COMPETITION POLICY REFORM (WESTERN AUSTRALIA) BILL
Second Reading




COMPETITION POLICY REFORM (WESTERN AUSTRALIA) BILL
Second Reading
House:Legislative Council - Second Reading
Date:22, October1996
Member:
Member:Chance, Hon Kim
Subject:COMPETITION POLICY REFORM (WESTERN AUSTRALIA) BILL Second Reading
Page:6898 / 1

The obverse was that I was inspired by the
militant, left leaning wheat growers' union and the things it did to assist
farmers in times of stress, particularly in relation to action against the bank.
However, it was the wheat growers' union in the main which led the fight against
the commercial agents in the wheatbelt and which tried to lock some form of
control of the Australian wheat industry in wheat growers' hands.

I referred to the wheat growers' union as a left leaning organisation, and it
most certainly was. However, in the 1950s there were still remnants of what had
been a very influential Communist Party in the area. The history of that time
shows that many of the union leaders were the Communist Party leaders in that
part of the world. Of course, the 1950s was the era of McCarthyism and none of
us remained entirely immune. However, against that background, these communists
and ex-communists who had been the leaders of the wheat growers' union were
still revered in the community. A close relation of mine was one of those
people. I was extremely fond of my uncle, but he was a communist. It was then
that I first discovered that one could not believe everything on the radio and
in the newspapers, because we were told every day that communists ate babies.

My uncle was the most kind, gentle and sincere man I have known. That certainly
influenced my view of the world. Some of the history of that period is
contained in the book A fine country to starve in, which is well worth reading.

The model of the Australian Wheat Board, which is essentially a
grower-controlled marketing bloc endowed with monopoly powers enshrined in
Statute, was duplicated in various forms and sadly with variable success across
most of the range of agricultural produce in the post war period. In numerous
cases, and none more spectacular than the Australian Wool Corporation, the model
has been dumped or gutted in favour of a return to free market systems. In my
27 years as a primary producer, I have been involved in a whole range of
industries that were regulated at one end of the scale and unregulated at the
other end. During that time, I never had cause to regret the concept of
regulation, which I always viewed as a valuable heritage from my father's
generation.

In a small way, I contributed to the extension of regulated marketing in the
lamb industry. However, in latter years, and with a great deal of sadness, I
witnessed the decline from favour of statutory systems in favour of the free
market. I feel more than somewhat uneasy about that trend.

A trend away from regulation of marketing systems is popular, and I recognise
the changing climate of public opinion. However, I still have not seen, and I
have no reason ever to expect to see, any evidence that the fundamental reasons
for the creation of regulated systems have ceased to exist. If that is the
case, it seems that we have condemned ourselves to endure again the pain that
unfettered market forces can cause. I referred earlier to a cycle and I am
depressed that we are committing ourselves to the continued rotation of that
cycle.

It is apparent to me that unless we are to commit ourselves blindly to an
endless cycle of boom and bust, of regulation and deregulation, we must achieve
some kind of balance between the efficiencies of the market system and the need
to manage that system in the public interest.

Hon B.K. Donaldson: Do you see the rationale for identifying a public benefit
before making those changes?

Hon KIM CHANCE: Yes. In fact, my next words are that this Bill is a credible
attempt to strike that balance. I sincerely believe that, because I have had to
think long and hard about where I stand in relation to this Bill.

I will not deal with the issues already adequately covered in the Minister's
second reading speech. Although it was fairly brief, it contained most of what
people need to know about the structure of the systems established by the Bill.

However, it is necessary at this stage to define the basic elements of
competition policy. In this case I am not referring to the Bill but, rather, to
the Hilmer report, or at least the report of a committee of the Federal
Parliament. That report outlines the six fundamental elements of competition
policy as follows: To limit anti-competitive conduct of firms; to reform
regulation that unjustifiably restricts competition; to reform the structure of
public monopolies to facilitate competition; to provide third party access to
certain facilities that are essential for competition - for example, common
carrier arrangements on a publicly owned gas pipeline or powerline; and to
restrain monopoly pricing behaviour and foster competitive neutrality between
government and private businesses when they compete. Part of that has been
adopted in this legislation and other parts have been added.

Like all reformers, proponents of this aspect of the Hilmer reforms might have
over sold the potential benefits in their enthusiasm to impress us with the
bounty that travels hand in hand with competition policy. For example, the
Industry Commission's analysis of the potential benefits of the implementation
of the principles was that there would be an increase in the gross domestic
product of about 5.5 per cent. The commission extrapolated that amount to an
annual boost to the economy of $23b. We have had this $23b figure thrown at us
ad nauseam, more particularly by the previous Federal Government. In my view,
$23b or 5.5 per cent of GDP, however one expresses it, is fairyland stuff and
no-one seriously believes it. At the same time, it is hard to deny that some
real benefits are available to the economy as a result of the adoption of these
principles.

Some of the consequences of the implementation of the principles are nothing
short of ludicrous.

The application of the taxation equivalent regime to a regional port, thus
creating a need to refund the amount that has been taxed to that port authority
through division 47 of the Budget, is silly.