One of the hottest topics in my shadow portfolios at the moment is the Harper review of competition policy. It's the first time Australia has taken an in-depth look at competition issues since the Hilmer review of the 1980s, and the recently-released interim report has a lot of interesting things to say about how we can make competition work for Australian consumers.I've jotted down some thoughts on what the report's strengths and weaknesses are in an opinion piece for Business Spectator.
Harper review sets the right course, Business Spectator, 16 October
When the Whitlam Labor government introduced the Trade Practices Act in 1974, it chose to do something rather novel for the time. It put consumers front and centre in the discussion.
Whitlam and his Attorney-General, Lionel Murphy, believed that the ultimate goal of competition was to make goods and services more accessible for Australian consumers. The old days of regulation as a protection racket for inefficient firms and near-monopolies were over
Through further competition reforms under the Hawke and Keating governments, the first question and fundamental test remained the same: how can policy reform help families doing their weekly grocery shop or paying their utility bills get a better deal?
This emphasis on consumers is a welcome feature of the interim report from the Competition Policy Review panel led by Professor Ian Harper. The panel has taken the view that competition policy should strive to make markets work in the long-term interests of Australia’s shoppers, users and buyers.
The interim recommendations covering improvements in competitive neutrality, price signalling and re-sale price maintenance -- among others -- will all work towards creating a competitive environment that benefits consumers.
Importantly too, the panel has recognised the role that competition policy plays in encouraging innovation, entrepreneurship and the entry of new players into locked-up markets. Technology and the rise of new ‘sharing economy’ services like Uber and AirBnB have the potential to bring real benefits for consumers. They make things like holiday accommodation and taxi transport more available and affordable; they can also challenge established providers to innovate and branch out in interesting ways.
The Harper panel’s open-minded view of services like Uber is the right approach for an area of business that is still evolving. We should not reflexively seek to protect established players at the expense of emerging ones if those new players can offer Australian consumers a better deal. But at the same time, we must ensure that new and old competitors alike match up on a level playing field by ensuring newcomers pay their taxes and offer consumers appropriate protections.
While the Harper panel has got some big things right, there are some ideas in the interim report which must be approached with care. For example, the panel has explored whether government service delivery in health and education should be exposed to greater competition.
Given the Coalition’s well-known antipathy towards public health and education, there is a real risk that increasing competition will be used as a fig leaf for further cuts to health and education. In the May budget, the Abbott Government cut $80 billion from health and education.
We must also be mindful of how the Harper panel’s findings intersect with other policy processes now in the works. The government’s forthcoming green paper on agricultural competitiveness is one case where Coalition members such as Barnaby Joyce appear to be pushing a parallel -- and perhaps even competing -- agenda to that of the competition review.
The review is taking a thorough look at how Australia's competition policy serves consumers, not particular firms or producers. That’s as it should be, and Minister Joyce’s attempts to pre-empt its recommendations with his own are deeply unhelpful. The Harper panel should be allowed to continue its work and publish its final report without being leant on to go any particular direction by members of the government.
There are many other challenging and important ideas in the Harper panel’s interim report, and Labor intends to take the time to think hard about them all. Where there is existing regulation which no longer serves the best interests of consumers, we will be happy to participate in the process of winding it back. But where there is a clear case for maintaining the status quo, Labor will resist any attempt by the Abbott government to make ideologically-driven changes.
Putting Australian consumers first is the touchstone of Labor’s approach to competition policy -- yesterday, today and tomorrow.