Testing the Effect

By Brian Tessmann, QDO President

In what was a tumultuous time in Federal Parliament last week, the introduction of the important s46 ‘effects test’ legislation was somewhat unfairly overshadowed by the backpacker tax headlines.

The addition of the effects test provision to s46 of the Competition and Consumer Act has been designed to help address the current unequal distribution of market power between different market players. This market power correction will directly assist the milk and dairy markets which are currently suffering from such imbalances. By restricting overtly dominate and anti-competitive actions by powerful players such as large supermarkets, the ‘effects test’ will encourage more transparent market actions mutually benefiting producers, processors, consumers and retailers.

Queensland Dairyfarmers’ Organisation (QDO), alongside our national body Australian Dairy Farmers’ (ADF), have strongly advocated for these changes since 2011. We see the ‘effects test’ as one of the measuresurgently needed in preventing the ongoing predatory pricing practices that have severely impacted our industry.

You would be remise to confuse the ‘effects test’ support as simply a farmer support mechanism, rather, the reforms will benefit consumers and other market sectors by moving towards an objective measure to assess the impact of anti-competitive behaviour.

It has been a long hard road to get this legislation to where we are now, however it is far from a done deal. Both sides of politics and the cross bench need to support this vital change that will bring Australia into line with most other developed economies.

QDO would like to thank the Deputy Prime Minister Barnaby Joyce, the Prime Minister, Treasurer and the Minister for Small Business for their support and delivering on their election commitment to introduce this important bill. Let’s hope this bill does not become the victim of politicisation like other agricultural bills have in recent times.

It’s time for Australia to catch-up with the rest of the world on competition policy. It’s time to implement an ‘effects test’ to deliver the certainly and fair playing field consumers, producers, processors and retails deserve.