#marketconcentration

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A Much Deeper Problem Facing Our Economy

Productivity in Australia has been on a downward trend for decades. The latest moribund GDP figures for this quarter are not anything particularly new. Yes, interest rates are hurting the economy, as they are supposed to be according to monetary policy in the Reserve Bank’s inflation beating crusade. The greater diminishing productivity trend is, however, an indication of a much deeper problem facing our economy. Successive governments have overseen the concentration of ownership in nearly all of our business sectors. Duopolies have replaced any real competition in our markets and this damages productivity. Capitalism works optimally when there is competition between businesses operating within sectors of the market. These corporate giants have circumvented this by gobbling up their competition via take overs and mergers. The ACCC and ASIC have been asleep at the wheel in preventing the overconcentration of corporate power in Australia. Figure 4         Impact of lower productivity growth on real GDP growth (annual percentage change)

Source: Treasury, (Canberra: Treasury, June 2021), 53. https://www.aph.gov.au/About_Parliament/Parliamentary_departments/Parliamentary_Library/pubs/BriefingBook47p/AustraliasProductivitySlowdown#:~:text=UsingproductivitycyclesFigure3,throughtotheearly2000s.

Australia’s Non Competitive Domestic Markets

Australia has become a rentier economy, where these duopolies charge their clients fees, subscriptions, and rents rather than being dependent upon productivity growth for their profits. Consumers and B2B clients are billed ‘user pays’ via charges, leases and fees under this economic model. The absence of any real competition within these sectors means innovation and productivity are not being driven by market forces. Similarly, these big companies control the employment market within their sphere’s of influence because they are the only employer in town. Wage growth has been largely stagnant due to this factor for decades in Australia. Yes, there has been some growth in wages over the last couple of years in response to the hikes in cost of living following high inflation. However, it has not kept pace in this regard and real wages have fallen in terms of their buying power within the economy.

Australian Banks Make Record Profits & The Scamming Of Customers Goes On

Governments Have Failed Our Economy

Our governments have not tackled the over concentration of corporate power within the economy. The agencies tasked with protecting competition are toothless tigers. Underfunded and staffed by people in thrall to the business world via future job opportunities, they have been ineffective in doing what their agency was set up to do. There seem to be no consequences for these failures and white collar collusion thrives downunder. Whilst our political parties take campaign donations from corporate sources and allow the free movement of civil servants/politicians from the public to the private sector things will not improve in this regard. The disinterest within the Australian community to endemic corruption like this will see it continue to the detriment of the economy and our lives. The NACC does a better job than the invisible man at keeping a low profile and so far has done bugger all to address long standing scams within our political and governance systems. Economists and central banks harp on about the importance of productivity to the economy but little has been said or done about the lack of competition within Australia. These folk have been wilfully blind to the effects of this overconcentration of corporate power within our business sectors for too long. Nobody has stood up to the banks and the big end of town during the decades of mergers and acquisitions. Rather, they have been cheerleaders toasting their success and increased size in the corporate quest for ever more market share. The neoliberal dance has been a conga line of CEO and shareholder aggrandisement sashaying its way across our economy. We now live in a world where consumers are struggling in a cost of living crisis, which shows no sign of abating any time soon. Duopolies can price set because there is no real competition for consumers to choose from. Consumers have lost all their market power in the manipulated version of capitalism currently operating in Australia. This is all economics 101 but our timid governments in thrall to zombie neoliberalism  show little sign of doing something about it. You can have all the reviews in the world but if you don’t actually do something nothing changes. Unfortunately, our 21C politicians live in a talk fest alternative universe where empty words are their only currency, it seems. “The ACCC welcomes today’s announcement by the Australian Government that it will direct the ACCC to conduct an inquiry into Australia’s supermarket sector, including the pricing practices of the supermarkets and the relationship between wholesale, including farmgate, and retail prices. The year-long inquiry will also examine competition in the supermarket sector and how it has changed since the ACCC’s last inquiry in 2008.” (https://www.accc.gov.au/media-release/accc-to-examine-prices-and-competition-in-supermarket-sector) We have already had several reviews into the fact that Coles and Woolies control 65% of the market share within the grocery sector. Australian governments love to be seen to be considering doing something without actually doing anything – it happens throughout their remit. Not wanting to offend a vested interest is no way to govern if you are fair dinkum about enacting real change for the better.

Photo by Pixabay on Pexels.com Money Laundering Via International Investments In Property In Australia, we have been waiting for 17 years for the loopholes to be closed to international money launderers in the property market. Despots and organised crime have been investing in Australian property for decades and Aussie middlemen have been growing fat on the fees they charge to facilitate such investments. Real estate agents, accountants and lawyers do not want any tightening up in this regard for obvious reasons. Successive governments have been faffing about in this space and dragging the chain. White collar collusion is thick on the ground downunder and nobody ever gets busted. This illicit investment pushes up property prices in the capital city markets around the nation. Poor Productivity A Symptom Of Tainted Markets We have a much deeper problem facing our economy long term and that is a downward trend in productivity over decades. Businesses have gamed the system and are scamming ordinary Australians. The lack of competition in our markets is hurting productivity and price gouging to the detriment of consumers more generally. Our central bank is too embedded with big business to call this out. Our governments are too afraid of hurting vested interests. Our corporate watchdogs are, in practice, owned and fed by the very corporations they are supposed to be policing. It is a bad puppet show really with the ACCC and ASIC going through the motions like a kabuki performance with no real substance. It is time for some action on this score but we wont get it until the political party donations and job offering carrots are banned. Corporate power needs to be tackled by a government committed to cleaning up the rigged game. Robert Sudha Hamilton is the author of America Matters: Pre-apocalyptic Posts & Essays in the Shadow of Trump. ©WordsForWeb

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Grocery Stores Under Fire: Are They Cheating Us? #anticompetitivepractices #commercefairness #ConsumerPriceIndex #consumerprotection #corporateaccountability #COVID19pandemic #Economicdownturn #economichardship #fairmarketpractices #FederalTradeCommission #fooddeserts #freshproduceaccessibility #governmentintervention #grocerystores #laborcosts #marketconcentration #NationalGrocersAssociation #pricefixing #pricegouging #pricemanipulation #ruralareadevelopment #supplychaindisruptions

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ACCC Failings: What Have They Been Doing?

The ACCC stands for Australian Competition and Consumer Commission. Did you note that term ‘Competition’? This body is supposed to ensure that healthy levels of competition exist in markets. Yet, we in Australia have the highest levels of market concentration ever seen in our history. ACCC failings: What have they been doing? Down under in Oz we pay lip service to things to avoid actually doing anything about scams and fudges in the business world. Toothless tigers are our speciality when we establish the various commissions and overseeing bodies. Governments make sure that regulators like the ACCC don’t have the funding or the necessary connections to really achieve what their remit states. “The market power of Australia's largest firms has grown in the last two decades, and price mark-ups have increased. "Over recent decades, there have been a number of significant changes in the Australian economy," he says in a forward copy of his address. "The job-switching rate has fallen. The business start-up rate has declined. The largest firms have increased their market share. Mark-ups have increased. "All this suggests that the Australian economy has become less competitive." Andrew Leigh, the federal Assistant Minister for Competition, Charities, and Treasury” - (https://www.abc.net.au/news/2022-08-25/andrew-leigh-speech-large-firms-are-dominating-the-economy/101368066)

A couple of decades of neoliberalism permeating through our governments has seen a laisse faire approach to monitoring markets and corporations. The mantra ‘the market will look after itself,’ has been the excuse vigorously proffered by ministers sweetened by corporate largesse in the form of campaign donations and kickbacks. Personally, I am amazed that no one is pointing the finger at the champions of neoliberalism who ushered in many of the moves that see us in the mess where we find ourselves. The smug, leering face of Tony Abbott and his cronies for instance.

Australian Competition & Consumer Commission Missing In Action

The ACCC are an obvious scapegoat, as their job was to be the gatekeeper to prevent market concentration in the Australian economy.   “New research by the e61 Institute assesses a change in the 2008 Australian merger guidelines, finding: The change resulted in the number of deals reviewed decreasing by 75%. A significant portion of this decrease came from deals that were not publicly notified. The average time spent reviewing a deal also doubled after this change, suggesting greater resources were spent on larger transactions. With Australia’s voluntary disclosure regime, smaller transactions are potentially leaving blind spots in our understanding of the competitive landscape in Australia. An important starting point for merger reform in Australia will be obtaining a clearer picture of merger activity.” - (https://e61.in/as-the-clock-strikes-midnight/)

Qantas flying off with your money

Role Of The ACCC

“The Australian Competition and Consumer Commission is an independent Commonwealth statutory authority. We are Australia’s competition and consumer regulator. We promote competition and fair trading and regulate national infrastructure to make markets work for everyone. We make markets work by: protecting consumers and ensuring fair markets by enforcing the Competition and Consumer Act 2010 and the Australian Consumer Law collecting information from consumers and businesses to help us understand what issues cause the most harm to Australian businesses and consumers and where best to use our resources reviewing and assessing company mergers and asset acquisitions, authorisation and notification applications in Australia promoting competition in the communication, bulk water, postal, and transport industries.”

Woolworths record profits, high prices for consumers but no real competition. Australians Hoodwinked By Big Business Market concentration means price setting and higher prices for consumers and other businesses. It, also, means falling productivity and low wage growth. Lack of competition denudes capitalism and free market economies from functioning as they should. Control of the market and rent seeking takes wealth from us and delivers it to an ever smaller percentage of our population. Over the last 10 years, in particular, we have seen the rich grow much richer and the rest of us lose out becoming less well off. Very low wage growth and now a cost of living crisis is stripping money out of our hands as we speak. The housing crisis and the disappearance of social housing over the last 20 years – who do you think is responsible for this? Neoliberal champions! Market forces manipulated by powerful corporations and rampant neglect by the monitoring bodies. The ACCC has overseen this economic shift and done next to nothing about it.

Neoliberal champions who led us where we find ourselves - ripped off by our own economy! How much do the biggest firms control? Three stark examples: the US vs AustraliaIndustryMarket share of top four AU firmsMarket share of top four US firmsCommercial banking94%Supermarkets91%Liquor retailing78% This graphic was taken from a 2016 article In Choice Magazine. It compares us with what is happening in America at that time. https://www.choice.com.au/shopping/everyday-shopping/supermarkets/articles/market-concentration Think of all those sectors where market concentration means an oligopoly controls it. The big 4 banks, Coles & Woolies, big 4 consultancy/auditors, Qantas & Virgin, cinemas, real estate, Telstra & Optus, petrol stations, liquor retailers, News Corp & Nine Fairfax control the media via newspapers, TV & radio networks with the exception of the ABC, health insurance, general insurance, internet providers, chemists, mining, car companies, department stores, and all these dominating corporations have tentacles reaching into other industries and sectors. Many of these companies spend vast sums on advertising to implant positive messages in our psyches. Think of Qantas and their emotive spirit of Australia ads, banking ads are full of feel good stories about home ownership and growing together, insurance ads likewise tell a helping hand narrative in times of dire need, and so on. Meanwhile, we the consumers are being ripped off via the absence of any real competition. Indeed, quite a few of the other players in the market are actually owned by the dominant corporations in the oligopoly. ACCC Failings: What have they been doing? The ACCC has completely failed us in the Australian economy and there should be an enquiry into this. Governments are complicit, so this will not happen without real push from the wider public. Robert Sudha Hamilton is the author of Money Matters; Navigating Credit, Debt, and Financial Freedom.  ©WordsForWeb

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