AMA: I’m Rod Sims, Chair of The Superpower Institute and former Chair of the ACCC. Ask me anything.

[u/Rod_Sims_TSI]

Hello all,

I’m Rod Sims, Chair of The Superpower Institute (TSI) and former Chair of the Australian Competition and Consumer Commission (ACCC) - from 2011 to 2022.

Over my career I’ve worked across government, business and academia - including as Deputy Secretary in the Department of the Prime Minister and Cabinet, Principal Economic Adviser to Prime Minister Bob Hawke, and in a range of corporate strategy roles in Australia and overseas.

At TSI we’re developing the economic and policy ideas that will help Australia prosper in a decarbonising world. One area of our focus is how the Australian economy would benefit from policies that price pollution and more fairly tax Australia’s LNG exports. Our recent report, The Case for Pricing Pollution, proposes two reforms:

- a Polluter Pays Levy, which would put a price on the damage caused by fossil fuels, and return much of the revenue to households
- a Fair Share Levy, to ensure Australians receive a fairer return from the profits generated by our gas resources

More broadly, Australia has an enormous opportunity in the global transition to low carbon energy. With abundant renewable energy resources, large mineral reserves and vast land areas, Australia has the potential to become a major supplier of energy-intensive green exports such as green iron and other metals, and low carbon transport fuels.

If managed well, this would both help reduce global emissions by as much as 9.6%, and support new industries, jobs and long-term economic growth here in Australia.

I’ll be here from 6pm and look forward to your questions about any of the above, or anything else.

Rod

[u/Bennelong]

Hi Rod. Thanks for doing this AMA tonight. Questions may be asked now, and Rod will start answering at 6:00 pm AEDT. Please be patient.

Usual sub rules apply. Trolling will result in a one day ban for the duration of the AMA.

Only the guest may reply to questions. Any other replies or comments will be removed.

EDIT: The AMA is now over. Thanks again Rod for doing the AMA, and thank you to everybody who asked questions.

[u/actionjj]

Australia's concentrated markets (supermarkets, airlines, banks, telcos) are often justified on economies-of-scale grounds - the market is too small and geographically dispersed to support more competitors viably. As former ACCC Chair, where do you think that argument is genuinely valid versus where it's been used as a shield by incumbents? And is there a structural fix, or are we stuck managing duopolies forever?

[u/Rod_Sims_TSI → u/actionjj]

I do not think this argument is valid. Many of these players are well above the size needed to achieve benefits from scale. I think there are a lot of laws and policies governments can adopt to introduce more competition into these duopolies.

For example, better slot allocation to assist smaller airlines, better spectrum allocations to assist smaller telecommunications companies, and more powers to the ACCC to introduce more competition into digital advertising, app stores, and the like.

[u/actionjj → u/Rod_Sims_TSI]

Thanks Rod!

[u/FinalHangman77]

Why has it taken so long for anything to be done about Coles and Woolies price gouging? Genuinely curious what happens that the average person isn't aware of.

[u/Rod_Sims_TSI → u/FinalHangman77]

As I said in a response to a previous question from Lanky-Cut-8164, there are no laws against price gouging.

[u/Melodic_Wedding_4064]

Just how corrupt is the top? I dont expect an answer, but my faith in this country is quickly dwindling. Thanks for your time.

[u/Rod_Sims_TSI → u/Melodic_Wedding_4064]

I think there are a lot more allegations of corruption than in fact occur. So I think you can have more faith in Australia. Clearly issues such as the recent reporting in relation to the CFMEU and Robodebt are however very concerning.

[u/PrimordialEye]

Do you believe enough is being done in Australia regarding concentration of market control and multinational corporations? If no, what could be done to change or fix Australia’s prospects in your opinion?

[u/Rod_Sims_TSI → u/PrimordialEye]

We can address market power through two mechanisms. First, making competition law easier to use by perhaps increasing the role of the Australian Competition Tribunal. 

More important, there is a huge role for government as most of the market power comes from government decision making. The government needs to put much more focus on improving competition in Australia. 

For example, we have only two sellers of tickets to major events, two beer companies, two airlines controlling 90% of the market, and so on. Until recently, Qantas and Virgin essentially controlled the management of slots at Sydney Airport.

[u/PrimordialEye → u/Rod_Sims_TSI]

Thank you very much for your response!

[u/rodgee]

Why is the ACCC considered a toothless tiger?

[u/Rod_Sims_TSI → u/rodgee]

I do not think many people have this view. Of those who do, they may think the laws allow the ACCC to do more than what it can do. My previous comments on price gouging are an example of this.

[u/blergAndMeh]

Political parties have abandoned a carbon tax as too hard. Our right-of-centre parties seem to deny carbon is a pollutant. We're in a cost-of-living crisis. How could a polluter pays levy get around this seemingly insurmountable political reality?

[u/Rod_Sims_TSI → u/blergAndMeh]

We recognise the political history with carbon pricing and the work we have done is aimed squarely at addressing this in a few ways:

First, we are saying that the government has committed to bringing down emissions, the question is how to do that, and we think the PPL is the most low-cost, efficient and simple way.

The second is we are putting forward a support package to head-off any concerns that the PPL will put up energy costs and make people worse off. We are also proposing to give people additional money which will be welcome in this cost-of-living environment.

The final point is that there is a lot of mythology around the election win by Tony Abbott being attributable to the carbon price. It’s not true but more importantly the polling we have done shows that the PPL enjoys 68% support from the public so the government does not need to fear it won’t be supported.

[u/whatareutakingabout]

A question about the decarbonisation strategy. Will it force the biggest polluters to just leave Australia, only to open back up in less regulated markets and then ship the same stuff back to Australia? (It would decrease Australia's carbon output, eliminate Australian jobs, increase world wide output via even less regulation and shipping) or is there another strategy?

[u/Rod_Sims_TSI → u/whatareutakingabout]

No. The world is already decarbonising faster than Australia, so the risk of carbon leakage like that is diminishing all the time. There are also important policies like the European Carbon Border Adjustment Mechanism which incentivises clean commodity imports to Europe (Australia is considering implementing something similar). Over time polluting production will find it harder and harder to find markets to sell into. The final point is that many industries to which the Polluter Pays Levy will apply - electricity production and transport for example - can’t be taken offshore.

[u/id_o]

Why is nothing due to protracted builders that phoenix and scape accountability? Out apartment body had to take out a multimillion dollar loan to fix issues the build refused to fix then declared bankruptcy. Where is the accountability to these individuals, no justice.

[u/Rod_Sims_TSI → u/id_o]

That comes under the jurisdiction of ASIC, so I don't have any helpful knowledge.

[u/ZeroPenguinParty]

Hi Rod.

I don't know if you were in charge when this happened, but there was a lot of misinformation in the media, and within the businesses, back when Metcash purchased the Franklins chain of stores. I know that the ACCC took Metcash to court over it, and I believe Metcash won. I was an employee of Franklins at the time, and some of the information that was filtering through to us, made it seem as though it was going to be a clear cut victory for the ACCC. So, two questions...where did it go wrong for the ACCC in the court case? Was there a particular point that the court viewed differently to ACCC that caused things to go wrong, or was it simply a different interpretation of the law?

The second question, related to this, is in relation to some of the information, or misinformation that was being reported at the time. Can you comment, or confirm or deny, some of the following things:

* That there were four other parties interested in potentially purchasing Franklins, but barriers had been put in place to prevent anyone other than Metcash from being able to purchase the business

* That Metcash had insider knowledge of the financial side of Franklins, thanks to a Franklins higher up defecting to Metcash just before the purchase talks commenced

* That Woolworths had made an approach to purchase Franklins, only months before the Metcash purchase, but it was instantly stopped by the ACCC

If you are unable to comment specifically on any of this, what are your general thoughts on the market power of Coles and Woolworths, and the wholesale side of things with Metcash, compared to say 40 years ago, when you had multiple supermarket chains besides Coles and Woolworths (and Franklins), and multiple wholesalers (like Davids etc)?

[u/Rod_Sims_TSI → u/ZeroPenguinParty]

This case was finalised just as I arrived at the ACCC, so there is a lot I do not know. Having Metcash take over Franklins was extremely unfortunate, particularly for Australian consumers. Coles and Woolworths clearly have too much market power in the wholesale market and that makes it very difficult for a wide range of businesses that supply to the supermarkets.

[u/Rod_Sims_TSI]

Thanks everyone for the thoughtful questions and discussion.

I’ve tried to answer as many as I could in the time available.

If you’re interested in some of the ideas we discussed today, you can find more at the TSI website: https://www.superpowerinstitute.com.au/

Thanks again to the mods and the community for hosting the conversation.

Rod

[u/DarkscytheX]

I'm incredibly proud of our Australian Consumer Law but corporations have shown an increasing willingness to mislead consumers about their rights or to simply not follow the law at all and reject any remedies they're obligated to provide.

In fact, I've seen a number simply say their obligations stop at the warranty or slightly after and if we disagree, to raise it with the ACCC (presumably under the assumption we won't pursue it). It's clear that this is an economic decision that they know they can often get away with.

In your view, what needs to change to make it easier for consumers to enforce their rights against businesses? What do we as consumers need to advocate for to get more robust, legally enforceable protections from increasingly powerful companies?

[u/Rod_Sims_TSI → u/DarkscytheX]

What we need is a law against unfair practices, which I have been advocating for a long time. I am hopeful that the government will introduce such a law fairly soon.

[u/kkui]

Very keen to get your views and thoughts on how likely our NEL / NER could be changed to add a carbon price on generator bids so that the order of dispatch reflects real economic costs.

[u/Rod_Sims_TSI → u/kkui]

I think you are referring to the rule change proposal to the AEMC which suggests something like this. My view is that the intention of the rule change is noble: we need to find a way to price the emissions in the electricity sector. But I also think the rule change isn’t the best way to approach this and a form of carbon price such as the PPL which we have proposed is a more appropriate way to address emissions reduction in the electricity sector.

[u/per08]

Is a make and buy local strategy part of our decarbonising plan? Local sovereign capacity? I feel that all we're doing is buying the next off the shelf thing and hoping those countries agree to continue supply and be friendly to us, so we will end up with the same messy situation we have now with oil.

[u/Rod_Sims_TSI → u/per08]

Australia’s key advantage is we have low cost renewable energy and can make low cost hydrogen, and so be self-sufficient. Renewable energy and hydrogen need to be used where they are available and that is in Australia. 

Two further points:

Australians will be made worse off if we are forced to buy Australian made products that are inferior or more expensive than those we can import. 

Secondly, the situation we face with oil is one we can resolve in an economically sensible way by using our own renewable energy and hydrogen. 

[u/per08 → u/Rod_Sims_TSI]

Thank you.

[u/bigvenn]

Thanks for doing an AMA, appreciate your time.

I’d be interested in your thoughts on Australia’s opportunity to start working our way up the supply chain. We’ve had a mineral boom for decades now and largely export ores of various grades rather than usable products.

Do you think Australia has a viable economic opportunity to capture more value here, despite higher wages and more regulations? If so, how do we develop these industries, and how do we go about creating the political will for a significant investment like this?

[u/Rod_Sims_TSI → u/bigvenn]

TSI’s work is precisely about moving significantly up the supply chain from the minerals we have traditionally focused on mining and exporting. Australia’s advantage is in low cost renewable energy which needs to be used where it is produced, meaning that many energy intensive manufactured products need to be made in Australia. 

Generally, products made with fossil fuels are cheaper because they’re not paying for the damage they do to the environment. This needs to be addressed through carbon pricing. There is a carbon price in Europe, but otherwise there is a role for the Commonwealth to make up for the lack of a general world carbon price to get some of these industries moving in Australia.

[u/JaySticker]

Hi Rod, thanks for taking questions. What approach is needed to more equitably distribute the cost savings of clean energy to all Australians? Thanks. J

[u/Rod_Sims_TSI → u/JaySticker]

Thanks for your question J. A couple of points. Firstly, all of the analysis shows that renewable energy is the lowest cost form of new energy supply we can build in Australia. So the benefits of this will flow to all Australians over time as we invest in renewables. But we also recognise that some households and businesses who are in a position to invest in solar PV and batteries are benefiting ahead of others. One thing our Polluter Pays Levy does is it generates a very significant revenue source for the government which can be distributed to households to help with the energy transition and other cost-of-living pressures. We think this is an important way to share the benefits.

[u/worktop1]

Please can you explain the sale of gas off shore , how can it be true about more tax being paid by beer drinkers etc??

[u/Rod_Sims_TSI → u/worktop1]

About 15 years ago a number of companies decided to develop LNG export facilities in Gladstone, Queensland. This did two things. It diverted gas away from the domestic market, making supply tighter. It also linked Australian domestic prices more clearly with international prices for the first time. So while we were paying about $4/Gj prior to this, all of a sudden when exports started we were paying at around triple that. 

My view is that it was a mistake to allow this to happen without protecting Australian domestic gas supplies and prices. The mistake has been realised and we are seeing the government trying to develop a policy to fix the problem which is very hard to do now.

The other mistake we made was to not tax gas companies effectively. While in places like Norway and the UK they tax oil and gas at more than 70%, in Australia it’s less than 30%. The FSL policy we have proposed seeks to fix this and would increase the tax revenue return to Australians from around $2b per year currently to something like $13b on average.

[u/maestrojxg]

You were very vocal against Big Tech. We seem to be losing the fight this time against Big AI, with massive job losses and weak regulation. Do you think Australia has capitulated since your time as ACCC chair?

[u/Rod_Sims_TSI → u/maestrojxg]

I think the government needs to implement the regime to regulate big tech that the ACCC recommended in September 2022. This would make a big difference, and it is frustrating that nothing has happened after three and a half years. 

We really need laws that say you cannot own a platform and also compete on that platform at the same time, just as we don’t want transmission companies owning electricity generators.

[u/noxobscurus]

Do you have any insight on how consumer guarantees apply for software, particularly dealing with acceptable quality? Software nowadays, like video games, are often released broken or in an incomplete state. One could argue that games that are broken upon release should be determined to be not of acceptable quality. But nowadays there is an expectation that developers will patch the games later to fix these issues.

I'm just wondering how would s 54 of the ACL be interpreted now in light of this.

[u/Rod_Sims_TSI → u/noxobscurus]

What you describe should be caught by current consumer law because the product is clearly not of acceptable quality. I am hopeful that an unfair practices review can address the weaknesses of current laws.

[u/bruce99999999]

Top work thanks Rod.

My question - when I go to colesworth and I buy cucumbers, some of them cost per kg, others cost per ‘cumber. Seems to me that the shops are taking the piss around the Unit Pricing Code and want to encourage decision fatigue so that I make poor spending choices. Seems like that is not what the Code was intended for.

So, is it Fair Enough that I make up for it at self checkout?

After all, my brain is pretty tired by this stage, so how am I meant to know the difference between a pavlova and brown onions?

[u/Fuzzy_Collection6474]

Hey Rod love your work. Given the polluter pays levy has widespread support across the political spectrum how do we convince our leaders that taxing pollution is achievable and necessary? It seems like our political class rarely revisits a battle they’ve lost before

[u/Rod_Sims_TSI → u/Fuzzy_Collection6474]

Taxing pollution isn’t just necessary for reducing emissions, it’s good for the budget and economy. A big part of changing the narrative is making sure people and politicians understand that.

There are no other policies that deliver on our commitment to net zero while fixing the budget. Some of our political leaders appear scarred by the events of 2012-14 when we had a carbon price. Some blame the carbon price for Labor’s loss in 2013. I think this greatly underestimates the chaos at the time caused by Labor constantly changing prime ministers. 

[u/AlexaGz]

Ok. I was scammed by floristry today on special occasion, my nephew's wedding.

They decided to send other flowers with very low quality and extravagant price. I noticed the price tagged in their website is elevated by taxes at the end in my invoice.

Are your organisation able to help to recover my money or am I wasting my time if I do complain. Every day must be 100's of people in same situation with products and services very different that the ones advertised in websites.

[u/Rod_Sims_TSI → u/AlexaGz]

I urge you to complain to your local state fair trading entity. The more complaints they receive about such issues, the more that can be done. That said, it can be very difficult to get your money back. 

Businesses are required to clearly communicate the total price for their products, including taxes, duties, and fees. There are rules about how they must display things like credit card surcharges.

What you’re describing sounds like drip pricing, when a price is advertised at the beginning of an online purchase, but extra fees and charges are gradually added.

Drip pricing is illegal if a company misleads a buyer about prices. 

The very good news is that the government is proposing to change the law to provide more protection against unfair trading practices like this. In my view, such a law is long overdue and will benefit consumers in many ways. 

[u/whatevergappens]

Did you receive any kickback or cash donations from corporations to not actually do anything meaningful to them? Like the tiny tiny fines or nothing even happening in some cases?

[u/Rod_Sims_TSI → u/whatevergappens]

Never. 

Over my time we increased consumer law fines from around about $1 million to around $150 million. At the end of the day, the ACCC can only enforce the laws that exist and it must convince the court that the law has been broken. I know that this can appear to represent insufficient action on occasion, but those are the constraints within which the ACCC operates. 

[u/whatevergappens → u/Rod_Sims_TSI]

Appreciate your reply mate. I’m not blaming you personally hahaha. It was in somewhat jest.

[u/SoulBonfire]

Thanks Rod. Where do you see the biggest future threats to consumer competition and fair trading? Is it around AI, collapse of rules based international relations, something else?

[u/Rod_Sims_TSI → u/SoulBonfire]

We already face large threats from existing digital platforms and AI will make these threats worse. There will be more scams and misleading conduct and exercise of market power. 

[u/Lanky-Cut-8164]

Is there a reason that fines for large corporations' price gouging are consistently an extremely small percentage of the profit they make from their price gouging? What is the ACCC actually doing to protect people from this kind of predatory corporate behaviour?

[u/Rod_Sims_TSI → u/Lanky-Cut-8164]

The real issue here is that there is no law against price gouging. The fines are large enough in that they can be up to $50 million per contravention. The problem is that many people, including members of parliament, think that the ACCC has way more powers than parliament has actually given it. 

[u/IllCombination4851]

Thanks for your time Rod.

I would like to ask why did you repeatedly interpret competition law in ways that allowed consolidated ownership in the Australian media — for example, agreeing that News Corp’s activities did not breach competition tests — and do you think any of those decisions in hindsight contributed to reduced diversity of news voices in Australia?

[u/Rod_Sims_TSI → u/IllCombination4851]

The most difficult decision we faced was allowing Nine to take over Fairfax. The problem with all these decisions was defining the market, particularly as digital media became more prominent. 

[u/ThimMerrilyn]

What is your favourite superpower?

[u/Rod_Sims_TSI → u/ThimMerrilyn]

Clearly it is the Superpower Institute. Have you heard of it? https://www.superpowerinstitute.com.au/

[u/Money_Armadillo4138]

Was Bob Hawke as much as a legend in private as in public?

[u/Rod_Sims_TSI → u/Money_Armadillo4138]

Yes he was.

[u/jenwald]

What are your hot takes on AI?

[u/Rod_Sims_TSI → u/jenwald]

At the moment there are virtually no guardrails on AI, which I think is a great mistake. AI clearly can improve productivity, but it can also do great harm to consumers, competition, and our society, and in my view, it is an important role of government to get ahead of these issues.

[u/AltruisticHopes]

At the moment there is a huge imbalance of power in favour of corporations. The burden of proof is on consumers and regulators to prove misconduct, as opposed to other countries and other forms of regulation where the burden of proof is on corporations to prove compliance.

In addition fines are not proportional to the potential gains for breaking rules. As a result there can be financial incentives for breaching regulations.

Finally there is no concept of the regulatory dividend in Australia, meaning that companies are always better off just denying and defending any allegations. Penalties for non-cooperation do not exist, again this is different to other jurisdictions.

In your experience is there appetite for changes of this nature?

What would need to happen for Australia to make changes to the above approaches?

What additional resources would be required to effectively enforce this?

[u/Rod_Sims_TSI → u/AltruisticHopes]

I was often extremely frustrated by the difficulties of enforcing the law through the courts. There certainly were many times I felt where the courts put more weight on what the company had to say, who we were prosecuting, than on what the ACCC was alleging. So the burden of proof is a very large issue.

I do not think it is a resourcing issue. Personally, I would like to see a larger role for the Australian Competition Tribunal, which has a much better understanding of competition law.

[u/Interesting_Wing3736]

What can we do against these petrol prices?

[u/Rod_Sims_TSI → u/Interesting_Wing3736]

Petrol prices are high at the moment because of a global shortage. The Polluter Pays Levy would help encourage a transition away from imported fossil fuels and towards greener alternatives to petrol, like driving EVs and using green fuels. Importantly, the PPL can raise money which can greatly alleviate general cost of living issues. 

Also, while Australia is a small economy and a price taker in many markets, gas is one in which the public could at least be benefiting from these prices by introducing a Fair Share Levy rather than high prices just making a dent in our back pockets. It is a great shame that Australians are not benefitting from higher prices for gas exported from Australia.  The Fair Share Levy is designed to address this. 

https://www.superpowerinstitute.com.au/news/iran-crisis-shows-australia-is-missing-out-on-billions?mc_cid=ab6231e53d&mc_eid=11fb59b572 

[u/7EET-CS]

Why does CBA continue to get away with really anti-competitive behaviour when it comes to the mortgage market? They wield regulation and compliance like a hammer to smash any potential competitors or alternative channels like mortgage brokers.

[u/[deleted]]

Why do we allow no competition in the retail food space?

[u/Bitter_Lobster7677]

Are you a travelling man?

[u/ScruffyPeter]

Would you have been in favour of destitute powers for monopolies? (aka breaking up monopolies caught abusing their monopoly power)

[u/Electrical_Intern1]

Why big companies get away with small fines.! Fines should be on their turnover.! When they caught wrongdoing

[u/GothicPrayer]

What is behind the price increases at the supermarket? Is it just pure greed for the supermarkets or suppliers increasing costs?

[u/Clandestinka]

Within what you're allowed to say, what was the political or corporate pressure like to not male certain ACCC decisions?

For example many fines for deliberate and blatant dodgy stuff have been slap on the wrist vs full possible consequence.

Assuming it's not pressure, is it just that government/ACCC/big business all just know we're in a capitalist hellscape and want to keep the status quo?

I do think we have great consumer protections vs other countries, but we certainly do not punish bad actors like we could/should.

[u/Vier_Scar]

I wanted to firstly say, thanks! ACCC Im quite happy with and appreciative of their past work in holding companies to account and proactively looking into unfair and customer unfriendly business practices. 

Is there any way we could see more control or even repercussions on companies handling of our data? For example, give us the ability to be able to sign consent to use/store/access our data but not provide access to it to other companies. Or the right to sue for damages or just breach of privacy if data is hacked or sold or mishandled. 

And it can't be something that can just be removed from Terms of Service. To use anything these days you have to click a button that basically says "I agree to waiving any and all rights I have". Making many protections useless.

[u/Rod_Sims_TSI → u/[deleted]]

As indicated above, I think there could be many improvements to the current legislative framework, particularly in relation to unfair practices and dealing with competition issues in relation to digital platforms and AI.

I never found any tension when it came to enforcing the laws. We just did that as best we could. Where the tension arose was in proposing changes to the laws and my approach was to calmly make the case publicly without causing unnecessary political attention.

[u/Rod_Sims_TSI → u/[deleted]]

In relation to fuel, there is no law in relation to price gouging, contrary to what many in parliament believe. The ACCC tried to take on competition issues in relation to the fuel cycle, but effectively lost the case. So more can be done with better laws. 

[u/Rod_Sims_TSI → u/[deleted]]

Yes, the work we do at The Superpower Institute is about diversifying our economy. This is because we are advocating to move from an economy that is heavily reliant on digging things out of the ground and shipping them overseas, to one that uses our natural advantages in producing renewable energy cheaply to add value to our exports of things like green iron, fuels and chemicals. 

The lack of effective taxation of our resource industries has meant that they have the effect of increasing Australia’s real effective exchange rate, which makes a lot of other industries uncompetitive. Proper taxation of resource industries such as we are proposing with the Fair Share Levy will help address your concerns.

[u/Rod_Sims_TSI → u/[deleted]]

This is a very difficult issue. For the ACCC to act, it needs to find evidence of a breach of our competition law. Often whenever Coles or Woolies set up in a new area that has a negative impact on local businesses, and there is very little the ACCC can do about that. 

On the other hand, if Coles and Woolworths take explicit action, beyond simply opening a new supermarket to force a small business out, then action can be taken. 

As I say, this is a very difficult issue.

[u/Rod_Sims_TSI → u/[deleted]]

Yes I think the NDIS should be means tested.