Andrew Leigh

JOINT MEDIA RELEASE

TREASURER JIM CHALMERS

RELEASE OF FOOD AND GROCERY CODE REVIEW INTERIM REPORT

Today we have released the interim report of the Food and Grocery Code of Conduct independent review, commissioned by the Albanese Government.

We want a fair go for families and a fair go for farmers.

This work is all about making our supermarkets as competitive as they can be so Australians get the best prices possible.

Following extensive stakeholder engagement, the interim report recommends the Code be made mandatory, with heavy penalties for major breaches.

FRIDAY 5 APRIL 2024, SYDNEY

It is a pleasure to be here today, with cooperative producers from across industry and around Australia. Thank you to Melina Morrison, chief executive of the Business Council of Co-operatives and Mutuals, for convening today’s conversation, and to all participants for joining us in Sydney, on the lands of the Gadigal people.

Let me start off with a with a story. My grandfather Keith Leigh was born in 1912. In 1929, when the stock market crashed and the Great Depression began, he was just 17 years old. In order to make ends meet, he hit the road as a travelling salesman, largely selling hosiery. As Keith liked to say of his business role, he was a ‘traveller in ladies’ underwear’.

The 1930s were tough on Keith, as they were for many Australians. At the end of the decade, he and his friend Lindsay Brehaut set up the Hobson’s Bay Co-Op, named after the little bay that sits at the top of Port Phillip Bay in Melbourne. The Hobson’s Bay Co-Op allowed locals to pool their buying power at a time when so many were feeling the pinch.

E&OE TRANSCRIPT
RADIO INTERVIEW
ABC CANBERRA – DRIVE WITH ROSS SOLLY
THURSDAY, 4 APRIL 2024

SUBJECTS: Voting age, Non-compete clauses

ROSS SOLLY (HOST): Andrew Leigh, do you think there is a case for 16 year olds to be allowed to vote?

ANDREW LEIGH: Thanks Ross. The challenge is how it meshes with compulsory voting laws. Universal voting has always been something that the Labor Party has felt passionately about. And the proposals to have a portion of the electorate who are voluntary voters is something that Labor hasn’t supported.

SOLLY: People have floated the option of making it non compulsory for 16 and 17 year olds, and then if they are interested enough in politics, they can vote, and then once they turn 18, it becomes compulsory.

LEIGH: Well, there you're undermining the principle of universal voting, Ross. You've got a share of the electorate who are voluntary voters. That's concerned us, and that's the reason why Labor representatives on the past inquiries into this issue have said they don't believe that Australia ought to move to voluntary voting for 16 and 17 year olds.

SOLLY. So, let's talk about compulsory voting for 16 year olds. Do you feel they're mature enough?

LEIGH: I have got to be pretty careful here, Ross, because I worry my 17 year old is going to be listening to this right now and take personally whatever I say! Look, I think he's brilliant and highly engaged with politics. The question is whether you want to go so far as to compel every 16 and 17 year old to vote. Not many countries around the world take that view. 18 has traditionally been the cut off. But look, it's an important conversation and the Labor party has been engaged in it.

SOLLY: All right, let's talk about non compete clauses. You've delivered a speech today taking aim, particularly at franchise businesses, accusing them of cartel like behaviour. How is this system still allowed to operate in Australia, Dr Andrew Leigh, when in many other countries around the world this sort of behaviour is illegal?

E&OE TRANSCRIPT
RADIO INTERVIEW
ABC MELBOURNE – DRIVE WITH WARWICK LONG
THURSDAY, 4 APRIL 2024

SUBJECTS: Non-compete clauses

WARWICK LONG (HOST): Dr Andrew Leigh is the Assistant Minister for Competition. Welcome to the program.

ANDREW LEIGH: Thanks, Warwick. Great to be with you and your listeners.

LONG: Why are non compete clauses bad for productivity?

LEIGH: Well, the biggest wage gains over a worker's career, Warwick, come when they switch jobs. If you look at job switches, they tend to get a significant pay bump, several thousand dollars on average. And we've seen the job switching rate falling over recent decades. One reason for that may be that a lot of employees have a clause in their employment agreement that says that they can't easily move to a competitor. They might be constrained to a particular geography in a particular time period. So, for example, you can't take another job in Melbourne for the next six months. And that means that workers miss out on the potential wage gains of shifting jobs. It also potentially means that a start up company can't hire the staff it needs in order to take on the incumbents. And that's why we've launched today this issues paper which is asking people to let us know their views on non compete clauses, whether they ought to be reformed, what ought to be the next steps.

E&OE TRANSCRIPT
PODCAST INTERVIEW
ABC RADIO PERTH - MORNINGS WITH NADIA MITSOPOULOS
THURSDAY, 4 APRIL 2024

SUBJECTS: Non-compete clauses

NADIA MITSOPOULOS (HOST): Now, I wonder if you've ever left a job and then found yourself subject to a non compete clause which prevented you from working for a competitor. Now, if you have, I'd like to hear about your experience. And did you think it was fair or did you feel like you had a choice? Dr Andrew Leigh is the Assistant Minister for Treasury. I spoke to him earlier this morning about this and I started by asking him how widespread non compete clauses are.

ANDREW LEIGH: It looks like about one in five workers in the Australian workforce are subject to a non compete clause. We've got that number two ways: we’ve done surveys of employees and of employers. Part of what we want to do in this exercise is to gather the data. Over the course of the last year, we've discovered that non compete clauses aren't just being applied to executives, but also to early childhood workers, yoga instructors, dance teachers, security guards and hairdressers. And the impact of them could well be to dampen wage growth as well as to reduce productivity.

E&OE TRANSCRIPT
PODCAST INTERVIEW
THE CONVERSATION – POLITICS WITH MICHELLE GRATTAN
THURSDAY, 4 APRIL 2024

SUBJECTS: Non-compete clauses, restraint of trade, no-poach agreements, competition reform

MICHELLE GRATTAN, HOST: The Albanese Government and the Australian public are at present highly focused on the immediate cost of living crisis, the implications of it and the ways to deal with it. But the longer-term economic story is all about the fundamental reforms that are needed. And one of these is finding ways to make the Australian economy more competitive.

There are calls for change from business and other stakeholders and from economists. But, like most areas of reform, boosting competition is a challenging task because while there are winners, there are also losers, and they have loud voices.

A Minister at the forefront of this debate is Dr Andrew Leigh. He is the Assistant Minister for Competition, Charities, Treasury and Assistant Minister for Employment. In a speech he'll deliver on Thursday, Andrew Leigh outlines the need to rethink current provisions under which people who leave their jobs can be banned from competing with their former employer, whether that's for a certain period of time, or in a particular geographic area, or even both.

ADDRESS TO THE MCKELL INSTITUTE

THURSDAY, 4 APRIL 2024

Non-compete clauses

As the Economist points out, when it comes to non-compete clauses ‘The clue is in the name’ (The Economist 2023). Non-compete clauses restrict an employee from working for a competitor or setting up a competing business when they leave. Non-compete clauses typically apply for a certain time, in a set geographic location, and within a defined industry. Let me provide some real examples to get things started.

Breakdancing

‘Charlotte’, a 17-year-old landed her first casual job as a dance teacher. It was her dream job, but it wasn’t perfect. Far from it – Charlotte was forced to quit after experiencing harassment.  Months later, she took a job at a different dance studio and immediately received a warning letter from her former employer. The letter said Charlotte had breached a restraint of trade clause to not work or volunteer for a competing business for 36-months within a 15-kilometre exclusion zone – noting the company had several studios. Putting her in a difficult position, Charlotte’s former employer also contacted the new dance studio.

Client disservice

‘Mia’, a disability support worker was doing what she loves – working in the community and helping people. She developed trust and rapport with her clients over many years.

Mia worked for a registered National Disability Insurance Scheme provider but wasn’t too happy about being offered a new contract with a lower hourly rate. So Mia went out on her own as an independent and later joined a rival registered provider. Without any cajoling, several former clients decided to transfer their care plans and follow her to the new provider. Mia received a letter from her former employer stating that she had breached restraint of trade clauses relating to non-competition and non-solicitation of clients.

Unbending

Patrick, a 21-year-old boilermaker, built a solid resumé and decided it was time to take his skills and pay packet to the next level. His new opportunity involved not working for a competitor but working in-house for a former client. It was a rural town and customers were hard to find so Patrick’s previous employer wasn’t pleased about losing a client.

Patrick was branded a troublemaker and was sent a letter saying he breached his post-employment obligations. The letter further applied the blowtorch by threatening court action seeking thousands of dollars in damages plus costs.

Consumers and investors have long understood that what they buy, and the investment decisions they make, have the power to influence social, economic, and environmental challenges. As far back as the 1700s, John Wesley advised his congregants against "any sinful trade". When the Methodist Church began investing in the stock market at the turn of the 20th century, it avoided companies involved in alcohol and gambling. When investors saw the destruction of the Vietnam War in the 1970s, they created the first ethical fund - the Pax World Fund - so they could avoid investing in weapons and weapons manufacturers.

Meanwhile, debate has raged about what this all means for corporations, and how they balance their responsibilities to shareholders and to the public. It's vital to create a financial system in which Environmental, Social and Governance (ESG) factors into shareholder value, as much as acquisitions or sales. Without transparency and robust public reporting, how will we know about the ESG factors faced by a company, and make decisions about where to invest our dollars accordingly?

Daniel Kahneman (1934-2024) was teaching air force flight instructors when one of them informed him that criticism worked better than praise.

Whenever they praised a successful performance, the instructor noted, the cadet pilot tended to get worse. By contrast, when instructors screamed at a pilot for a poor performance, the cadet generally improved.

Kahneman realised that the instructors were reacting to what statisticians call “regression to the mean”. Because performances are a function of both luck and skill, a lousy execution is typically followed by an improvement, while a great execution is typically followed by a deterioration.

But rather than turning the flight class into a maths lecture, Kahneman decided to illustrate the point by a simple exercise. He asked everyone to toss a coin over their shoulder towards a target. After the first attempt, people were ranked in their performance. They then tried again. As regression to the mean would predict, the best performers got worse, while the worst performers got better.