Economists not being very good at small talk, we get right down to business.
I ask Sims, who succeeded Ross Garnaut as Prime Minister Bob Hawke’s economic advisor, to nominate the one policy area where the greatest gains could be made to enhance the welfare of the Australian people. “Phew, in a sense you’re asking the wrong person,” Sims begins, “because I have always dealt with a whole range of issues. That’s what I like to do.
“That’s why when I was in government I was in the Department of Prime Minister and Cabinet dealing with a range of issues. When I went to the private sector I dealt with a range of issues and now I’m at the ACCC dealing with a range of issues.”
And what a range it is. Today, the competition watchdog has an unprecedented scope to conduct inquiries across the biggest sectors of the Australian economy: from telecommunications, to banks, to digital giants, to electricity and gas.
Ultimately, Sims lands on data rights and how digital platforms like Google and Facebook use – and sell – the information consumers provide as the most significant modern challenge. “Facebook will argue: ‘Well, how else do you expect us to make money?’. I guess it comes down to ‘how well informed are consumers?”‘
While staunchly pro-consumer, Sims says he is not anti-business, having worked in the private sector for nearly two decades with consulting firm Port Jackson Partners – established by Fred Hilmer – on whose eponymous landmark competition review Sims also worked.
I ask about the “most-feared man” tag line. Is it his natural style? “No,” he says, but “I guess you’d rather be feared than loved because you’ve got to be effective.”
Can you infer that if someone’s got market power, they’ll use it? I would have thought you could. All my experience [tells me] they will.
“I just have a very strong belief that market economies only work if the competition and consumer act is complied with. As you know from your economic history, Adam Smith said the invisible hand only works if there’s a lot of competition. I think – had he’d had the wit to think of it – he might have said it also only works if you have well-informed consumers who aren’t misled.”
Sims recalls being asked, six months after leaving government for the private sector, what advice he would give to then Prime Minister, Paul Keating?
“Without thinking, I said I’d double the size of the ACCC,” he recalls, before quickly adding: “I didn’t have designs on this job back then – it was a long time ago.
“It’s more I always thought there was a good need for the ACCC and I guess being out in the private sector just reinforced that. But not because people are nasty, but because their businesses matter a lot to them and they want them to succeed.”
“Some people have said to me the only way companies succeed is to look after the interests of their consumers. Well, that is patently false.”
Our food arrives, so we switch gear to discussing Sims’ meticulous morning routine, which includes a 5am start, a vigorous workout in his home gym – replete with barbells to bench-press and a lateral muscle pulldown machine – before he commences his 11-hour workday at 7.30am.
Was Sims an early adherent to the “5AM Club”, advocated by leadership guru Robin Sharma?
“No, it doesn’t come from that. It just comes from the fact that, well, two things, I suppose. I do go to bed early – probably 9.30 or 10. For me, the morning is when my brain is fresher. It’s when I’m at my most effective. So why not have a bit of that time to myself?
Naturally slim, Sims reckons he has maintained his morning fitness routine since about age 15.
“I think routines are really important,” he says. “Despite my looks, I’ve always exercised and always lifted weights so you can just imagine what I would be like if I hadn’t.”
Sims says he listens to ABC radio, or other current affairs shows including Alan Jones, while exercising. He reads the newspapers each morning but has little time for social media. “I get probably 300 emails a day and I use SMS a lot and a bit of WhatsApp. By the time you look at those, there’s really no time to open up another social front.”
It’s a daily regime which has so far kept the nearly 70-year-old fighting fit.
Indeed, after eight years in the top job, Sims is showing no sign of slowing down, with 2020 heralding both a contentious new inquiry into bank mortgage pricing and, separately, the opportunity to deploy a tough new penalty regime for companies who breach competition and consumer law.
“We’ll be looking for penalties above $100million for major companies engaging in significant breaches of the act. We just need more people to take the act seriously. I don’t think companies do, yet.”
Sims recalls that one of the first matters he encountered in the job was alleged unconscionable conduct by supermarket giants against their suppliers, for which Coles earned a $10 million rebuke.
“Woolworths succeeded in saying ‘no, no, this is how we do business’. I think if that’s normal, that’s appalling. I think we need to get those penalties up and we need to stop that behaviour.”
“If you’re the board sitting around the boardroom table … [and] everything else on your agenda is hundreds of millions of dollars, your share price just moved that much in the last three seconds either up or down. So how do you expect them to take it seriously? So I think we need higher penalties.”
On mortgages, Sims’ ACCC will be investigating the difference in interest rates charged to bank’s “front-book” of new customers and their “back-book” of existing clients.
It is this scrutiny which prompted former Westpac chairman David Morgan to accuse Sims of running a “jihad on the back-book”.
Sims is unrepentant. “I don’t think markets work well when you don’t know the rate you can get. You don’t know whether you got the best rate. You know you got a discount off the Standard Variable Rate because everybody gets that. Some people don’t get that because they don’t even ask.”
Is that unethical, to be charging some customers such a high rate?
Sims ducks the question: “Some people think it is; some people think it isn’t.”
Is it illegal? “There’s nothing illegal about it. It’s actually what you would expect. My job is to point it out to people.”
“My job is to say that if you have a mortgage and you haven’t sought to look at that rate over a number of years, you’re likely paying too much – and that amount of money is significant. You’re talking thousands of dollars over the life of the loan. You’re talking maybe even thousands of dollars each year, so this matters.”
“People were saying I was criticising [the banks], I was simply saying … I was pointing it out to consumers and I was saying to banks: just keep in mind these are the messages you’re sending to your customers. You’re actually saying to your customers ‘you must contact me each couple of years, you must contact other providers, otherwise you’re paying too much’.”
“I didn’t get into the ethics, I just got into the reality and doing our job. Now you could meet two people and put the front-book back-book to them, some will say that is just appalling. Some will say ‘what do you expect them to do? If you’re not asking, why shouldn’t you pay more?’.”
“Like most things in economics, there’s no absolutes in this world. It very much depends, in a sense, where you start from philosophically. And that’s just a fascinating question.”
Our time is running short. Sims has a meeting to be at in five minutes. Enough time, Sims concludes, to order a piccolo – his third of the day.
I take this final opportunity to quiz Sims on his losing streak on opposing company mergers. The ACCC has lost six merger cases in a row. If the court allows TPG to merge with Vodafone it will mark a seventh defeat.
Sims is frustrated. While he is yet to formally propose any law changes, he clearly thinks the hurdle his ACCC must jump – to prove a merger which will ‘substantially lessen competition’ – is too high.
Instead, Sims muses, there ought to be a “rebuttable presumption” that a merger will reduce competition, which prospective partners should have to disprove.
“It’s very hard for us when a lot of faith is being put on what is being said by the merger parties and we have to disprove what these respectable people are saying.”
“Can you infer that if someone’s got market power, they’ll use it? I would have thought you could. All my experience is they will. If they won’t, the board will probably fire the chief executive and say ‘why aren’t you behaving more commercially?’. But no, we’ve got to prove to the court that that’s actually what’s going to happen.”
“The whole commercial strategy world knows that market structure matters and we’re told in the merger world that it doesn’t. I mean: rubbish.”
Sims has arrived at a characteristically succinct crescendo. Our time is up.
“I’d better run, thank you very much,” he says as I reassure him I can pick up the tab. “You can see why I prefer dinners; that way we can have a longer period. But, then again, drinking wine while you’re getting interviewed is not a good idea.”
Like most of what Sims has to say, it’s a difficult conclusion to rebut.
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Jessica Irvine is a senior economics writer with The Sydney Morning Herald.