Mr BRADBURY (Lindsay—Assistant Treasurer and Minister Assisting for Deregulation) (15:27): I appreciate the opportunity to contribute to this debate and thank the member for Kennedy for bringing this important matter of public importance before the parliament. I know that the member for Kennedy is a very passionate advocate of people in his part of the world. Certainly much of the passion that we have come to see from him in the past was evident in that contribution today. I would like to address the issue that underlies the matter of public importance today. I begin by saying that, whilst I think there is a general acknowledgement of some of the concerns that are raised in relation to the use of market power generally across various markets in this country from time to time, it is the government's position that the existing competition framework is adequate to deal with many of these challenges. Certainly we stand ready to consider any evidence that might suggest that there are other alternatives, more appropriate means, through which better outcomes can be achieved. When we ask the question about what those better outcomes might be, we must bear in mind the question, obviously, of the interests of producers, but ultimately we need to ensure that we have an efficient and productive economy and one that is giving consumers a fair go and a fair deal. That is ultimately at the heart of our approach to competition policy. When you look at the major supermarket chains and the supermarket sector, you see that upon coming to office this government directed the ACCC to undertake a specific inquiry into the major supermarket chains and the retail sector. There were a number of findings that came out of that review. In particular, that review found that there was workable competition within the supermarket sector. The review did indicate that, in particular, smaller players like ALDI were playing an important role in introducing competition into this sector. It is worth noting that ALDI represents a very small part of the overall market, as do some of the other independent operators and some of the smaller players, like IGA. I think it is worth noting the respective market shares of the major supermarket chains. Here I am citing data from the IbisWorld Supermarkets and Other Grocery Stores in Australia report, which indicates that Woolworths has approximately a 40 per cent market share and Coles has approximately a 31 per cent market share. Inherent in this matter of public importance that has been brought forward is the clear suggestion that there should be some divestiture of the market share that those players currently hold. What is unclear, and what is a difficult question for proponents of divestiture to answer, is what might be an appropriate threshold for market share to be set at. Indeed, just as difficult a question to ask and to answer is how one might determine and define that market share. One of the things the ACCC's inquiry into the retail sector showed was that for an overwhelming majority of consumers—in particular in metropolitan areas, where it was more than 90 per cent of consumers—most of their shopping is done within five kilometres of where they live. This gives rise to the very question of market definition: what is the market? If the test here is one of market size or market penetration, then obviously one needs to go through that exercise of defining what the market is. More broadly, the approach this government has brought to competition policy—which is consistent with approaches that have previously been taken—has been to say that market share, on its own, is not determinative of whether or not a competitive framework exists. You need to have a look at the full range of factors. People talk about monopolies, but clearly we do not have a monopoly. I am not trying to be technical about it, but we do not have a monopoly. There are people who call it a duopoly, but we do not have a duopoly. We have a market in which two major supermarket chains have very significant market shares; there is no question about that. But I will make this observation: it would be fair to say that in recent times we have seen more robust competition in the grocery sector than we have seen for a very long time. This is feedback that I get in my community, and I know many others get it elsewhere. The very vigorous competition that is currently in play in our major supermarket chains is on display for all to see. I would not entirely attribute the current price deflation to that competition, but I think anyone who brought any serious analysis to the price deflation that has been experienced in recent times would have to acknowledge that the aggressive competition that has been occurring between Coles and Woolworths has contributed in part. That leads to all sorts of debates. One of the debates we have had before committees and in the public more generally has been around milk prices. Two parliamentary committees have looked at this. The first parliamentary committee looked at it because milk prices were too high; the second parliamentary committee looked at it because prices were too low. That raises all sorts of very serious questions about what we are hoping to get out of these inquiries and, ultimately, what type of marketplace we are looking to operate within. The government takes the view that competition policy is always about a balance. It is about ensuring that we have a set of rules and a framework in place that allows serious competition to exist between competitors but, at the same time, makes sure that ultimately the best outcomes are being generated for consumers. Mr Katter interjecting— The DEPUTY SPEAKER ( Hon. BC Scott ): The member for Kennedy will remain quiet or will find himself out of the chamber. Mr BRADBURY: Perhaps I could address the issue of divestiture, which is at the heart of this matter of public importance. There are a whole series of very difficult questions that proponents of divestiture have to answer. I have heard many discussions, but I have not heard too many answers to these questions. The first one, which I have already identified, relates to market definition: what is the market? Secondly, what percentage of market share is appropriate, and what is not? I have just gone through the figures: 40 per cent for Woolworths and about 30 per cent for Coles. Let's just say, for argument's sake, that someone says 25 per cent is the appropriate figure. Mr Katter: Mr Deputy Speaker, a point of order: he claims 40 or 30 per cent. That was in 2002— The DEPUTY SPEAKER: No, there is no point of order. You are debating the minister. Mr BRADBURY: I am not seeking to engage in argument on this. The figures I quoted were from the IbisWorld Supermarkets and Other Grocery Stores in Australia report from this year. Let's assume for just one minute that proponents of divestiture are arguing that 25 per cent is the cap—that that is the limit on what market share should exist. That means anyone who has more than that in market share is going to have to forgo stores all around the country. One has to ask the question: where are the first stores that are given up going to be? Are they going to be the most profitable stores? I suspect they will not be the most profitable stores; I suspect they will be some of those stores in poorly serviced areas, often in rural and regional communities. It is worth noting that we are talking about companies that employ a significant number of Australians; in fact, the numbers are in the thousands, if we put the two major supermarket chains together. If we are to force divestiture, which is the proposition we are talking about here, that would mean Coles and Woolworths would have to basically sell some of their stores. I put it to you that it would be the least profitable stores that they would be willing to sell. I also ask the question: who is going to buy these stores? Quite often the people who are most in favour of divestiture are the people also most opposed to foreign investment. It is most likely that the lack of capital that exists within this country means that foreign capital will come in and pick up those stores. I assume that we are happy with that foreign investment, but I understand that is not without contention in this place. The ACCC report indicated that ALDI, which is foreign owned, was a force that was bringing competitive pressure into this sector. So we see that the complex dynamics of divestiture are not as simple as the suggestion that you simply divest. I put it to you all that there are legitimate concerns being raised in relation to market power. There are a number of changes that have been made to our competition laws in recent times, many of which have not been tested before the courts. The ACCC Chairman, Rod Sims, has indicated that the ACCC are undertaking very, very robust inquiries in relation to some of these matters. I think it is important, and the government believes it is important, that we give the regulator the opportunity to test the laws that have already been introduced. If it is the case that there are suggestions that the laws are ineffective or inadequate to address clearly identified problems, then of course the government will consider what action that requires. Can I make some further points in relation to the lack of alternatives to the approach that the government has outlined. I know that the opposition will have their opportunity to contribute to this debate. I was really interested to find out what their position on competition policy was. I had a look at the coalition speakers notes that were leaked a bit earlier this year. There are about 140 pages, and I searched the notes page by page from front cover to back cover and I could not find anything about competition policy. I then thought that it must be in there under consumer policy. Well, there was nothing under consumer policy either. In fact, I was alerted to this by an article, an opinion piece, that I saw in the paper this morning from Peter Costello, who said: Recently, Nationals senator John ''Wacka'' Williams called for an ombudsman to be given the power to force supermarkets to increase prices. … … … But a statement like that should draw a response from political leaders lest people start thinking it is serious. … … … A government has to decide whether it is for the consumer or the producer. … … … The Coalition has committed to a ''root and branch'' review of competition policy. This will be another showdown between rational economics and rural populism. We know who has the balance of power over there at the moment—it is the rural populists. The rural populists are in control. Well, at least in opposition the rural populists are in control. When I heard about this root and branch review I thought that maybe there is a policy. So I went to the website of the member for Dunkley, who is the shadow minister in this area. I thought that perhaps he had set out some of the problems that they have identified and need to be assessed in this root and branch review. When I looked at the website the word 'competition' only appeared in the headline. There was no reference to competition. In fact, the Competition and Consumer Act, the relevant piece of legislation, was not mentioned. The only thing I could see a reference to was the Australian Accounting Standards Board. I have been scratching my head all day trying to understand what connection that has with competition policy. Let's not forget that there have been two major reviews of competition policy in the last 20 years—the Hilmer review and the Dawson review. And let's not forget that neither of those reviews recommended divestiture powers. Indeed, the last root and branch review, which was the Dawson review, recommended a couple of interesting things like the criminalisation of cartel conduct, which is something that the former government sat on for year after year and did nothing about. It took this government to come into power and to introduce legislation to criminalise that conduct. We will continue to monitor developments within the marketplace. To the extent that evidence emerges that there is misuse of market power that extends beyond those powers that the ACCC currently has, we will stand ready to consider any future changes. (Time expired)