Harper Review a Blueprint for a More Competitive Australia

04 June 2015

“The final report of the Competition Policy Review puts forward a substantive microeconomic reform agenda that in the main would set Australia up for a more prosperous future,” the Chair of the Business Council of Australia’s Efficient Regulation Committee, Danny Gilbert, said.

“The report builds on past reforms by extending competition into new parts of the economy to support continued economic growth and strong job creation,” Mr Gilbert said.

“A more competitive economy is good for consumers, and good for businesses facing global competition and substantial digital disruption. Making Australia’s markets more competitive will allow Australian companies to innovate, grow and create jobs.

“The panel’s comprehensive blueprint for competition policy reform deserves an equally comprehensive response from our governments.

“Governments should regard most of the recommendations as a package that together will lift Australia’s competitiveness, but there are some recommendations to change competition law which run counter to this and should be rejected. These include the recommended changes to section 46 of the Competition and Consumer Act that, if implemented, would overreach and constrain competitive conduct.

“We would be concerned if the government’s initial focus was on contested changes to the law rather than capturing the overwhelming benefits from implementing the productivity enhancing recommendations which make up the majority of the report.

“Delivering the benefits of the competition policy changes proposed in the report will be challenging and will require a steadfast commitment to reform by all governments,” he said.

Key competition policy changes

The Business Council supports most of the 56 recommendations in the final report.

The report’s recommendations in the areas of planning and zoning, coastal shipping, retail trading and infrastructure markets can lower business costs and encourage business investment.

The report’s road pricing reforms will enable the road transport sector to become more efficient and will help fund future investment. They should be implemented in a staged approach, starting with the implementation of COAG’s heavy vehicle charging and investment reforms.

A stronger commitment to competitive neutrality will level the playing field for private businesses and encourage private entrants in parts of the economy traditionally occupied by the public sector. 

The review’s proposed changes to the delivery of human services are potentially far reaching and will require extensive program redesign. The benefits to recipients from greater choice and innovation could be significant.

Competition law

The report contains a number of recommendations to simplify the Competition and Consumer Act that should be able to be implemented relatively quickly.

However, some of the proposed changes to the competition law, such as the section 46 ‘misuse of market power’ provision, should not be supported.

The panel has recommended fundamental changes to section 46, including by introducing an “effects test.” The changes risk harming price competition, new product development and business expansion for no clear identified benefits for consumers, employees or businesses, large or small.

Indeed, the panel acknowledges the recommended changes run the risk of capturing pro-competitive conduct and seeks to mitigate that risk. While the panel concedes there would be costs and risks associated with the proposed changes it has failed to identify any pro-competitive or pro-consumer benefits.

The recommended changes would introduce regulatory cost and uncertainty at a time when the forward investment intentions of Australian businesses are already weak.

The current version of section 46 works well, is consistent with the rest of the Act and international practice and is well understood. No examples have been given of misconduct going unchallenged under the current provision. There is no good reason to expose the economy to the costs and uncertainty from this unnecessary legislative change.

Any changes to the Competition and Consumer Act must be subjected to a rigorous Regulatory Impact Assessment and cost-benefit analysis.

Institutional changes

Important changes to Australia’s institutional settings outlined in the report can deliver the objective of fit-for-purpose competition policy on an ongoing basis.

•    The proposed Australian Council for Competition Policy (ACCP) will have a critical role to drive implementation and monitor progress of the reform agenda. Competition payments should be tied to reform effort and ensure that revenue gains flow to the jurisdictions undertaking the reform.

•    The introduction of a national pricing and access regulator will support functional separation, create a centre of excellence for access regulation and should, in time, lead to greater national consistency for businesses operating across jurisdictions.

•    The panel’s view that governance reforms will be needed to inject a wider range of views into Australian Competition and Consumer Commission (ACCC) decision making is supported. The ACCC should also quickly implement the panel’s recommendation to establish a media code of conduct.

“Overwhelmingly, the panel has produced a very good report that identifies the major reforms needed to improve competition policy in Australia and addresses the competition policy issues that the Business Council considers to be of most importance,” Mr Gilbert said.

“However, the proposed changes to section 46 remain a major concern for the BCA and should not proceed.

“The government is to be commended for commissioning this review and the panel commended for delivering a comprehensive agenda for competition policy reform.”

For further information contact:
Scott Thompson, Director, Media and Public Affairs
Business Council of Australia
Telephone (03) 8664 2664 • Mobile 0403 241 128



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