around 3% - something that has never been achieved in my life time.

So ensuring that we have that innovation, that drive, that enterprise, that entrepreneurship -that improvement in productivity has to be central to everything that we do and that is why in my work so much of it is around trying to support that improved level of growth.

I was in China recently for an APEC SME Ministerial Council, and it was fascinating to see what other countries are doing - realising that for us here this is a race that continues with a receding finish line while other countries try and make their jurisdictions more attractive for investment and more supportive entrepreneurial eco-systems.

This is where some of the issues that Gary and I have bonded over for many years come into play - making sure that this entrepreneurial eco-system is as supportive as it can be. The red tape stuff we talk about, and thank you all that have contributed to that work, we’re almost there for this year. You know that billion dollar commitment? It is not for the life of the Government, it is each year.

There’s many reasons why I like our Prime Minister, but he’s a bit like me - he laughs at his own jokes, even when they’re not funny - you’re supposed to laugh at that point by the way.

In Cabinet this is a constant focus for our work, that we’re well past the three quarters of a million dollars this year, well on the way to achieving that billion dollar target, but it starts all over again and this is why we need to keep working to reduce that compliance burden. In your particular area though there are some fascinating dynamics that we talked about before.

My driving ambition is for businesses, big and small, that are efficient - they should be able to invest with certainty and predictability. To be able to engage in healthy, competitive commercial relationships with a sense of fair conduct happening between the parties. Some of that work is what Gary has touched on earlier and I want to thank you all, all the parties that were involved in the preparation of the proposed Food and Grocery Code of Conduct. My encouragement to the industry was to lead this work with an industry led solution, where you know far more about the interactions between the parties than any Government official or Minister could at a federal level.

And this work jointly developed by Coles and Woolworths and the AFGC is a good piece of work. It is aimed at improving those commercial dealings that have been such a focus of contacts with me and things that have kept people awake at night for some years.

We’ve been working through that because the draft that came to us was actually unable to be implemented. It had some constraints according to the Government solicitor on avenues for redress - that no code could trump what the law or common law allowed in terms of remedies. My undertaking to the parties was to translate the work and the negotiated positions that are represented into something that could at least be enacted. I thought you would think I was reckless putting something out for consultation that we could not implement anyway. That would’ve been just dopey and would’ve reflected badly on all the parties and frankly would have been a terrible thing for me to do as well. So we’ve done that and we’ve tidied that up and so that document has been out in the marketplace.

Consultations have closed now and we’ve got quite a range of submissions that came through in September. So we’re working through that quickly with the view of getting it implemented within the 12 month timeframe that we talked about when we originally received it.

There are some decisions that will need to be taken though. We’ll need to satisfy ourselves that the code will actually make a positive contribution to fair and efficient and mutually respectful commercial dealings and that it doesn’t impose excessive regulatory burdens.

One of the disciplines that we have as Ministers is if we’ve got a regulatory intervention that survives the analysis of: Is this justified? Is the problem real? And is this the most light-handed way of resolving it? What is the cost of implementation and compliance? Having satisfied all of those things and decided that a regulatory intervention is the way to go, we have to find offsets for it, so that that stock of regulatory burden we touched on earlier isn’t added to.

I’m optimistic we can do that, I’m grateful for your input in that work.

I was pleased to have a chat with John Durkan recently about one aspect of that code that I have some concerns about, and that is, given that much of the code is borne out of a frustration or grievance related to the imbalance in negotiating power – why is there an escape clause that says: we won’t do A, B, C and D unless there’s an agreement that we can?

That seems to put us right back into that negotiating imbalance but I’m encouraged by John’s reaction, that we can polish that a bit so that where those agreements seem to step outside the code there is a mutual beneficial requirement to that, so that work is progressing and it is going well.

A lot of it was borne out of another thing we talked about 12 months ago and this has also been well progressed. This is the extension of unfair contract terms protections that are available to consumers, but not available to small businesses. Now I shared with you, my wife and I, our enterprise adventure, we’ve lived the dream, pillow talk of cash flow and all the joy that that represents. And the clear recognition that in my engagement with some bigger businesses, the ‘take it or leave it’ contracts that I was given, I had no capacity to vary, no ability to push back on those provisions but because I was a small business I couldn’t access those remedies that were available as I would if I was a consumer. Now we’re seeking to extend those unfair contract terms protections and I’m pleased that the code embraces some of that thinking, that work is progressing as well.

There’s also our work on the small business and family enterprise ombudsman. A trusted, reliable, alternative dispute resolution provider or concierge where there are other avenues to quickly resolve commercial disputes - so that businesses can get back to business.

Small business caught in litigation has a very substantial uphill battle. You might be right but you might have run out of cash to prosecute the case. So something that is more nimble and responsive is very important and the reason why access to remedies was part of the terms of reference for the Harper Review.

The Harper Review, and Professor Harper will be here later today to talk to you about it, is a crucial piece of work. We know that Hilmer added 2.5% to our GDP and we need to achieve similar ambitions with this piece of work. It is about making sure that the institutions, the competition policy settings and the law itself support that point I made earlier - that this is a good place for an efficient business, big and small to thrive, to grow and to prosper.

Where there is confidence and predictability in the way the law and the institutions operate. That we can support improved productivity. That there is sure footedness when you’re making investments. That there’s opportunity for reward for your innovation and that that supports long term benefits to consumers and competitiveness in our economy.

Now, it is a good piece of work and the terms of reference are broad and I’m grateful for your input to it. It is about saying, well what can we do to make sure our economy hums? Because it needs to hum - going back to that earlier point about the productivity challenge we face given the ageing of our population and the terms of trade tracking the way they are.

There’s been extensive consultation and I’m not going to reiterate all the arguments, because I’ve tried to steadfastly stayed out of it. You know I have some views on key topics but we wanted clear air for an objective, evidence based analysis of these important issues to identify where there are aspect of our economy that are choke points, or gumming up our capacity for productivity and innovation. And also to see what we’ve learned from the application of the black letter law that we have now and the institutional arrangements that are in place.

The first instalment of the Harper Review’s deliberations has been released. Their draft report gives you an indication about the issues as they’ve seen them and as they’ve weighed them. There’s a chance for a further engagement and I would encourage you to be involved in that. That process of further consultation runs through to the middle of November and I’m expecting to get the Harper panel’s final report early in the New Year.

This is just a sample of what we’ve been doing in the last 12 months, dealing with particular issues of my area of responsibility of Small Business and Competition and Consumer Affairs. But as a Cabinet Minister I’m not shy and the hunting licence that the Prime Minister has given me to venture wherever we need to go, where the head winds and obstacles are in your way, is something that I’ve taken up.

It is also a sense that this is a whole of government enterprise - to support your enterprise. That is part of why we looked and learned from what others are doing and try to out-perform them, going back to that sporting analogy at the beginning, but for you this crucial.

Flying out of that APEC SME Ministerial Council meeting in Nanjing, I was looking for a gift for my micro humans - I’ve got a six year old and a five year old - and they’re all busting for some Hello Kitty stuff. Well there wasn’t any and it was a joy to wander around Nanjing Airport looking for something like that, but as I walked past the premium, internationally recognised brands of beverages and I saw spirits and the like, as a teetotaller, I don’t know what they taste like but I am familiar with the brands and then I saw some Australian made powdered baby formula sitting alongside the premium beverage offer.

It reminded me of what I heard in China just a few months earlier, that our reputation as a clean, green, reliable food secure provider will be rewarded in that market.

One of the reasons I was there was to find out how to navigate a market that is so brim packed of possibilities, but so notoriously challenging and hotly contested.

I visited Alibaba and inquired about their platforms and their approach; about payment predictability, about logistics arrangements that can get you through quarantine and border arrangements, about an internet platform that taps into 500 million Chinese that are internet engaged - 300 million already involved in e-commerce, a neat coalescence of internet engagement and income looking for premium quality product.

This is part of our work. That is a part of that delicious world of possibilities and I want to make sure we are working as hard as we can to win that opportunity, and you can exercise your enterprise with Government as an ally and advocate, not an adversary.