LAURA TINGLE:
Treasurer, welcome back to 7.30.
JIM CHALMERS:
Thanks very much, Laura.
TINGLE:
A lot of Australians would be surprised to find out that until now, business mergers happen first, then regulators got to have a look at them to see whether they were competitive or not. How did that happen?
CHALMERS:
It's certainly true, Laura, that the current system is not up to scratch. It's too hit‑and‑miss. It's a voluntary system. We screen about a quarter of mergers and we don't know if they are the right ones. And I think this is a key reason why our economy isn't competitive enough, because we don't take a stronger, more streamlined approach to approving mergers in our economy. That's what we're fixing with the really important economic reforms that we announced today.
TINGLE:
Are there good mergers and bad mergers? How would you define them?
CHALMERS:
Most mergers are good mergers – where there are mergers which are looking for scale or for technological improvements or sometimes in relation to their workforces. Most mergers are good for our economy, but there is a sliver of merger activity which is very concerning. And so what we're trying to do with these reforms that I have announced today with Andrew Leigh is we're trying to streamline the process for the majority of mergers, which are good for the economy and good for people, but strengthen the regime for those which concern us, and they concern us where there's the capacity to substantially lessen competition in our economy or where it will expand or entrench market power for some of these businesses. And where that's the case, we are introducing a much more robust screening regime.
TINGLE:
Well, you mentioned in your speech today that one of the big sectors you've got to think about is the digital economy. How does that change the landscape in terms of mergers?
CHALMERS:
Certainly at least at one level it changes the way people shop. But more fundamentally than that, the digital transformation is transforming our economy more broadly, as is the energy transformation. There are different kinds of businesses forming at different paces. And so what we need to do is we need to make sure that our competition policy settings keep up with change in the economy more broadly. And when you've got a more competitive economy, you're more likely to give consumers more choices at fairer prices, and that's really what's motivating us here. It's the biggest change to the merger regime in something like 50 years. It's a key economic reform, but consumers are really front and centre here because we want to strengthen the economy on their behalf.
TINGLE:
You've got the general endorsement of the Business Council for this proposal but some of the smaller parts of the economy, some of the small, high‑tech companies are not so sure about this. One of the big questions will be what the threshold is for having to notify the ACCC of a merger. What's the process you're going to go through to work out how high those thresholds are? People have been speculating they'll be very low.
CHALMERS:
We have taken a really consultative approach when it comes to landing these reforms, and we will consult further when it comes to the thresholds. We've got a bit more work to do, and we want to adopt the same kind of consultative and inclusive approach to determining the thresholds that we took when it came to determining the package overall. This is really about streamlining the process for good mergers, strengthening the process for those mergers which concern us and overwhelmingly most mergers will fall into the former category rather than the latter.
TINGLE:
The ACCC wanted a reverse onus of proof, that is, that they wanted companies to prove that they weren't going to lessen competition with a merger proposal. You've knocked that back. What were the pros and cons in considering that?
CHALMERS:
A couple of things about that. First of all, it's worth noting that the ACCC position evolved over time, as did the BCA position and others. And one of the things I'm actually really proud about these reforms that we announced today is that people started at opposite ends of this conversation, and the more we consulted, the more they coalesced around something which looks a little bit more like a consensus. Not unanimity on every aspect of it, but something that looks like a consensus, and that was the point of the consultation. So, that's a good thing. The ACCC has enthusiastically supported the reforms that we announced today. Their position evolved, as did other players in this consultation. And because of that work that we did over a period of some months, in a considered and a methodical way, we got to an outcome that everybody can live with.
TINGLE:
You've said that this will dramatically improve the lives of everyday Australians. How will that happen? I mean, it's not going to diminish the level of market concentration we've already got, is it?
CHALMERS:
A more competitive economy is more likely to deliver for consumers more choice, downward pressure on prices. We know from competition reforms earlier in the last 50 years or so, we know from earlier waves of competition reform that it did contribute to a faster‑growing economy. It did put downward pressure on prices, and that's the kind of success that we're looking for here. It strengthens the economy, but it strengthens the economy, not for its own sake, but to deliver more effectively for consumers and workers and pensioners and people, real people in real communities right around Australia.
TINGLE:
Just on a different subject Treasurer, Penny Wong has said recognition of Palestine statehood is the only hope to end violence in the Middle East. How is it going to do that?
CHALMERS:
I thought Penny Wong made a characteristically thoughtful and considered contribution last night. I was in the audience when she made these comments. And the point that Penny was making, which I support wholeheartedly, is that if we're looking for a pathway out of this endless cycle of violence and bloodshed, then a two‑state solution is the best place for us to focus our efforts. And that's why the international community is considering whether recognising the Palestinian state is an important way to build momentum towards that two‑state solution, which we think gives us the best chance of delivering peace for people on both sides of that absolutely horrendous conflict that we're seeing unfolding in the Middle East.
TINGLE:
Treasurer, thanks so much for your time tonight.
CHALMERS:
Really appreciate it, Laura, thank you.