SABRA LANE:
The federal government is unveiling a major overhaul of business merger laws today with the aim of speeding up and streamlining the process for low‑risk deals, but it wants more transparency in the process. Boosting the power of the competition watchdog, the Australian Competition and Consumer Commission, to examine planned big takeovers to ensure monopolies don't result, or even to analyse companies that swallow up smaller businesses over a period of time which thwart competition and consumers lose out.
The new laws won't be in place until 2026. The Treasurer, Jim Chalmers, joined me earlier.
Jim Chalmers, before we get to the new merger laws could I ask about the question of Palestine? The federal government says it's considering recognising Palestine as a way of building support for a two‑state solution. The Opposition says that recognition rewards Hamas for the October 7 attacks. Is that the danger here?
JIM CHALMERS:
No, I don't think so, Sabra, and I was there at the Australian National University for Penny Wong's characteristically considered and thoughtful contribution. She made a number of points but among them was the point that if we want to build a pathway out of this endless cycle of violence and bloodshed, then a two‑state solution offers us the best chance and that's why the international community, including our friends around the world, are considering whether recognition builds momentum towards that two‑state solution and the peaceful future that we want for people on both sides of that horrendous conflict.
LANE:
You see this as the only way of stopping that war?
CHALMERS:
Well, we see it as an important way forward, and unfortunately progress towards a two‑state solution has stalled, and in recent times we've seen the consequences of the Hamas terrorist organisation running that part of the world. And one of the arguments that Penny made was that a two‑state solution offers the best chance for stability in that part of the world but also for that peaceful future that we want to see for everyone.
LANE:
To the proposed new merger laws. Why does this matter for everyday Australians? How will these merger takeover laws improve their lives?
CHALMERS:
Well a more competitive economy means more choices for people at fairer prices, and our economy is not competitive enough as it stands, and it's been getting less competitive over recent decades and that comes at a cost to everyone. We want to address that because a more competitive economy is better for consumers, it's better for businesses and it's better for the economy more broadly.
Mergers reform is a big part of that – of making our economy more competitive and that's why we're embarking today on the biggest changes to the mergers regime in something like 50 years.
LANE:
The government is proposing more power for the consumer watchdog, the ACCC. It will have 30 days to approve or reject most mergers. There'll be time for complex takeovers. Companies will have to be explicit and tell people about their merger plans. Now that doesn't always happen. What will be the number one consideration in accepting or rejecting these planned takeovers?
CHALMERS:
Well the first thing to recognise is that the current system is too hit and miss. It's voluntary, there are multiple streams that people can choose from. We don't actually know if the right mergers are being scrutinised so we are going to fix that and that's because we want good mergers to proceed more quickly, but we want concerning mergers to receive a bit more robust scrutiny.
In terms of your question specifically, what this means is if a potential merger raises competition concerns, the ACCC can apply a test of whether it substantially lessens competition, but also whether it expands and entrenches more market power in the market.
Most mergers are good. Most mergers are about scale. Most mergers have obvious economic benefits but there are some which are concerning, where they expand and entrench market power or where they substantially lessen competition. These reforms will mean the regime is faster and simpler, more targeted, more transparent, and stronger, but it means that good mergers can proceed quicker and concerning mergers receive a bit more robust scrutiny.
LANE:
You were working for Treasurer Wayne Swan as an advisor when he allowed Westpac to take over St George. In hindsight was that wise? Would a fifth major bank perhaps have stopped the bad behaviour that followed in the remaining decade?
CHALMERS:
Well, I think that's a bit of a stretch, Sabra, but I'm reluctant to comment on or second‑guess decisions taken by former Treasurers, whether it's Wayne or otherwise.
What this is about is getting the merger regime right into the future. There has been scrutiny of bank mergers in the past and currently but what we want to do here with these really important reforms is to make sure that mergers are fine, whether they're below a threshold or they don't raise any competition concerns they can proceed and for those that do raise those concerns, then they get robustly scrutinised.
By fixing the mergers regime, we make our economy more competitive. If it's more competitive, it's more dynamic and it's more productive and it's better for consumers and businesses alike.
LANE:
As you've alluded to – another major bank merger is sitting on your desk right now. ANZ wants to take over Queensland's Suncorp Bank. How happy do you think your fellow Queenslanders would be to see that brand disappear at a time when the big four are still trying to repair their reputations?
CHALMERS:
Again, there are a range of considerations that I need to apply to that. That's been through a couple of processes now. That one has been robustly scrutinised in some detail by the ACCC and then by the relevant tribunal, so I will take the necessary time to go through the arguments put in relation to that. There are a number of considerations that I need to apply, and it wouldn't be appropriate for me to pre‑empt them today on your show.
LANE:
Jim Chalmers, thanks for talking to AM.
CHALMERS:
Much appreciated, Sabra. Have a great day.