The boss of Coles-owner Wesfarmers, Richard Goyder, says an “effects test” is bad policy favoured by people who want to return Australia to the protectionism of the 1960s.
Goyder said he felt disappointed and to a degree, disillusioned, by the Turnbull government’s surprise announcement on Wednesday that it will implement an effects test.
The effects test will prohibit big companies from acting in such a way that would have the effect of substantially reducing competition without any economic justification.
Goyder said an effects test had always been about politics and not policy.
“I just think it’s bad policy, and I think the winners will be lawyers,” Goyder said at the Australian Financial Review Business Summit on Wednesday.
“The reason people want an effects test is they want less competition from Coles, they want less competition from Bunnings, they want less competition from Coca-Cola and Amazon and everyone else.
“They want the corner store and the protectionism of the 1960s to come back, and I think it’s totally misguided.”
Goyder said an effects test would not deter Wesfarmers from trying to provide great outcomes for consumers in a way that was ethical and responsible, even though it might land the company in court.
“We’re not going to change the way we do things, which is to give good outcomes to our customers,” he said.
Goyder said Wesfarmers would be doing the wrong thing by its shareholders if it decided to stop investing and stop reducing prices.
“If someone wants to take us to court in due course, then we’ll deal with that.”
Business Council of Australia president and Telstra chairman Catherine Livingstone said the council was extremely disappointed by the government’s decision and viewed an effects test as anti-competitive.
“The effects test will affect the whole economy. It’s not a big-business-only issue. In regional markets, it will be involving small business, so we are very disappointed,” she said.
“But we will work with the government through the drafting process to try to pre-empt any unintended consequences.”
Meanwhile, the Australian Newsagents’ Federation (ANF) applauded the government for supporting small business by pushing ahead with the effects test.
Alf Maccioni, ANF CEO said “We have supported strongly the government’s initiative to address necessary competition policy reforms and we support the intent of the Harper Panel consultations.”
“The government has endured a significant lobbying campaign by big business against this reform and we want to recognize the government’s commitment to small business, that after an exhaustive consultation, they are now addressing this long awaited reform and bringing Australia into line with other overseas jurisdictions,” Maccioni said
“Newsagents’ simply want the freedom to compete robustly to the extent that we as small businesses can in our relevant markets,” Maccioni said. “We would have liked even stronger measures, however this is an important step in the right direction and we hope that once the amendments are completed, the ACCC will move quickly to test the new laws so we can assess over the next few years the effectiveness of the reforms.”
“Our members benefit from the recently announced extension of unfair contract terms that we pushed hard for, unconscionable conduct provisions and the mandatory code provisions of the CCA, which are all of assistance to small businesses like ours. These provisions nonetheless need to be supported as part of a package, and a necessary part, by a provision that doesn’t prevent or deter competitive conduct by smaller players,” Maccioni said.
