Brian Carlton:
There is a fair bit going on as I am sure you are aware in the retail sector. Allegations that there are too many of us shopping online and the big retailers are even complaining about that. Then there's the sad decline in what you might call the small local business. On the line I have got the Small Business Minister, the Federal Small Business Minister, Bruce Billson who has been tackling both ends of this equation over the past couple of days. Minister welcome.
Bruce Billson:
Good afternoon to you and your listeners.
Carlton:
Thank you. Now yesterday or the day before you were talking about Coles and Woolies and the concerns you have about their supply chain and the affect of them having 80 per cent of the supermarket business between them. Now there will be an ACCC investigation into this as I understand. What are you hoping to achieve from that?
Billson:
Well there is a couple of things going on. At the moment the ACCC is looking at allegations of unconscionable conduct or an abuse of their market power where big supermarkets have been engaging in ways that no one would like to see, that's the allegation with some of their suppliers. So the ACCC is investigating those allegations.
Carlton:
So let's just put it into plain everyday speak. This is Coles and or Woolies or both squeezing the suppliers on price, obviously they have to absorb those extra costs or push them further back down which is ultimately hurting farmers and packagers, those sorts of industries?
Billson:
That's the broad context. We have seen furious competition at the till between the big supermarkets that to the credit of the big supermarkets has provided a lot of your listeners savings on their household grocery bill but what we have also seen is the pressure of that has worked its way down he supply chain. So that those involved in providing fresh produce and those in processed foods, the items that people are buying a lot of that savings is actually being driven out of strong negotiations, if we could call it that, with the supply chain. There have been some allegations that that pressure and market power that the big supermarkets have may have involved some conduct against out competition laws and is requiring investigation by the ACCC.
Carlton:
The suppliers are stuck between a rock and hard place really aren't they? They don't really have a bargaining position here to the extent the price you are going to pay us for product X is just not enough we're not going to sell so their out of business aren't they?
Billson:
Look you have nail exactly the precious bargaining position suppliers and producers have, where they have got only a couple of potential outlets for what they produce. So they are faced with going into a negotiation where they are not really in a balanced bargaining position. If they are wanting to stay in business some are feeling they are having to make decisions or agree to terms and supply contracts that are really against their own survival. What we are saying is that there are current laws that deal with things like the misuse of market power, like unconscionable conduct and the ACCC is investigating claims looking at those current powers, but in addition what we were talking about yesterday Brian was a need for a root and branch review of those competition laws to make sure they are up to date and fit for purpose to make sure a modern day small business is the equivalent of a serfdom where the overlord tells you what you can and can't do and if you are allowed to be profitable.
Carlton:
That's always going to be an issue when you have got two players who have effectively got 80 per cent market share. The Americans back in 1920's from memory had a pretty radical solution to the Standard Oil problem which is exactly the problem we are dealing with there. Standard Oil was way to big squeezing the suppliers on the way through, the small oil producers and the Government eventually decided that this company had to be broken up into four component parts. Is there any possibility that at the outcome of review the recommendation might be to break Coles up, to break Woolies up into smaller competition businesses?
Billson:
Look there is no proposition of that kind on the table but what the review is doing is looking at changes in the economy. You touched on the supermarket area but this isn't only about the supermarkets. This is across the economy where we are seeing concentrated markets. Its in petrol and in other areas. Your listeners, you Brian and other presenters on 2UE talk about it regularly because there are genuine and legitimate concerns about areas of our economy where there are great concentrations and players enormous market power doing battle with smaller competitors and small suppliers. What we're on about is making sure that if you are an efficient business and you are meeting the needs of your customers you should have a future in our country, you should be able to invest, to innovate and to feel that there is some prospects of success ahead of you. That's competition on merit between efficient businesses. What we are concerned about is where competition is based on muscle just being big and bulky and able to throw your weight around might see efficient businesses not given a fair go and not given the opportunity to prosper and to employ. That is the heart of the concern. In the case of the Standard Oil case, if you look back in US law the Sherman Act is very brief. It says aspire to be a monopolist, that's what drives market economies, buy by heck don't ever behave like one. That was the law in the United States. Our law is very detailed, very thick, bits of it have promised much in terms of supporting competition but haven't lived up to their billing. That's why we have announced a root and branch review of those laws to make sure they are fit for purpose, they can do what is expected and support prosperity and economic opportunity, investment and a strong diverse economy where big and small businesses that are efficient can look forward to a brighter future. That's why we are conducting that review.
Carlton:
I guess the issue here is the extent to which we shop on price, which tends to lead us to perhaps the larger establishments, be they supermarkets or department stores. I noticed today you were part of a launch of a shop small campaign, which is effectively a month long campaign. It started in the United States a few years ago to encourage people in the community to go out and support their local small business. How in reality does that work when most people do shop on price and often sadly the small business, even the local hamburger shop, is not going to be as cheap as the feed from Maccas?
Billson:
Well look your radio station carries ads where you have got a potato sales outfit that offers a direct line to their customers from growers and offering good prices. You've got small businesses offering excellent service, competitive prices, choice and personal care for their customers. That is attractive to people, most people value that. What we're celebrating Brian with this Shop Small campaign is that we're inviting your listeners to look around their communities, look at those strip shops, look at the areas they love to visit, love to go and have a look in the windows, love to go and talk about choice and how they want to spend their consumer dollar. And making the simple point that if you support and value small business people, Shop Small, put some of your hard earned money into buying the services from the smaller businesses, that keeps the bigger businesses on their toes and nimble. What you often find is that it is very satisfying working with small business people that you know have mortgaged their house, they lie awake at night wondering about cash flow and how to pay the rent in their business for the next month and getting behind those entrepreneurial Australians that still provide about 43 per cent of all the private sector jobs in our country. Admittedly that is down substantially as a percentage and in real terms from where it was when the Howard Government was in office. But its still providing enormous numbers of livelihoods and opportunities. I value that and the Abbott Government values that, I know you and many of your broadcasters and listeners do. We're saying well put effort behind that commitment if you value small business spend some money with them and that's what the Shop Small campaign is about.
Carlton:
Appreciate your time this afternoon Minister. Thank you