HOUSE OF REPRESENTATIVES - 27 NOVEMBER 2024
The Albanese government is working hard to get a fairer go for families and a fairer go for farmers.
We know that large firms don't just squeeze their consumers, they squeeze their suppliers too. We have heard too many stories about the suppliers not getting a fair deal.
Earlier this year, third-generation cherry farmer Michael Cunial said that he was getting out of the industry. He told the ABC:
'We're at the mercy of them. We're price takers. So the profit just isn't there anymore… "There's a huge, huge imbalance. Supermarkets are making these multi-billion-dollar profits and growers are losing money.'
When the Food and Grocery Code was established by the former coalition government in 2015, it was set up as a voluntary code. When it was reviewed in 2018, the former coalition government decided that it should remain a voluntary code. I note in passing that this decision was made when the current shadow agriculture minister, the member for Maranoa, was the agriculture minister. The member for Maranoa had a chance to deliver a mandatory Food and Grocery Code, but decided to keep the code voluntary.
When Labor came to office, we asked former competition minister Dr Craig Emerson, one of Australia's best policy brains, to review the Food and Grocery Code of Conduct. Dr Emerson consulted broadly and concluded that the code was not doing its job. As he noted, there were no penalties, and no formal complaints had been raised after the 2021-22 financial year. His report made 11 recommendations, and the government accepted all of them. The most important recommendation was that the Food and Grocery Code be made mandatory, with substantial penalties for more harmful breaches.
As Dr Emerson noted, what it really means is that the supermarkets will need to treat their suppliers in good faith. They must not abuse their superior bargaining power, the muscle that they have over smaller suppliers.
The government's intention is that penalties will apply principally to corporations—that is, to supermarkets themselves. Consistent with other industry codes, the bill provides for non-body corporate penalties. Breaches by non-bodies corporate are lower to provide a proportionate approach.
The bill will ensure penalties for treating suppliers poorly in breach of the code are not merely a cost of doing business. These are serious penalties. They are the highest corporate penalties under any industry code.
The bill provides that the maximum penalty that can be prescribed in the code will be the greater of $10 million, three times the value of the benefit gained from the contravening conduct, or 10 per cent turnover in the preceding 12 months.
The introduction of penalties into the new Food and Grocery Code will enable the Australian Competition and Consumer Commission to issue infringement notices where it has reasonable grounds to believe that a supermarket has breached the code. These are an important tool in the Australian Competition and Consumer Commission armoury that allow for efficient, low-cost enforcement outcomes for minor breaches.
The new Food and Grocery Code of Conduct regulations, the substance of the code, will be made this year, with the code coming into force from 1 April 2025. The code will implement other recommendations including making the code mandatory, strengthening the dispute resolution process and new obligations to protect suppliers from retribution. This will be complemented by the establishment of an anonymous supplier and whistle-blower complaints pathway through the Australian Competition and Consumer Commission.
This is only one part of Labor's extensive supermarket competition policy agenda. We are cracking down on shrinkflation by strengthening the Unit Pricing Code to make it easier for Australians to make accurate and timely price comparisons, working with the states and territories to reform planning and zoning regulations to boost competition and reduce land banking, ensuring the Australian Competition and Consumer Commission will be notified of every merger in the supermarket sector in the biggest strengthening of Australia's merger settings in half a century and providing the Australian Competition and Consumer Commission with an additional $30 million in funding to crack down on misleading and deceptive pricing practices in the supermarket and retail sectors.
We've raised the penalties for anticompetitive conduct, banned unfair contract terms, funded CHOICE to conduct quarterly price monitoring, and we're consulting on a general prohibition on unfair trading practices.
Dominant firms can squeeze their suppliers—something called monopsony power. The government is scrutinising the use of non-compete clauses in worker contracts due to concerns that they may be anticompetitive. And a concern over monopsony power is why our government is making the Food and Grocery Code mandatory, because competition reform isn't just about benefiting consumers, it's about benefiting workers and farmers too. More competition means a more dynamic and efficient economy.
Enabling higher penalties to be prescribed in the Food and Grocery Code is not the only measure in this bill. I turn now to a discussion of each of the schedules in the bill.
Schedule 1 to the bill is necessary for the transfer of business register functions back to the Australian Securities and Investments Commission and to delay auto commencement of corporate collective investment vehicle reporting provisions as a result of the government's decision to stop the former Modernising Business Registers program.
The legislative changes outlined in schedule 1 to the bill will ensure that the employment terms and conditions of transferring staff are maintained in line with the Public Service Act 1999 and the Fair Work Act 2009. These legislative changes are required as the Australian Securities and Investments Commission is not within the Australian Public Service. These legislative changes will provide continuity of business register services by minimising potential staffing changes and will also ensure business registers staff will be subject to the same legislative framework as existing Australian Securities and Investments Commission staff members when they conduct their duties.
Schedule 1 to the bill will also provide for legislative changes necessary to give greater time to analyse reporting provisions related to corporate collective investment vehicles. These provisions were designed under the former Modernising Business Registers program but require further consideration following the government's decision to stop the program.
Schedule 2 to the bill seeks to amend the Competition and Consumer Act 2010 and the Australian Consumer Law, to streamline product safety standards and save businesses $5 billion over 10 years in administrative, testing and compliance costs once fully implemented. These changes will also help lower the cost of household products and take pressure off Australians by offering greater product choice for consumers without compromising safety.
Globally, consumer goods are often manufactured and tested to product safety standards developed by expert organisations which are widely accepted in major economies such as the United States and the United Kingdom.
However, the Australian Consumer Law does not easily allow for overseas standards to be recognised alongside Australian standards. Instead, the current provisions lead to duplicative retesting and relabelling to adhere to the relevant Australian standard, even when the product already complies with an overseas standard which offers an equivalent or a better level of consumer protection. The changes proposed by this bill will make it easier for the commonwealth minister to recognise trusted overseas standards in safety and information standards made under the Australian Consumer Law. This will mean that Australian regulation keeps pace with updates to Australian and overseas standards. The changes also require businesses to provide evidence of compliance with mandatory standards following a request from the regulator.
The reforms will allow businesses to import and sell products without duplicative testing and compliance measures, provided the products have been tested and are found to comply with a trusted, equivalent overseas safety standard. They will allow businesses to expand their product ranges and import products sooner without compromising on consumer safety. They will also ensure that compliance requirements in Australia do not fall out of step with international best practice as Australian and overseas standards are updated.
These changes are good for consumers and good for businesses. They will help drive competition by increasing consumer choice, all the while ensuring product safety standards are held to a high standard to keep Australians safe.
Schedule 3 to the bill seeks to amend the Housing Australia Act 2018 to increase the legislated cap on the amount of money which can be credited to a dedicated special account established to fund and support Housing Australia's housing finance programs.
The act established Housing Australia to improve housing outcomes for Australians, including through efforts to increase supply of, provide finance for, and encourage investment in, social and affordable housing.
The act also establishes the Housing Australia Special Account, which sets aside funds from consolidated revenue to fund and support the provision of finance for social and affordable homes. Housing Australia draws down on the Housing Australia Special Account to fund, through loans and grants, organisations to support the provision of social and affordable homes through a range of housing finance programs. These include the Housing Australia Future Fund Facility, the National Housing Accord Facility and the Affordable Housing Bond Aggregator.
The balance of the special account is subject to a legislated cap of $1 billion under section 47D(1) of the act. If the balance of the special account exceeds $1 billion, any funds above the cap must be returned to consolidated revenue. This means any excess funds would be 'lost' from the special account and not able to be used to fund Housing Australia's social and affordable housing finance programs.
In the 2024-25 budget, the government increased the size of the line of credit supporting the Affordable Housing Bond Aggregator program from $1 billion to $4 billion to support more lending to community housing providers who are crucial to the delivery of social and affordable housing. Increasing the cap on the special account would enable the full $4 billion of funds to be made available to Housing Australia in accordance with this budget decision. Additionally, the first rounds of the Housing Australia Future Fund Facility and National Housing Accord Facility will deliver an additional 13,700 social and affordable dwellings, which will be supported through funding that flows through the Housing Australia Special Account.
This means the Housing Australia Special Account is subject to increased frequency and volume of both drawdown and replenishment to support the financing of social and affordable homes. This amendment will support the government's commitment to deliver 40,000 social and affordable homes by enabling Housing Australia to approve more applications for financing, helping more Australians into social or affordable homes as soon as possible.
Schedule 4 to the bill amends the Competition and Consumer Act 2010 to strengthen the penalty regime for industry codes, including by permitting higher maximum penalties to be set for breaches of the new food and grocery code and the unit pricing code. The schedule also increases infringement notice penalties for alleged breaches of industry codes generally and clarifies the ability for industry codes to confer functions and powers on persons and bodies.
The schedule makes the legislative changes needed to implement the government's respective responses to the food and grocery code review and the franchising code review, and the government's announcement to introduce substantial penalties for supermarkets who breach the unit pricing code. The schedule also creates consistency and strengthens the enforcement regime across industry codes to deter non-compliant behaviour.
These changes form part of a range of actions the government is taking to foster a competitive and sustainable supermarket industry to get a better deal for supermarket customers and suppliers.
Schedule 5 to the bill amends the income tax law to specifically list Skip Foundation Ltd as a deductible gift recipient.
Specifically listing an organisation encourages philanthropic giving and supports the not-for-profit sector as donors may claim income tax deductions for donations to organisations with deductible gift recipient status.
The schedule also removes the following specifically listed deductible gift recipients as the organisations are no longer operating:
- Don Chipp Foundation Ltd
- Ian Clunies Ross Memorial Foundation
- Ian Thorpe's Fountain for Youth
- Layne Beachley—Aim for the Stars Foundation Limited
- National Congress of Australia's First Peoples Limited
- Sir William Tyree Foundation
- SouthCare Helicopter Fund Pty Ltd
- The Lingiari Policy Centre Limited.
The removal of inactive specific listings is necessary to maintain trust and integrity in the administration of tax concessions that can be accessed by not-for-profits that have deductible gift recipient status.
Schedule 6 to the bill amends various laws in the Treasury portfolio to ensure these laws operate in accordance with policy intent, to make minor changes to improve administrative outcomes and remedy unintended consequences, as well as correcting technical and drafting defects.
In closing, let me thank the many officials within Treasury who have worked on this bill. I want to acknowledge the valuable work of Craig Emerson and his secretariat in bringing down the Food and Grocery Code review. I want to particularly thank my adviser Tori Barker, who's here on the floor of parliament, for her critical work throughout this process and in bringing this important reform to fruition.
Full details of the measure are contained in the explanatory memorandum.
I commend the bill to the House.