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Land of the giants

We all lose when power is held by a few

May 2019

Federal elections tend to be dominated by debates about a few key issues where the parties see an opportunity to differentiate themselves or to poke a hole in the other side's modelling.

It means we often miss the opportunity to debate the bigger issues affecting our society. And when you look at what's happening to consumers in Australia and across the world, there are some big themes that we really need to discuss. 

Within Australia, a small number of very large companies dominate the industries that we are forced to deal with from day to day. 

Electricity is either provided by a monopoly retailer or, in the states and territories where consumers can choose a retailer, by three big companies. 

Banking is dominated by the big four banks. 

While there are lots of home and car insurance brands, policies are provided mostly by four big insurers. 

And whenever we go online, our access to information is invisibly guided by the power of global tech giants like Google and Facebook. 

It should come as no surprise that these businesses are abusing their extreme market power. 

Our banks, insurers and electricity companies have taken advantage of complex markets to confuse consumers into paying much more than they need to. 

The ACCC's draft report on digital platforms raises concerns about the power of Google and Facebook to control our access to news and current affairs. If news is one of the ways that we learn about what is happening in our society, this has serious implications for our democracy. 

Yet in the face of these problems, our current laws and institutions are largely impotent. It's not illegal for a business to have extreme market power. It's only illegal to misuse it and that's a very difficult thing for the ACCC to prove in court. 

The ACCC's laws weren't designed to help it take on global tech giants. It took something as horrific as the massacre in Christchurch for Facebook to start paying attention to national governments in countries like Australia and New Zealand. 

If there's one thing I've learned from working at CHOICE, it's that extreme market power is always bad for people. It means we have less choice, and end up paying more than we need to. Even more importantly, the lobbying might of powerful companies too often leads to weak laws that let them continue to get away with ripping us off. 

While I hold little hope of the debates during the election campaign traversing these issues, I hope that they become a priority for the next parliament.

Alan Kirkland, CHOICE CEO
Twitter: @AlanKirkland