Should Sims shut up?

Call me old-fashioned, but I am inclined to the view that the head of a regulatory agency should simply get on with implementing the legislated regulations for which it is responsible as efficiently as possible and leave it at that.

But not our Rod Sims, head of the ACCC.  He has been out and about, criticising the privatization of government assets (frankly, I think I would prefer a private monopoly than a government monopoly) and calling for specific changes to the legislation that governs the operation of his agency. As I was driving to lunch, he was on the radio banging on about making it a civil offence for companies to refuse to hand over confidential material to the ACCC when it doing an investigation aka self-seeking frolic.  He also proposes meaningful fines for big businesses.

(Clearly, he missed the classes on economic freedom when he attended the University of Melbourne.  Hey, hang on, where there any?)

Sims wants to see Section 46  ’beefed up’.   This section is about the misuse of market power by shifting it from an intentions test to an effects test.  This would be disastrous because any aggressive competitive action by a business that commands a reasonable share of a market (and note the importance of how the market is defined) and which benefit consumers greatly could be charged with a wrongdoing under Section 46.

What Sims doesn’t seem to realise there is a very big difference between promoting competition and protecting competitors.  Just because an action by one company damages others does not mean that the first company is acting anti-competitively.  In fact, it may mean the reverse – it is hyper-competing.

Sims leans way too far in the direction of protecting competitors.  Sadly, there are many of the Coalition government that probably take the Sims line, particularly when it comes to that protected species – small business.

But do you also think that Sims should just shut up?  And should the ACCC really be in the game of making a submission about changes to the legislation?

Here is a piece from the Silly:

The head of the consumer watchdog has warned that competition policy needs to be reinvigorated, with governments increasingly failing to make competition central to the privatisation of public assets.

As a result, the federal government needs to ensure the present review of competition policy, the so-called Harper review, is used to both strengthen competition policy as well as to help reinvigorate so-called ”micro-economic reform”, ongoing changes to government policy to revitalise the economy.

”Australia has lost a lot of its pro-competition culture that it gained from the 1990s National Competition Policy. Clearly we need ‘Hilmer Mark II’, as the current Harper review is styled,” Australian Competition and Consumer Commission chairman Rod Sims will say at Monday’s State of the Nation Conference organised by CEDA.

Effective competition policy depends on using competition and other incentives to boost productivity, effective competition laws and creating processes and institutions that continually foster competition. In particular, the present approach to the privatisation of public assets raises particular concern, Mr Sims will say.

”Where governments are increasingly failing is in how to privatise,” Mr Sims will tell the conference.

”Privatising in ways that limit competition in order to maximise the one-off sale proceeds is the wrong way. Such an approach increases the sale proceeds by effectively taxing future generations and Australia’s future competitiveness.”

Mr Sims was speaking after the ACCC moved to block the $1.5 billion acquisition by Australian Gas and Light Co of the largest electricity generator in the country, Macquarie Generation, which it claimed would lessen market competition, since it would result in just three companies controlling more than 80 per cent of power generation.

The ACCC decision has been challenged by AGL, with the Australian Competition Tribunal expected later this week to make its ruling on the matter.

In the field of micro-economic reform, infrastructure is an area of unfinished business, with road supply and usage, congestion pricing and shipping three areas that should be tackled.

”I always find it irritating when people say Australia has picked all the low-hanging micro-economic reform fruit. We have not; and besides, there is never only one crop,” Mr Sims will say.

Foreshadowing the content of the ACCC’s submission to the Harper review, principles including efficiency, universality and clarity are important in determining where competition laws could be improved.

”While the ACCC recognises competition laws must strike a careful balance, and not inhibit healthy competitive behaviour, if competition laws are too weak there are large efficiency and welfare losses from systematically poor conduct.”

Mr Sims nominated Section 46 of the Competition and Consumer Act as a provision that is particularly deficient, and outlined two areas for improvement.

One area of success has been the integration of competition enforcement, consumer protection and economic regulation into a single agency with the sole purpose of making markets work as they should.

To address Australia’s diminished commitment to competition, Mr Sims will say the role of market studies needs to be considered in order to gain an in-depth understanding of how markets or market practices work.

”The inability of the ACCC to initiate market studies using our information-gathering powers means we are out of step with overseas regulators, and Australia is losing an opportunity for a continuing competition focus on particular sectors and activities.”

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19 Responses to Should Sims shut up?

  1. Bruce of Newcastle

    What do you expect? Mr Sims was appointed by Gillard and served as an advisor to Bob Hawke.

    He should hand in his resignation immediately for politicizing his position.

  2. All that is needed is that the cost of being Big — in the sense of a size to be able to generate more profit from manipulating the playing field than playing on it — is higher than any benefit accruable.

  3. Baldrick

    Sims is part of the Labor apparatchik and was appointed to his current position by TLS. Nothing he says or does has any relevance to a conservative led government.
    So in answer to your question … Yes.

  4. blogstrop

    Reminds me of an ABC reporter who used to be very amusing – Geoff Sims.
    Here’s his (transcript) report on the last snake man at La Perouse. Although this dates from as recently as 2010, Sims dates from back when the ABC was about more than just proselytising for Labor and Greens.

    http://www.abc.net.au/7.30/content/2010/s2871906.htm

  5. 3d1k

    How many competitive enterprises has Mr Sims run? Perhaps he had an inkling of the AGL decision. Or is deflecting from the fact that the ACCC ruling prohibiting supermarkets offering customers competitive fuel discount vouchers would more than have compensated for any fuel excise increase.

  6. Combine_Dave

    To answer the question.

    No. He shouldn’t shut up. He should be fired. From a cannon. Into the sun.

    Where the fk is Abbott?

  7. Richard Bender

    Can’t blame it all on Gillard and Sims. What about Howard-appointee Graeme “Mike Smith responding to Wayne Swan’s ignorant bullying on interest rates is price signalling” Samuel?

  8. red breast

    O/T Judith but how did you get roped in as guest speaker for Dangerous Ideas? The audience will ignore your common sense, logic and honesty and you will never change their prejudices. Seriously Judith, don’t lower yourself.

  9. David

    Graeme “Mike Smith responding to Wayne Swan’s ignorant bullying on interest rates is price signalling” Samuel

    He is the head of some Directorate or other in The Almost Soviet Republic of Victoriastan is he not?

  10. Johno

    (Clearly, he missed the classes on economic freedom when he attended the University of Melbourne. Hey, hang on, where there any?)

    Not at Melbourne. Not at Monash. Not at Sydney. Not at any taxpayer funded university anywhere in Australia.

    They all preach the same doctrine. Market failure, market failure, market failure, which somehow the government can magically fix. (Not that we have any idea now government can do that.)

  11. WhaleHunt Fun

    Just have all your records created, managed and stored by an independent contracted company in Panama and you can always explain that the contracted company has refused to release the information unless and until Sims and the slapper are punished innovatively and the footage posted on you-tube. All our stuff sits in some cloud crap somewhere with bugger-all ever actually sitting inside Australia.

  12. WhaleHunt Fun

    of course every time the useless internet connection goes slow, no one can get at anything. But laughing in Sims face would pay for all the inconvenience.

  13. Just because an action by one company damages others does not mean that the first company is acting anti-competitively. In fact, it may mean the reverse – it is hyper-competing.

    This is something that has worried me about competition regulators for some time. Competition is the system working as intended.

    Companies don’t plan to all have their little slice of the pie like a big happy family at sunday lunch. They want as much of the pie as they can get. That’s what happens in a market economy. Every company, indeed every business, every seller, would love to have a monopoly. Imagine being the only ice cream van in town. Imagine being the only car salesman.

    They try to defeat their competitors because that’s what they all do. because if you’re not trying to grow, you stagnate and die. Cosy oligopolies are brittle and can collapse without warning.

    Not only is getting a larger piece of the pie the natural thing for them to be doing, it’s what they will always do, and it’s what they should do. But they are successful, regulators don’t like that. Regulators are happy when everyone tries, but fails, to crush their competitors.

  14. A H

    When I skimmed this headline, I thought it might be something along the lines of properly structuring the auctioning of public assets. There’s plenty of bullshit that occurs under the aegis of privatisation which is simply economic fascism, such as Melbourne’s train system.

    But, as usual, it’s another government agency saying “Since we have demonstrated that we can’t do what we are supposed to do, give us more power/money.”

  15. rickw

    I want to see Sims sacked and the who ACCC disbanded. The cure is worse than the disease.

  16. RMR

    An effects test sounds very dangerous in the hands of a bureaucracy, any bureaucracy. Our whole economic system is based on price and quality competition. The aim is to win. But people join the public service because they generally see the game as perverse and not appropriate for them to play. And now they would be the umpire in the game. You must be joking.

  17. Pedro

    I don’t think there is anything weird about a regulator making recommendations about how they might better do their job. The important point is to ensure regulators are not viewed as impartial and independent oracles. No doubt the police often recommend increases in their powers.

    But spot on about missing the big issues. Sims has been dreadful.

  18. johanna

    The ACCC seems to think that its job is to be a sort of playground monitor, ensuring that all the children play nicely together and share. Since companies, like children, don’t behave like that in the real world, they want even more powers to enforce their vision of utopia.

    What next? Participation badges just for showing up? The banning of public annual financial reports because they might make others feel bad?

    The ACCC is a regulatory quagmire. The whole lot should be scrubbed, with a (very few) residual matters placed into the Corporations Law and a bare bones Consumer Protection Act.

  19. Richard

    Companies don’t plan to all have their little slice of the pie like a big happy family at sunday lunch. They want as much of the pie as they can get. That’s what happens in a market economy. Every company, indeed every business, every seller, would love to have a monopoly. Imagine being the only ice cream van in town. Imagine being the only car salesman.

    The market economy is not about dividing up the pie. That’s socialism. The socialist’s belief in a fixed-size pie – if someone gets a bigger slice, then everyone else gets a smaller slice – is one of the fundamental reasons why socialists will always damage economies. They can’t understand that the size of the pie isn’t fixed.

    It’s about growing the pie and, indeed, making lots and lots more pies. You can snaffle as much of the pie as you can handle, there will always be enough left over. And if something goes wrong and there isn’t, someone else will make some more pies.

    The ACCC seems to me to be interfering in the growth of the size of the pie.

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