The Commonwealth has announced a ‘root and branch’ competition policy review to, “help identify ways to build the economy and promote investment, growth and job creation. The PM said the review “will examine not only the current laws but the broader competition framework, to increase productivity and efficiency in markets, drive benefits to ease cost of living pressures and raise living standards for all Australians”.
The terms of reference are still being worked out with state governments. But the agenda will be markedly different from that which followed from the 1993 Hilmer report into competition policy.
Hilmer itself was largely about the government placing (mainly state) monopoly government suppliers in energy, water, ports etc on a similar footing to private sector suppliers and opening up those parts that were contestable to competition. Labor at that time was still far from convinced that private supply is always more efficient than government supply but its senior people knew that state-owned businesses in Australia were inefficient and needed to be run along business lines.
Already, by the time the government had in place a response to Hilmer, some movement towards disaggregation of state business entities and their separation from ministerial control had commenced, especially in Victoria where Kennett had already moved along the road to privatization of electricity supply. This was fused with a deregulation program which was also in its fledgling state, where it has remained.
The program response to Hilmer involved the Commonwealth rewarding state governments that acted in accord with their consumers’ interests and reduced regulation and competitive barriers thereby lowering costs.
The agenda was never completed – we still have regulatory restraints in such areas as coastal shipping and regulations designed to combat mythical dumping of overseas supplied goods.
And the role of the agencies set up to police competition, the National Competition Commission (NCC) and the Australian Competition and Consumer Commission (ACCC) is confused. Both set out to promote contrived models of competition. Thus NCC has spent a fruitless decade or so trying to force Rio and BHP to open up their private rail lines to competition.
ACCC has aided and abetted this and other action that seeks to enforce common carriage at the expense of property rights rather than seeking to eliminate entry barriers. And ACCC’s “consumer” and “competition” functions often clash with the latter losing out. Thus the ACCC has encouraged dominant electricity retailers to collude in avoiding door-knocking marketing activities that apparently irritate some consumers. Similarly the ACCC has required Coles and Woolworth’s to limit the discounts they offer on petrol to protect unaffiliated petrol stations.
Nonetheless these, trade restraints and the remaining areas of government ownership are residuals that would not justify the “root and branch” attack to promote productivity that the PM foreshadowed. And presumably the very necessary reforms to the labour market will be handled separately.
Prime productivity killing measures all rest with government regulations. They include
- Occupational regulations that have escalated credentialism by, for example, requiring university degrees of child minders
- land use regulation that impedes more efficient farming, restrains some areas of mining (especially coal seam and shale gas) and above all by creating artificial scarcities imposes a huge cost premium on land for housing.
- Building codes often imposed to promote energy savings (nowadays that means greenhouse gas reductions) and requiring people to incur costs to facilitate better access for the disabled.
- The ceaseless march of environmental regulations that stop almost all activities from fishing to clearing land for farming or any other development. It has been a long time since a politician ridiculed such levels of restraint along the lines of Jeff Kennett who was not going to have plans stopped by “some trumped-up corella”
The environmental regulatory front will prove particularly troublesome with Greens and their allies having successfully installed layers of regulations that might stifle all but the most urgent new ventures. Attempts to create one-stop-shops to avoid duplication are an obvious starting point but even they may get bogged down in judicial appeals. In this vein, today, Radio National’s Hindsight program predictably wheeled out global warming zealots and lock-up-the-economy promoters to call for the Commonwealth to continue usurping the state role in environmental matters claiming that the Great Barrier Reef was doomed without such duplications. The program’s producer Lynne Gallacher is a staunch supporter of carbon restraint
And Judith reminds us of the pernicious and powerful bodies like the Forest Stewardship Council which can extract funding from businesses for ticks of approval as an alternative to facing embargoes on their products. Bodies like this are presently immune from being prosecuted for damages caused by the false charges they make on businesses.
Righting the wrongs of regulatory layers introduced over many decades is likely to prove difficult. It may even be difficult to get agreement for an agenda which involves paring back the regulations governments have imposed. It will be a test for the Coalition as well as the ALP, though the Greens will find opposing it straightforward.