JIM CHALMERS:
Good morning, everyone. Thanks for being here and thanks, in particular, to Gina Cass‑Gottlieb for all of her work as the Chair of the ACCC, but also for joining us here to talk about these really important reforms. I also wanted to shoutout my colleagues Andrew Leigh and also Stephen Jones for the work that they do on this with the support of the PM and the cabinet.
I’m about to introduce this morning to the Parliament some very important changes to our mergers regime. This is a really important economic reform. It is a total overhaul of our mergers regime. The current system is too slow and too many mergers slip through the cracks, so we are making the biggest reforms to mergers in around half a century. It will make the system stronger, faster, simpler, more targeted and more transparent. It will help make our economy more competitive, more dynamic and more productive as a consequence.
We recognise and we understand that most mergers have genuine economic benefits, but some can present serious economic harm as well. This is about approving the good ones faster and catching the damaging ones where we can. It’s about more competition for consumers and more certainty and clarity for business.
We are setting clear thresholds to determine whether a merger needs approval, and there are also powers to ensure that all of the high‑risk mergers are looked at. And using those powers we have decided already that every merger in the supermarket sector will be looked at by the ACCC. We think this is especially important when people are facing cost‑of‑living pressures at the checkout, and it’s consistent with the approach that we are taking to supermarkets in other ways as well.
This is an important part of our competition policy agenda, but it’s not the only part. We have a very big focus as a government on doing what we can, working the ACCC, to make our economy more competitive because a more competitive economy provides more choice and fairer prices for people, and that is our objective.
If you look right across the board at our suite of competition policy changes we are empowering and resourcing the ACCC, we’ve got the work that we’re doing with the states to revitalise National Competition Policy, we’ve abolished 500 nuisance tariffs in our economy, we’re making the Food and Grocery Code mandatory, we’re funding CHOICE and we’re making it easier for people to find a better deal in the banking system as well.
So this is a really important day, a really proud day. I wanted to acknowledge, again, Gina’s work, but also the consultation that we’ve been doing with the business community as well. This has been a real demonstration of the benefits of working closely with our regulators, with our employers and businesses and investors, making sure that we get the best possible outcome for the people we work for. So I’m very proud to be presenting it today – a very, very important economic reform.
I’m going to ask Gina to say a few words about it now, and then I’ve got 2 other issues I want to touch on briefly, and then we’ll take your questions. Thanks, Gina.
GINA CASS‑GOTTLIEB:
Thank you, Treasurer. This is a day that ACCC has been seeking. We sought this reform because currently many transactions that pose real risks to competition the ACCC doesn’t see, can’t review and can’t ensure that the proper protection is in place for competition for consumers, for greater choice and for lower prices. With this reform the ACCC will have fit‑for‑purpose, world‑appropriate tools that will enable us to review the transactions that pose real risk to competition in our community. It will also, for business, where business is frank and engages upfront with full information with the ACCC it will be faster, more efficient and more certain for domestic transactions and global transactions.
We will also be delivering to small business and to consumers much greater transparency of the process. So we will be providing transparency of what we’re reviewing, the issues we’re considering and then the reasons for our decisions. It will enable communities, small businesses, customers and suppliers to engage with our process and to tell us about the mergers that matter to them while we are conducting the process.
This is a much‑needed reform. We understand now parliament will do its deliberations. We do welcome the introduction of the bill and the government for bringing it to this point.
CHALMERS:
Thanks very much, Gina. Two other issues and then happy to take some questions.
I wanted to say a few things about the Middle East and the global economy, and then I wanted to touch on an appointment that the government is making today. The situation in the Middle East is very concerning, and we are focused primarily on the human cost of the conflict in the Middle East, but there are also economic consequences for the escalation of the conflict there. We’re focused on our efforts to get people out, we’re focused on the human cost, but there are economic costs as well.
Further escalation of the conflict in the Middle East does risk more economic uncertainty, and one of the ways that we observe and monitor this uncertainty is when it comes to the global oil price. We are seeing a spike in oil prices, and that has consequences for motorists and families and communities here in Australia and right around the world. Almost a third of the world’s oil comes from the Gulf. Last night overnight Brent oil was trading at around $77 a barrel, that’s 11 per cent lower than it was a year ago, but it is 7 per cent higher than it was a week and a half ago. And so oil prices had come down considerably, but we are now seeing a spike in oil prices because of the escalation of the conflict in the Middle East.
And to give you a very rough sense of what it means for us, the rough rule of thumb that we use, that Treasury uses, is that every 10 per cent increase in the barrel price of Brent oil, if it’s sustained for a year takes about 0.1 per cent off our GDP and it adds about 0.4 percentage points to our CPI. And so that’s just to give you a very rough rule of thumb of what it means when we see oil prices spike as they have. If those kinds of spikes are sustained or, indeed, of course, if they get worse you can see the very direct impact that has on economies like ours and economies right around the world.
There’s always a premium on responsible economic management but particularly when the global economy is as uncertain as it is right now. Global oil price and the escalation in the Middle East is a big concern for us. There have been some welcome steps taken in China, but the Chinese economy remains a concern for us. There are developments in the US and elsewhere as well. The global economic uncertainty has consequences for Australians, and we’re seeing that in a number of different ways.
The last thing I wanted to touch on was the very happy news that we will be reappointing Dr David Gruen, Australia’s Statistician. We are very proud to be announcing this appointment. My colleague Andrew Leigh and I work very closely with David Gruen, and he is an absolutely first-class economist, public sector leader, thinker and innovator. David is a person of outstanding calibre and character, and that’s why we’re so pleased to be reappointing him. This will be his second five‑year term. He is one of Australia’s most experienced and respected economists. He does have a very distinguished record already as a leader and innovator, and we are very fortunate to have him and we’re very grateful that he’s agreed to serve for another term.
Among Australia’s many blessings is the quality of the people who serve in senior positions – at the ACCC, at the ABS and elsewhere. And so we’re proud to be making this appointment today. And we’re very proud to be introducing the legislation which goes to the mergers reform and this economic reform that we’re introducing very shortly. But happy to take some questions in the interim.
We’ll start up the back with Katina.
JOURNALIST:
Treasurer, or perhaps to the Commissioner, can you give us some examples of mergers that you think have been damaging for consumers that weren’t picked up but would be under these new rules?
CASS‑GOTTLIEB:
Yes. So, firstly, there was Petstock amassed the second largest chain of pet products across Australia with no notification whatsoever to the ACCC. We saw it when a large listed company, Woolworths, notified it to take a shareholding in it. In order to proceed with that transaction we required divestitures in 40 communities across Australia to return competition and lower prices. So that’s an example, but we have examples in cancer radiology, pathology, supermarket acquisitions, petrol station acquisitions, liquor store acquisitions. In every community across Australia there will be happening today transactions that we don’t see. We note Treasury taskforce estimated 1,000 to 1,500 transactions each year. We see roughly 300 to 350, and we know we do not see all the transactions that pose real competition risk.
CHALMERS:
Too many potentially damaging mergers are slipping through the cracks, and unfortunately the regime as it exists and the reason why we need to make these important changes is that currently it takes too long and it’s not comprehensive enough, and we want to address both of those things.
I saw Poppy and then Charles and then we’ll come over to Ron.
JOURNALIST:
Sure. So again, maybe Chair or Treasurer, but supermarkets have been singled out, but there are other sectors that are highly concentrated in Australia. Are there other sectors that you’ll consider this mandatory notification on and you’ll try to get every single one across the ACCC’s desk.
CHALMERS:
I might go first and then throw to you, Gina, if that’s okay.
What we’ve done here is we’ve deliberately designed it so that most of the transactions that we would be worried about are captured by the monetary thresholds. And one of the reasons why we determined that we didn’t need the market concentration threshold anymore is because we thought that we had everything we needed in the monetary thresholds, plus the ability to designate other sectors to be able to assess all of the mergers that might trouble us.
What we’re saying in the legislation and what we’re saying today is that there is a clear case already in supermarkets. We’ve already had the work done, Gina’s team has already done the work to determine that there’s already a clear case for supermarkets. And if there are other parts of the economy that warrant it, there will be a robust process where the ACCC will provide advice to me and we can designate other parts of the economy as well. But supermarkets and the steps that we’re taking when it comes to private businesses, we think that’s appropriate for now. But there will be a process that allows us to designate other sectors when the circumstances warrant it.
CASS‑GOTTLIEB:
The sectors that we have commenced an engagement with Treasury about and have indicated as ones that we would want to take further steps towards such a process include radiation oncology, pathology and liquor retailing.
CHALMERS:
We’re going to go Charles, Ron, Paul.
JOURNALIST:
My question was going to be that one, but I’ll ask about student caps. The legislation went to the Senate committee last night. How concerned are you, given the headwinds you’ve outlined in the economy, that this big industry for Australia is about to be cut off at the knees?
CHALMERS:
I don’t see it that way at all. I’m a very big supporter of our university sector, and I understand and recognise and am grateful for the very big contribution it makes to our economy. You can see in the most recent few sets of national accounts just how important our services exports are to what little growth there is in the economy right now and so we respect and acknowledge that.
This is about ensuring that we manage the growth in student numbers. And it’s about ensuring that when universities add substantial amounts of foreign students that they are incentivised, they are required, to build more student accommodation. And I don’t think that’s unreasonable. We’re still going to see this industry grow. It has been a top 5 export earner for Australia for a little while now, and it will continue to be a top 5 export earner. We are a big supporter of that, but it’s not unreasonable for governments to manage the growth in enrolments, and that’s all we’re seeking to do.
I think I said Ron and then Paul, and then we’ll go John and then Mark and then up the back.
JOURNALIST:
Thanks, Treasurer. A bit of a triple‑header – Ms Cass‑Gottlieb, can I just check, you’ve obviously been given $30 million extra for supermarket work; that’s a one‑off, that’s not recurrent funding. The government keeps on giving you lots of work to do, are you confident that you’ve got the ongoing funding to do everything you need to do without having to reallocate resources from other parts of the ACCC? And just what’s your response to lawyers who basically say that you’ve removed their ability to question the ACCC’s economic analysis by not being able to put on more evidence before competition tribunals in rebuttal to the evidence that the ACCC is putting forward? And, Treasurer, can I get your response to the reporting today that there have been raids in relation to the ANZ‑AOFM ongoing scandal?
CASS‑GOTTLIEB:
I’ll start?
CHALMERS:
Please.
CASS‑GOTTLIEB:
So I’ll do a triple response: on the $30 million, it is in effect 8 and a half across 3 years. We have received a commitment for increased funding to be able to increase our resources so that we are able to deliver to the fast time frames that the statute is going to require in relation to the merger reviews. And we are already engaged in training. We know this is subject to parliament passing the bill, but we have agreed that we will take new applications under the new program voluntarily from 1 July next year, mandatorily from 1 June 2026. So we are already working to be ready for the change.
In terms of the question about lawyers’ concerns, there are 2 critical points: that our decisionmaking will be both transparent to the parties but also transparent to the public. So the parties will receive an explanation and an understanding of the grounds of all of our analysis, including the economic analysis. In addition, in the tribunal the reform includes a capacity for the tribunal to decide to open up new evidence if we have failed in our due process responsibility to give the parties an understanding of the grounds and the evidence on which we have relied, so that they understand it and we explain it.
CHALMERS:
Just on resourcing, before I get to the other matter, there’s another $56 million in resourcing for this merger process, recognising that a change of this magnitude and the responsibilities being taken on by the ACCC warrants more funding, and that funding is being provided enthusiastically, just like it was when I stood here last week or the week before and announced around $30 million for investigation and enforcement.
In a tight budget we have made sure we’ve found the resources that Gina and her colleagues need to do this really important work. It’s high‑quality work, it’s important work, and it’s being resourced properly.
In relation to your other question, I’m obviously aware of those reports and I expect to be briefed on developments there but I haven’t been briefed yet. And because of the legal situation I’d be reluctant to comment any further.
We’re going to go Paul, then John and then Mark and then I think we said up the back and then here and then there and we finish.
JOURNALIST:
Are the petrol prices that drivers are paying at bowsers proportionate to the increase in the oil price, or is there a risk that consumers will now be gouged because they’ve become accustomed to even higher prices a year ago, and what is the government and the ACCC able to do about that, please?
CHALMERS:
I might say something about that and then throw to Gina.
Obviously, we are concerned at a time when the global oil price is increasing, we don’t want to see the service stations take Australian motorists for mugs. And we want to make sure that the global price is appropriately reflected in the price that people pay at the bowser. People are under enough pressure already; we don’t want to see the service stations do the wrong thing by people.
The petrol price has been much lower in the last little while than at most times of the last couple of years. We have seen the global oil price come down considerably over the course of the last year but spike in the last week and a half for obvious reasons, and we want to make sure that people are treated in the right way when they fill up their car. Gina.
CASS‑GOTTLIEB:
The ACCC has a petrol price monitoring role. We put on our website each week reports from not only the major capital cities but we also look at regional towns as well. We also provide quarterly reports to the Treasurer and those are published and they do track the correlation between the shifts in both the global oil price and also the Singapore refined petrol price, which is the key import price for most of the petrol supplied in Australia. And that tracking has shown generally – we do see with some lag – the correlation between those prices. But the monitoring does allow very clear scrutiny and an absolute shining of the light for consumers, which is why we put information for local areas on our website, but also for government.
CHALMERS:
Did I say John next, and then Mark?
JOURNALIST:
Great, thanks, Treasurer. Just on the tensions in the Middle East potentially or actually increasing global oil prices, so bad for growth, bad for inflation, as Treasury says, but also wouldn’t it potentially be good for your budget, as we saw in the commodity price spike in the early days of the Ukraine‑Russia war?
CHALMERS:
I don’t see it that way, and I don’t think about it in those terms. I think what is happening in the Middle East is a disaster, and that’s because we are humans first, and too many innocent lives have been lost and are being lost in a dangerous part of the world. So that’s our primary focus. We’re focused on getting Australians out. But there are economic consequences as well, and you know, John – you cover it as closely as anyone – that really the last 15 years has been marked by periods of really substantial global economic uncertainty. And right now weakness in the Chinese economy combined with the economic consequences of an escalation in the Middle East, this is creating some substantial concern and volatility in the global economy. And that’s why we don’t see it in the terms that you’ve put to us.
The iron ore price, some of our bulk commodity prices have come up a bit. That has largely been a reaction to the statements made by the Chinese authorities when I was in Beijing, and so we’ve seen the iron ore price come up considerably, but it’s very volatile. Those of you who watched the iron ore price even just this week, when there was an expectation of more Chinese support for growth, wasn’t forthcoming, in one press conference you saw about a $5 fluctuation in a couple of days in the iron ore price.
I think that just all gives us a sense, whether it’s global oil, iron ore, coal, other important exports, it gives you a sense of how jumpy people are in the global economy, and I think in lots of ways that’s not unwarranted.
Mark.
JOURNALIST:
Treasurer, also on the oil price, lower petrol prices have been a bright spot for consumers just recently. On the advice that you’ve got, how much more can consumers expect to pay at the bowser and for how long?
CHALMERS:
I don’t want to pre‑empt the way that service stations will pass things through. As Gina outlined a moment ago, the ACCC keeps an eagle eye on petrol prices to make sure that people are doing the right thing, that the changes in the global price are appropriately reflected in the price that people pay at the bowser.
If you think about the last few years, people have been under extraordinary pressure, and we don’t just acknowledge that we’ve done our best to act on that – tax cuts, energy bill relief, early childhood, medicines, getting wages moving again, rent assistance – all of the ways that we’ve talked about before. But we think competition and monitoring and enforcement, we think that’s an important part of the fight against inflation as well.
We know that the more competitive our economy is the better it is for consumers, and that’s our primary motivation. But also a more competitive economy can benefit businesses too and make our economy more productive, more dynamic. And so whether it comes to petrol price monitoring, whether it comes to mergers reform, all of these other steps we’re taking in the supermarket sector and elsewhere, it’s really all about one thing, and that’s making sure that we recognise the pressures that people are already under. We don’t want to add to those pressures. If anything, we want to use the power of competition to alleviate some of the pressures that people feel.
I think I said I’d go up the back.
JOURNALIST:
I’ll take it.
CHALMERS:
Transferrable question.
JOURNALIST:
We work together. In terms of some of the industries that you’re talking about looking into for merger laws, you mentioned liquor, and a lot of those liquor stores in Australia are attached to supermarkets. Would you then be encouraging divestiture of supermarkets from that – in that sector?
CASS‑GOTTLIEB:
There has been some separation between them, but, yes, some are connected. The reason we want this merger reform is that it enables us, not afterwards – which is what divestiture powers are about – but before to protect competition and promote it. Because where we retain the capacity for independent stores, for example in liquor, to provide real competition on the range they offer and on their pricing, it makes a change, provides competition, better choice on the ground around Australia. Divestiture will be, in effect, after the event. We’ll need to investigate and we’ll need to enforce and we’ll need to get a court to make an order. This change, we are the decision‑maker, administrative decision‑maker, and we can ensure that there is a protection of key sectors.
CHALMERS:
I think Jason and then Shane and then we’ll go over to Jack and Julia.
JOURNALIST:
Treasurer, how did you interpret the RBA’s policy meeting minutes? Do you think their language suggests that the bank is moving in a sort of more dovish direction?
CHALMERS:
I thought the minutes were consistent with the very comprehensive remarks that the Governor of the Reserve Bank made after the meeting itself. And so there weren’t any surprises in the minutes as I read them. I think whether it’s the Reserve Bank or the government, we recognise we’ve made a lot of progress together when it comes to the fight against inflation. And they’ve indicated the sorts of things that they are watching closely, and they’re very similar to the sorts of things that we’re watching.
One of the most heartening things in that monthly data – with all of the usual caveats about monthly data – was that we didn’t just see the headline rate come down substantially, we saw the underlying measures come down substantially. We saw services come down, we saw non‑tradeables come down. So they will factor all of that in. As you know, Jason, I don’t pre‑empt or second‑guess the decisions or the commentary of the independent Reserve Bank. They’ve got a job to do and they’re focused on that and I’ve got a job to do and I’m focused on that too.
We’ll just do a couple more and then I’ve got to be in the parliament to introduce it. I think I said Shane and then Jack and then Julia and I’ll be as swift as I can.
JOURNALIST:
Treasurer, the RBA this week released its review of the TFF, that follows the forward guidance review, the bond purchase program and the yield target. Treasury’s only review has been on JobKeeper. Given that the federal government spent about $300 billion during COVID, have you asked Treasury to look more closely at the outcomes and the processes around, say, superannuation release, the employer cash flow, some of the other programs because of the volume of money that went out during that period?
CHALMERS:
First of all, I welcome the Reserve Bank’s willingness and capacity to reflect on and review some of the decisions they took during the COVID period, I think that’s a good thing. I think it speaks well of the bank and its people. I haven’t formally sought further advice beyond the review that made some conclusions about JobKeeper. Obviously JobKeeper was a very good program, a very worthy program, I think badly implemented and there was a lot of waste. I haven’t commissioned further advice on other elements of the previous government’s response. We have paid down about $150 billion of debt, including a lot of that debt that was racked up during COVID, and so that’s been our focus rather than on going through some of the specific elements of it.
Jack.
JOURNALIST:
Treasurer, with your power to adjust and calibrate the thresholds how does that work in practice? Will the ACCC make a recommendation to you or a referral? How does that actually work?
CHALMERS:
The thresholds are set by regulation, not by legislation. But I thought it was important that you all have and the country beyond us have visibility about the thresholds, but they’re made by regulation. So the legislation sets up the regime, the thresholds are determined by regulation. We’re announcing them today because we’ve done a heap of consultation and a heap of work and they’re ready to be kind of let out into the wild. But they can be changed by regulation.
We will rely very, very heavily on advice from the ACCC, as we have throughout this process. And so that’s the threshold piece. And then the other parts of it, which we’ve been talking about in different ways when your colleagues have asked us, is around our ability to designate other sectors as well. And as I’ve indicated and as Gina has indicated, we keep that under constant review, but we start with the supermarkets.
Last one.
JOURNALIST:
Is there be anything in the legislation which specifically references supermarkets, and how significantly do you think grocery prices could be lowered?
CHALMERS:
Well, first of all, the legislation sets up the ability for me to designate sectors like supermarkets, and that’s what I’m doing. I’m not prepared to put a number on the impacts of what we are proposing here but what we are proposing here means more competition. More competition means fairer prices and more choice for consumers. And what we’re proposing here means more certainty and clarity for business as well.
Thanks very much.