Reinvigoration of Australia's Competition Culture
Tuesday 24 June 2014 @ 9.43 a.m. | Legal Research | Trade & Commerce
The Harper Review provides an ideal opportunity to reinvigorate Australia’s competition culture, Australian Competition and Consumer Commission (ACCC) Chairman Rod Sims said at the CEDA State of the Nation Conference in Canberra on 23 June 2014.
Mr Sims said:
“Australia has lost a lot of its pro-competition culture that it gained from the 1990s National Competition Policy. Clearly we need ‘Hilmer Mark 2’, as the current Harper Review is styled.”
The Chairman said 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 listing areas where competition has taken a back seat, Mr Sims said the prevailing approach to privatisation raises particular concern.
The Chairman commented:
“Where governments are increasingly failing is in ‘how’ to privatise. 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.”
The ACCC is urging governments to maximise competition, not sale prices, when selling state assets and believes governments are incentivised to cap competition against an asset that is being sold in order to maximise the sale price and says that will not work for the benefit of consumers or taxpayers in the long run.
The Perils of Privatising
The NSW Government is currently talking up the partial sale of its electricity poles and wires to raise funds for infrastructure projects, which concerns the ACCC. The Chairman cautioned:
… In privatising to maximise proceeds my worry is that the government will sell them in ways that give the buyers the ability to raise prices in the future … “
Recent NSW Government sales, such as the ports of Botany and Newcastle, have shown potential problems in the way sales are being handled.
Micro Economic Reform
In discussing micro economic reforms, Mr Sims said infrastructure is a major area of unfinished business. He identified road supply and usage, congestion pricing and shipping as three areas that could 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.”
In foreshadowing the ACCC’s submission to the Harper review, Mr Sims said 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.”
Deficiencies in the Competition and Consumer Act
Mr Sims nominated s 46 of the Competition and Consumer Act 2010 (Cth) (the Act) as a provision that is particularly deficient, and outlined two areas for improvement. He said a key success story of Australia’s competition policy is 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.
Mr Sims said:
“Given this common objective the current ACCC structure provides many synergies and economies of scale; it also avoids the many gaps that would arise if these complementary functions were separated; and it avoids the overlap that would arise as the same behaviour could be pursued by more than one agency.”
To address Australia’s diminished commitment to competition, Mr Sims said the role of market studies needs to be considered in order to gain an in-depth understanding of how sectors, markets, or market practices are working.
The ACCC Chairman further said:
“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 … The result of these studies can be enforcement action, recommendations to governments, simply shining a light on particular practices or, often more important, they can explain clearly to the public why there is not a problem.”
The click here to access the ACCC Chairman’s address to the CEDA State of the Nation Conference.
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Sources:
ACCC Release NR158/14
Article from abc.net.au
