Graeme Samuel wants direction for the Australian economy

The change agent

Graeme Samuel uses his tough guy image as a front for a man whose sense of fairness and public service started with a certificate he received as a boy.

This article is from the September 2015 issue of INTHEBLACK

Graeme Samuel’s parents put a certificate in his bedroom when he was a boy. He remembers it because it stated he was a life governor of various hospitals across Melbourne and it was given to him because of the significant donations his parents had made. The certificate was designed to instil in the young Graeme and his brothers a sense of public service – that it was their duty to ensure that the disadvantaged members of the community were adequately provided for.

His father was in the rag trade but what punctuates Samuel’s memories of his modest upbringing is the community work he saw his mother and father involved in. His father was awarded an MBE for his services to charity. 

Samuel’s education in justice and equality continued to build. First at university then with every promotion in his long and active legal career, and later as an executive director at Macquarie Bank. Each new new role saw him move closer to that life of public service his parents had encouraged.

“It’s to the major advantage of the community for business and welfare groups to speak with one voice.”

Samuel made his mark as the head of the Australian Competition and Consumer Commission (ACCC) in 2003, a role he held for eight years and remains passionate about today. During that time Samuel took on cartels and blocked key takeovers in industries with already concentrated ownership.

One of his biggest wins was against packaging giant Visy over price fixing and collusion with its competitor Amcor, resulting in a record fine. He is also credited with tackling the anti-competitive behaviour of Australia’s dominant telecommunications provider, Telstra. 

In an interview with former CPA Australia chief executive Alex Malley, Samuel discussed how increasing globalisation has changed the role of a competition regulator from what it must consider in its deliberations, such as how e-commerce has opened new markets and broadened existing ones, to how it is run. He says more specific and expert skills are needed to consider matters of law, market dominance and price setting.

Malley and Samuel also discussed what would be Samuel’s focus if he were in government, and showed yet again how his spirit of equality and fairness would come into play.

Alex Malley: Tell me about the Samuel family growing up.

Graeme Samuel: We started off in very modest surroundings. My father had gone into partnership with his father-in-law in the rag trade in Flinders Lane (in Melbourne). It was a bit of struggle street at the start but he gradually built up the business. Right through this period, I was named as a life governor of some hospitals in Melbourne, all of which flowed from donations that he and my mother had made.

He proudly put the certificates in our bedrooms, all designed to instil in us the concept of philanthropy and, particularly, public service.

Dad was focused on issues of the disadvantaged, of welfare, of aged care. He took leadership roles in all those areas, as did my mother. He was awarded an MBE for his services to charity and (you’ll laugh when you hear this, Alex) he tended to take leadership roles in areas of reform, of change. 

If Samuel were in politics

Malley: If you were in politics today in Australia, with your rich breadth of knowledge on policy, what would be your two or three policy platforms? Both in terms of where you see Australia now and where it has to go?

Samuel: One would be the focus on the very clear direction towards our future economic wellbeing, which I think is missing at the moment. We’ve backed off from that and there’s even the danger of recidivism.

Number two is interrelated, because we can so often talk about the economic wellbeing of the country, but interconnected with that is the social wellbeing of the country. There are a range of issues which are raising their head – issues relating to the adaption of our community to social change. There are still some very conservative people in the leadership of the country who are holding back on embracing those changes.

It’s [about] dealing with some social issues of very significant impact on Australia, both as the Australian community and as part of the international community. It’s our role in dealing with important issues [to which] we tend to turn a blind eye … which I know is tricky for us, the issue of refugees and issues of world conflict.

I’m often tackled about my well-known atheist views. It’s my view that many parts of religion have caused so much damage to communities throughout the world. They’ve been the cause of so many wars, of so much social distress and disadvantage. I have a very, very strong view on that.

"The task of assessing issues competition is going to be become quite specialised."

Class warfare

Malley: If you look at most economies that are doing well, it’s the strength of the middle class. I have a feeling that for the first time in Australia’s history there are cracks at the bottom of the middle class and gaps between that and the next layer. That is a danger to any economy if there’s not a clear pathway into the middle class through employment.

Samuel: The class warfare of the socially disadvantaged versus the elite and the super wealthy erupts every now and then, to my dismay. But in that class warfare we tend to forget that there is a massive middle class who have grown to become the mainstay of the Australian community – and not with the protection or the nurturing of government. [That class warfare] developed badly under the Rudd-Gillard years, particularly with the former treasurer, Wayne Swan. It’s diminished now, although we do see it breaking out every now and then when we talk about superannuation and retirement incomes.

Samuel doesn't see the internet as disruptive technology, but as a competition booster.I was once asked during a television interview for my view and the ACCC’s view on tax. I said the income tax system was in a state of massive disrepair, it needed to be reformed and we should be reexamining the issue of a goods and services tax or a broad-based consumption tax.

Later I spoke to Robert Fitzgerald, who was then president of the Australian Council on Social Service. I said to him: “Let’s sit down and talk about this together, because this is something that affects business on the one hand and those socially disadvantaged that you represent on the other.” We agreed on a conjoint approach to tax reform which culminated in the 1996 tax summit.

I remember meeting with [Australia’s then prime minister] John Howard after the summit and saying to him: “Prime Minister, don’t get involved in this. This is a politician-free zone. We will deal with this, we will run this campaign, and if you feel that the community is behind it then you can take it up at a point of time.” Which he did, in May 1997. 

The point I’m illustrating is that it’s not only possible, but also to the major advantage of the community for business and welfare groups – two opposite ends of the spectrum – to talk about issues of the economy, of economic reform, of tax reform and to speak with one voice.

Globalisation

Malley: We are hearing more about globalisation and there are multiple views on free trade agreements. A free market in a global economy is quite a different beast to what most people think it is. What’s the role of the ACCC (and its type) into a future with no boundaries, no borders?

Samuel: The ACCC’s role is that of a regulator. It is not and should not be an advocate of policy or a policy reform.

In global terms, the ACCC is still going through a major adjustment of its thinking, particularly in areas relating to mergers and determining if a merger of two companies in Australia would be anti-competitive. It has to take into account the impact of technology and that we are now increasingly living, working and having an economy operating in a global environment.

Many years ago you’d have talked about issues involving two companies merging in Australia with a simple look at imports. What you’ve got to do now is look at the issue of the ability to trade online, whether online trading opens up markets substantially.

They call it disruptive technology. I don’t think it’s disruptive; I think it’s more a technology that is facilitating competition in markets that previously have seen less competition. You’ve just got to look at Myer and David Jones and the other big department stores … we have got groups like Airbnb that on an international basis are now providing challenges to the traditional forms of accommodation.

The hardest thing for the ACCC is to be able to make a prognosis as to what is likely to be the state of the market two, three, four years in the future. Size is becoming important as well, because you’ve got to operate in an environment where the boundaries of the shores of Australia are becoming less and less relevant.

The future

Malley: What is the regulator of the future going to look like? 

Samuel: The task of assessing issues of competition is going to become quite specialised. It will require a particular analytical mindset and process which is both economics and, to a smaller extent, legal. It is a simple question legally of whether a particular course of conduct is misleading and deceptive. 

There’s a third element and that is the regulatory element of price setting and of dealing with access to monopoly infrastructure. And, again, that’s a different mindset to that of a competition regulator and a legal regulator; we’ve actually recommended that they ought to be broken up into three different sections. 

Because these areas are becoming so complex, we’ve got to start focusing on the different cultures and the different analytical processes that are required in respect of each. We’ve got to ensure that we have the best people focusing on those areas rather than try to say you can all be dealing with competition price regulation and consumer protection, all in the one organisation. 

We’re going to be forced into a process where we have more focused organisations dealing with the particular regulatory analytics that are required … and they are different people, [with] different training, different backgrounds, different culture.

“You’ve got to operate in an environment where the boundaries ... of Australia are becoming less and less relevant.”

Innovation

Malley: Looking at the culture of innovation in Australia, do you think it’s at the level we need to sustain the country into the future? 

Samuel: Yes and no. Yes, in the sense that we can always purchase innovation from outside Australia but no, if we believe that the future of Australia is in developing our own innovative technology, our own medical research, scientific research and the like.

We have tended to put those as matters of second or third priority rather than of fundamental necessities in terms of Australia’s economic development. 

We’ve recently had, for example, the establishment of the medical research future fund [subject to legislation currently before the federal parliament]. That’s been a long struggle to get that set up. There is no reason why Australia can’t be at the forefront [of medical research], including on an international collaborative basis, but we starve our researchers of the necessary funds.

We don’t place them at that level of esteem in the community that they so richly deserve because of what they can do, both socially and economically, for the Australian community.

Alzheimer’s Australia

Malley: You are now national president of Alzheimer’s Australia. Your mum suffered from Alzheimer’s. Can we expect any breakthroughs soon?

Samuel: No, there are no breakthroughs. What we are doing is potentially getting to what causes Alzheimer’s disease, although there is some vigorous debate about that. And then we are potentially getting to a means of detecting very early in the piece whether things are happening to people’s brains that may be leading to what is potentially the cause of Alzheimer’s disease.

There is an interesting television program called Redesign My Brain, which was focusing on the plasticity of the brain. That’s the ability of the brain to grow itself beyond its current level of cognitive ability and agility. 

One of the things that I’m having a really serious look at with researchers is the ability of the brain to compensate for damage that’s done, or limitations that are there, by stretching it through training.

Social wellbeing and economic wellbeing are interconnected," says Graeme Samuel.

This article is from the September 2015 issue of INTHEBLACK

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