Andrew Leigh

COMPETITION DRIVES INNOVATION *

Closing Remarks to the Australian Auto Aftermarket Innovation Awards Breakfast

Melbourne, Thursday 11 April 2024

In the 1950s, Sweden’s national electricity company noticed something curious. Although they managed a network of high-voltage cables, the biggest risk of death didn’t come from electricity. Instead, the greatest danger came when their employees were driving. At the time, cars either had no seat belts, or simple lap belts. If they crashed, deaths were common – even at low speeds.

So the company did something remarkable. Two safety engineers, Bengt Odelgard and Per-Olof Weman, developed the three-point lap-sash belt. Swedish inventor Nils Bohlin developed it for Volvo. In 1959, three-point seatbelts were installed in all Volvo cars.

Then Volvo did something remarkable too. It allowed any car company in the world to use its patent. Where lap belts had done little to save lives, lap-sash belts turned out to be the best piece of safety equipment ever installed in a car.

Just over a decade later, in 1970, the state of Victoria became the first place in the world to enact compulsory seat belt laws; after a trial of seat belts in police cars proved their effectiveness. In the 65 years since three-point seat belts were patented, they have saved over a million lives (O’Grady 2009).

It's not just in design where we’ve seen innovation. Today’s mechanics are far more productive than their predecessors. To see the difference, take a look at this short video, which shows how Formula One pitstops have changed from the 1950 Indianapolis 500 to the 2013 Melbourne Formula One Grand Prix (Pictures of the Past 2014). 

Innovation has always been highly prized in the automotive industry. And it’s something that should be rewarded.

So it’s great to be here today to recognise the best innovators in the automotive aftermarket industry – those of you who have deployed creativity and problem-solving skills to make the world a bit better for all of us.

The field of nominees for today’s Australian Auto Aftermarket Innovation Awards is strong. But that doesn’t surprise me. You make a living solving problems and your industry has adapted and shifted gears over many decades (AAAA 2020).

Most recently, you’ve seen a ‘booming’ four-wheel drive modification market (AAAA 2024), an era where new cars are virtually computers on wheels, and now the rise of electric vehicles.

Before long, I hope automotive innovators will bring us self-driving cars, though this is one area where the breakthroughs have fallen short of the boosters. I had hoped that self-driving cars would be a reality before my teenage sons got their driving licences, and before my octogenarian father lost his. Now, I’m not quite so confident.

Competition in need of repair

One of the best things governments can do to encourage more innovation across the economy is to get the competition settings right.

Competitive markets increase incentives and opportunities for businesses to invest and innovate, and it keeps Australian businesses competitive relative to our peers in other countries.

Less dynamic markets don’t have that same competitive pressure.

A lack of competition puts the brakes on innovation and entrepreneurs.

Alas, if we put Australia’s economy across the competition pits there would be visible concerns.

The warning light on the dash would indicate a rise in market concentration and an increase in price markups.

The wheels would be out of alignment as fewer workers enjoy the wage boost that comes from switching jobs.

And you would see wear and tear from the worst decade of productivity growth and real wage growth in the post‑war era (Leigh 2024).

Like the cars in the 24-hour Le Mans race, other countries find themselves at similar crossroads.

And like them, we are committed to fixing things because we know competition has the potential to accelerate economic growth.

Competition reforms in 1990s helped unleash a surge of dynamism in the economy, leading to a rapid increase in productivity.

The breadth of the reforms is hard to comprehend today but we have the same ambition to make the Australian economy zippier.

But we are not racing the same event. The challenges are different today.

The trend towards digitalisation, robotics and artificial intelligence, the growth in services, and the net zero transformation present challenges and opportunities.

Lots of potential for innovation.

And lots of potential for cooperation including working with state and territory governments to revamp our National Competition Policy.

We’ve recently asked the Productivity Commission to conduct a study to inform our approach and come up with priorities for governments to consider (Chalmers 2024).

Within Treasury, the Competition Taskforce has a brief to lift the bonnet and examine whether Australia’s competition laws, policies and institutions remain fit for purpose.

The Taskforce is looking at Australia’s merger laws as one of its first priorities – the first serious review in more than a decade.

The Taskforce has also published an issues paper inviting comment on the use of non-compete clauses in Australia and their impact on workers, businesses and competition.

Underpinning this work, the Taskforce is analysing large datasets and taking a fresh approach to understand Australia’s competition landscape.

Ultimately, the Taskforce’s role is to produce practical policies that will boost competition and help fuel innovation.

Consumer action

One of the goals of the Australian Automotive Aftermarket Association is to advocate the industry before the community, government and regulators.

And I know you are a strong advocate for consumer rights and consumer choice.

At a national level, the Albanese Government has taken action in several areas to improve consumer outcomes.

We’ve increased penalties available under the Competition and Consumer Act to ensure a level playing field for all Australian businesses, big and small.

We’ve delivered on our promise to strengthen unfair contract term laws – which are significant for the small businesses in the room who deal with larger businesses and standard form contracts.

We’ve just passed legislation to provide designated consumer and small business advocates with a process where they can report significant or systemic market issues to the Australian Competition and Consumer Commission.

And we’ve consulted on options to address unfair trading practices that may currently fall outside the scope of the Australian Consumer Law.

When it comes to enforcement, the Australian Competition and Consumer Commission continues to be vigilant on consumer guarantees.

In one recent example, the Federal Court ordered Mazda Australia to pay $11.5 million in penalties and pay compensation for misleading consumers about their rights when serious vehicle faults occurred (ACCC 2024).

Motor Vehicle Service and Repair Information Sharing Scheme

I also want to mention the Motor Vehicle Service and Repair Information Sharing Scheme.

After championing the need for access to service and repair information for many years, I was pleased to announce the Scheme’s start date of July 2022 as one of my first actions as Assistant Minister for Competition.

Prior to its introduction around one in ten vehicles taken to repair workshops experienced a lack of access to service and repair information (Treasury 2021).

And some will recall situations where cars were being towed back to the dealership just to have a pin code entered (Leigh 2022).

The Scheme is an innovation that wouldn’t be possible without the backing of industry.

For the first time, the Scheme required data providers, including car manufacturers, to make motor vehicle service and repair information available for purchase by all Australian repairers and registered training organisations at a fair market price.

As a result, consumers have greater choice of repairers who are able to safely and effectively repair their vehicles.

Given the Scheme is the first of its kind in Australia, we are not resting on our laurels. We are continuing to monitor for any potential implementation issues associated with the Scheme, as they arise.

The Government is committed to ensuring the Scheme remains fit-for-purpose, and we will continue to collaborate with the automotive sector to ensure Australia has world-leading right to repair laws.

Final Lap

Thank you to the Australian Automotive Aftermarket Association and today’s sponsors for their commitment to innovation.

Awards and expos are a great way to encourage and diffuse new ideas.

Sometimes all it takes is a spark – one idea leads to another, and you’ve set off a chain of innovation.

Competition creates the incentives for firms to outdo each other – and we all benefit from that.

Congratulations to all the award nominees and winners. I hope you have an enjoyable conference.

References

Australian Automotive Aftermarket Association (AAAA) 2020 History, Australian Automotive Aftermarket Association website.

Australian Automotive Aftermarket Association (AAAA) 2024, Growing 4WD Market To Be Celebrated At Auto Aftermarket Expo Australian Automotive Aftermarket Association media release issued 1 March 2024.

Australian Competition and Consumer Commission Mazda to pay $11.5m for misleading consumers about consumer guarantee rights for serious vehicle faults [Media release issued 14 February 2024].

Chalmers J 2024 Treasurer’s work together to boost competition [Media release issued 15 March 2024].

Leigh A 30 January 2024 Opinion piece: Chocolate, cartels and competition [Op Ed published in the Daily Telegraph].

Leigh A 2022 Keynote address to the Australian Repair Summit 2022, Canberra, speech delivered 5 August 2022, Canberra.

O’Grady S 2009 The man who saved a million lives: Nils Bohlin - inventor of the seatbelt, The Independent, 19 August 2009

Pictures of the Past 2014 ‘Formula 1 Pit Stops 1950 & Today’, available at https://www.youtube.com/watch?v=RRy_73ivcms

Treasury 2021 Motor Vehicle Service and Repair Information Sharing Scheme [Fact Sheet] Treasury.

* My thanks to officials in the Australian Treasury for valuable drafting assistance.