On Thursday September 05 2024, the Carmichael Centre hosted the third annual Laurie Carmichael Lecture in partnership with RMIT’s Business and Human Rights Centre. The lecture was delivered by Professor Emeritus Allan Fels AO, inaugural chairman of the Australian Competition & Consumer Commission (ACCC), on the topic of ‘Power, Profits, and Price Gouging’. Professor Fels was introduced by Sally McManus, Secretary of the ACTU, and the event was chaired by Emeline Gaske, new National Secretary of the ASU.
The following article on the lecture was published on RMIT's website on September 06:
“We need to put power back in the hands of the people”: former ACCC chair calls for stronger government action on corporate profiteering
Professor Allan Fels AO, former chairman of the Australian Competition & Consumer Commission (ACCC), called for stronger government action to combat corporate profiteering, while delivering the 2024 Laurie Carmichael Lecture at RMIT University.
“Reform isn’t just urgent – it’s a matter of survival for ordinary Australians who are being bled dry by unfair prices and unchecked market power,” Fels said.
“We need decisive action to level the playing field, bring real competition back, and put the power back where it belongs: in the hands of the people.”
As part of his keynote lecture, Fels presented the findings from a recent inquiry he chaired, which investigated unfair pricing practices and price gouging by business in Australia.
The inquiry was commissioned by the Australian Council of Trade Unions, whose Secretary, Sally McManus, introduced Fels to the audience.
Fels called for the government to establish a National Competition and Prices Commission, leaving the currently overloaded ACCC to law enforcement across vast areas.
“We need a watchdog with real teeth, that doesn’t just talk but takes action,” he said.
“A commission that will dig into the dirty secrets of high prices, expose the causes, and fight back against the forces keeping them up.”
Inflation as a cover for profiteering
Fels said corporate Australia had used the cover of rising inflation, caused by post-pandemic supply issues, to increase prices at rates beyond simply covering their higher costs.
“In plain terms, companies have been hiking prices to boost their profits, and they’re getting away with it in a market where competition is weak and corporate giants dominate,” he said.
“Corporate profits are the only major component in national income which has increased its share of total GDP since the pandemic,” he said.
“Despite the recent moderation in inflation, gross corporate profits are still 3.7 percentage points higher as a share of GDP than pre-COVID.”
He explained that this profiteering had a negative effect on almost every other part of society in Australia.
“Virtually everyone else has lost out during this inflation,” he said.
“Workers have lost out: their share of GDP is smaller. Small business owners have really lost out: their share of GDP is substantially smaller.
“But the corporate share grew during the post-COVID inflation to record highs, and despite a modest pullback it has stayed much higher than historical norms.”
“That is proof positive that companies were not just passing on higher costs on their own inputs. They were capturing extra profits.”
Lack of competition exacerbating the pain
Fels lamented a lack of competition in many Australian markets, with the nation experiencing a steady concentration of market power into the hands of corporate giants in the 21st century, with negative impacts for ordinary Australians.
“Let’s not kid ourselves – far too many sectors in Australia are anything but competitive,” he said.
“Just look around: banking, supermarkets, mobile telecommunications, internet services, energy, gas, transport, insurance, pathology services, air travel – in each of these markets, a handful of big players hold all the cards.”
“And what does that mean for consumers? Higher prices, fewer choices, and a lot less power.”
Fels suggested Australia needed several policy remedies to address a lack of competition and its impact on consumer’s hip-pockets, including stronger powers for government to break up large firms engaging in anticompetitive practices.
“We need a divestiture law – one that would break up big businesses in instances where courts have found that they have broken the law and where courts think that this is the best remedy,” he said.
“Divestiture has been very successfully but carefully applied in the United States – in areas like oil, cigarettes, chemicals and telephones and it should be part of our armoury.”
An annual celebration with a social impact lens
Now in its third year, the Laurie Carmichael Lecture is an annual keynote lecture hosted by the Carmichael Centre, an initiative of the Australia Institute's Centre for Future Work, and RMIT's Business and Human Rights Centre (BHRIGHT).
BHRIGHT addresses the human rights impact of business through research, education, innovation and collaboration, and is an interdisciplinary centre located in RMIT’s College of Business and Law.
Past Laurie Carmichael Lecture keynote speakers have included Nobel Prize-winning economist Joseph E. Stieglitz and international trade union leader Sharan Burrow.
In 2024, the Carmichael Lecture was included as part of RMIT’s College of Business and Law (COBL) Festival of Social Impact, a two-day event celebrating RMIT’s commitment to achieving UN Sustainable Development Goals through its work with industry partners, transformative research and innovative teaching.
Story: Finn Devlin in RMIT News