Harper Competition Review to promote productivity and entrepreneurship

Australia's competition policy needs a dramatic overhaul to promote productivity improvements and growth in the economy, a CEDA forum in Victoria has been told.

Federal Minister for Small Business, the Hon. Bruce Billson said the Harper Review of Competition Policy has a broad remit to consider impediments to competition that "effectively gum up the opportunity and restrict the potential of our economy".

This includes an examination of new market structures in groceries and petrol, as well as the effects of digitisation.

The review - the first major review of competition policy for 20 years - would be critical to making the regulatory system "a more supportive ecosystem for entrepreneurship," he said.

This is particularly important given the challenges facing Australia including declining terms of trade, an ageing population and the legacy of poor productivity growth over the past decade.

"Effective competition in our economy is a key part of its strength and its dynamism," he said.

"Competitive markets benefit consumers by putting downwards pressure on prices and promoting value and choice.

"Over time these competitive pressures, where they are healthy and fair, can drive innovation and investment in new products, new services and new technologies…innovation will drive economic growth and improvements in living standards.

In addition Mr Billson said everyone with "an opinion, an argument or a perspective" should contribute to the review.

"We need to do all we can to improve productivity growth - to do things better if we are to sustain our living standards…our living standards are far from a birthright for our nation; we need to work for them," he said.

Former Australian Competition and Consumer Commission (ACCC) Chair, Professor Graeme Samuel, told the audience the review would be a waste of time if it focused on amendments to competition law which had been "debated ad nauseam".

Instead it must focus on an ongoing program of reform under the National Competition Policy.

"In my view this is clearly the most important remit of the review …a re-energisation of that policy which died a premature death in 2004 will do more for the social and economic wellbeing of the Australian community than laborious debate over the wording of provisions of our competition law," he said.

National Competition Policy should focus on competition in energy as well as water trading arrangements for irrigation and urban use; competition in freight and passenger transport; taxis and hire cars; pharmacies; and single desk marketing for agricultural products.
Applying private sector pricing and efficiency principles to regulated bodies could also produce "stunning dividends" for the community, he said.

Professor Samuel said the Commonwealth Government should re-instate the successful policy of making payments to states and territories conditional on specific competition reforms.

"Leadership in this area requires copious amounts of the three c's: conviction courage and communication," he said.

"It requires a strong sense of values and sense of purpose and courage to pursue those values in the face of vested interests," he said.

"It requires a compelling understanding and acceptance of the importance of placing the public interest above that of private and political issues.

"And communication is as vital as conviction and courage for if the electorate is to be persuaded to accept a reform package, it must first understand the problems sought to be dealt with."