March 30th 2013


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Articles from this issue:

EDITORIAL: The decline of Australian manufacturing

ECONOMIC AFFAIRS: Labor's failure to tackle root causes of soaring cost of living

CANBERRA OBSERVED: Stricken Labor picks fight with media in election year

NEW SOUTH WALES: Widening ripples from Obeid corruption scandal

WA ELECTIONS: Conservative tsunami hits Labor and the Greens in WA

ENVIRONMENT: More alarmism from the Climate Commission

MARRIAGE LAWS: State same-sex marriage laws would be invalid: leading QC

NATIONAL AFFAIRS: Push to change ALP and Coalition on marriage

LIFE ISSUES: Tasmanian abortion laws to criminalise dissent

SOCIETY: Radical feminism's war on men, marriage and children

DEFENCE OF FREEDOM: The power of truth: Reagan's 'Evil Empire' speech turns 30

LATIN AMERICA: Death of Venezuela's Hugo Chávez

SOUTH-EAST ASIA: Brunei: a small country alone in a turbulent region

LETTERS

CINEMA: In defence of 3D dreadfuls

BOOK REVIEW The life and death of Roger Casement

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ECONOMIC AFFAIRS:
Labor's failure to tackle root causes of soaring cost of living


by Frank Zumbo

News Weekly, March 30, 2013

With the cost of living continuing to spiral out of control, you have to ask who has the guts at the federal level to tackle the issue.

We all know that Julia Gillard was in western Sydney recently, but we have to ask if she will feel the full impact of the cost-of-living pressure faced by families across western Sydney every day.

Living in a hotel is a luxury that many western Sydney families simply can’t afford. And living in a hotel room means that Julia doesn’t have to experience the full pain that those in Western Sydney endure when they travel hundreds of kilometres each week traversing the traffic nightmare that Sydney has become.

Tackling cost of living means getting tough with companies that rip off consumers. Major petrol retailers, the banks, electricity companies, insurance companies and even the major supermarket chains all need to be made accountable. It’s no coincidence that the escalating cost of living comes at a time when we are seeing more and more record profits from the ever expanding companies that have come to corner the market.

The notion of a “free market” has been distorted to mean that monopolies, duopolies and oligopolies are free to rip off consumers. That’s why we need strong and effective competition laws. Who has the guts to give us the strong and effective competition laws that we need?

Let’s start with the federal Labor government. Will the Prime Minister Julia Gillard, the Minister Assisting for Deregulation David Bradbury and the Minister for Small Business Chris Bowen give us strong and effective competition laws? Well, they will need to be quick as the federal Labor Government has let us down so far.

Interestingly, both Bradbury and Bowen will feel the heat of any failure by federal Labor to bring down the cost of living. Both Bradbury, in the federal seat of Lindsay, and Bowen, in the federal seat of McMahon, are in real danger of being early casualties of a Labor loss at the next federal election.

Both seats of Lindsay and McMahon have a strong contingent of families doing it tough because Labor has failed to effectively tackle the monopolies, duopolies and oligopolies that are ripping off Australian consumers.

Now, Bowen did give us an Australian Competition and Consumer Commission (ACCC) Petrol Commissioner and, indeed, Labor has been good at appointing more and more highly paid senior bureaucrats; but have these bureaucrats helped bring down the cost of living? Of course not. How could they when they were not given any new legislative powers to tackle the cost of living?

From time to time we did get to hear from Labor-appointed senior bureaucrats, but they usually tell us that there’s no problem. Indeed, the ACCC Petrol Commissioner has kept telling us that there’s nothing wrong with petrol prices.

Well, one would suspect that all those motorists out there struggling with their household budget each week would feel ripped off every time they buy petrol. These motorists don’t get the benefit of having the taxpayer paying for their petrol, as one would assume is the case whenever Julia and her senior ministers make their pilgrimage to western Sydney.

One would imagine that the Labor Government would have realised by now that having more ACCC chairpersons and commissioners is not the answer. These are likely to be seen as window-dressing, as having more ACCC chairpersons and commissioners is no substitute for strong and effective competition laws.

Why has the Labor Government failed to get the cost of living down? Quite simply, because they haven’t tackled the heart of the problem and that’s the growing number of monopolies, duopolies and oligopolies that are in the business of extracting as much out of consumers as they can get away with.

While the Government says that our competition laws are fine as they are, the federal Opposition, through their spokesperson Bruce Billson, is promising a wide-ranging review of our competition laws.

Billson is even promising some action to deal with unfair contract terms that can be imposed on small businesses by larger businesses. Billson is also committed to appointing an Australian small business ombudsman with real legislative power. Obviously, Billson and the federal Opposition see small business and consumers as key constituents in this year’s election.

Even the federal Greens are trying to stand up for small businesses by introducing legislation to give the Labor-appointed Australian Small Business Commissioner some teeth.

Let’s not forget Queensland National Party Senator Barnaby Joyce and South Australian independent Senator Nick Xenophon, who have long been standing up for small business and consumers. Both believe small businesses are vital to the competitive process, and view monopolies, duopolies and oligopolies as a serious threat to the free market.

For them a general divestiture power to break up the monopolies, duopolies and oligopolies is an essential part of Australia’s competition laws. The United States and United Kingdom have a general divestiture power in their competition laws, so why can’t Australia?

Queensland federal MP, Bob Katter, also has a strong commitment to small business. Plenty of Queenslanders are devoted to him and would vote for Katter’s Australian Party (KAP) to send a message to those in the major parties who have done nothing to prevent struggling Queensland farmers from being destroyed by the monopolies, duopolies and oligopolies.

Nor should the Democratic Labor Party (DLP), with its committed Victorian Senator John Madigan, be underestimated, as the DLP could hold, or at least share, the balance of power in the new Senate following this year’s election. Madigan speaks passionately about the plight of farmers and small businesses, and everyone should heed what he has to say.

So, as eyes are turned to western Sydney, there are many things for Prime Minister Gillard and her ministers, such as Bradbury, Bowen and Tony Burke, to think about. Surely none of them wants to think about losing their jobs come September 2013.

Frank Zumbo is an associate professor within the School of Business Law and Taxation at the University of New South Wales. During the past 20 years he has been at the forefront of business law reform. This has included drafting the “Birdsville Amendment” (2007) to effectively outlaw predatory pricing, as well as drafting the proposed “Blacktown Amendment” (2009) requiring that companies charge the same low price for the same product in all their retail outlets in the same area. A slightly longer version of the above article appeared in The Punch (March 6, 2013).
URL: www.thepunch.com.au/articles/theres-more-to-the-cost-of-living-race-than-flinging-money/




























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