tag:theconversation.com,2011:/africa/topics/accc-722/articlesACCC – The Conversation2024-03-24T19:06:54Ztag:theconversation.com,2011:article/2260022024-03-24T19:06:54Z2024-03-24T19:06:54ZAustralia’s biggest chemist is merging with a giant wholesaler. Could we soon be paying more?<figure><img src="https://images.theconversation.com/files/582712/original/file-20240319-24-9w8vvm.jpg?ixlib=rb-1.1.0&rect=278%2C352%2C5095%2C1998&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/sydney-australia-oct-11-2019-outside-1714118746">Dr. Victor Wong/Shutterstock</a></span></figcaption></figure><p>Corporate Australia loves a big merger. And amid a <a href="https://ministers.treasury.gov.au/ministers/andrew-leigh-2022/articles/opinion-piece-merger-policy-critical#:%7E:text=The%20data%20show%20that%20larger,patent%20than%20an%20average%20firm.">growing flurry</a> of them across the business scene, a new blockbuster has emerged.</p>
<p>All eyes are on two titans of the pharmacy industry – Chemist Warehouse and Sigma Healthcare. They are poised to join forces under an <a href="https://www.abc.net.au/news/2023-12-11/chemist-warehouse-sigma-healthcare-merger-deal-explained/103213384">A$8.8 billion deal</a>, which could radically reshape the way Australians access medication and other health products. </p>
<p>Mergers can lower business operating costs and make companies more efficient. But reduced competition in any sector typically leads to <a href="https://www.accc.gov.au/business/competition-and-exemptions/misuse-of-market-power">higher prices</a> for consumers. </p>
<p>What could this deal by “Australia’s cheapest chemist” mean for everyday Australians and their wallets? </p>
<h2>An unmatched pharmacy giant</h2>
<p>If the proposed merger goes ahead, the new entity will be enormous – far bigger than any of its individual competitors. </p>
<p>It will <a href="https://investorcentre.sigmahealthcare.com.au/static-files/d2c377b3-f487-4488-b34d-43c02330e6b7">combine</a> the market power of about 600 existing Chemist Warehouse outlets with <a href="https://sigmahealthcare.com.au/our-background/">more than 1,200 pharmacies</a> currently aligned to Sigma as a wholesaler, giving it more than 26% market share.</p>
<p><iframe id="7TRHG" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/7TRHG/2/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<p>Sigma is listed on the Australian Stock Exchange (ASX), meaning its shares can already be bought and sold by the public. </p>
<p>Through the merger, privately owned Chemist Warehouse, whose <a href="https://www.afr.com/companies/retail/chemist-warehouse-records-surging-sales-profits-ahead-of-asx-debut-20240320-p5fdyj">surging profits</a> have excited potential investors, will also get a backdoor entrance to the ASX without undergoing a lengthy initial public offering process. </p>
<h2>Who the players are</h2>
<p>Chemist Warehouse has earned a reputation as the “<a href="https://www.afr.com/markets/equity-markets/like-bunnings-fund-managers-bullish-on-chemist-warehouse-20231212-p5eqsy">Bunnings of pharmacies</a>”, famous for its perceived affordability. </p>
<p>It has established a strong retail presence nationally, with franchise outlets stocking not only prescription and over-the-counter medicines, but also a <a href="https://www.morningstar.com.au/insights/personal-finance/235983/the-rise-and-rise-of-chemist-warehouse">huge range of other health products</a> such as vitamins, cosmetics and toiletries.</p>
<figure class="align-right ">
<img alt="Amcal pharmacy storefront signage" src="https://images.theconversation.com/files/583622/original/file-20240322-28-4ouual.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/583622/original/file-20240322-28-4ouual.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=451&fit=crop&dpr=1 600w, https://images.theconversation.com/files/583622/original/file-20240322-28-4ouual.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=451&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/583622/original/file-20240322-28-4ouual.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=451&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/583622/original/file-20240322-28-4ouual.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/583622/original/file-20240322-28-4ouual.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/583622/original/file-20240322-28-4ouual.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Sigma owns retail pharmacy brands, including Amcal.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/melbourne-australia-september-27-2015-allied-321194645">Nils Versemann/Shutterstock</a></span>
</figcaption>
</figure>
<p>Sigma Healthcare, on the other hand, operates retail pharmacy chains including Amcal and Discount Drug Store. </p>
<p>It is also one of <a href="https://www.afr.com/companies/retail/sigma-could-shed-customers-after-chemist-warehouse-merger-20231212-p5eqt6**">top three largest pharmaceutical wholesalers</a> in Australia, with a broad customer base.</p>
<p>This merger is a masterful blend of two <a href="https://www.masterclass.com/articles/horizontal-integration-explained">business strategies</a>: </p>
<ul>
<li>vertical integration – buying part of your own supply chain </li>
<li>horizontal integration – acquiring a competing business.<br></li>
</ul>
<p>The new entity will be able to independently source and sell its own products, fully controlling its own ecosystem of wholesale, distribution and retail pharmacies. </p>
<h2>How could this affect competition and consumers?</h2>
<p>Economic theory tells us that for consumers, mergers can be <a href="https://academic.oup.com/qje/article-abstract/120/2/701/1933966">a double-edged sword</a>. </p>
<p>On the one hand, they often increase business efficiency, scale and bargaining power. These cost savings may translate into lower prices for consumers.</p>
<p>In some industries, mergers have reduced prices by <a href="https://www.nber.org/papers/w31123">more than 5%</a>. </p>
<p>However, the decrease in competition brought about through a merger can allow companies to get away with charging <a href="https://www.brookings.edu/articles/the-consequences-of-increasing-concentration-and-decreasing-competition-and-how-to-remedy-them/">higher prices</a>, or even lowering the quality of their product offering.</p>
<p>Evidence from the US shows that in the <a href="https://www.investopedia.com/terms/c/cpg.asp">consumer packaged goods sector</a>, which includes drugs and other healthcare products, mergers <a href="https://www.nber.org/papers/w31123">increased prices</a> by 1.5% on average and lowered the total volume of goods sold by 2.3%.</p>
<figure class="align-center ">
<img alt="shelves containing various medications in Chemist Warehouse" src="https://images.theconversation.com/files/582715/original/file-20240319-16-xv7v5j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/582715/original/file-20240319-16-xv7v5j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/582715/original/file-20240319-16-xv7v5j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/582715/original/file-20240319-16-xv7v5j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/582715/original/file-20240319-16-xv7v5j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/582715/original/file-20240319-16-xv7v5j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/582715/original/file-20240319-16-xv7v5j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The prices of many prescriptions in Australia are tightly regulated under the pharmaceutical benefits scheme (PBS).</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/sydney-nsw-australia-march-20-2023-2277956295">Gerry H/Shutterstock</a></span>
</figcaption>
</figure>
<p>In Australia, tight regulation of prescription medications means there isn’t much leeway to increase prices for medicines covered under the <a href="https://www.pbs.gov.au/pbs/home">Pharmaceutical Benefits Scheme (PBS)</a>. </p>
<p>But Chemist Warehouse <a href="https://investorcentre.sigmahealthcare.com.au/static-files/d2c377b3-f487-4488-b34d-43c02330e6b7">earns</a> a whopping 67% of its revenue from its non-prescription “front of store” sales, compared to a rate of 27% at other Australian pharmacies. </p>
<p>This gives the giant a unique opportunity to capitalise on increased market power in the Australian context.</p>
<h2>Calls to increase competition</h2>
<p>There have long been <a href="https://www.pc.gov.au/research/supporting/competition-policy-review">calls</a> to enhance competition in Australia’s pharmacy sector. </p>
<p>The Harper <a href="https://www.pc.gov.au/research/supporting/competition-policy-review">National Competition Policy Review</a> singled out the <a href="https://www.guild.org.au/programs/seventh-community-pharmacy-agreement">Community Pharmacy Agreement</a> for stifling competition, saying its rigid location and ownership restrictions pose significant barriers for new players. </p>
<p>This has largely prevented Australia following in the steps of the United States and Europe, where deregulation in this industry has allowed consumers to <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7911380/">buy over-the-counter medicines in supermarkets and gas stations</a>.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/a-loaf-of-bread-and-a-packet-of-pills-how-supermarket-pharmacies-could-change-the-way-we-shop-122640">A loaf of bread and a packet of pills: how supermarket pharmacies could change the way we shop</a>
</strong>
</em>
</p>
<hr>
<p>This merger stands to further weaken competition in an industry already held back by such restrictions.</p>
<h2>Australian retail is already highly concentrated</h2>
<p>Australia’s high level of industry concentration – where markets are controlled by a small number of large players – has found itself in the spotlight amid a stubborn cost of living crisis.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/flying-under-the-radar-australias-silent-and-growing-competition-crisis-212116">Flying under the radar: Australia's silent and growing competition crisis</a>
</strong>
</em>
</p>
<hr>
<p>One way to assess market concentration is to measure the share of the market held by the top four companies. </p>
<p>In Australia, the top four players in the pharmacy sector collectively hold <a href="https://www.ibisworld.com/au/market-size/pharmacies/">over 50% of the market</a>.</p>
<p>As industry concentration has intensified across other sectors, many larger Australian corporations have been seen to <a href="https://treasury.gov.au/sites/default/files/2023-11/competition-review-mergers-background-note.pdf">increase their price mark-ups and suppress wage growth</a>.</p>
<p>If successful, this merger will further entrench the pharmacy sector among banks, supermarkets and petrol retailers in the ranks of <a href="https://theconversation.com/flying-under-the-radar-australias-silent-and-growing-competition-crisis-212116">the most concentrated Australian industries</a>. </p>
<h2>Will it go ahead?</h2>
<p>There are still significant hurdles for this merger to go ahead. </p>
<p>The move has to be approved by shareholders in both companies, and more importantly, receive a green light from the ACCC, Australia’s competition watchdog.</p>
<figure class="align-right ">
<img alt="A mobile phone open to the homepage of the ACCC website" src="https://images.theconversation.com/files/583624/original/file-20240322-20-tqaufc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/583624/original/file-20240322-20-tqaufc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=337&fit=crop&dpr=1 600w, https://images.theconversation.com/files/583624/original/file-20240322-20-tqaufc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=337&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/583624/original/file-20240322-20-tqaufc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=337&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/583624/original/file-20240322-20-tqaufc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/583624/original/file-20240322-20-tqaufc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/583624/original/file-20240322-20-tqaufc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The ACCC is not always able to block large mergers.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/stuttgart-germany-03252023-mobile-phone-webpage-2282182035">T. Schneider/Shutterstock</a></span>
</figcaption>
</figure>
<p>Submissions to the ACCC’s <a href="https://www.accc.gov.au/public-registers/mergers-registers/public-informal-merger-reviews/sigma-healthcare-limited-chemist-warehouse-group-holdings#:%7E:text=Submissions%20are%20invited%20from%20interested,Warehouse%20%E2%80%93%20attention%20Isobel%20Graham%22.">formal enquiry</a> into the merger will close this week. </p>
<p>However, the ACCC has struggled to block similar mergers in the past, such as the seismic <a href="https://www.afr.com/companies/financial-services/accc-admits-defeat-on-blocking-anz-s-4-9b-takeover-of-suncorp-s-bank-20240305-p5fa35">ANZ-Suncorp deal</a> that was finally approved in February. Regulatory obstacles alone may not be enough to prevent this consolidation.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/anzs-takeover-of-suncorp-will-reduce-bank-competition-but-will-that-be-enough-to-block-it-187279">ANZ's takeover of Suncorp will reduce bank competition – but will that be enough to block it?</a>
</strong>
</em>
</p>
<hr>
<p>Australians have a vested interest in a healthy competitive landscape. Reduced competition in the pharmacy sector will affect the pricing pressures on every store, not just the major players. </p>
<p>Don’t be surprised down the road if a visit to your local pharmacy shocks you with pricier cosmetics, sunglasses and even jellybeans!</p><img src="https://counter.theconversation.com/content/226002/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Angel Zhong does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The new retail giant will control more than 26% of the Australian pharmacy market.Angel Zhong, Associate Professor of Finance, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2232992024-02-25T19:05:30Z2024-02-25T19:05:30ZSo, you’ve been scammed by a deepfake. What can you do?<figure><img src="https://images.theconversation.com/files/576658/original/file-20240220-24-qi0t3y.jpg?ixlib=rb-1.1.0&rect=92%2C115%2C3731%2C2283&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/deep-fake-ai-face-swap-video-2376208005">Tero Vesalainen/Shutterstock</a></span></figcaption></figure><p>Earlier this month, a Hong Kong company <a href="https://www.theguardian.com/world/2024/feb/05/hong-kong-company-deepfake-video-conference-call-scam">lost HK$200 million (A$40 million)</a> in a <a href="https://www.esafety.gov.au/industry/tech-trends-and-challenges/deepfakes">deepfake</a> scam. An employee transferred funds following a video conference call with scammers who looked and sounded like senior company officials.</p>
<p>Generative AI tools can create image, video and voice replicas of real people saying and doing things they never would have done. And these tools are becoming increasingly easy to access and use.</p>
<p>This can perpetuate <a href="https://theconversation.com/taylor-swift-deepfakes-new-technologies-have-long-been-weaponised-against-women-the-solution-involves-us-all-222268">intimate image abuse</a> (including things like “revenge porn”) and disrupt <a href="https://www.unswlawjournal.unsw.edu.au/article/disinformation-deepfakes-and-democracies-the-need-for-legislative-reform">democratic processes</a>. Currently, many jurisdictions are grappling with how to <a href="https://pursuit.unimelb.edu.au/articles/picture-to-burn-the-law-probably-won-t-protect-taylor-or-other-women-from-deepfakes">regulate AI deepfakes</a>.</p>
<p>But if you’ve been a victim of a deepfake scam, can you obtain compensation or redress for your losses? The legislation hasn’t caught up yet.</p>
<h2>Who is responsible?</h2>
<p>In most cases of deepfake fraud, scammers will avoid trying to fool banks and security systems, instead opting for so-called “push payment” frauds where victims are tricked into directing their bank to pay the fraudster.</p>
<p>So, if you’re seeking a remedy, there are at least four possible targets:</p>
<ol>
<li><p>the fraudster (who will often have disappeared) </p></li>
<li><p>the social media platform that hosted the fake</p></li>
<li><p>any bank that paid out the money on the instructions of the victim of the fraud </p></li>
<li><p>the provider of the AI tool that created the fake.</p></li>
</ol>
<p>The quick answer is that once the fraudster vanishes, it is currently unclear whether you have a right to a remedy from any of these other parties (though that may change in the future). </p>
<p>Let’s see why.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/voice-deepfakes-are-calling-heres-what-they-are-and-how-to-avoid-getting-scammed-201449">Voice deepfakes are calling – here's what they are and how to avoid getting scammed</a>
</strong>
</em>
</p>
<hr>
<h2>The social media platform</h2>
<p>In principle, you could seek damages from a social media platform if it hosted a deepfake used to defraud you. But there are hurdles to overcome.</p>
<p>Platforms typically frame themselves as mere conduits of content – which means they are not legally responsible for the content. In the United States, platforms are explicitly <a href="https://www.law.cornell.edu/uscode/text/47/230">shielded from this kind of liability</a>. However, no such protection exists in most other common law countries, including Australia. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/this-is-why-australia-may-be-powerless-to-force-tech-giants-to-regulate-harmful-content-169826">This is why Australia may be powerless to force tech giants to regulate harmful content</a>
</strong>
</em>
</p>
<hr>
<p>The Australian Competition and Consumer Commission (ACCC) <a href="https://www.theguardian.com/technology/2022/mar/18/accc-takes-meta-to-court-over-facebook-scam-ads-depicting-australian-identities">is taking Meta</a> (Facebook’s parent company) to court. They are testing the possibility of making digital platforms directly liable for deepfake crypto scams if they actively target the ads to possible victims.</p>
<p>The ACCC is also arguing Meta should be liable as an accessory to the scam – for failing to remove the misleading ads promptly once notified of the problem.</p>
<p>At the very least, platforms should be responsible for promptly removing deepfake content used for fraudulent purposes. They may already claim to be doing this, but it might soon become a legal obligation. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-accc-is-suing-meta-for-celebrity-crypto-scam-ads-on-facebook-heres-why-the-tech-giant-could-be-found-liable-179655">The ACCC is suing Meta for celebrity crypto scam ads on Facebook. Here's why the tech giant could be found liable</a>
</strong>
</em>
</p>
<hr>
<h2>The bank</h2>
<p>In Australia, the legal obligations of whether a bank has to reimburse you in the case of a deepfake scam aren’t settled.</p>
<p>This was recently considered <a href="https://www.supremecourt.uk/cases/uksc-2022-0075.html">by the United Kingdom’s Supreme Court</a>, in a case likely to be influential in Australia. It suggests banks don’t have a duty to refuse a customer’s payment instructions where the recipient is suspected to be a (deepfake) fraudster, even if they have a general duty to act promptly once the scam is discovered. </p>
<p>That said, the UK is introducing a <a href="https://www.psr.org.uk/news-and-updates/latest-news/news/psr-continues-to-take-bold-action-on-app-fraud-as-it-publishes-final-reimbursement-details-ahead-of-2024-implementation/">mandatory scheme</a> that requires banks to reimburse victims of <a href="https://www.latrobe.edu.au/news/articles/2023/opinion/making-banks-pay-for-scam-losses">push payment fraud</a>, at least in certain circumstances. </p>
<p>In Australia, the <a href="https://www.theguardian.com/money/2023/feb/01/australian-banks-should-reimburse-scam-victims-accc-and-consumer-advocates-say">ACCC</a> and others have presented proposals for a similar scheme, though none exists at this stage. </p>
<figure class="align-center ">
<img alt="Customers stand outside Australian bank ATMs" src="https://images.theconversation.com/files/576676/original/file-20240220-22-6n09mj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/576676/original/file-20240220-22-6n09mj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/576676/original/file-20240220-22-6n09mj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/576676/original/file-20240220-22-6n09mj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/576676/original/file-20240220-22-6n09mj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/576676/original/file-20240220-22-6n09mj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/576676/original/file-20240220-22-6n09mj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Australian banks are unlikely to be liable for customer losses due to scams, but new schemes could force them to reimburse victims.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/melbourne-australia-july-2-2017-unidentified-676982497">TK Kurikawa/Shutterstock</a></span>
</figcaption>
</figure>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/australia-can-learn-from-the-uks-experience-by-making-banks-pay-for-scam-losses-209585">Australia can learn from the UK's experience by making banks pay for scam losses</a>
</strong>
</em>
</p>
<hr>
<h2>The AI tool provider</h2>
<p>The providers of generative AI tools are currently not legally obliged to make their tools unusable for fraud or deception. In law, there is no duty of care to the world at large to prevent someone else’s fraud.</p>
<p>However, providers of generative AI do have an opportunity to use technology to reduce the likelihood of deepfakes. Like banks and social media platforms, they may soon be required to do this, at least in some jurisdictions. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/who-will-write-the-rules-for-ai-how-nations-are-racing-to-regulate-artificial-intelligence-216900">Who will write the rules for AI? How nations are racing to regulate artificial intelligence</a>
</strong>
</em>
</p>
<hr>
<p>The recently proposed <a href="https://ec.europa.eu/commission/presscorner/detail/en/ip_23_6473">EU AI Act</a> obligates the providers of generative AI tools to design these tools in a way that allows the synthetic/fake content to be detected. </p>
<p>Currently, it’s proposed this could work through <a href="https://www.theverge.com/2024/2/13/24067991/watermark-generative-ai-deepfake-copyright">digital watermarking</a>, although its effectiveness is still being <a href="https://venturebeat.com/ai/invisible-ai-watermarks-wont-stop-bad-actors-but-they-are-a-really-big-deal-for-good-ones/">debated</a>. Other measures include prompt limits, digital ID to verify a person’s identity, and further education about the signs of deepfakes.</p>
<h2>Can we stop deepfake fraud altogether?</h2>
<p>None of these legal or technical guardrails are likely to be entirely effective in stemming the tide of deepfake fraud, scams or deception – especially as generative AI technology keeps advancing.</p>
<p>However, the response doesn’t need to be perfect: slowing down AI generated fakes and frauds can still reduce harm. We also need to pressure platforms, banks and tech providers to stay on top of the risks. </p>
<p>So while you might never be able to completely prevent yourself from being the victim of a deepfake scam, with all these new legal and technical developments, you might soon be able to seek compensation if things go wrong. </p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/tmFFd8fMqxk?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">With audio, video and image deepfakes only growing more realistic, we need multi-layered strategies of prevention, education and compensation.</span></figcaption>
</figure>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/australians-are-concerned-about-ai-is-the-federal-government-doing-enough-to-mitigate-risks-221300">Australians are concerned about AI. Is the federal government doing enough to mitigate risks?</a>
</strong>
</em>
</p>
<hr>
<img src="https://counter.theconversation.com/content/223299/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jeannie Marie Paterson receives funding from the Australian Research Council and the Department of Foreign Affairs and Trade.</span></em></p>Deepfake scams are on the rise – but can their victims claim compensation? The legal landscape is still developing.Jeannie Marie Paterson, Professor of Law, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2238572024-02-20T06:09:16Z2024-02-20T06:09:16Z8 ways Woolworths and Coles squeeze their suppliers and their customers<p>To hear the Woolworths and Coles chief executives speak on <a href="https://www.abc.net.au/news/2024-02-19/super-power-the-cost-of-living-with-coles-and-woolworths/103486508">Four Corners</a> this week, you’d think their industry was highly competitive.</p>
<p>For instance, Woolies’ chief Brad Banducci said:</p>
<blockquote>
<p>this community over here, there will be three Coles stores within two kilometres of it, at least one ALDI store, a series of independents, ability to within 24 hours have a quarter of our store delivered by Amazon – it’s an incredibly competitive market</p>
</blockquote>
<p>Meanwhile, Coles’ chief Leah Weckert said:</p>
<blockquote>
<p>there are quite often comparisons that are made between the UK and Australia, but Australia has about a third of the population, and we operate stores on a geographic footprint 30 times the size, those considerations need to be taken into account </p>
</blockquote>
<p>Between them, Coles and Woolworths control <a href="https://www.abc.net.au/news/2024-02-20/woolworths-coles-supermarket-tactics-grocery-four-corners/103405054">65%</a> of Australia’s grocery market. Aldi has just 10%, and independents such as IGA have the rest. </p>
<p>Four Corners reported that meant that, on average, for every $10 Australians pay for groceries, $6.50 is spent at Coles and Woolworths, and just $1 at Aldi. In the United Kingdom, there are five major chains vying for a cut of that $10. </p>
<p>But having a large market share isn’t the same as unreasonably using it. </p>
<p>This week’s Four Corners set out eight ways in which Coles and Woolworths are said to use their market power, each of which will be examined by the Australian Competition and Consumer Commission’s <a href="https://www.accc.gov.au/inquiries-and-consultations/supermarkets-inquiry-2024-25">inquiry</a> into supermarkets.</p>
<p>Many hurt their suppliers more than their customers.</p>
<h2>1. Squeezing farmers</h2>
<p>Hundreds of farmers have little choice but to sell their crops to the big two, and little choice but to accept whatever is offered.</p>
<p>One cherry farmer sent 15 tonnes of cherries to Coles – an entire semi-trailer load. He hoped to receive A$90,000. </p>
<p>Instead, he was told the fruit was not up to standard and was only able to get $5,800 on the seconds market.</p>
<p>He said when Coles is dealing with thousands and thousands of pieces of fruit, it can pick out ten pieces and say the consignment is no good.</p>
<blockquote>
<p>so that is power, that’s market power when you can simply reject something for no great reason</p>
</blockquote>
<p>The behaviour described might amount to “<a href="https://en.wikipedia.org/wiki/Competition_and_Consumer_Act_2010">misuse of market power</a>” under the Competition and Consumer Act 2010. </p>
<h2>2. Demanding money to accept price increases</h2>
<p>Four Corners told the story of a supplier who asked to be paid 5% more and was told the request would be approved only if he paid Coles A$25,000.</p>
<p>The lump sum was for promotions. </p>
<p>It said the Coles buyer’s initial desire to keep prices low for the consumer had been “quickly forgotten”.</p>
<p>The supplier said if he wasn’t prepared to do what the supermarket wanted, there was “a lot of intimidation”.</p>
<p>The tools used included deleting suppliers’ products from sale, forcing customers to buy their competitors’ products. </p>
<p>While this behaviour appears not to be illegal, it might worry the Australian Competition and Consumer Commission.</p>
<h2>3. Charging for Coles Radio</h2>
<p>Four Corners said suppliers wanting to do business with the big two were asked to pay for in-house advertising. </p>
<p>It quoted the cost of a full-page ad in Woolworths’ Fresh Magazine at $30,000, and the cost of a four-week spot on Coles radio at $28,000.</p>
<p>Suppliers were also expected to meet the cost of special discounts rather than the supermarket. That means suppliers need to set their recommended retail price at a higher level than was needed in order to offer periodic discounts.</p>
<p>While quite legal, this behaviour has the effect of forcing up general prices. It would be illegal if it misrepresented ordinary prices. </p>
<h2>4. Matching prices</h2>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/576669/original/file-20240220-20-rnn4ko.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Photo of prices being changed" src="https://images.theconversation.com/files/576669/original/file-20240220-20-rnn4ko.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/576669/original/file-20240220-20-rnn4ko.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/576669/original/file-20240220-20-rnn4ko.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/576669/original/file-20240220-20-rnn4ko.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/576669/original/file-20240220-20-rnn4ko.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/576669/original/file-20240220-20-rnn4ko.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/576669/original/file-20240220-20-rnn4ko.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/rising-prices-cost-living-interest-rate-2264867763">Shutterstock</a></span>
</figcaption>
</figure>
<p>The supermarket giants monitor each other’s pricing very closely. If one changes its prices, the other follows.</p>
<p>A former category manager for Coles and Woolworths said if one put up a price, the other would quickly follow.</p>
<p>He said if you did five shops in Woolworths and five in Coles and spent around a hundred dollars, there would only be a few cents difference.</p>
<p>The behaviour might be the result of intense price competition of the kind the Commission wants to encourage, or it might be the result of an implicit understanding between the big two not to compete on price, something the Commission will be keen to determine.</p>
<h2>5. Blaming inflation</h2>
<p>Woolworths’ latest <a href="https://www.woolworthsgroup.com.au/content/dam/wwg/investors/reports/2023/f23-full-year/Woolworths%20Group%202023%20Annual%20Report.pdf">annual report</a> shows its cost of doing business was flat, but its profit margin from selling groceries climbed from 5.3% to 6%, which meant an extra $318 million in profits.</p>
<p>An industry insider told Four Corners that the big two used “the cover of inflation” to raise prices, something each denied.</p>
<p>Woolworths said its price increases were legitimate, pointing to increases in the price of fertiliser, international freight, wages, and the cost of disruptions in obtaining goods.</p>
<p>Even if unjustified, there is nothing illegal about raising prices, unless false representations are made about the reasons, which is something the Commission will want to examine. </p>
<h2>6. Banking land</h2>
<p>An industry insider told Four Corners the big two buy up “spoiler sites” years before they even get approvals to build.</p>
<p>If they get the green light, it’s a new supermarket. If not, they’ve kept their rivals out.</p>
<p>In one growing community west of Brisbane, Woolworths bought more than 6 hectares of land over 11 years. But a supermarket is still years away.</p>
<p>German supermarket giant Kaufland abandoned plans to enter the Australian market in 2020. Media reports said a lack of suitable sites was one factor.</p>
<p>The Commission would be hard-pressed to find such behaviour was illegal unless it was able to make a case that it significantly lessened competition.</p>
<h2>7. Dark stores</h2>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/576677/original/file-20240220-18-miohox.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Photo of worker in hi-vis jacket picking stock" src="https://images.theconversation.com/files/576677/original/file-20240220-18-miohox.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/576677/original/file-20240220-18-miohox.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/576677/original/file-20240220-18-miohox.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/576677/original/file-20240220-18-miohox.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/576677/original/file-20240220-18-miohox.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/576677/original/file-20240220-18-miohox.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/576677/original/file-20240220-18-miohox.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<p>Delivery and click-and-collect orders sometimes come from “dark stores” without customers in which stock pickers work at speed in what can be stifling heat.</p>
<p>“There is an industry standard of a pick rate of about 180 items per hour,” one stock picker said. “Our warehouse, particularly during busy periods, will push you to go above and beyond that, which might be 210, 220.”</p>
<p>In the past, the names of pickers who fell behind were displayed in red.</p>
<blockquote>
<p>Every summer there’s people who feel dizzy, every summer there’s people whose sweat’s just dripping off them and they want to sit down, but you get a 15-minute break in a five-hour shift</p>
</blockquote>
<p>While not infringing on competition law, such behaviour might breach industrial laws. The Commission is likely to find it beyond the scope of its inquiry.</p>
<h2>8. A conduct code with no penalty</h2>
<p>Former Australian Competition and Consumer Commission Chairman Rod Sims, described the Food and Grocery Code of Conduct as a “joke” because it had no penalties. </p>
<p>He said it was like having a speed limit of 60 kilometres an hour with no penalty for driving at 80.</p>
<p>Woolworths conceded it hadn’t received a single complaint under the grocery code of conduct in the past year. Asked why, chief executive Brad Banducci said Four Corners should ask suppliers.</p>
<p>Only one continuing supplier agreed to appear in the program on the condition that the appearance was anonymous.</p>
<p>The Commission is certain to recommend that the code be given teeth.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1759391473567490367"}"></div></p>
<h2>Over to the Commission</h2>
<p>The Competition and Consumer Commission’s investigation is likely to confirm that Australian supermarkets have some of the highest profit margins in the world, deriving in large part from their high market share.</p>
<p>At issue will be what this enables them to do to their suppliers and customers.</p>
<p>The Commission will publish an <a href="https://www.accc.gov.au/inquiries-and-consultations/supermarkets-inquiry-2024-25">issues paper</a> this month and report to the government in August.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-prices-are-so-high-8-ways-retail-pricing-algorithms-gouge-consumers-223310">Why prices are so high – 8 ways retail pricing algorithms gouge consumers</a>
</strong>
</em>
</p>
<hr>
<img src="https://counter.theconversation.com/content/223857/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sanjoy Paul does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Suppliers and customers are squeezed harder in Australia than in other countries because Coles and Woolworths control 65% of the market.Sanjoy Paul, Associate Professor, UTS Business School, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2233102024-02-15T19:03:47Z2024-02-15T19:03:47ZWhy prices are so high – 8 ways retail pricing algorithms gouge consumers<figure><img src="https://images.theconversation.com/files/575804/original/file-20240215-28-d833it.jpeg?ixlib=rb-1.1.0&rect=114%2C175%2C1776%2C1011&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>The just-released report of the inquiry into <a href="https://pricegouginginquiry.actu.org.au/">price gouging and unfair pricing</a> conducted by Allan Fels for the Australian Council of Trades Unions does more than identify the likely offenders.</p>
<p>It finds the biggest are supermarkets, banks, airlines and electricity companies.</p>
<p>It’s not enough to know their tricks. Fels wants to give the Australian Competition and Consumer Commission more power to investigate and more power to prohibit mergers.</p>
<p>But it helps to know how they try to trick us, and how technology has enabled them to get better at it. After reading the report, I’ve identified eight key maneuvers.</p>
<h2>1. Asymmetric price movements</h2>
<p>Otherwise known as <a href="https://www.jstor.org/stable/25593733">Rocket and Feather</a>, this is where businesses push up prices quickly when costs rise, but cut them slowly or late after costs fall.</p>
<p>It seems to happen for <a href="https://www.sciencedirect.com/science/article/abs/pii/S0140988323002074">petrol</a> and <a href="https://www.sciencedirect.com/science/article/abs/pii/S105905601730240X">mortgage rates</a>, and the Fels inquiry was presented with evidence suggesting it happens in supermarkets. </p>
<p>Brendan O’Keeffe from NSW Farmers told the inquiry wholesale lamb prices had been falling for six months before six Woolworths announced a cut in the prices of lamb it was selling as a “<a href="https://pricegouginginquiry.actu.org.au/wp-content/uploads/2024/02/InquiryIntoPriceGouging_Report_web.pdf">Christmas gift</a>”. </p>
<h2>2. Punishment for loyal customers</h2>
<p>A <a href="https://theconversation.com/simple-fixes-could-help-save-australian-consumers-from-up-to-3-6-billion-in-loyalty-taxes-119978">loyalty tax</a> is what happens when a business imposes higher charges on customers who have been with it for a long time, on the assumption that they won’t move.</p>
<p>The Australian Securities and Investments Commission has alleged a big <a href="https://theconversation.com/how-qantas-might-have-done-all-australians-a-favour-by-making-refunds-so-hard-to-get-213346">insurer</a> does it, setting premiums not only on the basis of risk, but also on the basis of what a computer model tells them about the likelihood of each customer tolerating a price hike. The insurer disputes the claim.</p>
<p>It’s often done by offering discounts or new products to new customers and leaving existing customers on old or discontinued products.</p>
<p>It happens a lot in the <a href="https://www.finder.com.au/utilities-loyalty-costing-australians-billions-2024">electricity industry</a>. The plans look good at first, and then less good as providers bank on customers not making the effort to shop around. </p>
<p>Loyalty taxes appear to be less common among mobile phone providers. Australian laws make it easy to switch <a href="https://www.reviews.org/au/mobile/how-to-switch-mobile-carriers-and-keep-your-number/">and keep your number</a>.</p>
<h2>3. Loyalty schemes that provide little value</h2>
<p>Fels says loyalty schemes can be a “low-cost means of retaining and exploiting consumers by providing them with low-value rewards of dubious benefit”. </p>
<p>Their purpose is to lock in (or at least bias) customers to choices already made. </p>
<p>Examples include airline frequent flyer points, cafe cards that give you your tenth coffee free, and supermarket points programs. The purpose is to lock in (or at least bias) consumers to products already chosen. </p>
<p>The <a href="https://www.accc.gov.au/consumers/advertising-and-promotions/customer-loyalty-schemes">Australian Competition and Consumer Commission</a> has found many require users to spend a lot of money or time to earn enough points for a reward. </p>
<p>Others allow points to expire or rules to change without notice or offer rewards that are not worth the effort to redeem.</p>
<p>They also enable businesses to collect data on spending habits, preferences, locations, and personal information that can be used to construct customer profiles that allow them to target advertising and offers and high prices to some customers and not others.</p>
<h2>4. Drip pricing that hides true costs</h2>
<p>The Competition and Consumer Commission describes <a href="https://pricegouginginquiry.actu.org.au/wp-content/uploads/2024/02/InquiryIntoPriceGouging_Report_web.pdf">drip pricing</a> as “when a price is advertised at the beginning of an online purchase, but then extra fees and charges (such as booking and service fees) are gradually added during the purchase process”. </p>
<p>The extras can add up quickly and make final bills much higher than expected. </p>
<p>Airlines are among the best-known users of the strategy. They often offer initially attractive base fares, but then add charges for baggage, seat selection, in-flight meals and other extras.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/junk-fees-and-drip-pricing-underhanded-tactics-we-hate-yet-still-fall-for-211117">Junk fees and drip pricing: underhanded tactics we hate yet still fall for</a>
</strong>
</em>
</p>
<hr>
<h2>5. Confusion pricing</h2>
<p>Related to drip pricing is <a href="https://www.x-mol.net/paper/article/1402386414932836352">confusion pricing</a> where a provider offers a range of plans, discounts and fees so complex they are overwhelming.</p>
<p>Financial products like insurance have convoluted fee structures, as do electricity providers. Supermarkets do it by bombarding shoppers with “specials” and “sales”. </p>
<p>When prices change frequently and without notice, it adds to the confusion. </p>
<h2>6. Algorithmic pricing</h2>
<p><a href="https://pricegouginginquiry.actu.org.au/wp-content/uploads/2024/02/InquiryIntoPriceGouging_Report_web.pdf">Algorithmic pricing</a> is the practice of using algorithms to set prices automatically taking into account competitor responses, which is something akin to computers talking to each other.</p>
<p>When computers get together in this way they can <a href="https://www.x-mol.net/paper/article/1402386414932836352">act as it they are colluding</a> even if the humans involved in running the businesses never talk to each other.</p>
<p>It can act even more this way when multiple competitors use the same third-party pricing algorithm, effectively allowing a single company to influence prices.</p>
<h2>7. Price discrimination</h2>
<p>Price discrimination involves charging different customers different prices
for the same product, setting each price in accordance with how much each customer is prepared to pay.</p>
<p>Banks do it when they offer better rates to customers likely to leave them, electricity companies do it when they offer better prices for business customers than households, and medical specialists do it when they offer vastly different prices for the same service to consumers with different incomes.</p>
<p>It is made easier by digital technology and data collection. While it can make prices lower for some customers, it can make prices much more expensive to customers in a hurry or in urgent need of something.</p>
<h2>8. Excuse-flation</h2>
<p><a href="https://www.bloomberg.com/news/articles/2023-03-09/how-excuseflation-is-keeping-prices-and-corporate-profits-high">Excuse-flation</a> is where general inflation provides “cover” for businesses to raise prices without
justification, blaming nothing other than general inflation.</p>
<p>It means that in times of general high inflation businesses can increase their prices even if their costs haven’t increased by as much.</p>
<p>On Thursday Reserve Bank Governor <a href="https://www.afr.com/policy/economy/inflation-is-cover-for-pricing-gouging-rba-boss-says-20240215-p5f58d">Michele Bullock</a> seemed to confirm that she though some firms were doing this saying that when inflation had been brought back to the Bank’s target, it would be </p>
<blockquote>
<p>much more difficult, I think, for firms to use high inflation as cover for this sort of putting up their prices</p>
</blockquote>
<h2>A political solution is needed</h2>
<p>Ultimately, our own vigilance won’t be enough. We will need political help. The government’s recently announced <a href="https://treasury.gov.au/review/competition-review-2023">competition review</a> might be a step in this direction.</p>
<p>The legislative changes should police business practices and prioritise fairness. Only then can we create a marketplace where ethics and competition align, ensuring both business prosperity and consumer wellbeing. </p>
<p>This isn’t just about economics, it’s about building a fairer, more sustainable Australia.</p><img src="https://counter.theconversation.com/content/223310/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Tuffley is affiliated with the Australian Computer Society (Member).</span></em></p>Each of these tricks is old, but each has been supercharged by the use of information technology.David Tuffley, Senior Lecturer in Applied Ethics & CyberSecurity, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2223682024-02-06T19:08:26Z2024-02-06T19:08:26ZWe’re in a food price crisis. What is the government doing to ease the pressure?<figure><img src="https://images.theconversation.com/files/573645/original/file-20240206-23-aernio.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C6000%2C3988&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/asian-local-woman-buy-vegetables-fruits-1280584279">PR Image Factory/Shutterstock</a></span></figcaption></figure><p>An affordable daily diet has edged too far away for many Australians. Food prices have risen sharply since <a href="https://www.abs.gov.au/articles/australian-dietary-guidelines-price-indexes">2021</a>, fuelling cost of living pressures and food insecurity. Some <a href="https://reports.foodbank.org.au/foodbank-hunger-report-2023/">3.7 million Australian households</a> experienced food insecurity in 2023 – 10% more than in 2022.</p>
<p>Food prices have always been a challenge for many Australians. This is especially true for people on low incomes, refugees, people living in rural areas, single mothers, and people with disability. A basic healthy diet can cost city-dwelling families who are doing it toughest roughly <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7675258/">one-third</a> of their income.</p>
<p>So what is the Australian government doing to ease the cost of a supermarket shop? Let’s take a look.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/amid-allegations-of-price-gouging-its-time-for-big-supermarkets-to-come-clean-on-how-they-price-their-products-219316">Amid allegations of price gouging, it's time for big supermarkets to come clean on how they price their products</a>
</strong>
</em>
</p>
<hr>
<h2>First, how much have food prices increased, and why?</h2>
<p>Food prices peaked in December 2022, with an average shopping basket costing <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release">9.2% more</a> than in 2021. Although food prices have eased since that peak, they remain significantly <a href="https://www.abs.gov.au/articles/australian-dietary-guidelines-price-indexes">higher</a> now compared to before the pandemic. </p>
<p>Almost <a href="https://www.abc.net.au/news/2022-07-10/food-price-data-pinpoints-most-expensive-items/101218998">all food</a> categories have been hit, but many healthy foods appear to have increased in price at almost <a href="https://www.mdpi.com/1660-4601/20/4/3146">double the rate</a> of discretionary (unhealthy) foods.</p>
<figure class="align-center ">
<img alt="A woman looks at her supermarket receipt." src="https://images.theconversation.com/files/573646/original/file-20240206-21-ygh93u.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/573646/original/file-20240206-21-ygh93u.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=415&fit=crop&dpr=1 600w, https://images.theconversation.com/files/573646/original/file-20240206-21-ygh93u.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=415&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/573646/original/file-20240206-21-ygh93u.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=415&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/573646/original/file-20240206-21-ygh93u.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=521&fit=crop&dpr=1 754w, https://images.theconversation.com/files/573646/original/file-20240206-21-ygh93u.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=521&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/573646/original/file-20240206-21-ygh93u.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=521&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Food prices are much higher now than pre-pandemic.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/senior-woman-supermarket-checks-her-grocery-2268463181">Lucigerma/Shutterstock</a></span>
</figcaption>
</figure>
<p>The COVID pandemic, climate events such as floods and bushfires, and international conflicts have all contributed, to varying degrees. These events have placed undue pressure on food supply chains through food shortages, increased fuel, energy and transport costs and a shortage of workers from farm to fork.</p>
<p>Big supermarkets have also been <a href="https://www.abc.net.au/news/2023-08-22/food-price-groceries-rise-dairy-frozen-tinned-coles-woolworths/102755276">scrutinised</a> recently. In Australia, supermarkets can set prices, with little transparency. This is against a backdrop of one of the most <a href="https://onlinelibrary.wiley.com/doi/10.1111/obr.12635">powerful</a> and concentrated grocery sectors in the <a href="https://www2.deloitte.com/content/dam/Deloitte/at/Documents/presse/at-deloitte-global-powers-of-retailing-2023.pdf">world</a>, severely limiting competition.</p>
<p>Claims of supermarket price gouging have inspired public outrage, particularly given the two supermarket giants each pocketed more than <a href="https://theconversation.com/amid-allegations-of-price-gouging-its-time-for-big-supermarkets-to-come-clean-on-how-they-price-their-products-219316">A$1 billion in profits</a> in 2022-2023.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/are-you-living-in-a-food-desert-these-maps-suggest-it-can-make-a-big-difference-to-your-health-196477">Are you living in a food desert? These maps suggest it can make a big difference to your health</a>
</strong>
</em>
</p>
<hr>
<h2>So what is the government doing to ease the pressure?</h2>
<p>The government’s Standing Committee on Agriculture undertook an <a href="https://www.aph.gov.au/foodsecurity">inquiry into food security</a> in Australia in 2023, and came up with <a href="https://apo.org.au/sites/default/files/resource-files/2023-12/apo-nid325229.pdf">35 recommendations</a>. While many of these recommendations may indirectly influence food prices, only one explicitly addressed food prices: to provide subsidies for remote community stores so fresh food can be sold at an affordable price. These recommendations are yet to be implemented.</p>
<p>At the end of 2023, the <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Supermarket_Prices/SupermarketPrices">Senate Select Committee on Supermarket Prices</a> was established to “inquire into and report on the price setting practices and market power of major supermarkets”. Submissions to the inquiry recently closed, with the final report due in May.</p>
<p>In early 2024, the government announced an independent review of the <a href="https://www.pm.gov.au/media/appointment-dr-craig-emerson-independent-reviewer-food-and-grocery-code-conduct#:%7E:text=The%20Albanese%20Government%20has%20appointed,Competition%20and%20Consumer%20Act%202010.">Food and Grocery Code of Conduct</a> to ensure the grocery retailers and wholesalers are dealing fairly with suppliers. Although not specifically focused on the shelf price of food, a fairer deal between retailers and suppliers may flow to lower prices for consumers.</p>
<figure class="align-center ">
<img alt="A young man stands in a supermarket holding a phone." src="https://images.theconversation.com/files/573648/original/file-20240206-21-6wsuub.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/573648/original/file-20240206-21-6wsuub.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/573648/original/file-20240206-21-6wsuub.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/573648/original/file-20240206-21-6wsuub.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/573648/original/file-20240206-21-6wsuub.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/573648/original/file-20240206-21-6wsuub.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/573648/original/file-20240206-21-6wsuub.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A number of inquiries are happening into supermarket prices in Australia.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/handsome-man-shopping-supermarket-2314430167">Hryshchyshen Serhii/Shutterstock</a></span>
</figcaption>
</figure>
<p>Most recently, the Albanese government formally issued a directive to the Australian Competition and Consumer Commission (ACCC) to carry out a 12-month investigation into <a href="https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/government-launch-accc-inquiry-supermarket-prices">supermarket prices</a>. This will have more teeth than other inquiries, allowing the ACCC to use legal powers to gather information, including from the supermarkets themselves. </p>
<p>If wrongdoing is uncovered, the ACCC has the power to take the supermarkets to court. The pressure from the inquiry may also lead to supermarkets voluntarily lowering food prices, in a similar way to <a href="https://www.accc.gov.au/media-release/supermarket-agreement-opens-way-for-more-competition">previous inquiries</a>.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-cost-of-living-is-biting-heres-how-to-spend-less-on-meat-and-dairy-206703">The cost of living is biting. Here’s how to spend less on meat and dairy</a>
</strong>
</em>
</p>
<hr>
<h2>What are other countries doing?</h2>
<p>In <a href="https://neoskosmos.com/en/2024/01/18/news/australia/australian-supermarkets-face-scrutiny-over-food-costs-greece-counterparts-to-lower-prices/">Greece</a>, the government has temporarily forced supermarkets to reduce prices on basic products. For example, the price of at least one type of bread would be lowered and advertised to shoppers at this lower rate. The Greek government has also provided low-income households with a <a href="https://www.reuters.com/world/europe/greece-seeks-price-transparency-supermarkets-help-families-2023-09-20/">monthly allowance</a> to support grocery costs, among other measures.</p>
<p>The <a href="https://www.reuters.com/markets/europe/how-france-secured-fall-food-prices-2023-06-12/">French government</a> has worked with the food sector to secure a commitment from 75 companies to cut their prices. It has also promised regular price checks at supermarkets to ensure prices fall, with financial penalties if they don’t.</p>
<p>In <a href="https://www.barrons.com/news/spain-extends-some-anti-inflation-measures-into-2024-bcc6e520">Spain</a>, the value added tax on basic foods, such as fruits, vegetables, pasta and cooking oils, has been eliminated or lowered. Government tax revenue will be reduced for these items, but retained for other non-basic foods (similar to the <a href="https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/in-detail/your-industry/food/gst-and-food/gst-free-food">GST</a> in Australia).</p>
<h2>What next for Australia?</h2>
<p>The multi-year food price crisis has revealed the vulnerability of our food system. We need to recover from where we are, but we must do so in a way that ensures a more resilient food system with stable food prices over time.</p>
<p>While it’s too early to know what will come of the various food price inquiries, the government is and should continue to provide general cost-of-living support. The recent <a href="https://theconversation.com/middle-australia-wins-from-the-governments-tax-plan-but-the-budget-is-the-biggest-loser-222383">revised Stage 3 tax cuts</a> are an example of increasing the flow of money to those who need it most, easing pressure at the supermarket checkout. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/trying-to-spend-less-on-food-following-the-dietary-guidelines-might-save-you-160-a-fortnight-216749">Trying to spend less on food? Following the dietary guidelines might save you $160 a fortnight</a>
</strong>
</em>
</p>
<hr>
<p>Further support for vulnerable households could be implemented by expanding existing <a href="https://www.raisetherate.org.au/">social safety nets</a> through increasing income support payments.</p>
<p>The fate of food prices in Australia is, at least for now, uncertain. But one thing is for sure. Unless the government steps up to ease the pressure, too many Australians will keep struggling to put food on the table.</p><img src="https://counter.theconversation.com/content/222368/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kathryn Backholer receives funding from the Australian Research Council, the National Heart Foundation, the United Nations Children's Fund, the World Health Organization, the National Health and medical Research Council, The Ian Potter Foundation, QUIT Victoria, and The Responsible Gambling Foundation. </span></em></p><p class="fine-print"><em><span>Christina Zorbas receives funding from the Victorian Health Promotion Foundation (VicHealth) and the International Food Policy Research Institute (IFPRI).</span></em></p>The COVID pandemic, climate events and international conflicts have all contributed, while supermarket giants have been accused of price gouging.Kathryn Backholer, Co-Director, Global Centre for Preventive Health and Nutrition, Deakin UniversityChristina Zorbas, Research Fellow, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2152592023-10-30T19:11:09Z2023-10-30T19:11:09ZYes, childcare is costly, but nowhere near as costly as recent reports suggest – here’s why<p>Childcare in Australia is generally regarded as expensive. </p>
<p>And it’s true that prices charged by some centres, particularly long daycare centres, can be pretty steep, climbing to as much as <a href="https://www.news.com.au/lifestyle/parenting/kids/sydneys-childcare-costs-soaring-to-200-a-day/news-story/0d024cd97bc1112b86a629a27377aee0">A$200 per day</a> or more in well-located parts of Sydney and Melbourne. </p>
<p>While those prices are indeed very high, they are not typical and don’t include the often substantial <a href="https://www.servicesaustralia.gov.au/child-care-subsidy">childcare subsidy</a> that families earning up to $530,000 receive to offset those costs. </p>
<p>The Australian Competition and Consumer Commission’s childcare inquiry reported in September that an average family with two children in care five days a week faced out-of-pocket costs (fees minus subsidies) that amounted to <a href="https://www.accc.gov.au/inquiries-and-consultations/childcare-inquiry-2023/september-2023-interim-report">16%</a> of its after-tax income. </p>
<p>This was much higher than the OECD average, which was 9%. </p>
<p>The ACCC calculation is based on what is called a <a href="https://www.accc.gov.au/inquiries-and-consultations/childcare-inquiry-2023/september-2023-interim-report">hypothetical family</a>, the same one used by the <a href="https://www.oecd.org/els/soc/benefits-and-wages/data/">OECD</a> to compare costs between nations.</p>
<p>That family has two children in long daycare five days a week and two adults working, each earning two-thirds of the average wage. </p>
<p>This month’s report of the the <a href="https://www.pmc.gov.au/resources/10-year-plan">Women’s Economic Equality Taskforce</a> discussed a similar hypothetical family with the same number of children in full-time care.</p>
<p>But, while useful to allow international comparisons using the OECD metric, in Australia that type of family is anything but typical.</p>
<h2>Most families don’t have 2 children in care, full-time</h2>
<p>What’s far more typical is one child in long daycare three days a week, with costs far lower than those of the OECD’s hypothetical family, and far lower than those heavily <a href="https://www.theguardian.com/australia-news/2023/oct/01/childcare-price-cap-accc-inflation-subsidies">reported in the media</a>.</p>
<p>Rather than examining the costs facing hypothetical families, it is possible to use the Australian National University’s <a href="https://csrm.cass.anu.edu.au/research/policymod">PolicyMod</a> microsimulation model to estimate costs as a share of income facing actual families. </p>
<p>PolicyMod uses data from the Australian Bureau of Statistics survey of income and housing which includes detailed information about childcare use. My team has updated this data using information from the department of education on childcare prices and the use of childcare by income. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/as-fees-keep-climbing-this-is-why-competition-isnt-enough-to-deliver-cheaper-childcare-209209">As fees keep climbing, this is why competition isn’t enough to deliver cheaper childcare</a>
</strong>
</em>
</p>
<hr>
<p>We find that after the latest increases in the childcare subsidy in July, not even one in 50 families with at least one child in long daycare faces childcare costs of 16% of their household’s after-tax income or higher. That’s right: very few.</p>
<p>Three in ten families with children in care face childcare costs of less than 2% of their after-tax income. Six in ten pay less than 4%.</p>
<p>The average cost is 4% of after-tax household income.</p>
<hr>
<iframe src="https://flo.uri.sh/visualisation/15541345/embed" title="Interactive or visual content" class="flourish-embed-iframe" frameborder="0" scrolling="no" style="width:100%;height:400px;" sandbox="allow-same-origin allow-forms allow-scripts allow-downloads allow-popups allow-popups-to-escape-sandbox allow-top-navigation-by-user-activation" width="100%" height="400"></iframe>
<div style="width:100%!;margin-top:4px!important;text-align:right!important;"><a class="flourish-credit" href="https://public.flourish.studio/visualisation/15541345/?utm_source=embed&utm_campaign=visualisation/15541345" target="_top"><img alt="Made with Flourish" src="https://public.flourish.studio/resources/made_with_flourish.svg"></a></div>
<hr>
<p>The average cost for all families regardless of type of care used varies by income, from 2.5% of after-tax family income for families in the bottom quarter of earners to 4.6% for families in the top quarter. </p>
<p>The Australian Competition and Consumer Commission’s estimate is also dated (to allow comparison with other OECD countries) and so doesn’t include the recent increases to the subsidy introduced by the Morrison government or the recent substantial increase introduced by the Albanese government in July. </p>
<p>The Women’s Economic Equality Taskforce’s estimates of workforce disincentives also use subsidy rates that predate the recent very significant changes that are particularly beneficial to families with multiple children in long daycare.</p>
<p>PolicyMod suggests that in raw dollar terms, across all families with children in daycare the median (middle) cost is about $2,400 per year. Around one fifth of childcare families spend less than $650 and one fifth spend more than $6,900. </p>
<h2>Some families pay a lot, most of them earn a lot</h2>
<p>A very small proportion of Australian families have very high out-of-pocket costs. </p>
<p>They are generally very high income families, particularly those with multiple children in long daycare and those with children attending very expensive centres for four or five days a week in inner city locations which charge fees in excess of the $13.73 per hour cap on support.</p>
<p>It is beyond dispute that childcare prices have increased substantially over time, but most of that increase has been worn by the taxpayer rather than families using childcare. </p>
<p>Our modelling suggests that for most Australian families with children in care, out-of-pocket costs are relatively contained and not quite as substantial as some may have you believe.</p><img src="https://counter.theconversation.com/content/215259/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ben Phillips does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The ACCC has published calculations for two children in care five days a week. More typical is one child in care two days a week. The typical cost is 5% of after-tax income, not 16%Ben Phillips, Associate Professor, Centre for Social Research and Methods, Director, Centre for Economic Policy Research (CEPR), Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2152632023-10-09T07:13:51Z2023-10-09T07:13:51ZSenate committee says government should ‘immediately review’ its rejection of Qatar flights<p>A Senate inquiry into the Albanese government’s refusal to agree to the extra flights sought by Qatar Airways has recommended the decision be immediately reviewed. </p>
<p>The inquiry’s report, tabled Monday, is also sharply critical of Qantas, whose executives came under hostile questioning over its treatment of customers, when they appeared before the committee. </p>
<p>In its majority report the committee, chaired by the Nationals Senate leader Bridget McKenzie, asks the Senate to re-appoint it so it can bring before it former Qantas CEO Alan Joyce, who declined to appear saying he was overseas. This will require a Senate vote.</p>
<p>Qantas opposed the Qatar application, on the ground it would distort the market. </p>
<p>The report criticises Transport Minister Catherine King for not clearly articulating the factors in her decision not to approve the Qatar application. She has maintained she acted in the “national interest”, and given various reasons at different times. </p>
<p>“A wide range of witnesses, including key stakeholders in Australian aviation, submitted that they did not fully understand the basis for the decision,” the report says. </p>
<p>“The weight of evidence before the committee indicates the national interest would have been well served by agreeing to Qatar’s request.” The report also criticises the government’s refusal to provide the committee with information it sought. </p>
<p>Evidence suggested the decision cost the economy a loss of up to $1 billion; it was also a missed opportunity for tourism and trade, particularly agricultural exports that use passenger planes, the report says. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/qantas-chief-alan-joyce-quits-early-amid-customer-fury-at-the-airline-212845">Qantas chief Alan Joyce quits early, amid customer fury at the airline</a>
</strong>
</em>
</p>
<hr>
<p>The inquiry recommends that in deciding on bilateral air agreements, the government should look at a cost-benefit analysis, consult widely with stakeholders including the Australian Competition and Consumer Commission, and publish its reasons for decisions. </p>
<p>In the wake of the government’s rejection, Qatar has asked for consultations.</p>
<p>King responded to the report by denouncing the inquiry as a “political stunt” by the Coalition. The committee has repeated its request to King to appear before it, which she has declined to do.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/grattan-on-friday-transport-minister-catherine-king-struggles-to-find-a-landing-strip-amid-qatar-turbulence-213076">Grattan on Friday: Transport Minister Catherine King struggles to find a landing strip amid Qatar turbulence</a>
</strong>
</em>
</p>
<hr>
<p>The committee comprised three Coalition senators, one from the United Australia Party, two from Labor and one from the Greens. </p>
<p>In their dissenting report Labor senators Tony Sheldon and Linda White said many of the majority recommendations “appear blissfully ignorant of the current policy framework underpinning Australia’s aviation sector”. Green senator Penny Allman-Payne also dissented on some issues.</p>
<p>The report recommends reinstatement of the monitoring of the airline industry by the ACCC. </p>
<p>It says that in addition to this broad monitoring of competition in aviation, “the committee would support a specific investigation by the ACCC into Qantas’ actions in the aviation market. </p>
<p>"The committee is concerned by evidence suggesting Qantas may be especially aggressive when seeking to maintain its market share. This muscular approach towards competitors and new entrants can compound the problems that are already caused by a lack of competition.”</p>
<p>The Qantas group has “significant steps to take to repair trust” with consumers, the report says. “The committee expects tangible improvements regarding their behaviour toward their customers.”</p>
<p>The committee recommends the government develop consumer protection reforms in the aviation industry as soon as practicable to address delays, cancellations, lost baggage and devaluation of loyalty programs.</p><img src="https://counter.theconversation.com/content/215263/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The inquiry’s report is sharply critical of Qantas, and has recommended the decision to block extra flights sought by Qatar Airways be immediately reviewedMichelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2137542023-09-27T20:05:29Z2023-09-27T20:05:29ZEven if Qantas is fined hundreds of millions it is likely to continue to take us for granted<figure><img src="https://images.theconversation.com/files/550516/original/file-20230927-25-ha0bmh.png?ixlib=rb-1.1.0&rect=119%2C724%2C3161%2C1670&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>As Qantas faces up to tough questioning from a Senate committee and a claim from the Australian Competition and Consumer Commission (ACCC) for as much as <a href="https://www.bandt.com.au/qantas-should-be-fined-hundreds-of-millions-if-found-guilty-of-misleading-ads-accc/">A$600 million</a> for allegedly selling tickets on more than <a href="https://www.accc.gov.au/media-release/accc-takes-court-action-alleging-qantas-advertised-flights-it-had-already-cancelled">8,000</a> “ghost flights” it had already cancelled, its customers might be thinking things are about to get better. </p>
<p>But there are reasons to think they won’t. At the heart of both the ACCC’s <a href="https://www.bandt.com.au/qantas-should-be-fined-hundreds-of-millions-if-found-guilty-of-misleading-ads-accc/">lawsuit</a>, and the airline’s separate refusal to quickly refund hundreds of millions of dollars worth of <a href="https://www.afr.com/rear-window/qantas-grand-theft-klepto-20230829-p5e0g8">credits</a> for flights cancelled during COVID, lies the indifference to customers typical of a duopolistic market.</p>
<p>Qantas does face competition on international routes, although the government’s action in denying Qatar Airways extra landing rights has <a href="https://theconversation.com/what-will-putting-the-interests-of-qantas-ahead-of-qatar-airways-cost-1-billion-per-year-and-a-new-wave-of-protectionism-of-legacy-carriers-212495">constrained</a> that competition.</p>
<p>But, with only one exception – Virgin – it faces very little competition within Australia, given the limited offerings by airlines such as Rex and Bonza.</p>
<p>On Wednesday former ACCC Chair Rod Sims told the <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Commonwealth_Bilateral_Air_Service_Agreements/cbasa">Senate inquiry into air service agreements</a> Qantas was able to use its leading market position to charge higher prices than it would otherwise have been able to.</p>
<p>One could put it more generally: Qantas had the power to treat customers worse than it would otherwise have been able to.</p>
<hr>
<p><iframe id="pDNcz" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/pDNcz/4/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<hr>
<h2>What the ACCC alleges</h2>
<p>The ACCC alleges Qantas engaged in false, misleading or deceptive conduct in breach of the Australian Consumer Law in 2022 by selling tickets for flights that had already been cancelled, and by falsely representing to consumers who already had tickets that their flights had not been cancelled.</p>
<p>Under the law, where liability for “misleading or deceptive conduct” is concerned, the reasons for the conduct don’t matter, meaning all that is likely to matter is whether the commission’s claims about Qantas’s conduct are true.</p>
<p><a href="https://gibbswrightlawyers.com.au/publications/misleading-deceptive-conduct">Section 18</a> of the Australian Consumer Law simply says:</p>
<blockquote>
<p>a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.</p>
</blockquote>
<p>For online bookings, the commission is suggesting Qantas may have made several misleading representations, including indicating flights were available when they were not, confirming bookings for flights that were not available, and displaying unavailable flights on customers’ “manage booking” pages.</p>
<p>While the ticket contracts may have included disclaimers, these would be unlikely to have force in the face of Section 18. The law does not permit contractual language to exclude liability for contraventions of this provision. </p>
<p>A disclaimer can be relevant to the factual question of whether a party was misled but, given <a href="https://www.tandfonline.com/doi/abs/10.1080/1369118X.2018.1486870">98%</a> of online consumer contracts are unread, it’s unlikely Qantas would be able to rely on disclaimers to claim customers weren’t misled.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/booking-customers-on-cancelled-flights-how-could-qantas-do-that-212793">Booking customers on cancelled flights – how could Qantas do that?</a>
</strong>
</em>
</p>
<hr>
<p>Even if the commission is successful in getting the Federal Court to award a penalty amounting to hundreds of millions, such a fine is likely to be manageable for Qantas given its <a href="https://www.abc.net.au/news/2023-08-24/qantas-profit-2023-annual-results-alan-joyce/102763766">$1.7 billion</a> 2022-23 profit.</p>
<h2>Qantas ill-prepared for questions</h2>
<p>At Wednesday’s Senate hearing Qantas chief executive Vanessa Hudson and Chairman Richard Goyder were not prepared to answer several questions, asking for them to be put on notice.</p>
<p>They also passed up the opportunity to provide the committee with a written statement addressing the <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Commonwealth_Bilateral_Air_Service_Agreements/cbasa/Terms_of_Reference">formal topic</a> of its inquiry which was the impact of government decisions about landing rights on competition in the aviation industry and the cost of living pressures on Australian families and businesses.</p>
<p>Pressed on whether Qantas would publish a redacted version of its representations to the government about foreign airlines’ bids for landing rights, Hudson declined, although she said Qantas would provide them in confidence. </p>
<p>Goyder told the hearing Qantas had “genuine contrition for where we are at” but had “sound commercial reasons” for many of the decisions it took during the years since the outbreak of COVID, including what the High Court subsequently found was an <a href="https://www.abc.net.au/news/2023-09-13/high-court-rules-in-qantas-twu-battle-over-ground-crew-staff/102848684">illegal decision</a> to sack 1,700 ground staff.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/high-court-ruling-vindicates-sacked-qantas-workers-but-doesnt-stop-the-outsourcing-of-jobs-in-the-future-213452">High Court ruling vindicates sacked Qantas workers but doesn't stop the outsourcing of jobs in the future</a>
</strong>
</em>
</p>
<hr>
<h2>What matters to Qantas is slots</h2>
<p>While there is little that can be done to make Qantas more responsive to its customers while it dominates the domestic aviation market, <a href="https://www.accc.gov.au/system/files/ACCC%20submission%20in%20response%20to%20the%20Aviation%20White%20Paper%20terms%20of%20reference%20-%20March%202023.pdf">freeing up landing slots</a> at airports would help loosen that dominance.</p>
<p>The current rules allow incumbent airlines such as Qantas to apply for more slots at airports such as Sydney than they will require, so long as they use them 80% of the time.</p>
<p>In a report to the government in 2021 former Productivity Commission chief Peter Harris recommended overhauling the system at Sydney Airport to make it <a href="https://www.infrastructure.gov.au/sites/default/files/documents/sydney-airport-demand-management-review.pdf">easier</a> for new entrants to get slots.</p>
<p>Among the recommendations was an independent audit of cancellations by a “reputable, unconflicted auditor”.</p>
<p>The government has yet to respond to the report, although when releasing the government’s aviation green paper earlier this month, Transport Minister Catherine King indicated she soon would.</p>
<p>Implementing needed reforms to free up slots at key airports would help to promote better consumer outcomes. However, profound change in Australian air travel seems unlikely for the foreseeable future.</p><img src="https://counter.theconversation.com/content/213754/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mel Marquis has in the past collaborated with the ACCC on unrelated matters. He has no involvment or interest in the pending litigation discussed in this article.
</span></em></p><p class="fine-print"><em><span>Neerav Srivastava does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The only thing Qantas seems to fear is losing landing slots. It’s time to reallocate the slots it doesn’t use.Mel Marquis, Deputy Associate Dean and Senior Lecturer in Law, Monash UniversityNeerav Srivastava, PhD Candidate and Teaching Associate, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2138622023-09-21T20:07:08Z2023-09-21T20:07:08ZWhy you’re probably paying more interest on your mortgage than you think<figure><img src="https://images.theconversation.com/files/549499/original/file-20230921-27-8s1n9e.png?ixlib=rb-1.1.0&rect=480%2C448%2C3262%2C1775&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>For most things we buy, the price we are quoted is the price we pay.</p>
<p>That’s supposed to be the case even where taxes and fees are involved. Australian law requires anyone selling anything to display a <a href="https://www.accc.gov.au/business/pricing/price-displays">total price</a> that includes all “taxes, duties and all unavoidable or pre-selected extra fees”.</p>
<p>But our investigations, which compare the interest rate quoted on our mortgages with the fine print in our own mortgage documents, shows this is hardly ever the case for home loans.</p>
<p>Even though we are both trained as accountants, until recently we hadn’t bothered to check – even as interest rates climbed. We assumed the rates we were being told we were being charged (say 5% per year) were the rates we were actually paying.</p>
<p>This would be easy enough, and in our view the right thing, for banks to do.</p>
<h2>The price quoted usually isn’t the price paid</h2>
<p>Mortgage interest is usually charged monthly, but the rates are yearly. This means that each time interest is charged, the outstanding amount <a href="https://www.investopedia.com/terms/c/compoundinterest.asp">compounds</a> as interest is applied to interest.</p>
<p>That sounds bad enough. But this isn’t our main complaint.</p>
<p>It’s that there are two possible ways to calculate the amount of interest. Banks calculate interest on a daily basis.</p>
<p>The most reasonable would be to calculate the daily amount in a way that adds up to an annual amount that matches what was quoted. That way, a 5% rate would really be 5%. </p>
<p>Although there’s a bit of <a href="https://cdn.theconversation.com/static_files/files/2814/compound_example.pdf">calculation</a> involved, it’s easy enough for banks to do.</p>
<h2>How banks calculate mortgage interest</h2>
<p>The other, arguably less reasonable, way is what’s called the “<a href="https://www.investopedia.com/articles/investing/020614/learn-simple-and-compound-interest.asp">simple</a>” method. Our investigations show that this technique is used by all the big four banks, and probably many others too.</p>
<p>It’s called the simple method because it involves simply dividing the annual rate (say 5%) by 365 to determine the daily rate.</p>
<p>This seems to not be important, but because of compounding it means the amount charged over a year is more than the rate quoted.</p>
<p>Say you borrow $100,000 for one year at an annual rate of 5%, repaying the whole amount at the end of the year. </p>
<p>You might expect to pay back $105,000. Instead, the banks’ method of calculating interest results in a total repayment of $105,116.</p>
<p>This is because the daily interest rate (5% divided by 365) is applied to the outstanding balance <em>each day</em> and added to your balance once a month. These regular increases mean your interest compounds costing you more.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/fixed-or-variable-the-choice-of-mortgage-isnt-as-simple-as-it-seems-179960">Fixed or variable? The choice of mortgage isn't as simple as it seems</a>
</strong>
</em>
</p>
<hr>
<h2>Over decades, the difference matters</h2>
<p>In July 2023, the average size of a new mortgage in New South Wales was about A$750,000, with an average interest rate of about 5.95%.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/549500/original/file-20230921-19-v6cu46.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/549500/original/file-20230921-19-v6cu46.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/549500/original/file-20230921-19-v6cu46.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=964&fit=crop&dpr=1 600w, https://images.theconversation.com/files/549500/original/file-20230921-19-v6cu46.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=964&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/549500/original/file-20230921-19-v6cu46.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=964&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/549500/original/file-20230921-19-v6cu46.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1212&fit=crop&dpr=1 754w, https://images.theconversation.com/files/549500/original/file-20230921-19-v6cu46.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1212&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/549500/original/file-20230921-19-v6cu46.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1212&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">$27,000 over the life of a 30-year loan.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<p>The method of calculation used by the banks and in the fine print of their mortgage contracts requires a monthly payment of $4,473 including the repayment of the amount originally borrowed over the life of a 30-year loan.</p>
<p>But if 5.95% were actually charged each year, the monthly payment would be $4,398 – a difference of $900 per year.</p>
<p>In this typical example, the difference over the life of the loan amounts to about $27,000. It means these borrowers will end up paying an effective interest rate of 6.11%.</p>
<h2>We had to read the fine print</h2>
<p>We checked the terms and conditions of each of the big four banks – Westpac, the Commonwealth, the National Australia Bank and the ANZ – as well as their biggest subsidiaries which include St George, The Bank of Melbourne, Bank SA and Bankwest. </p>
<p>They all charge interest using the “simple” method.</p>
<p>Mutual banks – the old credit unions and building societies owned by their members – have different reporting requirements, and we were unable to check the terms and conditions used by each one. But where we could, we found they used the same method as the big four.</p>
<p>You can find this small print yourself, usually in the middle of your mortgage document. It’s a formula, accompanied by a paragraph of explanation.</p>
<p>But you have to look carefully. Or you could call customer service, as we did, and ask the bank to explain the calculation. </p>
<p>You shouldn’t have to.</p>
<h2>The price quoted ought to be the price paid</h2>
<p>We think the price quoted for a product should be the price that’s actually charged, as the law <a href="https://www.accc.gov.au/business/pricing/price-displays">generally requires</a> for products other than mortgages.</p>
<p>This means if you are told you’ll be charged 5.95% interest per year, you should pay 5.95% per year – not 6.11% because of a quirk in the formula.</p>
<p>Mortgages are a larger financial commitment than most purchases. This means that honesty and clear communication are even more important.</p>
<p>It’s worth knowing what you are letting yourself in for when signing up for a mortgage. That way, when the bank or broker explains it to you and it’s not what was advertised, you can ask for a discount.</p><img src="https://counter.theconversation.com/content/213862/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>I currently have a mortgage that is impacted by the elements covered in this story (as do all mortgage holders in Australia).</span></em></p>The way banks calculate interest means that Australian borrowers who sign up to pay 5.95% per annum pay something closer to 6.11%.Sander De Groote, Lecturer, School of Accounting, Auditing and Taxation, UNSW SydneyKevin Li, Senior Lecturer, School of Accounting, Auditing and Taxation, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2138752023-09-19T12:31:54Z2023-09-19T12:31:54ZPositive outlook for local and export gas supplies for early 2024: ACCC<p>The outlooks for both local and export supplies of gas are positive for the early months of next year, according to the Australian Competition and Consumer Commission inquiry’s September report. </p>
<p>The inquiry, which provides regular information on east coast supply, says there will be sufficient gas to meet domestic demand as we go into 2024, while exports are predicted to be 9% higher in the first quarter, compared to the same quarter this year.</p>
<p>Even if all uncontracted gas is exported, there will still be an overall east coast surplus of 1.4 petajoules in the first quarter of 2024, according to the report.</p>
<p>It also forecasts gas supply in quarter one 2024 will be 5.9 petajoules above that forecast in June and 13% higher than actual supply in quarter one this year.</p>
<p>Export demand in the first quarter next year is projected to be 8.2 petajoules higher than the June forecast or 9% above actual LNG exports in the first quarter of this year.</p>
<p>The report says recent investment in pipeline infrastructure has improved the east coast gas market’s ability to transport gas from the northern states to the southern states, with further upgrades to be ready for next winter.</p>
<p>The forecast on domestic supplies follows actions by the government to ensure companies provide adequate quantities of gas into the local market at reasonable prices. </p>
<p>The ACCC does warn, “While the overall outlook is positive there remains risk that the outlook could worsen, particularly from higher-than-expected gas demand”. </p>
<p>The ACCC notes its data was collected during “a changing policy environment, including the implementation of the Gas Market Emergency Price Order and consultation on the Gas Market Code of Conduct”.</p>
<p>Under the code, which came into full operation this month,
producers may be exempted from reasonable pricing
requirements in exchange for making domestic supply commitments. </p>
<p>“However, as data was collected before the code was finalised, forecast supply in quarter 1 2024 does not reflect possible supply commitments producers may make to gain an exemption from the code.” </p>
<p>Treasurer Jim Chalmers said the data disproved the opposition’s fearmongering claims about the government’s energy price relief plan.</p>
<p>“The Liberals and Nationals voted against energy relief for families and small businesses in the parliament and they said the sky would fall in as result of our price caps and gas code of conduct. This data collected after the government announced action to limit the worst impacts of gas price increases is more proof they have no idea what they’re talking about.”</p>
<p>Chalmers said the plan was designed “to deliver better, fairer prices for Australian consumers at the same time as we honour our trusted role as an energy supplier”. The evidence showed it was working, he said.</p>
<p>He said gas would “play a crucial role in the defining decade ahead as we look deepen and broaden our industrial capacity and make the most of the transformation to cleaner, cheaper energy”.</p>
<h2>Employment White Paper released on Monday</h2>
<p>The long-awaited employment white paper, prepared by Treasury, will be released on Monday. </p>
<p>The paper will list five objectives. They are delivering sustained and inclusive full employment; promoting job security and strong, sustainable wage growth; reigniting productivity growth; filling skills needs and building the future workforce; and overcoming barriers to employment and broadening opportunities. </p>
<p>It will include a small number of initiatives, and point to future reform directions across ten policy areas. These are: </p>
<ul>
<li><p>strengthening economic foundations</p></li>
<li><p>modernising industry and regional policy</p></li>
<li><p>planning for our future workforce</p></li>
<li><p>broadening access to foundation skills</p></li>
<li><p>investing in skills, tertiary education and lifelong learning</p></li>
<li><p>reforming the migration system</p></li>
<li><p>building capabilities through employment services</p></li>
<li><p>reducing barriers to work</p></li>
<li><p>partnering with communities</p></li>
<li><p>promoting inclusive, dynamic workplaces.</p></li>
</ul>
<p>Chalmers said the white paper “is a roadmap for ensuring more Australians can make the most of the big shifts underway in our economy and society over the coming decades”.</p>
<p>“Today our unemployment rate is around historic lows and the participation rate is near record highs. This positions us well in the face of the immediate challenges of slowing economic growth and continuing global uncertainty, but more needs to be done to shape the future direction of our labour market and put the benefits of employment within reach of more of our people.”</p><img src="https://counter.theconversation.com/content/213875/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The brighter outlook for domestic supplies follows actions by the government to ensure companies provide adequate quantities of gas into the local market at reasonable pricesMichelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2129802023-09-06T07:14:16Z2023-09-06T07:14:16ZWord from The Hill: Danielle Wood to head Productivity Commission, Alan Joyce bows to public anger, PM jets off again<p>As well as her interviews with politicians and experts, Politics with Michelle Grattan includes “Word from The Hill”, where she discusses the news with members of The Conversation’s politics team.</p>
<p>In this podcast Michelle and politics + society editor Amanda Dunn discuss the latest national accounts and Jim Chalmers’ announcement that Grattan Institute CEO Danielle Wood will take over as head of the Productivity Commission. The appointment came as a surprise, after Chris Barrett, chosen for the position only recently, decided he had a better offer – he will become head of the Victorian Treasury.</p>
<p>They also canvass the QANTAS saga, which has seen its now former CEO Alan Joyce step down earlier than scheduled. The news came amid public anger over its poor customer service, and after the national carrier was taken to court by the consumer watchdog for selling more than 8000 tickets on flights already cancelled.</p>
<p>And finally, they discuss Anthony Albanese’s trip to Indonesia for the ASEAN summit, followed by a visit to the Philippines, before he attends the G20 meeting in India.</p><img src="https://counter.theconversation.com/content/212980/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In this podcast, @michellegrattan and @amanda.dunn10 discuss the week in politicsMichelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2128482023-09-05T05:16:08Z2023-09-05T05:16:08ZWill it be greener pastures for Qantas as Alan Joyce takes off?<p>A turbulent two weeks for Qantas have today culminated in its group chief executive Alan Joyce fast-tracking his retirement by two months to help the organisation and its brand <a href="https://www.qantasnewsroom.com.au/media-releases/announcement-on-qantas-ceo-succession/">accelerate its renewal</a>.</p>
<p>Joyce was on the way out in any case, and was paid a board-approved bonus worth <a href="https://www.afr.com/companies/transport/qantas-board-under-pressure-on-bonuses-joyce-s-share-sale-20230901-p5e18f">more than A$10 million</a> on Friday, to which were to be added short-term and long-term bonuses taking the total to <a href="https://www.afr.com/companies/transport/alan-joyce-to-depart-qantas-early-20230905-p5e210">$24 million</a>.</p>
<p>What the early retirement will do is bring forward the arrival of chief executive-designate Vanessa Hudson to Wednesday, to enable her to drive a cultural change and a new strategy. </p>
<p>It is not unreasonable to assume she will say that what happened in the past is Joyce’s legacy and that under her leadership the airline will transform and essentially start with a clean sheet.</p>
<h2>The new chief’s key challenges</h2>
<p>Accelerating renewal of the fleet to improve its carbon impact is likely to be at the core of Hudson’s strategy. While the arrival of these “better for the environment” planes is expected to be expedited, the challenge for Hudson is to find the A$12 billion to A$20 billion that will enable Qantas to get to these greener and more sustainable pastures.</p>
<p>Taking greater care of the environment and the communities that Qantas serves, and having this as a key pillar of the renewed strategy and corporate communication, will be good for the airline. It will allow it to transform into an internationally and domestically competitive carrier, fit for the future in which climate change will become an even more pressing issue.</p>
<p>What many commentators are questioning is why Joyce was allowed to retire early. In fact, the board may have recommended he do so.</p>
<p>Regardless, this latest twist seems like an easy way out, as it saves him from fronting shareholders at the upcoming AGM, during which he would have had to respond to angry questions and account for the crisis Qantas is now in. </p>
<p>This will now be the board’s role and will include, among other things, fielding questions around the chief executive’s bonus (including the retirement package, which was going to be announced as part of the annual report presented to the AGM) and his performance. The ACCC allegations around selling tickets on cancelled flights, the pending court case related to COVID flight credits, the damage done to the brand and how to repair it will also be raised.</p>
<h2>Did Qantas sway the government to block Qatar?</h2>
<p>There will likely also be questions around Qantas’s role in lobbying the Australian government to <a href="https://theconversation.com/what-will-putting-the-interests-of-qantas-ahead-of-qatar-airways-cost-1-billion-per-year-and-a-new-wave-of-protectionism-of-legacy-carriers-212495">reject Qatar’s application</a> to essentially double its air traffic rights (three more daily flights to Sydney, Brisbane and Melbourne).</p>
<p>This would have helped restore capacity - and thus drive down airfares - on the Europe-to-Australia sector, which is still 30% below pre-pandemic levels.</p>
<p>That, however, may be a question that should be directed at the government. Yesterday, Prime Minister Anthony Albanese even felt the need <a href="https://www.smh.com.au/politics/federal/albanese-declares-he-did-not-get-lobbied-by-qantas-on-qatar-airways-decision-20230904-p5e1q9.html">to declare</a> he had not been lobbied by Qantas on the Qatar Airways decision. </p>
<p>When I read this, I wondered, was someone at Qantas not doing their job? As applies to any ASX listed company and airline in the world, they have an entire department that does nothing else but lobby politicians. That is how the game works and is entirely accepted. </p>
<p>As outlined in <a href="https://theconversation.com/what-will-putting-the-interests-of-qantas-ahead-of-qatar-airways-cost-1-billion-per-year-and-a-new-wave-of-protectionism-of-legacy-carriers-212495">my analysis</a> published on The Conversation last week, bilateral air service negotiations are a government affair akin to trade agreement negotiations. </p>
<p>The Australian government will, on a regular basis, negotiate with the governments of Qatar, Singapore, the United Arab Emirates, the United States and others on such matters, and airlines at both ends of the negotiating table will lobby their respective governments.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/qantas-chief-alan-joyce-quits-early-amid-customer-fury-at-the-airline-212845">Qantas chief Alan Joyce quits early, amid customer fury at the airline</a>
</strong>
</em>
</p>
<hr>
<p>Based on what is in the best interests of the country, the government – in our case the Transport Minister Catherine King – then makes a determination. There is, therefore, opportunity for the government to revisit such decisions or come to a less restrictive determination in future rounds.</p>
<p>All of the above suggests there is huge potential for a fresh start and for building a better and more sustainable future for Australia’s largest airline, which will be beneficial to Australian travellers and the economy at large.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/what-will-putting-the-interests-of-qantas-ahead-of-qatar-airways-cost-1-billion-per-year-and-a-new-wave-of-protectionism-of-legacy-carriers-212495">What will putting the interests of Qantas ahead of Qatar Airways cost? $1 billion per year and a new wave of protectionism of legacy carriers</a>
</strong>
</em>
</p>
<hr>
<img src="https://counter.theconversation.com/content/212848/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rico Merkert receives funding from the ARC and various industry partners. He loves to work with and for airlines including Qantas and Virgin Australia</span></em></p>Despite the change at the top, the Qantas board can expect to face a grilling from angry shareholders at the upcoming AGM.Rico Merkert, Professor in Transport and Supply Chain Management and Deputy Director, Institute of Transport and Logistics Studies (ITLS), University of Sydney Business School, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2121162023-08-29T20:12:58Z2023-08-29T20:12:58ZFlying under the radar: Australia’s silent and growing competition crisis<figure><img src="https://images.theconversation.com/files/545227/original/file-20230829-19-1azvqg.png?ixlib=rb-1.1.0&rect=742%2C167%2C2952%2C1628&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Australia has long had far less competition in consumer markets than the US.</p>
<p>New research from the <a href="https://e61.in/">e61 Institute</a> finds that in all but one of 17 broad industry divisions identified by the Australian Bureau of Statistics, Australian industries are on average more concentrated than their counterparts in the United States.</p>
<p>The measure used is “CR4” – the market share of the top four firms. </p>
<p>In 2017, the most recent year for which we could obtain comparable figures, Australia was far more prone to high levels of market concentration, with the top four firms accounting for 80% of some markets and averaging more than 60% across some industry categories.</p>
<hr>
<p><strong>Average concentration across industry groups, Australia versus United States</strong></p>
<p><em>Market share of the top four firms, per cent</em></p>
<hr>
<p>Importantly, we find market concentration in Australia increasing over time.</p>
<p>Between 2006 and 2020 Australia’s average CR4 measure of concentration increased 3 percentage points, with notable increases in industries that initially had a moderate level of concentration, such as retail and transport.</p>
<h2>Concentrated industries don’t welcome new entrants</h2>
<p>To be sure, concentrated does not always mean that competition is lacking, especially if there is credible threat of being displaced by dynamic upstarts. </p>
<p>But we found that in highly concentrated industries the four largest firms rarely got dislodged from their top positions over the 14 years between 2007 and 2021.</p>
<p>And those industries that experienced a rise in concentration over the seven years to 2014 recorded a decline in new firm entry over the following seven years.</p>
<p>This might mean we have as many as 6,300 fewer employing firms than we would have, giving Australian workers fewer employment options and suppressing real wage growth. And given that young firms are more innovative, it might mean lower productivity growth. </p>
<h2>Concentrated industries break rules more often</h2>
<p>Ranking Australian industries by their average concentration, we found the most concentrated had the most infringement notices and enforceable undertakings issued by the Australian Competition and Consumer Commission.</p>
<p>The airline industry, which is famously concentrated, has been hit with 12 such notices and enforceable undertakings over the past 30 years compared to only four for the accommodation industry.</p>
<hr>
<p><strong>ACCC infringement notices and undertakings versus industry concentration</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/545045/original/file-20230828-205898-q9bf2t.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/545045/original/file-20230828-205898-q9bf2t.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/545045/original/file-20230828-205898-q9bf2t.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=475&fit=crop&dpr=1 600w, https://images.theconversation.com/files/545045/original/file-20230828-205898-q9bf2t.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=475&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/545045/original/file-20230828-205898-q9bf2t.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=475&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/545045/original/file-20230828-205898-q9bf2t.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=597&fit=crop&dpr=1 754w, https://images.theconversation.com/files/545045/original/file-20230828-205898-q9bf2t.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=597&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/545045/original/file-20230828-205898-q9bf2t.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=597&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Infringement notices and enforceable undertakings per 1,000 firms 1993-2023. Industry concentration is defined as the average sales concentration of the top 10 firms over 2007-2021.</span>
<span class="attribution"><a class="source" href="https://e61.in/">ABC, ACCC, e61</a></span>
</figcaption>
</figure>
<hr>
<h2>Concentration means higher prices</h2>
<p>To explore the impact of market concentration on prices, we examined margins between retail and wholesale petrol prices in Brisbane and the Gold Coast and their relationship to the number of competing petrol stations within three kilometres.</p>
<p>We found that where petrol stations faced less competition they tended to charge higher margins, and that when wholesale prices rose, they appeared to be quicker in passing on this cost to consumers to maintain margins.</p>
<hr>
<p><strong>Competitors within 3 kilometres versus average petrol margins</strong></p>
<hr>
<h2>Concentration is happening more quietly</h2>
<p>Whereas in the US large mergers have to be reported to regulators, in Australia mergers are more like marriages.</p>
<p>Just as you don’t have to tell your family you are getting married, you don’t have to notify the Australian Competition and Consumer Commission you are about to merge with a competitor.</p>
<p>Companies are <a href="https://www.accc.gov.au/system/files/Merger%20guidelines%20-%20Final.PDF">encouraged</a> to notify the ACCC if the merged parties make either substitutes or complements <em>and</em> the merged firm will have a market share of more than 20%, but that is a <em>guideline</em> rather than a requirement, and the guidance was <a href="https://www.unswlawjournal.unsw.edu.au/wp-content/uploads/2017/09/32-1-4.pdf">relaxed</a> in 2008.</p>
<p>If you are high-profile enough to be listed on the Australian Securities Exchange, the ACCC is going to find out anyway through the media (ASX companies have to disclose significant acquisitions), so in practice most companies planning large mergers ask for the ACCC’s blessing ahead of time to avoid embarrassment.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/are-mergers-harming-consumers-we-wont-know-if-we-dont-check-115378">Are mergers harming consumers? We won't know if we don't check</a>
</strong>
</em>
</p>
<hr>
<p>That means while voluntary notification works well enough for bringing royal-wedding-style mergers to the ACCC’s attention, Vegas-style elopements can go undetected.</p>
<p>Although these small transactions can seem innocuous, their collective impact can be significant. In the US, it is estimated transactions too small to be reported account for <a href="https://www.nber.org/system/files/working_papers/w29655/w29655.pdf">28–47%</a> of the increase in concentration between 2022 and 2016. </p>
<p>In Australia, there is a risk that many of these transactions are going undetected.</p>
<p>e61 has found the number of private mergers (not reported to public financial markets) reviewed by the ACCC has <a href="https://e61.in/">plummeted</a> since the ACCC relaxed the reporting guidelines, from 55 in 2006 to just 12 in 2022</p>
<hr>
<p><strong>Number of private mergers reviewed by the ACCC per year</strong></p>
<hr>
<p>The head of the Competition and Consumer Commission Gina Cass-Gottlieb told the National Press Club this year she wanted Australia to move away from voluntary notifications to <a href="https://www.accc.gov.au/about-us/media/speeches/the-role-of-the-accc-and-competition-in-a-transitioning-economy-address-to-the-national-press-club-2023">formal clearances</a> of the kind required overseas where there was</p>
<ul>
<li><p>a mandatory requirement to notify the ACCC of mergers above specified thresholds </p></li>
<li><p>a requirement for transactions to be suspended from completion prior to ACCC clearance</p></li>
</ul>
<p>Parties proposing a non-contentious merger could apply for a notification waiver that, if granted, would mean they wouldn’t need to make a full formal application and the proposal could be dealt with quickly.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/cartels-caught-ripping-off-consumers-should-be-hit-with-bigger-fines-78750">Cartels caught ripping off consumers should be hit with bigger fines</a>
</strong>
</em>
</p>
<hr>
<p>Cass-Gottlieb said businesses were increasingly pushing the boundaries of the informal system, giving the ACCC late, incomplete, or incorrect information, and threatening to complete their transactions before it completed its reviews.</p>
<p>At times overseas authorities knew about proposed transactions involving Australian companies before the Australian authorities.</p>
<p>Our research finds that not only are Australian industries concentrated and becoming more so, but mergers might be increasingly flying under the radar.</p>
<p>The government has announced a review of competition policy that will include a <a href="https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/more-dynamic-and-competitive-economy">review of merger laws</a> as well as <a href="https://theconversation.com/1-in-5-australian-workers-have-non-compete-clauses-new-survey-207987">non-compete clauses</a>. Our research suggests there’s a strong economic case for taking action on both fronts.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/1-in-5-australian-workers-have-non-compete-clauses-new-survey-207987">1 in 5 Australian workers have non-compete clauses: new survey</a>
</strong>
</em>
</p>
<hr>
<img src="https://counter.theconversation.com/content/212116/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dan Andrews is affiliated with the e61 Institute. </span></em></p><p class="fine-print"><em><span>Elyse Dwyer is affiliated with the e61 Institute</span></em></p>New research finds Australian industries are becoming concentrated with greater power to charge high prices. Unlike US firms, Australian firms are not required to report merger plans to authorities.Dan Andrews, Visiting Fellow and Director – Micro heterogeneity and Macroeconomic Performance program, Crawford School of Public Policy, Australian National UniversityElyse Dwyer, Researcher, Department of Economics, Macquarie UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2073192023-08-02T19:59:39Z2023-08-02T19:59:39ZBid-rigging is rife in Australian construction, but the process itself is partly to blame<figure><img src="https://images.theconversation.com/files/540638/original/file-20230802-15-z4z9qi.png?ixlib=rb-1.1.0&rect=323%2C760%2C3502%2C1640&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Earlier this year the Federal Court found ARM Architecture and its then managing director <a href="https://www.vic.gov.au/learn-my-mistake-do-not-engage-cartel-conduct">Tony Allen</a> were guilty of attempting to <a href="https://www.accc.gov.au/media-release/arm-architecture-and-its-former-md-to-pay-penalties-for-attempted-rigging-of-university-tender">rig bids</a> for a tender relating to a $250 million building project at Charles Darwin University.</p>
<p>The Court ordered ARM Architecture to pay a penalty of $900,000 and Mr Allen to pay $75,000.</p>
<p>In a <a href="https://www.vic.gov.au/learn-my-mistake-do-not-engage-cartel-conduct">public statement</a>, Mr Allen said he had made</p>
<blockquote>
<p>a very serious mistake by attempting to induce the other firms to engage in bid-rigging, and this has had serious consequences for me. I have lost my position, my reputation, and my involvement in a profession that I love.</p>
</blockquote>
<p>Allen had sent <a href="https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2023/2023fca0351">an email</a> to at least eight other architecture firms that were members of the Australian Institute of Architects Victorian Branch Large Practice Forum prior to the close of bids:</p>
<blockquote>
<p>Our request to you is simple. Please do not submit a tender as we are relying very heavily on continuing with this project to keep our practice alive throughout the remainder of this strange and difficult COVID time.</p>
</blockquote>
<p>He had followed it up with this second email: </p>
<blockquote>
<p>We have received very positive responses from Architectus and JWA. We would greatly appreciate a short note from you to let us know of your intentions either way.`</p>
</blockquote>
<h2>The biggest fine for architects so far</h2>
<p>Although colluding in bidding for contracts is rife in the construction industry and materials supply industries, this is the biggest fine so far for an individual professional services firm.</p>
<p>In Australia, the Australian Competition and Consumer Commission managed to successfully prosecute <a href="https://www.accc.gov.au/media-release/full-federal-court-orders-206million-penalties-against-cement-australia-companies">Cement Australia Pty Ltd</a> in 2017 for anti-competitive practices resulting in a fine of $20.6 million. </p>
<p>And in the United Kingdom, so many construction firms were involved in massive bid-rigging scandals uncovered in <a href="https://www.independent.co.uk/news/business/news/builders-fined-pound-129m-for-rigging-contract-bids-1791268.html">2008</a> and <a href="https://www.gov.uk/government/news/construction-firms-fined-nearly-60-million-for-breaking-competition-law-by-bid-rigging">2020</a>, that the UK government had to warn its agencies not to blacklist them because it would “limit choice”.</p>
<h2>Fees used to be fixed</h2>
<p>In the supposedly more genteel design professions, submitting tenders for fees is relatively new. Until about 40 years ago, architects and engineers normally worked on a fixed-fee basis, and often made deals to divide work between them. </p>
<p>The Royal Institute of British Architects, founded in 1834, was set up primarily as a <a href="https://www.investopedia.com/terms/c/cartel.asp">cartel</a> to maintain a schedule of fees and prescribe educational standards for those who wanted to use the term “architect”. </p>
<p>Although fixed fees are likely to upset economists on principle, they have the advantage of not encouraging architects to shortcut their professional responsibilities in order to compete on price.</p>
<p>This might be why the law allows medical professionals, lawyers and pharmacists to set fees for their services. Few people would be tempted to select their surgeon on the basis of price.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-universities-may-come-to-regret-the-costs-of-city-deals-and-private-sector-solutions-166670">Why universities may come to regret the costs of City Deals and private sector 'solutions'</a>
</strong>
</em>
</p>
<hr>
<p>Until about 1980, the Royal Australian Institute of Architects also attempted to fix fees. When the government gently pointed out that this was illegal under trade practices law, the Institute began a long, slow retreat and eventually stopped publishing a recommended fee scale, much to the chagrin of many members.</p>
<p>Competitive tendering is typically seen as the “gold standard” for getting value in construction, but tendering processes have become so onerous and convoluted that the costs of tendering in relation to the potential gains may now be reducing rather than enhancing competition. </p>
<p>This is especially significant for design consultants such as architects and engineers whose profitability is typically well below average for the industry.</p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/540641/original/file-20230802-10044-ku6rqb.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/540641/original/file-20230802-10044-ku6rqb.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=965&fit=crop&dpr=1 600w, https://images.theconversation.com/files/540641/original/file-20230802-10044-ku6rqb.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=965&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/540641/original/file-20230802-10044-ku6rqb.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=965&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/540641/original/file-20230802-10044-ku6rqb.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1212&fit=crop&dpr=1 754w, https://images.theconversation.com/files/540641/original/file-20230802-10044-ku6rqb.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1212&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/540641/original/file-20230802-10044-ku6rqb.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1212&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The original Charles Darwin University design.</span>
<span class="attribution"><span class="source">ARM Architecture</span></span>
</figcaption>
</figure>
<h2>Bidding processes convoluted</h2>
<p>The Charles Darwin University project is a case in point. ARM was selected to design what was to be an “<a href="https://www.infrastructure.gov.au/sites/default/files/migrated/cities/city-deals/darwin/files/darwin-city-deal.pdf">iconic</a>” building, but documentation of the design was to be the subject of a second tender, which was the subject of ARM’s emails.</p>
<p>This two-stage process, devised by a project management firm, was self-defeating. </p>
<p>Charles Darwin University wanted a highly-awarded architect to deliver an iconic building, but much of the design ARM contributed has been lost. </p>
<p>The images of the new building, produced by another firm, do not resemble the original ARM design and are not the stuff architectural icons are made of.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/540691/original/file-20230802-21-ctgz3u.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/540691/original/file-20230802-21-ctgz3u.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=339&fit=crop&dpr=1 600w, https://images.theconversation.com/files/540691/original/file-20230802-21-ctgz3u.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=339&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/540691/original/file-20230802-21-ctgz3u.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=339&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/540691/original/file-20230802-21-ctgz3u.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=426&fit=crop&dpr=1 754w, https://images.theconversation.com/files/540691/original/file-20230802-21-ctgz3u.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=426&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/540691/original/file-20230802-21-ctgz3u.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=426&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The updated Charles Darwin University design.</span>
<span class="attribution"><span class="source">CDU</span></span>
</figcaption>
</figure>
<p>ARM and Tony Allen have paid a very high price for their folly in asking other firms not to tender, but the project management firm that devised the expensive and ultimately unproductive double tender process has not been subject to any public scrutiny or criticism.</p>
<p>If we are going to have fee tenders, we need a transparent system with enforceable rules sufficient to stop public clients needlessly adding costs by wasteful convolutions, as happened with the Charles Darwin University double tender.</p>
<h2>Maybe there’s a better way</h2>
<p>Alternatives should to be considered. It ought to be possible for the client to nominate a reasonable fee, and then select consultants who will accept the nominated fee based purely on their merit. </p>
<p>Another possibility is a two-envelope system, where the fee and the quality of submission are assessed separately, with the fee envelope only opened when an evaluation of the quality of submissions has taken place. </p>
<p>Other than that, we could do worse than revert to a fixed percentage fee and reap a huge saving in the effort, time and money put into selection processes. Free-market economists might like to think about how much competitive tenders actually cost.</p><img src="https://counter.theconversation.com/content/207319/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Geoff Hanmer's firm ARINA was involved in the second stage of the bidding for the CDU project with Richard Kirk Architect. ARINA had no role in the selection of ARM for the project nor in the subsequent selection process other than as a participant in the second competition with Richard Kirk. </span></em></p>There’s no excuse for colluding not to complete on fees, but the time-consuming and complicated bidding process for design work encourages it.Geoff Hanmer, Adjunct professor of architecture, University of AdelaideLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2095992023-07-14T05:33:34Z2023-07-14T05:33:34ZMore stick, less carrot: Australia’s new approach to tackling fake news on digital platforms<figure><img src="https://images.theconversation.com/files/537437/original/file-20230714-19-aosiso.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C1000%2C667&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>An urgent problem for governments around the world in the digital age is how to tackle the harms caused by mis- and disinformation, and Australia is no exception.</p>
<p>Together, mis- and disinformation fall under the umbrella term of “fake news”. While this phenomenon isn’t new, the internet makes its rapid, vast spread unprecedented. </p>
<p>It’s a tricky problem and hard to police because of the sheer amount of misinformation online. But, left unchecked, public health and safety, electoral integrity, social cohesion and ultimately democracy are at risk. The COVID-19 pandemic taught us not to be complacent, as fake news about COVID treatments led to <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8611855/">deadly consequences</a>.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/covid-misinformation-is-a-health-risk-tech-companies-need-to-remove-harmful-content-not-tweak-their-algorithms-175364">COVID misinformation is a health risk – tech companies need to remove harmful content not tweak their algorithms</a>
</strong>
</em>
</p>
<hr>
<p>But what’s the best way to manage fake news spread? How can it be done without government overreach, which risks the freedom and diversity of expression necessary for deliberation in healthy democracies?</p>
<p>Last month, Minister for Communications Michelle Rowland released a <a href="https://www.infrastructure.gov.au/department/media/publications/communications-legislation-amendment-combatting-misinformation-and-disinformation-bill-2023">draft exposure bill</a> to step up Australia’s fight against harmful online mis- and disinformation.</p>
<p>It offers more stick (hefty penalties) and less carrot (voluntary participation) than the current approach to managing online content.</p>
<p>If passed, the bill will see Australia shift from a voluntary to a mandatory co-regulatory model.</p>
<h2>Following an EU model</h2>
<p>According to the draft, disinformation is spread intentionally, while misinformation is not.</p>
<p>But both can cause serious harms including hate speech, financial harm and disruption of public order, according to the Australian Communications and Media Authority (ACMA).</p>
<p>To date, <a href="https://eprints.qut.edu.au/236986/1/Regulating_misinfo_Meese_Hurcombe.pdf">research</a> shows countries tend to approach this problem in three distinct ways:</p>
<ul>
<li><p>non-regulatory “supporting activities” such as digital literacy campaigns and fact-checking units to debunk falsehoods</p></li>
<li><p>voluntary or mandatory co-regulatory measures involving digital platforms and existing media authorities</p></li>
<li><p>anti-fake news laws.</p></li>
</ul>
<p>The Albanese government’s draft bill will bring us closer to the European Union-style model of mandatory co-regulation.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1558751024965472259"}"></div></p>
<h2>Platforms remain responsible, not government</h2>
<p>Initial opinions about the bill are divided. Some <a href="https://www.skynews.com.au/opinion/chris-kenny/acma-agency-being-given-position-as-the-official-censor-of-the-internet/video/ac27a65a775b137318dd0954851312a6">commentators</a> have called the proposed changes “censorship”, arguing it will have a chilling effect on free speech. </p>
<p>These comments are often unhelpful because they conflate co-regulation with more draconian measures such anti-fake news laws adopted in illiberal states like Russia, whereby governments arbitrarily rule what information is “fake”.</p>
<p>For example, Russia amended its <a href="https://cpj.org/wp-content/uploads/2022/07/Guide-to-Understanding-the-Laws-Relating-to-Fake-News-in-Russia.pdf">Criminal Code</a> in 2022 to make the spread of “fake” information an offence punishable with jail terms of up to 15 years, to suppress the media and political dissent about its war in Ukraine.</p>
<p>To be clear, under the proposed Australian bill, platforms continue to be responsible for the content on their services – not governments.</p>
<p>The new powers allow ACMA to look under the platform’s hood to see how they deal with online mis- and disinformation that can cause serious harm, and to request changes to processes (not content). ACMA can set industry standards as a last resort.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-public-trust-in-elections-is-being-undermined-by-global-disinformation-campaigns-181825">Why public trust in elections is being undermined by global disinformation campaigns</a>
</strong>
</em>
</p>
<hr>
<p>The proposed changes don’t give ACMA arbitrary powers to determine what content is true or false, nor can it direct specific posts to be removed. Content of private messages, authorised electoral communications, parody and satire, and news media all remain outside the scope of the proposed changes. </p>
<p>None of this is new. Since 2021, Australia has had a voluntary <a href="https://digi.org.au/disinformation-code/">Code of Practice on Disinformation and Misinformation</a>, developed for digital platforms by their industry association (known as DIGI).</p>
<p>This followed government recommendations arising out of a lengthy Australian Competition and Consumer Commission (ACCC) inquiry into digital platforms. This first effort at online regulation was a good start to stem harmful content using an opt-in model.</p>
<p>But voluntary codes have shortfalls. The obvious being that not all platforms decide to participate, and some cherry-pick the areas of the code they will respond to. </p>
<h2>The proposed changes</h2>
<p>The Australian government is now seeking to deliver on a <a href="https://www.paulfletcher.com.au/media-releases/new-disinformation-laws">bipartisan</a> promise to strengthen the regulators’ powers to tackle online mis- and disinformation by shifting to a mandatory co-regulatory model.</p>
<p>Under the proposed changes, ACMA will be given new information gathering powers and capacity to formally request an industry association (such as DIGI) vary or replace codes that aren’t up to scratch.</p>
<p>Platform participation with registered codes will be compulsory and attract warnings, fines and, if unresolved, hefty court-approved penalties for noncompliance.</p>
<p>These penalties are steep – as much as 5% of a platform’s annual global turnover if repeatedly in breach of industry standards.</p>
<p>The move from voluntary to mandatory regulation in Australia is logical given <a href="https://digital-strategy.ec.europa.eu/en/policies/digital-services-act-package#:%7E:text=The%20DSA%20has%20been%20published,later%2C%20after%20entry%20into%20force.">the EU</a> has set the foundation for other countries to hold digital technology companies responsible for curbing mis- and disinformation on their platforms.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1639198227647066112"}"></div></p>
<h2>Questions remain</h2>
<p>But the draft bill raises important questions to address before it’s legislated as planned for later this year. Among them are: </p>
<ul>
<li><p>how to best define mis- and disinformation? (at present the definitions are different to DIGI’s)</p></li>
<li><p>how to deal with the interrelationship between mis- and disinformation, especially regarding election content? There’s a potential issue because <a href="https://benjamins.com/catalog/jlp.21030.car">research</a> shows the same content labelled “disinformation” can also be labelled “misinformation” depending on the online user’s motive, which can be hard to divine</p></li>
<li><p>and why exclude online news media content? Research has shown news media can also be a source of harmful misinformation (such as 2019 election stories about the “<a href="https://benjamins.com/catalog/jlp.21030.car">Death Tax</a>”).</p></li>
</ul>
<p>While aiming to mitigate harmful mis- and disinformation is noble, how it will work in practice remains to be seen.</p>
<p>An important guard against unintended consequences is to ensure ACMA’s powers are carefully defined along with terms and likely circumstances requiring action, with mechanisms for appeal.</p>
<p>Public submissions <a href="https://www.infrastructure.gov.au/have-your-say/new-acma-powers-combat-misinformation-and-disinformation?utm_source=sfmc&utm_medium=email&utm_campaign=&utm_term=&utm_content=https%3a%2f%2fwww.infrastructure.gov.au%2fhave-your-say%2fnew-acma-powers-combat-misinformation-and-disinformation">close</a> August 6.</p><img src="https://counter.theconversation.com/content/209599/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Andrea Carson receives funding from the Australian Research Council. She has also received research funding from Meta Inc. Professor Carson is a member of Facebook's global Misinformation Interventions Working Group.</span></em></p>How can fake news be managed without government overreach? Under the draft bill, platforms continue to be responsible for the content on their services – not governments.Andrea Carson, Professor of Political Communication, Department of Politics, Media and Philosophy, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2094002023-07-10T08:36:24Z2023-07-10T08:36:24ZPolitics with Michelle Grattan: Bill Shorten on Robodebt report’s sealed section, and progress on NDIS reform<p>The Robodebt royal commission’s report has excoriated a raft of former ministers, especially Scott Morrison, who was a main instigator of the program, as well as public servants who were involved.</p>
<p>What we don’t know is who has been referred for prosecution or other action, because the names are in a sealed section of the report. </p>
<p>When in opposition, Bill Shorten pursued the scandal, mobilising a class action. Now Shorten is Minister for Government Services, overseeing a department that in an earlier iteration was at the centre of Robodebt. He’s also Minister for the National Disability Insurance Scheme.</p>
<p>In this podcast, Shorten joins The Conversation to discuss the aftermath of the royal commission report, and progress in reforming the NDIS.</p>
<p>Shorten sees Commissioner Catherine Holmes’s report as groundbreaking: “I genuinely believe that this royal commission and the report has the opportunity to educate a generation of politicians and senior public servants about the errors that have occurred here […] the way that the royal commissioner has drafted the report, her words, her analysis […] I think has sent shockwaves through Canberra.”</p>
<p>He condemns Morrison’s lack of contrition in light of the strong findings against him. “I just think that a lot of politicians I know, not just on the Labor side, but also the Liberal side who, when confronted with the same evidence, would show more contrition, would show more self-awareness.”</p>
<p>On the sealed section, naming those against whom action should be taken, Shorten toes the Labor line on Holmes’ advice to keep it secret – although he notes, “the discredited trade union royal commission certainly released the names of delegates and organisers” <a href="https://www.royalcommission.gov.au/trade-union/final-report">it recommended action against</a>.</p>
<p>He says Commissioner Holmes did “such a fantastic job” in getting to the heart of matters, so if she believed not putting out all the evidence “improves the odds of better investigation by regulatory authorities […] well, I think the government’s prudential to listen to her advice”.</p>
<p>“I do, though, accept that there’s an interest in accountability, that there’s scepticism […] I just want to reassure people, as the person who helped organise the class action and who campaigned for the royal commission, I and the government are completely committed to accountability in this.”</p>
<p>Shorten says he has already undertaken major reform of the NDIS since taking it over, changing the leadership and getting more people with a disability into senior roles. The scheme is about to undertake a mass conversion of labour hire staff into full-time roles, as promised in the May budget.</p>
<p>A major part of Shorten’s reform drive is to tackle fraud, taking particular aim at agencies “rorting” the scheme. “I’m talking to the ACCC [The Australian Competition and Consumer Commission] about how we can clamp down on price-gouging.”</p>
<p>“Our criminal task force [is] going after not the people on the scheme, but some service providers who are rorting the system, and we’ve got a lot of operations underway. We just want to get rid of the crooks out of the scheme, but we’re not creating notional budgets that somehow this will deliver some mountains of gold. I just want to straighten up the scheme in the best interest of participant.”</p>
<p>Earlier this year the government said the growth rate of the scheme would be cut to 8% a year by 2026. Shorten recently suggested it wouldn’t be the end of the world if this target wasn’t reached, but he quickly had to backtrack. “I was a bit naive in my language,” he says, explaining he’d been trying to make it clear this was a “target” not a “cap”. “It’s not a cap. Funding for people isn’t going to run out [at] 11 months in a 12-month program,” he says.</p><img src="https://counter.theconversation.com/content/209400/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In this podcast, Bill Shorten joins The Conversation to discuss the aftermath of the royal commission report, and progress reforming the NDIS to make it more sustainable.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2092092023-07-06T01:04:53Z2023-07-06T01:04:53ZAs fees keep climbing, this is why competition isn’t enough to deliver cheaper childcare<figure><img src="https://images.theconversation.com/files/535935/original/file-20230705-17-lpavph.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C4168%2C2760&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Ksenia Chernaya/Pexels</span></span></figcaption></figure><p>The Australian consumer watchdog is halfway through an <a href="https://www.accc.gov.au/inquiries-and-consultations/childcare-inquiry-2023/june-2023-interim-report">inquiry into childcare prices</a>. </p>
<p>The Australian Competition and Consumer Commission’s <a href="https://www.accc.gov.au/media-release/pricing-practices-and-operating-costs-of-childcare-services-to-be-examined-as-latest-accc-report-confirms-fees-outpaced-inflation">interim report</a> was released on Wednesday. It comes just days after the federal government’s <a href="https://www.education.gov.au/child-care-subsidy-campaign?gclid=CjwKCAjwqZSlBhBwEiwAfoZUIJTQeJ063e82GpNgNpYKDjozmpNTLVj7Qw4MoXndNssToBdM0ywAEBoCNrMQAvD_BwE&gclsrc=aw.ds">increased childcare subsidies</a> kicked in on July 1. </p>
<p>This is one of two major inquiries the federal government has commissioned on childcare. The <a href="https://www.pc.gov.au/inquiries/current/childhood#draft">Productivity Commission</a> is also looking at how early education is set up in Australia.</p>
<p>After six months on the job, the ACCC report is full of facts and figures but short on conclusions. </p>
<p>However, reading between the lines of the 146 pages, the implication is competition alone is probably not enough to deliver high-quality and affordable childcare for Australian families.</p>
<h2>Childcare markets are highly localised</h2>
<figure class="align-left ">
<img alt="A child stacks blocks in a tower." src="https://images.theconversation.com/files/535936/original/file-20230705-19-lpavph.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/535936/original/file-20230705-19-lpavph.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=900&fit=crop&dpr=1 600w, https://images.theconversation.com/files/535936/original/file-20230705-19-lpavph.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=900&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/535936/original/file-20230705-19-lpavph.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=900&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/535936/original/file-20230705-19-lpavph.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1131&fit=crop&dpr=1 754w, https://images.theconversation.com/files/535936/original/file-20230705-19-lpavph.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1131&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/535936/original/file-20230705-19-lpavph.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1131&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Childcare choice for families is much more limited than it may seem.</span>
<span class="attribution"><span class="source">Markus Spiske/Unsplash</span></span>
</figcaption>
</figure>
<p>The first reason for this is choice is much more limited than it may appear. Childcare markets are highly localised. Centres only really compete within a 2-3km radius, because most parents are not willing to travel more than 15 minutes for care.</p>
<p>The ACCC’s survey of parents suggests location and availability are the two most important factors in informing where parents chose to send their child. That’s understandable – if you can’t find a convenient place on the days you need, most other considerations are moot. But that dynamic softens the degree of competition between centres.</p>
<p>The ACCC finds that affordability of care – the out-of-pocket costs parents face – is most important for determining how much care parents use. But crucially, once the decision has been made to use a certain amount of care, price appears less important than other factors. Indeed, price is only fifth on the list of the things parents consider when choosing between centres.</p>
<p>The implication here is price competition is weak. Indeed, fees are actually higher in local markets with more childcare services. This is likely due to a larger number of services in wealthier areas where parents can afford to pay more. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/better-cheaper-childcare-is-on-the-horizon-in-australia-but-4-key-challenges-remain-199864">Better, cheaper childcare is on the horizon in Australia, but 4 key challenges remain</a>
</strong>
</em>
</p>
<hr>
<h2>Switching is costly</h2>
<p>The second factor that softens competition is parents rarely switch providers. </p>
<p>The ACCC found 65% of parents they surveyed had not switched provider since 2020. One in five of this group said the reason they did not switch was that they didn’t want to disrupt their children. Moving into a new environment and building new relationships with educators is a barrier to moving to a better-quality or lower-priced centre.</p>
<h2>Quality is hard to judge</h2>
<p>The third reason is it is hard for parents to judge the “quality” of childcare services.</p>
<p>Of course parents want to put their children in high-quality care, but they find it difficult to measure key dimensions of quality, such as the standard of the educators. </p>
<p>The government has tried to fill some of the information gaps by introducing National Quality Standards, but the ACCC found parents do not place emphasis on these – probably because many are unaware of them.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/more-than-1-million-australians-have-no-access-to-childcare-in-their-area-179557">More than 1 million Australians have no access to childcare in their area</a>
</strong>
</em>
</p>
<hr>
<h2>Fees have risen</h2>
<p>One trigger for this ACCC inquiry was the increases in childcare centres’ fees – something that has been costly not only for parents and but also governments (who pick up an average of 60% of the fee for centre-based care via <a href="https://www.servicesaustralia.gov.au/child-care-subsidy">the childcare subsidy</a>).</p>
<p>The ACCC shows between 2018 and 2022 childcare fees – the total amount charged – increased across childcare service types by between 20% and 32%. Government subsidises have reduced the impact of these rises on parents, with out-of-pocket expenses for childcare growing at a slower rate.</p>
<p>It is not surprising childcare costs tend to grow faster than inflation. That’s because childcare is highly labour intensive with limited scope for productivity gains. But the ACCC’s analysis show fees have also grown faster than wages over the past five years.</p>
<p>These high fees hurt everyone, but particularly low-income households. The ACCC’s analysis shows out-of-pocket expenses as a share of disposable income were higher on average for households in the bottom 10% of income earners, despite the higher subsidy for this group.</p>
<figure class="align-center ">
<img alt="A room in a childcare centre, with toys and shelves." src="https://images.theconversation.com/files/535937/original/file-20230705-29-s5muy6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/535937/original/file-20230705-29-s5muy6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=396&fit=crop&dpr=1 600w, https://images.theconversation.com/files/535937/original/file-20230705-29-s5muy6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=396&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/535937/original/file-20230705-29-s5muy6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=396&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/535937/original/file-20230705-29-s5muy6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=498&fit=crop&dpr=1 754w, https://images.theconversation.com/files/535937/original/file-20230705-29-s5muy6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=498&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/535937/original/file-20230705-29-s5muy6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=498&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Childcare fees have risen by up to 32% between 2018 and 2022.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<h2>Follow the money</h2>
<p>The interim report flags the most important part of the ACCC’s work is yet to come – understanding where the money is going.</p>
<p>The childcare market is highly diverse, with different models of care, and centres run by government, for-profit and not-for-profit providers. Many people struggle to understand how childcare can simultaneously cost so much for governments and parents, while its workers are paid so little.</p>
<p>Some in the industry are making good money. As <a href="https://www.afr.com/property/commercial/childcare-centres-in-demand-at-sold-out-property-auction-20230704-p5dlkj">articles in the financial media</a> regularly remind us, it is a market where private equity and commercial property investors see attractive returns relative to the risks.</p>
<p>In the next phase of its inquiry, the ACCC will examine costs, profits, and quality across the sector. If there are excess profits being made, I’m confident the ACCC will find them. </p>
<p>This next stage of the inquiry will also inform whether the ACCC recommends stronger price regulation for the sector. This interim report is treading softly, but it looks like this is where the ACCC is heading.</p>
<p>The final report is due by December 31.</p><img src="https://counter.theconversation.com/content/209209/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Danielle Wood's employer, Grattan Institute, has been supported in its work by government, corporates, and philanthropic gifts. A full list of supporting organisations is found at <a href="http://www.grattan.edu.au">www.grattan.edu.au</a></span></em></p>The consumer watchdog is halfway through an inquiry into childcare prices. It found location and availability are the two most important factors informing where parents chose to send their kids.Danielle Wood, Chief executive officer, Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2073272023-06-25T20:04:05Z2023-06-25T20:04:05ZYes, Australian businesses have become less dynamic. But there are bigger reasons for our sliding productivity growth<p>Since 2005, annual labour productivity growth (growth in output per hour worked) has been the best part of one percentage point below its long-term average in Australia and other developed countries.</p>
<p>The <a href="https://www.pc.gov.au/inquiries/completed/productivity/report">Productivity Inquiry</a> that I helped conduct for the Productivity Commission found this will lead to much-slower improvements in Australians’ living standards than in the past.</p>
<hr>
<p><iframe id="1EM7Q" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/1EM7Q/5/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<hr>
<p>In the search for a culprit, economists including Australia’s Competition Minister <a href="https://ministers.treasury.gov.au/ministers/andrew-leigh-2022/speeches/fh-gruen-lecture-australian-national-university-canberra">Andrew Leigh</a> have pointed to reduced business competition resulting in decreasing dynamism, by which they mean:</p>
<ul>
<li>less <a href="https://blogs.worldbank.org/developmenttalk/when-do-firms-call-it-quits">entry and exit</a> of firms </li>
<li>less job-switching</li>
<li>a significant reduction in business investment</li>
<li>mergers leading to increased business concentration</li>
<li>an increase in the markups businesses can sustain</li>
<li>only few highly-productive firms, with the rest increasingly less so</li>
</ul>
<p>A study that I have just published in <a href="https://onlinelibrary.wiley.com/doi/10.1111/1759-3441.12389">Australian Economic Papers</a>, reviews the evidence and finds that while most of these things have happened (and while many are undesirable) they <em>aren’t sufficient</em> to explain what’s happened to productivity. </p>
<p>The findings suggest that even if we did make our economy more competitive and businesses more dynamic (and we probably should) improving productivity growth depends on a much bigger set of policy reforms.</p>
<p>Here’s what we find.</p>
<h2>Firm entry and exit has been slowing</h2>
<p>In Australia, the rates of firm entry and exit (meaning companies either joining or dropping out of an industry) <a href="https://onlinelibrary.wiley.com/doi/10.1111/1759-3441.12389">declined</a> between 2005–06 and 2012–13. </p>
<p>While there’s been an increase in firm entry more recently, it’s been mainly among non-employing business – sole traders and independent contractors – rather than bigger businesses.</p>
<p>In the US (we don’t have an equivalent Australian study) red tape may be strangling dynamism. Investment in new profitable businesses has slowed at the same time as there has been a significant increase in regulation of those businesses. </p>
<p>In Australia, improvements in business survival rates at least partly seem to reflect improved conditions for both survivors and new entrants, rather than barriers that protect unproductive survivors at the expense of more-productive entrants.</p>
<h2>Job-switching has slowed</h2>
<p>Australian job mobility has <a href="https://www.pc.gov.au/inquiries/completed/productivity/report/productivity-volume7-labour-market.pdf">declined dramatically</a> over the past 30 years, in part because the population is ageing, and older workers are less likely to switch jobs than younger workers.</p>
<p>Another explanation might be that Australian businesses face a less volatile environment, suggesting job turnover does not have value in its own right. </p>
<p>While job churn tends to fall if barriers to job mobility rise, it also falls when businesses face fewer shocks, making any link between declining job turnover and diminished competition ambiguous.</p>
<h2>Business investment has slowed</h2>
<p>Non-mining business investment in Australia has stagnated over recent decades, as it has in a number of other advanced economies.</p>
<p>Among the suggested explanations are risk aversion and uncertainty, pessimism about the future and lower productivity growth. The role, played by competition – if any – is far from clear.</p>
<h2>Business concentration has climbed</h2>
<p>The average concentration of Australian businesses (the extent to which industries are dominated by a few big firms) appears to have been falling until the early 2000s, and <a href="https://treasury.gov.au/sites/default/files/2022-10/p2022-325290-productivity-growth.pdf">climbing</a> since then. </p>
<p>Most of the increased concentration appears to have been in already-concentrated industries, with technological advances and exposure to imports explaining a lot of it.</p>
<p>As an example, concentration has increased in “warehousing and storage”, but the industry has taken advantage of <a href="https://www.pc.gov.au/research/supporting/economic-dynamism">technological advances</a> including parcel tracking and smart warehouses, meaning both concentration <em>and</em> competition have increased as firms have scaled up to install new technologies.</p>
<h2>Businesses profit margins have climbed</h2>
<p>Markups (profit margins) appear to have climbed by around 57% in Australia between 1980 to 2016, which is less than in the US, Canada and much of the European Union, but greater than in New Zealand and most Asian countries except for South Korea. </p>
<p>But markups at the level of the firm are difficult to measure because they depend on assumptions about the way the firm makes its products. Different assumptions can produce very different estimates.</p>
<h2>There are only a few highly-productive firms</h2>
<p>Globally and in Australia the most-productive firms seem to be three to four times more productive than the less productive, but, at least in Australia, there is little evidence to suggest the gap is widening. </p>
<p>What evidence there is suggests the gap between the most-productive Australian firms and the most-productive global firms is <a href="https://read.oecd-ilibrary.org/economics/the-best-versus-the-rest_63629cc9-en#page1">widening</a>, suggesting <em>all</em> Australian firms are slower to adopt leading technologies than they were.</p>
<p>Put bluntly, Australian businesses as a whole appear to have become slow to adopt world best practice; which is a problem, but not necessarily a problem of highly-productive firms versus the rest.</p>
<p>There are a <a href="https://www.pc.gov.au/inquiries/completed/productivity/report/productivity-volume5-innovation-diffusion.pdf">range of policies</a> that can help to reverse the decline, but it is far from clear that competition plays much of a role.</p>
<h2>We’re at risk of chasing the wrong target</h2>
<p>The broader reasons for Australia’s declining productivity growth include changing demographics, changing international trade patterns and the changing nature of industries as Australia continues to moves towards a more service-based economy.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/533440/original/file-20230622-17-zjbjcb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/533440/original/file-20230622-17-zjbjcb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/533440/original/file-20230622-17-zjbjcb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=967&fit=crop&dpr=1 600w, https://images.theconversation.com/files/533440/original/file-20230622-17-zjbjcb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=967&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/533440/original/file-20230622-17-zjbjcb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=967&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/533440/original/file-20230622-17-zjbjcb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1215&fit=crop&dpr=1 754w, https://images.theconversation.com/files/533440/original/file-20230622-17-zjbjcb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1215&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/533440/original/file-20230622-17-zjbjcb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1215&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://www.pc.gov.au/inquiries/completed/productivity/report">Productivity Commission</a></span>
</figcaption>
</figure>
<p>Fixing our productivity problem requires a suite of changes that address these and other issues. In March, the Productivity Commission laid out a <a href="https://www.pc.gov.au/inquiries/completed/productivity/report/productivity-recommendations-reform-directives.pdf">roadmap</a>.</p>
<p>Of course, we shouldn’t ignore competition. The government’s 2015 <a href="https://treasury.gov.au/publication/p2015-cpr-final-report">Competition Policy Review</a> focused on updating competition and consumer laws. </p>
<p>Many of its recommendations remain on the shelf. </p>
<p>Further, new challenges are emerging. To pick one, Australia currently has three alternative ways to get competition clearances when businesses merge.</p>
<p>Unsurprisingly, they pick the path of least resistance. </p>
<p>The head of the Competition and Consumer Commission Gina Cass-Gottlieb has <a href="https://www.accc.gov.au/about-us/media/speeches/the-role-of-the-accc-and-competition-in-a-transitioning-economy-address-to-the-national-press-club-2023">developed a proposal</a> that would help. </p>
<p>Actually boosting productivity will require measures that cover education, technology, business regulation, taxation, carbon emissions, and more. </p>
<p>Blaming declining dynamism and declining competition for declining productivity is not just a diversion, it risks making us do the wrong things.</p><img src="https://counter.theconversation.com/content/207327/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen King is a Commissioner at the Australian Productivity Commission and a former Commissioner with the Australian Competition and Consumer Commission. He was one of the authors of the recent Productivity Commission 5-year Productivity report. The views in this article are his own.</span></em></p>Put bluntly, Australian businesses as a whole appear to have become slow to adopt world best practice. But if we want to lift productivity, we need to act on a wider suite of solutions.Stephen King, Professor, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2025072023-04-02T20:03:59Z2023-04-02T20:03:59ZCapitalising on climate anxiety: what you need to know about ‘climate-washing’<figure><img src="https://images.theconversation.com/files/518342/original/file-20230330-24-znn3xy.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C4591%2C2897&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/hands-painting-blue-green-pollution-chimney-2044199009">Shutterstock</a></span></figcaption></figure><p>People are increasingly making choices about which products to buy and which service providers to use on climate change grounds. With concerns about climate change <a href="https://australiainstitute.org.au/report/climate-of-the-nation-2022/">now affecting most</a> Australians, businesses that promote climate-aligned practices and make emissions-reduction promises have a competitive advantage over those that don’t.</p>
<p>But sometimes these claims fail to live up to reality. Climate-related greenwashing, or “climate-washing”, communicates a message that exaggerates or misrepresents climate credentials through advertising, branding, labelling or reporting. </p>
<p>Examples include where corporate marketing and government campaigns promising “net-zero emissions by 2050” are not backed by a credible plan. Or products are promoted as “carbon neutral” or “climate friendly” when they’re not. It also includes where banks and other investors claim to fund a “cleaner future” when this is not completely true, potentially masking climate-related financial risk.</p>
<p>Climate-washing is a problem because the offending businesses capitalise on climate anxiety. It also allows businesses lacking robust credentials to gain customers and market advantage on false pretences. Ultimately, it also hinders rather than helps progress towards emissions reduction goals. </p>
<p>In March, the Australian Competition and Consumer Commission (ACCC) <a href="https://www.abc.net.au/news/2023-03-02/accc-to-crack-down-on-%E2%80%98greenwashing%E2%80%99/102045408">announced a crack-down</a> on climate-washing and greenwashing. This followed an ACCC report revealing claims made by <a href="https://www.accc.gov.au/system/files/Greenwashing%20by%20businesses%20in%20Australia.pdf">more than half</a> the 247 Australian businesses reviewed in an internet sweep raised concern. The ACCC has said it will now undertake enforcement, compliance and education activities.</p>
<p>On Wednesday the Senate agreed to establish an <a href="https://greens.org.au/news/greens-establish-senate-inquiry-greenwashing">inquiry into greenwashing</a> by corporations in Australia. The inquiry will investigate the impacts of greenwashing on consumers and the environment and will identify the legal and regulatory actions needed to stop it. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/greenwashing-how-ads-get-you-to-think-brands-are-greener-than-they-are-and-how-to-avoid-falling-for-it-183169">Greenwashing: how ads get you to think brands are greener than they are – and how to avoid falling for it</a>
</strong>
</em>
</p>
<hr>
<h2>The credibility gap</h2>
<p>The imperative to reach net-zero emissions by mid-century has been consistently reinforced by climate science. This includes, most recently, this month’s <a href="https://report.ipcc.ch/ar6syr/pdf/IPCC_AR6_SYR_SPM.pdf">report</a> by the Intergovernmental Panel on Climate Change. </p>
<p>One of the upshots has been a deluge of net-zero strategic marketing. Particularly in the case of large climate change contributors – such as fossil fuel companies, airlines and the meat industry – adopting a net-zero narrative switches public perception that the company is part of the solution, rather than the problem. </p>
<p>Climate-washing essentially describes a gap between what’s promised and what’s likely to be achieved. This “credibility gap” can be due to factors such as over-reliance on speculative technology, offsetting, and modelling that’s outdated or hasn’t been properly verified. Although there’s a big global push toward transparency, many entities don’t adequately disclose the data and assumptions behind their promises. </p>
<h2>Complaints and court cases</h2>
<p>Last week, a group called Flight Free and their lawyers <a href="https://flightfree.net.au/wp-content/uploads/2023/03/230323-MR-Etihad-greenwashing-referral.pdf">approached the ACCC</a> over Etihad Airways advertising that said, “flying shouldn’t cost the earth” and “net zero emissions by 2050”. The ads were shown prominently at a soccer match in Melbourne last year. <a href="https://www.edo.org.au/wp-content/uploads/2023/03/230322-Complaint-to-ACCC-Etihad-Airways-climate-advertisements.pdf">Flight Free says</a> the advertising is misleading.</p>
<p>The Etihad complaint follows the Australasian Centre for Corporate Responsibility’s Federal Court proceedings against gas company Santos. Currently afoot, <a href="https://www.accr.org.au/news/australasian-centre-for-corporate-responsibility-expands-landmark-federal-court-case-against-santos/">this complaint</a> challenges Santos’ “clean fuel” and “net-zero by 2040” claims. </p>
<p>Earlier this year, corporate watchdog ASIC (the Australian Securities and Investment Commission) initiated proceedings <a href="https://asic.gov.au/about-asic/news-centre/find-a-media-release/2023-releases/23-043mr-asic-launches-first-court-proceedings-alleging-greenwashing/">against super fund Mercer</a> for allegedly misleading investors into thinking their investments in a “sustainable” investment option excluded fossil fuels. </p>
<p>Around the world, there’s been a <a href="https://cssn.org/wp-content/uploads/2022/01/CSSN-Research-Report-2022-1-Climate-Washing-Litigation-Legal-Liability-for-Misleading-Climate-Communications.pdf">recent rise</a> in climate-washing litigation. <a href="http://climatecasechart.com/non-us-case-category/misleading-advertising/">Multiple complaints</a> allege that the football association FIFA falsely advertised the Qatar World Cup as “fully carbon neutral.” </p>
<p>In aviation, there’s a pending court case against KLM targeting its “fly responsibly” campaign, and there’s also been a successful challenge to RyanAir’s low-carbon campaign. </p>
<p>Product complaints have ranged from allegedly climate-neutral bin liners, to “climate-controlled pork” in Denmark, and “climate-neutral croquettes” in Germany. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1640179330725867523"}"></div></p>
<h2>How is climate-washing regulated?</h2>
<p>Climate-washing is a form of misleading and deceptive conduct, which is regulated in Australia under federal <a href="https://www.legislation.gov.au/Details/C2023C00043">competition and consumer law</a>. </p>
<p>Climate-washing that relates to financial products and services is regulated under <a href="https://www.legislation.gov.au/Details/C2021C00281">securities and investments law</a>. </p>
<p>Both the ACCC and <a href="https://asic.gov.au/regulatory-resources/financial-services/how-to-avoid-greenwashing-when-offering-or-promoting-sustainability-related-products/">ASIC</a> monitor climate-washing. </p>
<p>Globally, concerns over climate-washing have led to action by the United Nations. A High-Level Expert Group on the Net-Zero Emissions Commitments of Non-State Entities was formed last year to target climate-washing. The group has a “zero tolerance for net-zero greenwashing” mantra, and delivered <a href="https://www.un.org/sites/un2.un.org/files/high-levelexpertgroupupdate7.pdf">a report</a> at November’s Climate Change COP in Egypt, which contains a “how-to” guide for credible, accountable net-zero pledges.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/toxic-cover-up-6-lessons-australia-can-draw-from-the-uns-scathing-report-on-greenwashing-194054">'Toxic cover-up': 6 lessons Australia can draw from the UN's scathing report on greenwashing</a>
</strong>
</em>
</p>
<hr>
<h2>What you can do</h2>
<p>There’s every reason to support businesses taking genuine and meaningful climate action. But as a consumer, it’s hard to fact-check simple statements that are in reality pretty complex claims. </p>
<p>If you’re suspicious of climate-washing, you can report it to the ACCC <a href="https://www.accc.gov.au/contact-us/contact-the-accc/report-a-consumer-issue">here</a>. You can also monitor the work of non-profits investigating and reporting on climate-washing. For example, stay informed by following sites such as ClientEarth’s <a href="https://www.clientearth.org/projects/the-greenwashing-files/">The Greenwashing Files</a>. And follow the public interest law centres taking action, such as <a href="https://www.instagram.com/enviro_justice_australia/?hl=en">Environmental Justice Australia</a>, the <a href="https://www.instagram.com/environmentaldefendersoffice/">Environmental Defenders Offices</a>, and <a href="https://twitter.com/eglawyers?lang=en">Equity Generation</a>. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1640353915316338690"}"></div></p>
<p>When buying a product or service, it never hurts to ask questions and to be sent more information. If you’re a <a href="https://www.nytimes.com/2022/05/10/climate/banks-shareholders-climate-action.html">shareholder</a>, look closely at annual reports. And make the most of voting opportunities. </p>
<p>Have a say on government proposals targeting climate change and climate-washing. The initial <a href="https://treasury.gov.au/consultation/c2022-314397">consultation process</a> for the Australian government’s action on climate disclosure and reporting has recently closed, but submissions on new reporting requirements will open later this year. </p>
<p>Ultimately, it’s a good thing that governments and corporations want to align with a smooth transition toward a net-zero future. And jumping on the net-zero bandwagon is certainly a welcome step away from climate denialism. </p>
<p>But in order for net-zero goals to actually be achieved in a way that avoids a last-minute scramble and significant losses along the way, it’s important for everyone that pledges and promises are made frankly, earnestly and credibly.</p>
<hr>
<p><em><strong>Editor’s note:</strong> In response to the misleading advertising claim, Etihad said it “runs a comprehensive research, development, and innovation programme to address aviation decarbonisation, and is committed to achieving net zero emissions by 2050”.</em></p>
<p><em>The Australian Centre for Corporate Responsibility case against Santos is before the courts.</em></p>
<p><em>Super fund Mercer said in a statement: “We have co-operated with ASIC on their enquiries and take their concerns very seriously. As this matter is before the courts, it would be inappropriate for us to comment further at this time.”</em></p><img src="https://counter.theconversation.com/content/202507/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Laura Schuijers does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>While the ACCC, ASIC and a new senate inquiry begin to flush out greenwashing, we take a closer look at dodgy climate claims. Complaints and court cases are stacking up. Here’s what you need to know.Laura Schuijers, Deputy Director, Australian Centre for Climate and Environmental Law and Lecturer in Law, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2002652023-02-21T04:55:05Z2023-02-21T04:55:05ZSee when Australia’s biggest banks stopped paying proper interest on your savings – and what you can do about it<figure><img src="https://images.theconversation.com/files/511334/original/file-20230221-24-soramb.png?ixlib=rb-1.1.0&rect=0%2C785%2C3389%2C1435&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Whenever interest rates went up in the past, I used to get told it wasn’t all bad news. At least it was good for some people: savers – people with money in the bank.</p>
<p>I hear a lot less of that these days.</p>
<p>If you’ve got money in the bank, you’re now lucky to earn anything at all. One in seven of the deposit dollars held by the Commonwealth bank (Australia’s biggest for deposits) is in a “transaction account” on which it <a href="https://images.theconversation.com/files/511239/original/file-20230220-18-uyzffw.PNG">no longer pays interest</a>. </p>
<p>Where interest is paid, it is so tiny compared to what it was that Treasurer Jim Chalmers this month directed the Australian Competition and Consumer Commission to conduct an <a href="https://www.accc.gov.au/media-release/accc-launches-inquiry-into-deposit-interest-rates">inquiry</a>, using its compulsory information-gathering powers.</p>
<p>The last time the commission conducted such an inquiry, into <a href="https://www.accc.gov.au/publications/residential-mortgage-price-inquiry-final-report">mortgage rates</a> in 2018, it gained access to nearly 40,000 documents from the big four banks and more than 7,000 from the smaller banks.</p>
<h2>Bad news for savers: when your rates began to fall</h2>
<p>What the commission is likely to find is that whereas transaction accounts stopped paying interest some time ago, so-called online accounts offering interest on large deposits were paying very reasonable interest – up until five years ago.</p>
<p>How do I know that’s the likely finding? Here’s what I found, when I graphed the Reserve Bank’s measure of the average online rate for a $10,000 deposit against the Reserve Bank’s cash rate, going back to 2010.</p>
<hr>
<p><iframe id="4oHRI" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/4oHRI/1/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<hr>
<p>What the graph shows is that, until about five years ago, the online rate for big deposits moved in line with the cash rate and (as it happened) almost exactly matched it. When the cash rate was 3%, the online deposit rate was 3%, and so on.</p>
<p>But from 2018, the deposit rate fell away. Except for the time when both rates were close to zero during the early years of COVID, the rate paid on large deposits has stayed well below the cash rate ever since.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/511276/original/file-20230221-14-vdhjax.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/511276/original/file-20230221-14-vdhjax.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/511276/original/file-20230221-14-vdhjax.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=969&fit=crop&dpr=1 600w, https://images.theconversation.com/files/511276/original/file-20230221-14-vdhjax.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=969&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/511276/original/file-20230221-14-vdhjax.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=969&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/511276/original/file-20230221-14-vdhjax.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1218&fit=crop&dpr=1 754w, https://images.theconversation.com/files/511276/original/file-20230221-14-vdhjax.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1218&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/511276/original/file-20230221-14-vdhjax.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1218&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Australian Banking Association chief Anna Bligh.</span>
<span class="attribution"><span class="source">Lukas Coch/AAP</span></span>
</figcaption>
</figure>
<p>That’s what the official figures say. But Anna Bligh, chief executive of the Australian Banking Association, sees them differently.</p>
<p>“This time last year, the four major banks, nobody, no bank was offering more than 0.3% on their savings account,” she told the <a href="https://www.afr.com/companies/financial-services/a-role-for-the-regulator-chalmers-warns-banks-to-lift-saving-rates-20230208-p5cirn">Australian Financial Review</a> this month. “Right now, they’re all offering at least 4% or more. So that’s a massive increase.”</p>
<p>But the rates Bligh quotes aren’t the standard ones. </p>
<p>The Commonwealth Bank is indeed paying 4% on its so-called NetBank Saver account, but the 4% is an introductory rate for new customers only – before slipping back to <a href="https://www.commbank.com.au/banking/netbank-saver.html">1.6%</a> after five months.</p>
<p>The web comparison site Canstar finds the average big bank introductory rate on $10,000 is <a href="https://images.theconversation.com/files/511271/original/file-20230221-28-xlcwh9.PNG">3.66%</a>, up from 0.24% before the Reserve Bank put up the cash rate by a total of 3.25 points.</p>
<p>But the average rate offered when the introductory bonus wears off has climbed by much less, from 0.05% to just <a href="https://images.theconversation.com/files/511271/original/file-20230221-28-xlcwh9.PNG">1.16%</a>.</p>
<h2>Complexity and suspected collusion makes switching hard</h2>
<p>And some of the high-looking rates have special conditions. </p>
<p>The Commonwealth’s GoalSaver account also offers 4%, but only if you put in more money in each month. If you can’t, or if you make a withdrawal, the rate plummets to <a href="https://www.commbank.com.au/banking/goal-saver.html">0.25%</a>.</p>
<p>The Australian Competition and Consumer Commission’s inquiry is likely to find that the complex nature of the deals makes switching hard, just as does the complex nature of electricity and health insurance deals.</p>
<p>That’s what it found about the bank’s <a href="https://www.accc.gov.au/publications/residential-mortgage-price-inquiry-final-report">mortgage offerings</a> in 2018.</p>
<p>It found the “opaque” nature of the offers inflated the costs of shopping around (including time and effort) and was one of the reasons why 70% of borrowers surveyed by one of the big banks said they signed up after getting just one quote.</p>
<p>It said the big four banks profited from the suppression of incentives to shop around and lacked strong incentives to make prices more transparent.</p>
<p>So why have the deposit rates offered by the big four banks dropped away?</p>
<p>When it came to mortgages, the ACCC suspected tacit collusion. Its 2018 report referred to a “synchronised” approach to rates seven times.</p>
<h2>Why the banks won’t act – unless we make them</h2>
<p>In very recent years, the banks have had less reason to offer high rates.
During the first 15 months of COVID, the Reserve Bank made available A$188 billion of funding to banks at the extraordinarily low rates of <a href="https://www.rba.gov.au/publications/bulletin/2021/sep/an-assessment-of-the-term-funding-facility.html">0.25% and 0.1%</a>.</p>
<p>This meant banks had less need to attract deposits, and in any event, they were overwhelmed with deposits. Elevated savings rates during COVID pushed an extra <a href="https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-finance-and-wealth/sep-2022/5232034.xlsx">$300 billion</a> through their doors, as worried and locked-down households sought out safe places to stash cash.</p>
<p>Both of these things are changing. The last of the Reserve Bank’s cheap three-year loans to banks expires mid-next year, and households are stashing less into banks than they used to.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-do-bankers-behave-badly-they-make-too-much-to-ask-questions-146685">Why do bankers behave badly? They make too much to ask questions</a>
</strong>
</em>
</p>
<hr>
<p>It is possible deposit rates might be about to improve, all the more so because the banks will be under scrutiny until the ACCC inquiry reports at the end of the year.</p>
<p>When announcing the inquiry, the treasurer invoked fairness. Chalmers called on the banks to “pass on the interest rate rises to savers as quickly as you pass on the interest rate rises to mortgage holders”. </p>
<p>But fairness has little to do with it. The banks will pay depositors more only when they need to, or when they are pressured to. Until then, for many of us, deposits will earn next to nothing, regardless of where the Reserve Bank moves rates.</p>
<p>So if you’ve got a savings account, why not call up your bank, quote this article – and ask them what they’re going to do about it.</p><img src="https://counter.theconversation.com/content/200265/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Martin does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>I graphed the average online rate for a $10,000 deposit against the Reserve Bank’s cash rate, going back to 2010. After seeing what that graph reveals, you’ll want to call your bank.Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2001662023-02-20T05:50:02Z2023-02-20T05:50:02ZProposed privacy reforms could help Australia play catch-up with other nations. But they fail to tackle targeted ads<figure><img src="https://images.theconversation.com/files/511077/original/file-20230220-19-p8vr96.jpeg?ixlib=rb-1.1.0&rect=123%2C6%2C4461%2C3052&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>In the recently released <a href="https://www.ag.gov.au/sites/default/files/2023-02/privacy-act-review-report.pdf">Privacy Act Review Report</a>, the Attorney-General’s Department makes numerous important proposals that could see the legislation, enacted in 1988, begin to catch up to leading privacy laws globally.</p>
<p>Among the positive proposed changes are: more realistic definitions of personal information and consent, tighter limits on data retention, a right to erasure, and a requirement for data practices to be fair and reasonable. </p>
<p>However, the report’s proposals on targeted advertising don’t properly address the power imbalance between companies and consumers. Instead, they largely accept a status quo that sacrifices consumer privacy to the demands of online targeted ad businesses.</p>
<h2>Capturing personal information used to track and profile</h2>
<p>Obligations under the existing Privacy Act only apply to “personal information”, but there has been legal uncertainty about what exactly constitutes “personal information”. </p>
<p>Currently, companies can track an individual’s online behaviour across different websites and connect it with their offline movements by matching their data with data collected from third parties, such as retailers or <a href="https://www.oracle.com/au/cx/advertising/data-enrichment-measurement/#data-enrichment">data brokers</a>. </p>
<p>Some of these companies claim they’re not dealing in “personal information” since they don’t use the individual’s name or email address. Instead, the matching is done based on a unique identifier allocated to that person – such as a <a href="https://help.abc.net.au/hc/en-us/articles/4402890310671">hashed email</a>, for example.</p>
<p>The report proposes an expanded definition of “personal information” that clearly includes the various technical and online identifiers being used to track and profile consumers. Under this definition, companies could no longer claim such data collection and sharing are outside the scope of the Privacy Act. </p>
<h2>Improved consent (when required)</h2>
<p>The report also proposes higher standards for how consent is sought, in cases where the act requires it. This would require voluntary, informed, current, specific and unambiguous consent.</p>
<p>This would work against organisations claiming consumers have consented to unexpected data uses just because they used a website or an app with a link to a broadly worded privacy policy with take-it-or-leave-it terms. </p>
<p>For example, companies would need to demonstrate the higher standard of consent to collect sensitive information about someone’s mental health or sexual orientation. The report also proposes that some further data practices, such as precise geolocation tracking, should require consent.</p>
<p>However, it specifically states consent should not be required for some targeted ad practices. Yet <a href="https://www.accc.gov.au/system/files/Digital%20platforms%20inquiry%20-%20final%20report.pdf">surveys</a> show most consumers regard these as misuses of their personal information.</p>
<h2>‘Fair and reasonable’ data practices</h2>
<p>The report proposes a “fair and reasonable” test for dealings with personal information in general.</p>
<p>This recognises that consumers are saddled with too much of the responsibility for managing how their personal information is collected and used, while they lack the information, resources, expertise and control to do this effectively.</p>
<p>Instead, organisations covered by the Privacy Act should ensure their data handling practices are “fair and reasonable”, regardless of whether they have consumer consent. This would include considering whether a reasonable person would expect the data to be collected, used or disclosed in that way, and whether any dealing with children’s information is in the best interests of the child.</p>
<h2>Prohibiting targeted ads based on sensitive information</h2>
<p>The report proposes the prohibition of targeting based on sensitive information and traits. However, it’s not always easy to draw the line between “sensitive” information or traits, and other personal information. </p>
<p>For instance, is having an interest in “cosmetic procedures” or “rapid weight loss” a sensitive trait, or a general reading interest? Companies may exploit such grey areas. So while prohibiting targeting based on sensitive information is appropriate, it’s not enough in itself.</p>
<p>Another loophole arises in the report’s proposal that consumer consent should be necessary before an organisation trades in their personal information. The report leaves open an exception to this consent requirement where the “trading” is reasonably necessary for an organisation’s functions or activities.</p>
<p>This may be a substantial exception: data brokers, for example, might argue their trade in personal information (without consumers’ knowledge or consent) is necessary.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/is-your-phone-really-listening-to-your-conversations-well-turns-out-it-doesnt-have-to-162172">Is your phone really listening to your conversations? Well, turns out it doesn't have to</a>
</strong>
</em>
</p>
<hr>
<h2>Opt out only, not opt in</h2>
<p>Both the <a href="https://www.accc.gov.au/system/files/Digital%20platforms%20inquiry%20-%20final%20report.pdf">ACCC</a> and the <a href="https://assets.publishing.service.gov.uk/media/5fa557668fa8f5788db46efc/Final_report_Digital_ALT_TEXT.pdf">UK Competition & Markets Authority</a> have recommended consumers should opt <em>in</em> to the use of their personal information for targeted advertising if they wish to see this content.</p>
<p>But the report proposes individuals should only be allowed to opt <em>out</em> of “seeing” targeted ads. This still wouldn’t stop companies from collecting, using and disclosing a user’s personal information for broader targeting purposes.</p>
<p>Even if a consumer opts out of seeing targeted ads, a business may continue to collect their personal information to create “lookalike audiences” and target other people with similar attributes. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1626662613500166144"}"></div></p>
<p>Although having the option to opt out of seeing targeted ads gives consumers some limited control, companies still control the “<a href="https://www.accc.gov.au/system/files/DPB%20-%20DPSI%20-%20September%202021%20-%20Full%20Report%20-%2030%20September%202021%20%283%29_1.pdf">choice architecture</a>” of such settings. They can use their control to make opting out <a href="https://cprc.org.au/dupedbydesign/">confusing and difficult</a> for users, by forcing them to navigate through multiple pages or websites with obscurely labelled settings. </p>
<h2>Are targeted ads necessary to support online services?</h2>
<p>This limitation of consumers’ choices was partly explained by the view of the Attorney-General’s Department that targeted ads are necessary to fund “free” services. This refers to services where consumers “pay” with their attention and data (which companies use to make revenue from targeted advertising).</p>
<p>However, many companies using customers’ personal information for targeted ad businesses aren’t providing free services. Consider online marketplaces such as Amazon or eBay, or subscription-based products of media companies such as NewsCorp and Nine.</p>
<p>Meta (Facebook) and the Interactive Advertising Bureau Australia argued that if consumers opt out of targeted ads, a company should be able to stop offering them the service in question. This proposal was rejected on the basis that a platform can still show non-targeted ads to such consumers.</p>
<p>Inconsistently, the report failed to question broader claims that targeted advertising – as opposed to less intrusive forms of advertising – must be protected for online services to be viable. </p>
<h2>Real change is needed</h2>
<p>The reform of our privacy laws is long overdue. The government should avoid watering down potential improvements by attempting to preserve the status quo dictated by large businesses. </p>
<p>The government is seeking <a href="https://ministers.ag.gov.au/media-centre/landmark-privacy-act-review-report-released-16-02-2023">feedback on the report</a> until March 31. It will then decide on the final form of the reforms it proposes, before these are debated in Parliament. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/this-law-makes-it-illegal-for-companies-to-collect-third-party-data-to-profile-you-but-they-do-anyway-190758">This law makes it illegal for companies to collect third-party data to profile you. But they do anyway</a>
</strong>
</em>
</p>
<hr>
<img src="https://counter.theconversation.com/content/200166/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Katharine Kemp receives funding from The Allens Hub for Technology, Law and Innovation. She is a Member of the Advisory Board of the Future of Finance Initiative in India, and the Australian Privacy Foundation.</span></em></p>The proposals from the Attorney-General’s Department could help bolster Australia’s privacy laws — but there are some deficiencies.Katharine Kemp, Senior Lecturer, Faculty of Law & Justice, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1945222022-11-15T04:47:42Z2022-11-15T04:47:42ZTo start cutting gas and electricity prices, here’s what the government looks likely to deliver by Christmas<figure><img src="https://images.theconversation.com/files/495521/original/file-20221116-17-ytsdio.png?ixlib=rb-1.1.0&rect=59%2C479%2C3269%2C1832&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Treasurer Jim Chalmers says he’ll have a system in place to deal with rising energy prices by
<a href="https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/transcripts/interview-stephen-engle-and-haidi-stroud-watts-bloomberg">Christmas</a>.</p>
<p>He can’t yet tell us what it will be, because that will depend on the outcome of negotiations with gas and electricity companies, and possibly on legislation he might have to get through parliament.</p>
<p>But thanks one of the treasurer’s most trusted confidants, we can now piece together a pretty good picture of what lies ahead.</p>
<h2>Clues from the head of Treasury</h2>
<p>The head of the treasurer’s department, Treasury secretary Steven Kennedy, shared his thoughts with a Senate estimates committee last week. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/495269/original/file-20221115-22-3vyzh9.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/495269/original/file-20221115-22-3vyzh9.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/495269/original/file-20221115-22-3vyzh9.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=967&fit=crop&dpr=1 600w, https://images.theconversation.com/files/495269/original/file-20221115-22-3vyzh9.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=967&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/495269/original/file-20221115-22-3vyzh9.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=967&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/495269/original/file-20221115-22-3vyzh9.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1216&fit=crop&dpr=1 754w, https://images.theconversation.com/files/495269/original/file-20221115-22-3vyzh9.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1216&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/495269/original/file-20221115-22-3vyzh9.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1216&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Treasury Secretary Steven Kennedy.</span>
</figcaption>
</figure>
<p>While Kennedy presented them as <a href="https://treasury.gov.au/speech/opening-statement-economics-legislation-committee-4">his own thoughts</a>, Kennedy’s day job is helping Chalmers work out what to do.</p>
<p>The first thing to note is that Kennedy, <a href="https://theconversation.com/leading-economists-back-federal-government-action-to-curb-rising-gas-and-electricity-prices-193831">like Chalmers</a>, doesn’t like the idea of intervening in markets just because prices are high. </p>
<p>As he told the Senate, usually the solution to high prices “is high prices”.</p>
<p>What he means is that usually when prices jump it’s because there isn’t enough of something. The high prices encourage new suppliers to get into business supplying that thing, and that forces prices down.</p>
<p>If that can’t happen quickly enough, the high prices will encourage users of that something to switch to a substitute, as we did when cyclones hit Queensland’s banana crops in <a href="https://images.theconversation.com/files/495208/original/file-20221114-16-nyn7yc.jpg">2006 and 2011</a>. We switched to other fruits grown elsewhere.</p>
<p>Interfering with high prices interferes with those adjustments. Usually.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/cheaper-gas-and-electricity-are-within-our-grasp-heres-what-to-do-193388">Cheaper gas and electricity are within our grasp – here's what to do</a>
</strong>
</em>
</p>
<hr>
<p>However, at the moment, there needn’t be an Australian gas shortage. Australia’s east coast produces roughly <a href="https://www.accc.gov.au/system/files/ACCC%20Gas%20Inquiry%20-%20July%202022%20interim%20report%20-%20FINAL.pdf">three times</a> as much gas as it uses each year. </p>
<p>Although most of the rest of the gas is exported in accordance with long-term contracts, an increasing amount is being exported over and above those contracts to take advantage of the temporary spike in international prices following Russia’s invasion of Ukraine.</p>
<p>If that gas was sold here at pre-invasion prices, there wouldn’t be a shortage, and Australian prices wouldn’t be up to four times what they used to be, pushing manufacturers <a href="https://www.afr.com/companies/energy/manufacturing-threat-as-gas-prices-spike-20220510-p5ajxs">to the brink</a> and pushing electricity prices way beyond normal.</p>
<h2>Whatever is done will be temporary</h2>
<p>Kennedy’s first point is that the global price hike is likely to be temporary, or as he put it, “hopefully temporary”. Even if the conflict persists, international supply and demand are likely to adjust to bring global prices back down. That means any intervention should be temporary, so it doesn’t distort markets forever.</p>
<p>Kennedy’s second point is that the gas exporters selling for ultra-high prices over and above what they are contracted to sell are making exceptionally high profits – “well beyond the usual bounds of investment and profit cycles”. They would do just fine if their profits were merely ordinarily high rather than super high.</p>
<p>His third point is that the temporarily high prices are hacking into the profits of other Australian businesses and “raising questions about their viability”. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/leading-economists-back-federal-government-action-to-curb-rising-gas-and-electricity-prices-193831">Leading economists back federal government action to curb rising gas and electricity prices</a>
</strong>
</em>
</p>
<hr>
<p>Households, especially lower-income households, will be severely affected.</p>
<p>Summing up more clinically, Kennedy says what’s happening in Ukraine is “leading to a redistribution of income and wealth, and disrupting markets”. </p>
<p>The national interest case for this redistribution is “weak, and it is not likely to lead to a more efficient allocation of resources”.</p>
<h2>Beyond a gentleman’s agreement</h2>
<p>In August the government signed a sort of gentleman’s agreement with the three east coast gas exporters in which they’ve agreed to offer uncontracted gas to local customers first, before offering it overseas.</p>
<p>But (and it’s a big but) they’ll offer it at international prices, with the only stipulation being that local customers “<a href="https://cdn.theconversation.com/static_files/files/2441/MR_29_Sept_King_Heads_of_Agreement__.pdf">not pay more</a>” than overseas customers.</p>
<p>Although well-intentioned, it will allow prices many times higher than the A$8 a gigajoule that was common before COVID – high enough to send some customers to the wall. </p>
<p>The two-step solution Kennedy is pointing to goes further, temporarily.</p>
<h2>Agreement on lower prices – or a tax might be next</h2>
<p>The first step is likely to be to ask the producers to supply enough gas to local customers to get local prices down to A$10 a gigajoule, an idea suggested by the former Australian Competition and Consumer Commission chief <a href="https://theconversation.com/cheaper-gas-and-electricity-are-within-our-grasp-heres-what-to-do-193388">Rod Sims</a>.</p>
<p>Sims thinks the producers are likely to agree. The Commonwealth has the power to impose export controls. If they don’t agree, Kennedy has hinted at stage two.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/politics-with-michelle-grattan-rod-sims-on-the-gas-price-crisis-192340">Politics with Michelle Grattan: Rod Sims on the gas price crisis</a>
</strong>
</em>
</p>
<hr>
<p>That fallback position would be a temporary tax on the excess profits of exporters and use it to subsidise domestic prices, along the lines of the temporary tax in the <a href="https://www.reuters.com/world/uk/uk-considering-extension-windfall-tax-energy-companies-source-2022-11-03/">United Kingdom</a>.</p>
<p>Economic purists, including those surveyed by <a href="https://theconversation.com/leading-economists-back-federal-government-action-to-curb-rising-gas-and-electricity-prices-19383">The Conversation</a> this month, would prefer the tax was paid to the victims of ultra-high prices in cash, rather than in subsidised prices, because it would encourage them to get off gas.</p>
<p>But Kennedy (and probably Chalmers) believe the ultra-high prices are temporary. Both want to bring down the current ultra-high rate of recorded <a href="https://theconversation.com/why-has-the-rba-raised-interest-rates-for-a-record-7th-straight-month-high-inflation-and-worse-is-on-the-way-193530">inflation</a>. It’s something price subsidies would do, but cash handouts would not.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/grattan-on-friday-we-must-find-a-way-to-get-gas-prices-down-but-how-192398">Grattan on Friday: We must find a way to get gas prices down, but how?</a>
</strong>
</em>
</p>
<hr>
<p>The two-step nature of the process is probably why it is taking so long. </p>
<p>Chalmers and colleagues need to ascertain what the exporters are prepared to do about prices if merely asked, and to prepare legislation for a temporary tax – should they need to take that final step.</p><img src="https://counter.theconversation.com/content/194522/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Martin does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Thanks one of the treasurer’s most trusted confidants, we can now piece together what the government’s likely to do next about rising energy bills. Here’s what I expect to see over the next month.Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1923402022-10-13T02:15:49Z2022-10-13T02:15:49ZPolitics with Michelle Grattan: Rod Sims on the gas price crisis<p>The government has flirted with, and now ruled out, changing the Stage 3 tax cut in the October 25 budget, which appears set to be dominated by some deep spending cuts. In the longer term, however, debate will continue over the need to reform Australia’s tax system, as the calls on revenue to finance big programs increase. </p>
<p>Meanwhile, the government is locked in a battle to get high domestic gas prices down, with its light touch policy towards the gas producers not having much impact.</p>
<p>In this podcast, Michelle Grattan talks with Rod Sims, former chair of the Australian Competition and Consumer Commission (ACCC), and now a professor at the Australian National University’s Crawford School for Public Policy, on tax, gas and privatisation. </p>
<p>Sims says tax reform should look beyond income tax. “We have plenty of other ways to raise taxation […] we should be altering the existing petroleum resource rent tax because I think it’s flawed and we can get more money out of that pretty well straight away”. This change could raise “billions per year”.</p>
<p>Advocating a more robust taxing of resources, Sims says: “You’ve got high mineral prices, high gas prices all around the world. That’s causing harm in Australia as well as elsewhere. Yet we’re not getting enough tax from them. I think that’s a really unhealthy situation to be in.” </p>
<p>Sims also criticises the way privatising state assets has been done, and urges changes for the future to ensure competition.</p>
<p>“We should stop privatising assets in ways that see monopolies in private hands without any regulation and often with arrangements to stop them facing competition. I think we’ve got to have tests for making sure we do these things in a competitive way with proper regulation […] if you have three bread shops that you can buy bread from, you get a much better deal than if the only choice you have is one bread shop.”</p><img src="https://counter.theconversation.com/content/192340/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Michelle Grattan talks with Rod Sims, former chair of the ACCC, now a professor at the Australian National University's Crawford School for Public Policy, on tax, gas and the budget.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1909902022-09-20T12:35:39Z2022-09-20T12:35:39ZGovernment announces inquiry into childcare costs, while Chalmers promises ‘conversation’ about budget challenges<figure><img src="https://images.theconversation.com/files/485540/original/file-20220920-3487-zi5w9q.jpg?ixlib=rb-1.1.0&rect=21%2C0%2C4770%2C3196&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Dan Himbrechts/AAP</span></span></figcaption></figure><p>The Albanese government will set up an inquiry into the increasing cost of child care, which will start in January and run for a year. </p>
<p>Childcare costs have risen by 41% over the last eight years. </p>
<p>The inquiry will be done by the Australian Competition and Consumer Commission. Next month’s budget will include $10.8 million to fund it. Government sources emphasised the probe would be very rigorous and operators would be put on the spot to explain high fees. </p>
<p>Meanwhile treasurer Jim Chalmers on Tuesday announced the budget outcome for the financial year just ended will be nearly $50 billion better than anticipated at the time former treasurer Josh Frydenberg’s delivered his budget in March. But Chalmers insisted this was largely due to temporary factors and next month’s budget would be difficult.</p>
<p>Figures (to be finalised and released in detail next week) would show a deficit for 2021-22 of “a little bit north of $30 billion” – compared with the earlier projected deficit for 2021-22 approaching $80 billion. </p>
<p>Chalmers said the deficit in the October budget for the current financial year was expected to be higher than last financial year’s outcome. </p>
<p>Labor’s more generous child care scheme starts mid-next year, and is being promoted by the government as both easing cost-of-living pressures and encouraging workforce participation. The government resisted pressure from some participants at the jobs summit to bring the start forward to January. It said that would be both expensive and present operational difficulties. </p>
<p>Next week Education Minister Jason Clare will introduce the legislation for the scheme, which Labor promises will make childcare more affordable for 96% of families with children in the system. </p>
<p>Chalmers said Labor’s plan would cheapen childcare for more than a million families. This meant “parents will be able to work more hours if they want to”. </p>
<p>“It shouldn’t cost parents more than they earn to put their kids through childcare. But for many families, that’s the challenge they face – when it’s sometimes cheaper to stay at home and take care of the kids than it is to go to work.”</p>
<p>Chalmers said for many families, childcare costs were “an incredible burden” and it was “important that we deliver responsible cost-of-living relief that delivers a long-term benefit to our economy”.</p>
<p>Clare said the cost of childcare was ‘a massive disincentive to work more hours or more days.</p>
<p>“At the moment about 60% of mothers of children under six who work, do part-time hours. A lot of Australians would want to work more, but if they did all of that pay would be gobbled up by the childcare bill. It means it’s not worth it.”</p>
<p>Giving an outline of the budget outcome and prospects at a news conference with Finance Minister Katy Gallagher, Chalmers said the almost $50 billion improvement in the deficit “is welcome, but the bulk of it is driven by temporary factors”. </p>
<p>In 2021-22 there had been an improvement in revenue of about $28 billion, while on the outlays side, the improvement was about $20 billion from lower than budgeted payments. </p>
<p>There had been a “substantial but temporary lift in taxes”, and commodity prices remained higher for longer than expected. And “billions of dollars that were promised weren’t delivered”. </p>
<p>There had been “a one-off boost in revenues from lower take-up of COVID business support measures – which has the effect of boosting revenues last year, but lowering them in the out-years compared to what was expected because of the accumulation of the deductions that businesses accumulate.”</p>
<p>“The large payment underspends are all about delays in COVID-related spending including the procurement of vaccines and PPE, also delays in infrastructure spending arising from supply chain disruptions and industry constraints, as well as lower payments across health and social security.”</p>
<p>Chalmers said commodity prices had already begun to drop, while much of the undelivered spending would spill over into this financial year and into subsequent years. </p>
<p>The government is set to ditch some of the former government’s undelivered commitments where it can but some will flow through to the coming budget. </p>
<p>Chalmers reaffirmed the petrol excise cut will end next week, but said prices should not immediately reflect the full amount of the restoration because a lot of petrol was in storage. </p>
<p>“There are hundreds of millions of litres of fuel underground in tanks that was purchased at the lower price,” he said. “And so the ACCC and the government expect that the price of petrol shouldn’t shoot up at the bowser on Wednesday night by the full 23 cents if the normal market pressures are in operation.”</p>
<p>Chalmers said the October budget would be “pretty standard”. </p>
<p>But, agreeing with sentiments expressed by Reserve Bank Governor Phil Lowe last week, Chalmers also said “we need to have a national discussion about the structural position of the budget, and how we fund the expectations that Australians legitimately have”.</p>
<p>He pointed to “the five big growing areas of spending in the budget, which are creating pretty substantial structural concerns – health, NDIS, aged care, defence, and the cost of servicing a trillion dollars in debt – all of those costs are growing fast. </p>
<p>"And that’s a combination of the unavoidable and the desirable, and so we do need to have a conversation about that.</p>
<p>"The first budget in October will be pretty standard, pretty solid, a bread-and-butter budget. But there are multiple opportunities in multiple budgets over the course of the next three years or so, for us to properly engage the people in a proper national conversation about the services that we provide, and how we fund them.”</p><img src="https://counter.theconversation.com/content/190990/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Jim Chalmers on Tuesday announced the budget outcome for the financial year just ended will be nearly $50 billion better than anticipated at the time former treasurer Josh Frydenberg’s delivered his budget in March.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1885862022-08-11T06:33:44Z2022-08-11T06:33:44ZAustralia’s News Media Bargaining Code led the world. It’s time to finish what we started<figure><img src="https://images.theconversation.com/files/478679/original/file-20220811-26-s8exbv.png?ixlib=rb-1.1.0&rect=17%2C245%2C3922%2C1706&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Public interest journalism is essential to a well-functioning society, even for those who do not watch or read it. It holds the powerful to account, provides a journal of record and is a forum for ideas.</p>
<p>Australia’s <a href="https://www.accc.gov.au/focus-areas/digital-platforms/news-media-bargaining-code">News Media Bargaining Code</a> was a world-first: set up to value public interest journalism, it’s made it easier for most Australian news media to do deals with global platforms such as Google and Facebook. </p>
<p>It was conceived of and largely formulated by the Australian Competition and Consumer Commission, of which I was chair until March 2022. </p>
<p>It was passed into law by the Australian parliament in February 2021 despite threats, <a href="https://theconversation.com/expect-delays-and-power-plays-google-and-facebook-brace-as-news-media-bargaining-code-is-set-to-become-law-151690">widely publicised around the world</a>, to remove Google Search from Australia and to take all news and more off Facebook.</p>
<p>But while that code has since become a template for several other countries, there remains unfinished business in Australia.</p>
<h2>Fixing ‘market failure’</h2>
<p>Google and Facebook need to have news on their platforms to maximise user attention and enhance the targeted advertising on which their revenue depends, but they do not need the content of any particular news business.</p>
<p>On the other hand, each media business needs to be on each of the platforms.</p>
<p>This imbalance (“<a href="https://www.investopedia.com/terms/m/marketfailure.asp">market failure</a>”) means commercial deals cannot be expected to achieve fair payment for the benefit the platforms get from news content.</p>
<p>The outcome is that less journalism can be afforded and provided.</p>
<p>While not all market failures need to be corrected, this one did and was.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/is-the-news-media-bargaining-code-fit-for-purpose-172224">Is the news media bargaining code fit for purpose?</a>
</strong>
</em>
</p>
<hr>
<p>Prior to Australia’s media bargaining code, news organisations were unable to negotiate with the platforms for any payment for their content. </p>
<p>After the code, they could require the platforms to negotiate, and trigger arbitration if those negotiations broke down.</p>
<p>The mere threat of arbitration evened bargaining power, as both sides wanted to avoid letting an arbitrator decide commercial arrangements.</p>
<p>For those with the market power, the threat of arbitration means they can no longer simply dismiss the claims of those whose products they use.</p>
<h2>$200 million a year more for Australian journalism</h2>
<p>Australia’s code has achieved its main objective. From not being able to engage with the platforms, Australian news organisations are getting deals worth more than A$200 million per year.</p>
<p>While some media organisations used payments from the code to significantly boost staffing numbers (The Guardian increased its staff 50% largely because of the code), for others the outcome is less clear.</p>
<p>But a number of journalists have told me and others that now is a great time to be a journalist, thanks to the media bargains struck under the code.</p>
<p>The code was a world first. While Google and Facebook had made minor payments throughout the world, largely in the form of grants, they had never effectively negotiated commercial deals.</p>
<h2>But some organisations have been left out</h2>
<p>In settling the details of the News Media Bargaining Code in discussions with Google and Facebook, the federal government commendably held its ground. It did make several changes, most of which were of no consequence. </p>
<p>One change that meant a lot to Google and Facebook was a provision that said before considering “<a href="https://cdn.theconversation.com/static_files/files/2247/Designation.pdf">designating</a>” a platform as subject to the code, the treasurer would consider whether it had already made a “significant contribution to the sustainability of the Australian news industry through agreements relating to news content of Australian news businesses”.</p>
<p>In order to avoid designation, Google and Facebook did deals quickly. It meant deals were done commercially, rather than by arbitration.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-news-media-bargaining-code-could-backfire-if-small-media-outlets-arent-protected-an-economist-explains-155745">The news media bargaining code could backfire if small media outlets aren't protected: an economist explains</a>
</strong>
</em>
</p>
<hr>
<h2>It’s time for designation</h2>
<p>There remains, however, a problem. Google has completed deals with essentially all qualifying media businesses. But Facebook has not, by quite some way, leaving companies employing 15-20% of Australian journalists out in the cold.</p>
<p>Among others, Facebook has not done deals with the SBS, Australia’s multicultural broadcaster, or <a href="https://theconversation.com/au/who-we-are">The Conversation</a>, which brings together Australian academics and journalists to publish research-based news. </p>
<p>Both represent some of the purist public interest journalism in Australia.</p>
<p>In my view, Facebook should now be “designated” by the Australian treasurer, so it is forced to negotiate with the remaining media businesses and face arbitration if commercial deals are not reached.</p>
<p>As provided for in its Act, the Treasury is <a href="https://treasury.gov.au/review/news-media-digital-platforms-mandatory-bargaining-code">currently reviewing the media bargaining code</a> and is due to report in September.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/478685/original/file-20220811-13-2nuikr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/478685/original/file-20220811-13-2nuikr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/478685/original/file-20220811-13-2nuikr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/478685/original/file-20220811-13-2nuikr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/478685/original/file-20220811-13-2nuikr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/478685/original/file-20220811-13-2nuikr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/478685/original/file-20220811-13-2nuikr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/478685/original/file-20220811-13-2nuikr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The US is considering a Journalism Competition and Preservation Act.</span>
<span class="attribution"><span class="source">Celil Kirnapci/Shutterstock</span></span>
</figcaption>
</figure>
<h2>Canada, the US, UK and India following our lead</h2>
<p>Australia’s code has been copied in many other countries. </p>
<p>Canada has <a href="https://www.parl.ca/DocumentViewer/en/44-1/bill/C-18/first-reading">legislation</a> out for comment at the moment. An improvement is that the deals need to be reported to the Canadian broadcasting regulator, who would tally them up and publicly report them. </p>
<p>In Australia, the ACCC did this informally and I spoke to media chief executives. This allowed me to say that the deals were worth more than A$200 million per year. </p>
<p>I think it makes sense to formalise reporting as Canada is doing.</p>
<p>The Canadian bill also lists more explicit criteria for exempting a platform from designation, another improvement Australia’s review should consider.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/is-news-worth-a-lot-or-a-little-google-and-facebook-want-it-both-ways-153787">Is news worth a lot or a little? Google and Facebook want it both ways</a>
</strong>
</em>
</p>
<hr>
<p>The United States is debating the <a href="https://www.congress.gov/bill/117th-congress/senate-bill/673">Journalism Competition and Preservation Act</a>, which has key features of the Australian code, but applies only to news businesses below a certain size. This seems workable, given that the mere threat of Australian-style legislation has prodded Google and Facebook to deal with larger companies.</p>
<p>Britain is considering overarching legislation applying to large digital platforms with “<a href="https://www.cooley.com/news/insight/2020/2020-12-01-uk-digital-markets-unit">strategic market status</a>” that will allow a range of codes to be put in place. </p>
<p>The first code being contemplated when the legislation passes, hopefully next year, is one that closely resembles the Australian code.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/stuff-up-or-conspiracy-whistleblowers-claim-facebook-deliberately-let-important-non-news-pages-go-down-in-news-blackout-182673">Stuff-up or conspiracy? Whistleblowers claim Facebook deliberately let important non-news pages go down in news blackout</a>
</strong>
</em>
</p>
<hr>
<p>Other countries are looking at adopting the approach; for instance, India’s Minister for Electronics and Information Technology and Electronics has <a href="https://zeenews.india.com/technology/facebook-google-to-pay-news-publishers-for-using-content-centre-hints-at-big-change-in-it-policy-2486052.html">foreshadowed</a> bringing one in.</p>
<p>In all these countries, as in Australia, Google and Facebook are employing enormous resources to lobby against bargaining codes. The key to success is for media businesses to be united in pressing for change and to lobby political parties to support codes like the News Media Bargaining Code.</p>
<p>Governments can be strong on issues in which they have the support of all of the media and all political parties, as happened in Australia.</p>
<p>If news organisations get paid for their content in enough countries, journalism’s future might just become secure. It’s something worth achieving.</p>
<hr>
<p><em>Disclosure: Facebook has refused to negotiate a deal with The Conversation under Australia’s News Media Bargaining Code. In response, The Conversation has called for Facebook to be “designated” under the code. This means Facebook would be forced to pay for content published by The Conversation on its platform.</em></p><img src="https://counter.theconversation.com/content/188586/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rod Sims was chair of the Australian Competition and Consumer Commission until March 2022 and helped design Australia's News Media Bargaining Code.</span></em></p>News organisations employing employing 15-20% of Australian journalists still don’t get paid by Facebook.Rod Sims, Professor in the practice of public policy and antitrust, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.