HOUSE OF REPRESENTATIVES, 29 NOVEMBER 2021
Australia has a competition problem. Work by the Treasury authored by Jonathan Hambur and others has shown that we've seen an increase in mark-ups over recent years. Work by the industry department led by Sasan Bakhtiari has shown we have seen a rise in market concentration. The ACCC told the House economics committee:
We agree the economy is too concentrated.
Under the Liberals' watch, large firms have gotten larger and the start-up rate has fallen. The Australian economy is becoming too concentrated by a small number of large firms. Indeed, you can play the dinner party game: 'Name us a handful of Australian industries that are not dominated by a handful of big firms.' This isn't just an issue of supermarkets and banks. It's not just an issue of telecommunications. It's an issue that goes as far as baby food, beer, internet service providers and department stores.
As the ACCC told the House economics committee, it has not won a contested merger for a quarter of a century. That's why you've had the ACCC head, Rod Sims, calling on the government to engage in a sensible conversation about Australia's merger laws and whether they're fit for purpose. But, instead, the government has ruled out that conversation entirely. It's not interested. It's not interested in having a conversation with the competition regulator and the Australian people about making sure that our markets are more competitive.
Competitive markets aren't just critical for customers. Of course, customers benefit through lower prices and greater variety, but competitive markets matter for those of us who care about dynamism, because so much of productivity growth comes through new firms and new ideas. If you are a large cosseted monopoly, you don't have to invest in research and development; you can just sit back and dig your moat and keep the competitors out or, if they get too big, buy them. So the Australian economy suffers when monopolies become too large.
Workers are hurt as well. The naughty cousin of monopoly is monopsony. That's the phenomenon that happens when workers don't have a choice of employers. The worst of this is the one-company towns, places like Pullman in the United States or, indeed, in Australia, I can think of a number of mining towns. When workers don't have outside options, their wages are lower and they're more vulnerable to mistreatment. So this rise that we have seen in monopolies across Australia has been bad for wage growth as well. Increasingly, economists are recognising one of the reasons that the labour share of national income has fallen is the rise in monopsony hiring power.
So it's good to hear the competition regulator speaking about these issues, as it did in the report that we're discussing today. But the problem is that the government isn't serious about tackling these issues, whether they occur at the high level of mergers or at a specific industry level. Labor went to the last election promising a 'your car, your choice' policy through which independent mechanics would get the data they need to fix modern cars. Because modern cars are computers on wheels, denying independent mechanics that data effectively denies them the ability to fix modern cars. The government always says it's committed in principle but in practice never gets around to doing it. The scheme is only now up and running, many years after the ACCC first warned about it. It's a long time after the government was first warned about it. How many independent mechanics have gone to the wall because of the government's inability to speak out for this critical sector?
We're seeing the same with the car dealers industry as well, and we're seeing the same in the area of scams. In the report that the member for Mackellar has referred to, the ACCC's Scamwatch has received almost 5,000 reports mentioning COVID-19. Labor will fight online scams by establishing a national antiscam centre and doubling funding for identification recovery services. Only Labor can be trusted to protect Australians from scams.
I want to acknowledge the House of Representatives Standing Committee on Economics secretariat, particularly Nicolette Cilia, who I understand was the key person responsible for drafting this important report.
Authorised by Paul Erickson, ALP, Canberra.