BCA Calls for Reinvigorated Competition Policy Reforms to Boost Productivity

The BCA has called for National Competition Policy to be reinvigorated and expanded to help Australia boost its productivity and lock in economic growth and prosperity.

The paper, Productivity Reform: A New Roadmap to Australia’s Future, which is contained within the BCA 2005 Annual Review, says the example set by National Competition Policy (NCP) provides the model for a new national productivity reform agenda to sustain productivity and economic growth, locking in Australia’s current and future prosperity.

“National Competition Policy has been one of Australia’s great reform success stories, playing a fundamental role in creating the incentives for sustained productivity and economic growth,” said Ms Katie Lahey, BCA Chief Executive.

“Along with other reforms over the past two decades, National Competition Policy helped to increase the average wealth of Australians by $83,000 and helped create 300,000 new jobs.

“However, the momentum from those reforms is running out and cannot be relied upon to drive future productivity growth.”

“A new reform agenda is now needed, focusing on boosting the productivity of the Australian economy,” she said.

National Competition Policy succeeded because it was developed around clearly stated policy goals, agreed by federal and state governments and backed by a strong institutional framework that bound governments together.

“NCP shows how much we can achieve with a common purpose. If we can do it once, we can do it again.”

“We need to do it again if we do not want our current prosperity to slip through our fingers,” said Ms Lahey.

The danger for Australia from a lack of co operation between governments is illustrated by recent reports that state governments are backing away from support for a national energy regulator, potentially delaying the national energy market by a decade.

“Australia cannot afford to delay national productivity reforms. We need to renew the reform process now, and we need all governments to overcome parochial interests and commit to reforms that will benefit all Australians,” said Ms Lahey

The paper forms part of the BCA’s advocacy of its policy reform package, released progressively throughout 2005, which puts forward integrated proposals for reform in the key areas of workplace relations, taxation, infrastructure and business regulation.

The BCA believes the new productivity agenda should encompass the unfinished elements of the current National Competition Policy program, while extending competition to areas currently outside the scope of NCP.

The paper argues the new national productivity reform agenda should:

  • Remove legislative and regulatory barriers to productivity.
  • Address existing and anticipated capacity constraints.
  • Achieve greater accountability in government administration and service provision.

The necessary steps to creating a new productivity agenda would include:

  • A strong and wide consensus on the need for further reform.
  • A commitment from governments to a new national reform agenda.
  • Agreement on a coordinated, cooperative process for identifying and delivering reforms, backed by binding commitments.

The new agenda should incorporate unfinished NCP reforms; a new NCP agenda dealing with those issues raised by the Productivity Commission in its review of NCP (health, education, human services and natural resources) and a new productivity agenda.

Implementation goals and timeframes would need to be agreed to, and backed up by independent and transparent oversight and possibly, the use of incentives and penalties.

“In each of the policy areas targeted by the BCA, a key impediment to reform and higher productivity is the separation of responsibility across federal and state jurisdictions,” said Ms Lahey.

The BCA calls on COAG to take responsibility for establishing a new agenda that will drive the reforms necessary to sustain and grow the economy and hence the prosperity of Australians.

“What is required is leadership and commitment on the part of all governments towards establishment of a new national productivity agenda as a key policy outcome in 2006,” Ms Lahey said.

Productivity Reform: A New Roadmap to Australia’s Future