16 March 2016
Transcript - #2016028, 2016

In the role of: Minister for Small Business and Assistant Treasurer [21 September 2015 - 18 July 2016]

Interview with Patricia Karvelas, RN Drive

SUBJECTS: The Government's changes to Section 46; the Budget

PATRICIA KARVELAS:

Kelly O'Dwyer is the Assistant Treasurer and the Minister for Small Business. Welcome back to RN Drive.

MINISTER O'DWYER:

Great to be with you Patricia.

KARVELAS:

So just to briefly recap for everyone. This change will mean that the effect of business' behaviour will be looked at rather than their purpose or intention in judging where there's been anti-competitive conduct. Is that right?

MINISTER O'DWYER:

Yes, and they will have to look at whether it substantially lessens competition. So Patricia, just to go back one step, I think it's important for your listeners to understand that a very significant competition review was conducted by Professor Ian Harper. They looked at, with a panel, a whole range of areas that required potential change. The Government responded to basically all of those recommendations last year except for this particular recommendation regarding the misuse of market power, Section 46. This is an issue that has been contentious over a fairly long period of time, with lots of different views on the impact of misuse of market power provision. But the one thing that we absolutely do know is that an effective misuse of market power provision is important and necessary in our competition law and it's particularly important for the more than two million small businesses which make up more than 97 per cent of all Australian businesses.

KARVELAS:

Malcolm Turnbull has been a critic of an effects test. Has he changed his mind? Or has he been outvoted? Because it seems like the Nationals, Barnaby Joyce, is very happy but big business isn't.

MINISTER O'DWYER:

That is in fact not a correct characterisation of the Prime Minister's position. In fact I don't think you'll find that he has made any comment on this at any point in time until today.

KARVELAS:

It is very well known that he opposed this.

MINISTER O'DWYER:

Well, no, you can talk about speculation but I am telling you the Prime Minister has not made any comment on this. He has had a very open mind to this. He basically takes the position that we want to have an agile, innovate and competitive economy and to do that, we need to make sure that business can get out there, can work hard, be competitive, can back themselves, can make investments. What the review found, after very extensive consultation, was that Section 46 wasn't fit for purpose because it permitted anti-competitive conduct that slows the entry of new firms and potentially delay new technologies coming into Australia which impedes productivity growth, which impedes growth more broadly in the economy.

KARVELAS:

But Kelly O'Dwyer, plenty of powerful critics remain. The Business Council says its disappointed and this is poor policy, in fact they back Labor's plan – which I'll get to in a moment – the Retail Council says the backflip by the Government is simply bad policy and the consumer is the loser. Westfarmers says it's a very disappointing decision, it's bad policy. You've got very strong opposition to this. All of these people are saying that this is actually going to have the impact of increasing prices for consumers.

MINISTER O'DWYER:

I think there are obviously some people who would like to see certain competitors protected in their position. We think it's important to protect the competitive process so that everyone can have a go at running their business and surviving and thriving on their merits and this change…

KARVELAS:

Isn't it more important that consumers have lower prices, could this increase prices?

MINISTER O'DWYER:

This is absolutely about consumers. This is absolutely about making changes that focus on the long-term interests of small business and consumers to make sure that we have the most competitive landscape out there so that people do have to compete and compete as well on things like price.

KARVELAS:

Most criticism is along the lines of it's too hard for business to predict what effect their actions might have on competition so what you're doing here is making sure that they become risk adverse and you'll actually weaken competition. That is a valid argument isn't it? I'd be too scared to try.

MINISTER O'DWYER:

I disagree with that and the point I'd make is this, there is absolutely nothing remarkable about competition laws focusing on anti-competitive conduct. Absolutely nothing at all. We have a range of sections already within the Competition and Consumer Act that has a substantial lessening of competition test that actually looks at the effect, that's in Section 45, 47 and section 50 so the idea that this is somehow going to be completely uncertain I think is not correct.

KARVELAS:

Can you guarantee it won't lead to higher prices for consumers?

MINISTER O'DWYER:

What it will lead to is the most competitive marketplace because it is about protecting competition.

KARVELAS:

But can you say for sure that there won't be an increase in prices for consumers?

MINISTER O'DWYER:

What we can say is there are safeguards built into this particular change to the law. There are safeguards that mean that if there are competitors who want to get out there and they reduce their price to a particular amount and are overall potentially would be in conflict with the change Section 46, they can go to the Australian Competition and Consumer Commission, the regulator in this space, and they can seek an authorisation on a Net Public Benefit Test so that it's in the net public benefit. There are protections built in to this we think that this is very, very positive, we think it is good for our economy to have strong competition laws that actually encourage competition and the competitive process, we think it is particularly good for all of those small businesses who are out there competing as well and we think it is really good for consumers which is why we have actually received a lot of support from groups like Choice who are all about the consumer, from a number of small business organisations who are very keen to compete in the market. We think that you need to engage in looking at these changes in a very sensible and prudent manner. That is what we have done, we have done that not only through the Harper Review process but separately the government has actually looked at this by sitting down with businesses both big and small at roundtables that I have hosted in Tamworth and Melbourne…

KARVELAS:

Kelly O'Dwyer if I can just interrupt you because we are running out of time but I need to – I really want to ask you this question on a related topic which is really in your portfolio. Are you disappointed that you don't have room in the May Budget to offer income tax cuts?

MINISTER O'DWYER:

Well I think there has been a lot of speculation about what is in the May Budget and I hate to say it Patricia but you and your listeners are going to have to wait until the May Budget to see what is in it.

KARVELAS:

But the Government made it quite clear that even though you kept talking about bracket creep and helping us all, we are all suffering from this bracket creep, we are not going to see tax relief in the Budget are we?

MINISTER O'DWYER:

Well you will see what is in the Budget when the Budget is handed down, the Budget will be handed down in May, as per the ordinary timetable. So this happens routinely, Patricia, where there is speculation that builds up over time in the lead up to the Budget where everybody wants you to deliver it well and truly in advance of Budget night, we are not going to buy into that, we are going to deliver the Budget on the day of the Budget, all of the tax…

KARVELAS:

Do we know that day; can you give me that date?

MINISTER O'DWYER:

It is the usual date, Patricia, and it is going to be very clear the government's policy in relation to taxation matters, we have been working very hard, very methodically, very consistently on an appropriate taxation policy, but we have also got to recognise that we are in a very fiscally constrained environment thanks to the environment that we have inherited from the previous Labor Government who took us from a position where we had no net debt now to a very significant net debt that means that we are paying in interest payments around about $12 billion every year.

KARVELAS:

Minister, many thanks for your time.

MINISTER O'DWYER:

Great pleasure, Patricia.