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Legislation

Competition Policy Reform Act 1995 (Commonwealth)

 

Summary

Implementation of Hilmer Committee reforms

See also intergovernmental agreements implementing National Competition Policy

Details forthcoming - but see Hansard and Press releases below.

 

The Act

The Competition Policy Reform Act consisted of 92 provisions and three schedules. It was introduced into Parliament on 29 March and was assented to on 20 July 1995. The six major elements of the legislation (as set out in the EM) included:

ACCC

The Act abolished the Trade Practices Commission and Prices Surveillance Authority and converred their powers, along with additional functions, on the Australian Competition and Consumer Commission (ACCC).

National Competition Council

The Act established a new body, the National Competition Council, with advisory and research functions and 'the role of making recommendations in relation to access and pricing). These can be found in a new Part IIA to the Act.

Access Regime

The CPRA established the Access regime in Part IIIA of the Principal Act.

Amendments to competitive conduct rules

The Act made a number of amendments to competitive conduct rules in Part IV of the Principal Act, including:

  • providing for authorisation (on public benefit grounds) of price fixing for goods and RPM
  • repeal of price discrimination provision (then in s 49 of the Act)
  • extension of the rules to the resupply of services
  • application of notification provisions to third line forcing
  • removal of Crown immunity for the States, NT and ACT in so far as the Crown carries on a business

Extended application to competitive conduct rules

The EM notes that provisions 'are included to facilitate the application of the competitive conduct mles and related provisions of the Principal Act to areas within State and Territory jurisdiction, and to ensure that the Commission and the Federal COUlt can exercise administrative and judicial powers respectively.'

These powers are expected to be conferred by State and Territory legislation.' States subsequently enacted this legislation. See, for example, Competition Policy Reform (New South Wales) Act 1995 (NSW).

Prices oversight

The Act formalised monitoring powers and extended coverage of prices surveillance and monitoring to State and Territory owned businesses.

 

The bill

The Competition Policy Reform Bill was introduced to the Senate on 29 March 1995.

See also Bills Digest

Explanatory Memorandum

The EM can be found on the Australian Parliament web site.

 

Hansard (including second reading speeches / consideration in detail)

House of representatives

Mr Katter (National Party of Australia) (House Hansard, Thurday, 29 June 1995, page 2726)

... tomorrow I most certainly will be voting against ... the Competition Policy Reform Bill, which I think is one of the most pernicious pieces of legislation that I will see in my lifetime come into an Australian parliament. I seem to be very isolated in that viewpoint on both sides of the House, although I suspect that there are many people sitting opposite who would agree very strongly with my point of view. I suspect there are a number of people on my side of the House who would oppose very strongly the legislation.

Mr Gear (ALP, Assistant Treasurer) (House Hansard, Friday, 30 June 1995, page 2793)

This bill is the central element of a new national competition policy. It will establish processes and institutions to encourage competition, not just in particular sectors, but across the whole economy. This bill and the associated agreements between the Commonwealth and state and territory governments have the potential to trigger reform initiatives for many years to come. Implementing this policy is the most important single development in micro-economic reform in recent years. Ultimately, the ability of the economy to grow and provide jobs and an improved standard of living depends upon how well the productive potential of the economy is employed and enhanced.

Mr Costello (Liberal Party, Deputy Leader of the Opposition) (House Hansard, Friday, 30 June 1995, page 2804)

Mrs Crosio (ALP, Parliamentary Secretary to the Minister for Social Security) (House Hansard, Friday, 30 June 1995, page 2810)

Mr Andrews (Liberal Party) (House Hansard, Friday, 30 June 1995, page 2814)

Mr Gear (ALP, Assistant Treasurer) (House Hansard, Friday, 30 June 1995, page 2819)

... Another area where we did not agree with the outcome of the report was that the prime focus on competition should be on economic efficiency. We stayed with the public interest test. Another area where we deviated from the report was in pricing. If you read the Hilmer report and you have a look at the final outcome of this bill and the inter-governmental agreements that go with it, you will find that the government has moved a long way from the rather limited recommendations that were contained in the Hilmer report to the government.

So it is absolutely wrong to think that, just because a report to a government favours certain things, the government should automatically adopt those things. ...

The other thing I would say about this package, and I stress this as often as I can, is that it is not about privatisation; this whole package is about competition. ...

Third reading in the House (House Hansard, Friday, 30 June 1995, page 2820)

Senate

First reading (Senate Hansard, Wednesday, 29 March 1995, page 2433)

Second Reading (Senator Crowley - ALP, Minister for Family Services) (Senate Hansard, Wednesday, 29 March 1995, page 2434)

This bill is the central element of a new national competition policy.

It will establish processes and institutions to encourage competition, not just in particular sectors, but across the whole economy. This bill, and the associated draft agreements between the Commonwealth and State and Territory Governments, have the potential to trigger reform initiatives for many years to come. Implementing this policy is the most important single development in micro-economic reform in recent years. ...

... The payoff from this bill for ordinary Australians is very real. It paves the way for cheaper prices, more growth and more jobs. It is an important element of our ambition to reduce unemployment to around 5% by the end of this decade. ...

The origins of the bill may be traced to 1991 when the Commonwealth and the States and Territories agreed to examine a national approach to competition policy. In 1992, the Government commissioned the National Competition Policy Review, chaired by Professor Fred Hilmer. The Hilmer Report was completed in August 1993. Since then the Government has been engaged in extensive consultations with State and Territory Governments on implementation of the Report. The Report was discussed by the Council of Australian Governments in February 1994 and August 1994.

The vision of the Hilmer Report was for a national competition policy in which the Commonwealth, States and Territories cooperated to ensure that universal and uniformly applied rules of market conduct apply to all market participants regardless of their form of ownership. The Commonwealth has worked hard to realise this vision ...

Report of Economics Legislation Committee

Senator Childs (ALP, NSW) (presenting the report, Senate Hansard, Wednesday, 7 June 1995, page 933)

Senator Boswell (Nationals, Qld) Senate Hansard, Wednesday, 7 June 1995, page 933)

I believe that the referral of the Competition Policy Reform Bill to the Senate Economics Legislation Committee accomplished a couple of things. Firstly, it gave an opportunity to many of the groups affected by the legislation to raise questions about it and to seek clarification in many instances. This was the first time these groups had a chance to have any input or to gain first-hand knowledge of a major piece of economic legislation. Secondly, the committee hearings and submissions served to highlight the previously unacknowledged concern of the small business sector about how the national competition policy would affect it. ...

The legislation has the potential to be very far-reaching and may have an impact far broader than originally intended.

Senator Margetts (Greens (GWA), WA) (Senate Hansard, Wednesday, 7 June 1995, page 934)

... Whatever you believe in relation to competition policy, I believe that it is not responsible for this parliament to be jumping in to actually legislate the changes until we have looked responsibly at what the implications are in those places that have made those kinds of changes.

... whilst I acknowledge that the committee report acknowledges some of the serious concerns and the need to address those concerns, I am deeply worried that the recommendation is, 'Let's go on with it anyway,' with undue haste without first working out how those serious concerns will be met.

Senator Harradine (Independent, Tasmania) (Senate Hansard, Wednesday, 7 June 1995, page 935)

... I know the government wants to get the program through, but I would request that the government ensures that Treasury provides the information that I, at least, have sought on this matter, and that it does so without the sort of obfuscation that one has seen, at times, from Treasury.

Senator Brownhill (Deputy Leader of the National Party, NSW) (Senate Hansard, Wednesday, 7 June 1995, page 935)

Senator Spindler (Democrats, Victoria) (Senate Hansard, Wednesday, 7 June 1995, page 1043)

I wish to raise some concerns that the Australian Democrats have and which were placed on the record this morning in our dissent to the report of the Economics Legislation Committee on the Competition Policy Reform Bill. That bill raises a fundamental issue of process as well as a number of substantive concerns. The competition policy agenda incorporates a radical rethinking of the role of government and government services.

This rethink has occurred within a narrow ideological framework based on the concept that competition, just like greed, is good at all times. There has been inadequate public debate on what this agenda means, where it is leading and why this narrow framework should be imposed on the provision of community services, the furthering of ecological sustainability, improving consumer protection, health and safety or the promotion of social equity.

These issues were not being adequately debated ...

A number of matters in the Competition Policy Reform Bill raise particular concerns and amendments concerning these matters are under consideration. I will address them briefly. The first is the definition of public service. ...

The second concern is about the access regime. ...

The next issue I wish to address is local government. While it is represented at COAG, the local government sector is not party to the agreements. ... Finally, there is the issue of representation. The proposed composition of the National Competition Council is in need of review. At the very least, provision needs to be made for the inclusion of a consumer representative.

Senator Gibson (Liberal Party, Tasmania) (Senate Hansard, Thursday, 22 June 1995, page 1694)

... The opposition welcomes the Competition Policy Reform Bill 1995. We are pleased to see competition being brought in for an additional substantial sector of the Australian economy. The emphasis now moves back to the states. The coalition is delighted that the state premiers have signed off and have agreed to implement these difficult reforms. ...

Senator Kernot (Leader of the Australian Democrats, Queensland) (Senate Hansard, Thursday, 22 June 1995, page 1697)

Senator Kernot - Here we go again, embracing another theory. Despite all the evidence of the last decade, here we go again. Unquestionably competition is always good -

Senator Panizza - Of course it is.

Senator Kernot -I will go on to talk about that in my speech. I might refer to Compass Airlines. I will come back to aviation later. Through you, Mr Acting Deputy President, I say to Senator Panizza: you cannot always embrace theories unilaterally or universally without thinking about their impact on ordinary people. You must ask the question: who pays the cost of change? That is the point I want to make in this speech. The Competition Policy Reform Bill 1995 will help set in train one of the most radical and far-reaching public reforms. The public sector as we know it will be forced to restructure in far-reaching and not necessarily positive ways. This bill will force public service agencies to reassess their role, their relationship to the public, and to realign their operations. I do not object to any of that. However, the focus is to do all of this on largely economic commercially driven lines. As I said, nobody objects to the notion of an efficient public sector, but the question is who pays for it.

In the Democrat's view, competition policy represents the victory of economics over equity, of competition over compassion and of accounting over accountability in the management of public services. Yet this bill, and the ramifications of this bill, have been the subject of very little public debate. [yes, apparently she was serious when making this claim; one can only assume the independent Hilmer Inquiry was considered by the Senator as entirely irrelevant] It has been the subject of minimal public scrutiny. It has been debated in closed forums - not by Australian people who own this debate and the outcome of it.

While the Industry Commission has debated it, while cabinet has debated it, and while COAG has debated it, everywhere I go Australian people are catching up with the fact that it exists. In my view, this bill highlights that parliament has been largely sidelined by the Keating government as the forum for policy debate.

The deal with the states on competition policy is already signed and sealed, and all this bill does is make sure it is delivered. The merits of the argument as to whether the Hilmer path, as opposed to any other path, is the best path or the only path have not been adequately aired. It is simply assumed. The majority of the media in this country has already accepted the Hilmer philosophy as gospel without any challenge to the likely effects or the fundamentally doctrinaire belief underpinning it that all competition is good and all regulation is bad - just like Animal Farm.

...

Competition policy has great potential for banditry and bastardy. We want to make sure that we keep the bandits and the bastards as honest as possible. [presumably unregulated monopoly is not the alternative the senator was considering when making this claim]

... It is predominantly because we do not believe that this bill has had enough public debate - and I do not mean parliamentary debate; I mean genuine Australian citizenry debate - that we are going to vote against it. We are not doing that because we believe everything in the bill is bad - of course there are some positive aspects to it - but because the competition policy reform agenda is based on a flawed premise [the Senator did not enlighten us as to why/how the premise was flawed (if there was one discernable - and given she acknowledges the extension of authorisation provisions the claimed premise that competition is always good was certainly open to challenge]] and a duping of the Australian public.

We are told that competition is good. Senator Gibson said that. The Hilmer report is laudatory of the untrammelled benefits of market and competition underpinning it. But we have heard that line for 12 years in this country since our first foray into deregulation. ...

Senator Boswell (Leader of the National Party of Australia, Qld) (Senate Hansard, Thursday, 22 June 1995, page 1700)

... The press in this country have not given this particular bill adequate debate. ...

The National Party of Australia fully supports and endorses the concept that economic efficiency is best served in a purely competitive market, where businesses can get on with their responsibility to maximise profits. However, my concerns are not within the bill itself but in whether it is possible to legislatively and unilaterally impose an economic principle or philosophy on a nation that will achieve its lofty objectives.

There are two major obstructions. The first is that while business must aim to maximise profits, the government must aim to maximise social or public benefit. The two do not necessarily go hand in hand. That is why, in this huge country of ours, we have community service obligations and cross-subsidies that may not maximise profits but do deliver equality of price of access by Australian citizens to telephone, mail, electricity and so on.

...

We are concerned about the impact on services which are meant to be universally accessible, even if there may be a fee for service. What are the chances of them remaining fully accessible if they have to go to full cost recovery?

...

How do we discern and define public benefit? The ultimate guardians of the public benefit are our Australian parliaments. Under the competition reform package, however, this power is abrogated to the competition commissioner. He or she will play an enormous role in adjudicating whether a specific market is operating in a way that is for or against the public benefit.

It comes as a surprise to many that small businesses are part of this nationwide push for improved competition. ...

The danger is obvious: unless you have a government committed to small business, which sees beyond the theory, then you are placing hundreds of thousands of small businesses, professions and farmers in a very vulnerable situation. ...

No-one can reasonably object to improving legislation. No industry can reasonably object to changes that will improve efficiency and competition in the public interest. Many rural industries have worked hard in recent years to do exactly that. But I think it is quite reasonable to be wary of simplistic maxims such as, 'Thou shalt deregulate', that assume a direct causal relationship with pure competition and public benefit.

...

The Hilmer report and the subsequent Industry Commission report used the fundamentally flawed assumption of pure competition, which is not possible in industries characterised by unequal market power.

...

Unless you have a strong fighter in parliament for small business, the outcome could be disastrous. There is a discussion these days about getting more women into parliament. I totally agree with that, but there is a category of Australian that is almost as rare as a bilby, and that is a parliamentarian with a small business background. I trod the boards of small business for 20 years before coming here ...

Senator Abetz (Liberal Party, Tas) (Senate Hansard, Thursday, 22 June 1995, page 1704)

...

It is anticipated that as a result of the reforms to be initiated by this legislation, there will be an average saving to each Australian household of about $1,500 per annum. I believe that that is a significant saving and a significant benefit for average Australians who otherwise might not normally be interested in a bill which is entitled the Competition Policy Reform Bill, but there are very real benefits for them - the ultimate consumers - at the end of the day, estimated at $1,500 per Australian household.

I welcome the general thrust of this legislation, look forward to its implementation and also look forward to other important reforms being undertaken as soon as there is a change of government.

Senator Margetts (Greens (GWA), WA) (Senate Hansard, Monday, 26 June 1995, page 1754)

... It is indeed unfortunate that debate has been so limited on this issue. It seems another of the areas where, philosophically, there is little difference between the major parties. As a consequence, many issues have not been brought out. Competition policy is primarily about extending the power of the private sector. You can talk about safeguards, but these are proposed to calm concerns about this extension of the private sector into what has been considered the public domain. Competition policy is about eliminating the public domain, maybe not entirely but at least as far as possible. Why would anyone want to do that? A few people—generally people with economic power—might make a good profit out of it. But this is not the reason we are told we should want this. The reason we are given is that the private sector will somehow be more efficient and cheaper and that we will all somehow pay lower bills. ...

Senator Calvert (Liberal Party) (Senate Hansard, Monday, 26 June 1995, page 1758)

... I say in closing that we must remember that the prime objective of this act is to enhance the welfare of Australians through the promotion of competition and provision for consumer protection. While all legislation passing through our hands should be good for Australians, this bill is seen to be more than usually beneficial, placing as it does change and progress before us and making organisations work for the betterment of Australia. ...

Senator Spindler (Australian Democrats) (Senate Hansard, Monday, 26 June 1995, page 1760)

Senator Chapman (Liberal Party, SA) (Senate Hansard, Monday, 26 June 1995, page 1763)

... We need to ensure that markets are exposed to international competition in order to improve the productivity of domestic industry. As a nation we have addressed the issue of competition somewhat late.

Twenty years ago there was fear at the introduction of the Trade Practices Act. It was fear of the unknown. The same emotion applies to the introduction of the Hilmer reforms but they are essential to our future well-being.

Senator Chamarette (Greens) (Senate Hansard, Monday, 26 June 1995, page 1768)

... I rise to speak to some of the environmental and social justice aspects, particularly in relation to water and power....

The Greens are indicating that they do not support this legislation. We regret that we are rushing into it because of the political monoculture in which we live where the major parties have indicated support for it. We urge people to be aware of the dangers that it will impose in environmental and equity terms on the Australian community.

Senator McGauran (National Party, Vic)) (Senate Hansard, Monday, 26 June 1995, page 1770)

... whatever competition policy might mean to senior executives and the mandarins of Canberra, to most Australians it is a very nebulous term. ...

Senator Coulter (Australian Democrats) (Senate Hansard, Monday, 26 June 1995, page 1772)

The Competition Policy Reform Bill is possibly one of the most important pieces of legislation to come before this chamber, because it underscores and emphasises once and for all the very damaging direction in which this government is taking the country.

One cannot legislate for goodness. However, a government can, over time, pass a series of laws which so undermine the fabric of society that anti-social behaviour flourishes and the moral and cultural cement that binds citizens together in a society is inexorably dissolved. The bill before us today marks one of the stages of that dissolution - just one of the stages. For over 200 years Australians have built up a culture of tolerance and mutual helpfulness. In the few short years of this Labor government, first under Prime Minister Hawke and now under Prime Minister Keating, this mutual respect and support one for the other has been steadily eroded.

The Competition Policy Reform Bill is possibly one of the most important pieces of legislation to come before this chamber, because it underscores and emphasises once and for all the very damaging direction in which this government is taking the country.

  One cannot legislate for goodness. However, a government can, over time, pass a series of laws which so undermine the fabric of society that anti-social behaviour flourishes and the moral and cultural cement that binds citizens together in a society is inexorably dissolved. The bill before us today marks one of the stages of that dissolution - just one of the stages. For over 200 years Australians have built up a culture of tolerance and mutual helpfulness. In the few short years of this Labor government, first under Prime Minister Hawke and now under Prime Minister Keating, this mutual respect and support one for the other has been steadily eroded.

The intentions are laudable, but nonetheless dangerous and their erosive effect on our culture and our social life is everywhere to be seen by those with eyes not blinded by the religious ecstasy of economic rationalist ideology. The simplistic economics which began to pervade our schools of economics after the Second World War spread the landmines which are now exploding and destroying our humanity. Not only did this new economic orthodoxy ignore the real world, cutting and hacking at the real world to make it fit its preconceived and simple models, it turned its back on the broad humanitarian context in which many earlier academic economists embedded their economic theories.

We all know the simple dictionary used by the economic rationalists: competition, market forces, level playing field, economic growth as a sine qua non of human welfare, `the market says', deregulation, smaller government, less tax, consumers instead of people. And so it goes on. Its basis is the stupid and hazardous assumption that humans are driven by an insatiable material greed.

...

In summary, I believe that this legislation is very wrongly conceived. Not surprisingly, of course, it is conceived in the same context that much government legislation has been conceived in in recent years. It makes assumptions that are faulty about the nature of human beings, and it makes assumptions that are incomplete and damaging because of the importance it gives to that one characteristic of seeking to fulfil an endless and insatiable material greed.

Many people have seen what was happening to our society: Galbraith was just one. Many people writing in the 1960s, 1970s and into the 1980s warned us of what lay ahead. Unfortunately, we have gone ahead and are putting our heads further into the noose with this legislation, and I believe as a society we will be the poorer. I believe this legislation and the whole ideology that goes with it should not be supported. We need to turn around, we need to go back the other way; we are heading up a blind alley. It will cost us a great deal materially in dollars as well as in our humanity. For all those reasons this legislation should not be supported.

Senator Campbell (Liberal Party) (Senate Hansard, Monday, 26 June 1995, page 1775)

...

I congratulate the government and the heads of government who sat around and worked out this competition policy. It is a great step forward. But if Australia is to make the most of this initiative, we would expand the principle of competition to a whole range of other areas.

Senator Woodley (Democrats) (Senate Hansard, Monday, 26 June 1995, page 1778)

The Competition Policy Reform Bill 1995 represents one of the greatest triumphs of economic rationalism over the basic needs of everyday people. It is a bill that the Australian Democrats oppose. The Democrats have continually spoken in the Senate about the dangers of trying to impose an economic model of competition on social and welfare services. This has been graphically illustrated by one of the ideas put forward to date by the Industry Commission. These ideas include the tendering and contracting out of welfare services and the introduction of benchmark measures across different welfare services.

...

Only market fundamentalists whose minds are made up and who do not want to be disturbed by what has happened in other countries which have gone down this road would espouse this madness. The Democrats will not support legislation that ignores the effects on people and the community, in pursuit of a mythical economic ideology.

Senator Tierney (Senate Hansard, Monday, 26 June 1995, page 1780)

I rise to add my support to the coalition on this bill that is now before the Senate. The Competition Policy Reform Bill 1995 is a very vital piece of legislation for Australia. The national competition reforms can lower business costs, promote new investments and create new jobs. ...

The Hilmer reforms that have sparked this bill really do address a real need in our economy; that is, the reform of the public sector enterprises to make them far more competitive. This is very welcome because Australia is still not fully modernised to compete in the world economy. ...

Senator Lees (Australian Democrats) (Senate Hansard, Monday, 26 June 1995, page 1783)

[The bill moved to Committee where amendments were moved on 27 June 1995]

[Third reading took place on 29 June 1995 and the bill moved to the House of Rep's on 30 June]

Third reading - Senator Margets (Greens (GWA), WA) (Senate Hansard, Thursday, 29 June 1995, page 2217) (opposing and condemning the bill)

I rise to make some final comments with regard to the Competition Policy Reform Bill. I believe that what has been done in this legislation is shameful and will not benefit the community, the general public, at all. I believe the objective of this bill is to cut up power, water and other utilities and force the states to sell them off according to a federal agenda to sell off large airports, increase costs for remote communities, and eventually close down or lead to a reduction of airports, post office agencies, train stations, medical services and schools.

  Part of the agenda is deregulation, where regulation is so-called anti-competitive. The Industry Commission called for all sorts of deregulation, all the way to cutting out requirements for minimum width for footpaths. You tell me what kind of competitive barrier regulations on footpath width represent. Yet the Industry Commission identifies this as an area for reform.

  I think we will see a lot of this sort of thing, without consultation and with very little consideration and probably without much sense but a lot of dry right bureaucrats will be busy. Of more concern are the perennial targets. I am sure regulations on trading hours will be the first to go. We will encourage the United States style shopping with a few big chains opening 24 hours a day, employing juniors to keep costs down. You can bet such a push will be accompanied by pressure to eliminate any overtime regulations based on unsociable hours. You can bet it will put a lot of family businesses, corner delis and such out of business. Their major niche was the after-hours trade. So much for competition.

  Coles, Woolworths and maybe a franchise deli chain like 7-Eleven will survive. It could mean death to thousands of small businesses. Competition is about survival of the fittest: the biggest with the most economic muscle. The name `competition policy' is misleading. This is not about consumer choice but about privatisation and deregulation. Concerns about privatisation and the potential impact on consumers, the community and the environment are being overruled.

  Privatisation will lead to private sector monopolies or oligopolies with consequent higher prices for many people and a reduction in the ability to pursue issues in the public interest. Yet we are told that the Trade Practices Act will allow anti-competitive private sector business behaviour to be taken to court.

  This does not correspond with the general view of the current actions of the Trade Practices Act in relation to the private sector. For example, the oil companies have for some time been recognised as being an effective oligopoly that engages in price fixing and generally recognises the market share of other players. The pricing of CDs in Australia has also been noted as being significantly higher than in other countries for no apparent reason. Monopoly arrangements on book supplies have also attracted criticism for decades: in part because of the substantially higher prices that result and in part because of issues of simple availability.

  Recently, government went so far as to join with other governments to re-establish the effective cartel of aluminium companies. This has been broken by the introduction of Russian aluminium. The government has established a minimum price for the protection of industries. These are industries assumed to take risks and, as a consequence, all profits from this intergovernmental action flow to the industries and their stockholders—not to the public and not to the governments concerned. The companies are not taking risks. Governments are helping them to form cartels to increase prices and guarantee them higher profits. There is no doubt that the move results in higher consumer prices on a global basis. It affects inputs in a range of industries and they will also end up raising their prices.

  This is not competition that government seems to be interested in. It is the use of so-called competition policy to justify a range of social cutbacks in the name of economic efficiency. It has been used to drive dismemberment of public sector activities and a radical change in federal-state powers.

  I would like to call the attention of honourable senators to the proposed operation of section 51(1) which used to create exemptions from trade practices for activities specified by law or regulation. Any authorised legislation is still exempt, but to be authorised under section 51(1B)(a) a law must explicitly refer to the Competition Policy Reform Act. This effectively means that we start out with no legislation or regulation exempt. Any attempt to create exempt legislation must be approved by the commission and the minister. Government amendment No. 5 will further extend this to conduct under licenses. These are mentioned and are now subject to section 51(1B)(a) and they must refer to the Competition Policy Reform Act to be exempt, and are therefore not exempt.

  I would like it noted that in the whole process it appears that the minister has absolute veto. The state ministers can inform the commission, and the commission, with the council, holds an investigation and reaches a conclusion. This is passed on to the minister who considers the issue and decides. If she or he decides in contradiction to the commission, the commission accepts it. This is the chain of power. Read the act carefully.

  This bill will create an organisation of considerable power; a vehicle to examine almost any aspect of government at almost any level—federal, state or local; a vehicle which can accept or reject decisions of parliament; a vehicle which will examine and approve or reject laws; a vehicle which will examine the private sector, the public sector and the service or community sectors; a vehicle which can effectively pass judgment on the department stores and businesses of this country; and a vehicle which can create offences by regulation and prosecute them through its own tribunal. It can examine prices and it can set prices.

  We are asked to create this immensely powerful vehicle for executive action; action which makes parliaments subsidiary and sets itself above them in judgment. It is a far more radical arrangement of power than almost any suggestion on constitutional change in relation to the republic debate.

  We will set up this very powerful vehicle operating in relative autonomy but answerable to a minister. As Senator Boswell pointed out, it is a vehicle that will act by regulation. It is the ultimate vehicle that acts by regulation. It comes with its own think-tank, its own tribunal. It need not ever converse with parliamentarians. It will communicate by edict—by acceptance or rejection of the efforts of poor representative democracy. It is the wave of the future.

  State government has been told to write an agenda for reform and, as an afterthought, to include what they will do for safeguards. It can bring this back in a year. By this time, the ACCC should be up and can pass judgment on what the states have put forward. I hope that makes the situation clear. The states' agenda is conditional. The final agenda will be decided by the commission. It will then be approved by the federal minister. All those access agreements must pass the least restrictive to competition test. This is the sort of thing the World Trade Organisation applied in relation to various regulations.

  Government makes decisions to protect and maximise its revenue. So we have it moving to a coordinated buying policy which will see virtually a third of computer goods bought from single sources. What is competitive about this? Nothing. Government does not pursue competition. It pursues short-term budget balancing and cost cutting. The point of privatisation is to generate short-term revenue. It is one-off revenue. At the same time, it eliminates income streams and the efficiency of potential integration of objectives and cooperation between departments. It will entail a massive regulatory effort to replace the natural oversight of a government agency. Either that, or there will not be regulation or consumer protection.

  In competition, people cut corners. This might save costs, but there are prices to pay. They usually do not come due until those that have made the cuts have gone. It is possible to cut corners by doing things like putting in lower standard steel piping for water mains. The savings or profits are made immediately. The cost does not appear for over a decade, but by then the cost is considerable. Another form of efficiency is gained when a water provider does not need to be concerned about downstream issues or long-term management. All the record keeping, labour and expertise becomes unnecessary. Lots of money is saved when the activities stop, but no management generally means mismanagement with a cost later. Of course, that cost is considered a natural disaster and a social cost.

  These types of approaches might provide short-term, narrow focus economic gains, but they are not efficient socially or from the perspective of overall economics or outcomes. Efficiency properly means doing more with less. The thing those keen on competition seem certain we need less of is labour. While there may be inefficiencies in some hypothetical instances, what often seems to have occurred in the last 10 years is that retrenchments have meant doing less with less.

  We see moves for efficiency in hospitals. When an economist sees a worker in an emergency ward who is not busy stitching up someone, that economist sees inefficiency: obviously there are too many staff. The ideal situation from an economics standpoint is when the staff are always flat out. They are flat out on a calm night, they will have people waiting for urgent treatment on an average night and people waiting longer on a heavy night. They will be stressed and rushing like competing track stars. Is it efficient?

  When a medical administrator sees an emergency room without enough staff to cope with a normal heavy night in a timely way, she or he sees a different sort of inefficiency—one that might lead to death or permanent injury—rather than a large outlay figure. Efficiency in medical terms is having enough staff to deal with the injured in a timely way on most normal nights, whether they are heavy nights, average nights or calm nights. This means that if you have enough to cope on a heavy night, you might be less than flat out on an average night. You may be able to relax a bit on a calm night. The test of efficiency is in the functional outcome—whether people get the treatment they need.

  People tend to see hospital services like the hospital administrator does. They see having to wait as inefficient. They call for efficiency and the economists step in and cut staff. Services are theoretically cheaper, although you might die waiting for them, or be in a lot of pain, and the cheaper treatment usually takes the form of less government outlay rather than actual savings for consumers.

  Is this paranoid fantasy? Not long ago an administrator at Woden hospital complained of exactly this, stating that he was quitting and that staff levels could not cope with an average night. He outlined the consequences of a real emergency, a bus crash or similar accident. Yet this is what we are told is efficient medical treatment.

  Is it efficient to eliminate rural clinics and centralise resources in big hospitals? Is it efficient for all the people who have further—sometimes very much further—to go, often for quite basic treatment? Is it economically efficient? Does it lower your hospital bills? No. It probably increases the cost of transport and time lost. But the argument is that it lowers the government hospital bills and Medicare payments. Of course, the ultimate in efficiency is where government has no costs and people pay for all the services they use themselves. It is very efficient because it reduces demand. It reduces demand because many people cannot afford treatment.

  A less horrific example of doing less with less—one that makes a different but related point—is of public transport. If a route is not frequently used and the bus is not fully loaded, it is less efficient. The economists would argue that you should reduce the number of times the bus passes. Loading per trip will be greater, but the less frequently the bus comes by, the less efficient it is for the users and the more they will look for other options. If bus use continues to be poor, an alternative is to increase charges to recover costs. Those people living in Western Australia would probably recall that when the new train service was put on for the northern rail line there were twice as many trains to cope with the northern service. In fact, the payback time became much faster than was expected because more people wanted to use the service.

  The ultimate result of economic efficiency measures designed to reduce expenditure is that a bus may run only once a day and a ticket costs twice or three times the cost of petrol for a private car. Only those who are entirely dependent on public transport are likely to use the bus at this stage. This happens far more often than it should and there are bus routes in Perth in exactly this state. Virtually everyone who can has given up and gone by car. At this point the transport company is liable to cut out the service altogether as unnecessary.

  When a response to service costs is to cut services, at some point services are cut to such a degree that they become pointless. What exactly is the point of having security guards in Parliament House where senators can reach under a desk and push a distress button, then ask the same senators to walk around the building alone in the dark at midnight? Anyone wanting to attack a senator—gosh, who would?—would only have to wait outside in a car, jump out and drive away. So what is the point? When services are cut back far enough, there is little point in having them at all. It is reductio ad absurdum in practice.

  The Greens (WA) would not oppose competition. It has its place, but it is not the supreme place, and certainly not the only place. This bill is a formula to hand over public functions to a handful of big players who are pursuing their own profit with little concern for the public. I see nothing in this bill that leads me to think that this bill provides provision for public welfare or well-being. When the agendas and safeguards and CSOs are in and spelled out, I might change my mind. But they are not, and we are passing this without them. The Greens (WA), therefore, completely oppose and condemn this bill.

[Source: Parliament of Australia website]

Third reading - Senator Harradine (Independent, Tasmania) (Senate Hansard, Thursday, 29 June 1995, page 2220)

 

Press releases

Commonwealth Government releases National Competition package: legislation introduced in Senate

Press release: Assistant Treasurer George Gear, 29 March 1995

The Competition Policy Reform Package was introduced into the Commonwealth Parliament today.

"The package provides a historic boost to the Government's micro-reform agenda," said Assistant Treasurer George Gear.

"For the first time, Australian firms and consumers will have the same rights in the marketplace, no matter where they work or live. Overseas investors will have greater certainty in the business rules that apply. A new access regime for essential facilities will make the most productive use of facilities such as gas pipelines and electricity grids. Business input costs will be lowered as all States embark on the reform of their water, electricity and gas authorities, and of rail and ports. As anti-competitive regulations are thrown out, legal service costs and household bills will drop."

This national competition package has been developed by the Commonwealth, State and Territory Governments in response to the 1993 Hilmer Report, which recommended a national competition and legal framework to boost Australia's economic performance.

"This package gives Australia one of the most sophisticated competition policies in the world," Mr Gear said. "It balances economic efficiency and the public interest. By promoting competition across the economy, it will help dismantle barriers to competition erected by Governments and the private sector since Federation."

The package consists of two parts:

  • The Competition Policy Reform Bill, which extends the Trade Practices Act to all business conduct in Australia. The Bill establishes two new national competition bodies, the Australian Competition and Consumer Commission (the merger of the Trades Practices Commission and the Prices Surveillance Authority) and the National Competition Council. It also establishes new access and pricing arrangements.
  • Two Inter-governmental Agreements, tabled in Parliament, setting out procedures and principles on structural reform of public monopolies, legislation review, competitive neutrality, prices oversight and access to essential facilities, and appointments to the new national competition bodies.

"I must point out that these reforms do not encourage privatisation," Mr Gear said. "This is spelled out in the Agreements. It is entirely possible and very often appropriate to pursue greater competition while retaining public ownership. We have demonstrated this in telecommunications, where competition has led to much lower prices, but Telstra has remained the property of the public."

The reform package has been introduced into the Parliament now so that it can be debated and passed in the Budget Sittings. The Government is committed to having the first stage of the reforms commence operation from July 1995.

The Council of Australian Governments will consider this package at its April meeting. The Commonwealth expects that all Governments will sign up, so that implementation of competition policy is on a truly national and co-operative basis. If not, the Commonwealth will proceed on its own to implement the reforms.

This package released today was finalised after more than six months of consultation with the States, businesses, consumers, unions and the wider community. This intensive process was very valuable. The Government has modified the original package to make the new processes simpler and more flexible. We have also underlined in the Bill and the Agreements the central thrust of the national competition regime: to improve the job prospects, the living standards and the quality of life of all Australians.

...

[Source: Parliament of Australia]

The public interest and competition

Press release: Treasurer Ralph Willis, 6 June 1995

As part of the National Competition Policy, all Governments have agreed to publish, by June 1996, their agenda for implementing the Competition Principles Agreement.

This statement will effectively be a blueprint for what each Government will do to achieve a more competitive economy. A vital part of that statement will be the way each Government intends to protect the public interest, and to deliver community service obligations. Equally important is the role each State sees for local government in the reform process.

...

[Source: Parliament of Australia]

Competition policy - victory of economics over equity

Press release: Senator Cheryl Kernot (Democrats), 22 June 1995

The Australian Democrats will vote against the Competition Policy Reform Bill and have criticised the non-Parliamentary process which saw the Bill formulated by business groups.

Democrat leader Senator Cheryl Kemot said in the Senate today that the benefits of the package had been over-rated, while the clown side - job losses, higher user-pays charges and challenges to important health, safety, professional and environmental regulations - had hardly been addressed.

"Nobody objects to a more efficient public sector but competition policy represents the victory of economics over equity, of competition over compassion and of accounting over accountability in the management of public services, Democrat leader Senator Cheryl Kemot said.

it is based on academic and political premises that have not delivered in other areas. It represents the politics of economic rationalism at its worse. And the same question remains: who wins and who loses?

"One should examine the evidence of the last decade compared with the promises of competition. Since 1983 the deregulation of financial markets and banks we have seen unlimited lines of credit open up for corporate customers. Yet today 100s of thousands of home loan borrowers and small businesses suffer much higher interest rates than 10 years ago.

"We need to make sure that the higher user-charges which will be a consequence of the Bill, and the end of cross-subsidisation, does not cull public services by those who need them most - especially those in regional Australia.

Associate Professor Dr John Quiggan of ANT.: refutes the Prime Minister's claim that competition policy will boost $22.5 billion to the economy. Dr Quiggan suggests that the net benefit to the economy could be as little as 0.5 percent of GDP or approximately $2 billion.

The Democrats are now considering using the power of Senate committees to closely monitor the impact of the implementation of competition policy refoims by state, Federal and local governments to ensure that consumers, the regions and the environment are not the big losers.

For more details contact Malcolm King on (06) 277 3203.

...

[Source: Parliament of Australia]

Competition Policy Reform Act 1995 receives Royal assent

Press release: Assistant Treasurer George Gear, 9 August 1995

The Competition Policy Reform Act 1995 received Royal Assent on 20 July 1995.

"This Act is the centre piece of the national competition policy reforms," Mr Gear [then ALP Assistant Treasurer] said. "It is the culmination of hard work and unprecedented cooperation to reach agreement between the Commonwealth, States and Territories at the Council of Australian Governments meeting in April this year."

The Act will commence in three stages.

The first stage will commence on 17 August 1995. At this time:

  • the amended competitive conduct rules in Part IV of the Trade Practices Act 1974 come into force; and
  • third line forcing conduct may be notified to the Trade Practices Commission/Australian Competition and Consumer Commission. This conduct may be allowed where its benefits outweigh its costs.

The second stage commences when the Act is proclaimed in October. From this time:

  • the new competition institutions - the Australian Competition and Consumer Commission and the National Competition Council - come into being;
  • the new national access regime begins; and . amendments to the Prices Surveillance Act 1983 come into force. These amendments extend the coverage of that Act to State and Territory government businesses and establish the prices monitoring powers of the Prices Surveillance Authority.

The third stage begins on 21 July 1996. At this time the provisions of the Competition Policy Reform Act 1995, and complementary State and Territory legislation, will apply the competitive conduct rules to the whole Australian economy.

All Governments agree that firms becoming subject to the trade practices law for the first time need time to change any anti-competitive behaviour. Accordingly, in addition to the lengthy notice before the new laws come into effect, there will be no pecuniary penalties for offences until one year later, 21 July 1997.

"We want an orderly transition to the new laws," Mr Gear said.

"We are interested in education and improved behaviour, rather than prosecution and punishment."

Substantial progress has been made in settling appointments to the new competition institutions.

"Following suggestions from State and Territory Premiers and Chief Ministers, I am finalising my consultations with possible appointees," the Minister said. "I expect to provide my list of names to the States and Territories shortly."

"I am confident of securing the services of high quality appointees and I expect to be able to make my announcement of the appointments to the Australian Competition and Consumer Commission and the National Competition Council in September."

[Source: Parliament of Australia]

New national competition policy comes into force

Press release: 30 October 1995

The Assistant Treasurer, Mr Gear, today announced that the most significant elements of the national competition policy package will commence on 6 November 1995.

6 November will see proclamation of Part 3 of the Competition Policy Reform Act 1995 and the commencement of:

  • the Australian Competition and Consumer Commission (ACCC) and the National Competition Council (NCC);
  • a new legal regime to facilitate third parties obtaining access to the services of certain nationally significant facilities (the access regime); and
  • extended coverage of prices surveillance to State and Territory businesses and establishment of a new formal price monitoring power.

The Trade Practices Tribunal will also be renamed the Australian Competition Tribunal and it will take on new responsibility for reviewing decisions under the access regime.

"These provisions will ensure that Australia maintains one of the most sophisticated competition policies in the OECD", Mr Gear said.

"In particular, creation of the new access regime is a major boost to enhancing competition in Australia," Mr Gear said. The notion underlying the new regime is that access to certain infrastructure facilities, such as electricity grids, gas pipelines or rail track, is needed to encourage competition in markets such as electricity generation, gas production and transport services.

"Competition in these sectors is important to sustaining Australia's economic growth," Mr Gear stated. Improving the performance of our essential facilities and related markets will help our businesses to remain internationally competitive and assist in improving living standards through lower consumer prices. There is every reason to believe that competition in these sectors will deliver benefits similar to those we have experienced since competition was introduced in telecommunications and domestic aviation."

Minor changes to the conduct rules in the Trade Practices Act commenced on 17 August. The Competition Policy Reform Act was passed by Parliament on 30 June 1995. The States and Territories are currently passing legislation to apply the Trade Practices Act in areas beyond the Commonwealth's jurisdiction. This is due to be finalised by 21 July 1996, at which time the complementary State and Territory legislation will apply the competitive conduct rules to the whole Australian economy.

The new competition institutions

Mr Gear also announced the appointees to the Australian Competition and Consumer Commission and the National Competition Council. A full list of appointments with biographical detail is attached.

The Chairperson of the Australian Competition and Consumer Commission is Professor Allan Fels. Professor Fels is the current Chairman of the Trade Practices Commission. The other full-time office holders are Mr Allan Asher, Deputy Chairperson; Mr Sitesh Bhojani; Mr David Lieberman; and Ms Rhonda Smith.

The President of the National Competition Council is Mr Anthony Daniels. Mr Daniels is Managing Director of Tubemakers Australia Ltd. The Councillors are Mr Michael Easson; Mr Stuart Hohnen; Ms Elizabeth Nosworthy: and Mr Graeme Samuel.

The Trade Practices Commission and Prices Surveillance Authority will cease to exist when the Australian Competition and Consumer Commission is established. The staff of both bodies and all existing work will be taken over by the ACCC.

Dr David Cousins, Chairman of the Prices Surveillance Authority, decided not to accept an offer of appointment to the ACCC. Mr Gear said he regretted Dr Cousins decision but understood the personal reasons for his decision. "The Government takes this opportunity to express its appreciation to Dr Cousins for his work as a full-time member of the PSA since 1989 and as its Chairman since 1993," Mr Gear said.

The appointments take effect from the commencement of the new institutions. The appointments have the support of State and Territory Governments.

National Competition Council

The NCC is to be a new high level advisory body. It will make recommendations to Ministers on third party access to nationally significant facilities, and advise on whether State and Territory access legislation and prices oversight of State and Territory government businesses is effective. In addition, through its work program, the NCC will assist all governments in implementing their microeconomic reform programs. The NCC office will be located in Melbourne.

Prices Surveillance

The amendments to the Prices Surveillance Act to commence on 6 November 1995 will streamline and improve the transparency of prices surveillance. Greater flexibility will be achieved by the new formal price monitoring arrangement. Under formal price monitoring, notified companies will be required to provide information on a regular basis to the ACCC on their prices, costs and profitability. This arrangement will reduce the administrative burden on companies compared with prices surveillance, while reassuring consumers that price movements are appropriate.

Mr Gear said that prices surveillance powers will continue to be a tool in those markets where competition is weak or lacking, and that the ACCC will continue the PSA's ongoing inquiry work.

For further information:

Daryl Quinlivan, Assistant Treasurer's Office, 06 277 7360

Biographical Details of Appointees

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

CHAIRPERSON

Professor Allan Fels of Melbourne, the former part-time Chairman of the Prices Surveillance Authority and Chairman of the Trade Practices Commission since 1991, is to be the Chairperson of the Australian Competition and Consumer Commission. He is eminently qualified, with an academic background in law and economics (he holds a PhD in Economics from Duke University, and a Bachelor of Laws from the University of Western Australia), and has extensive experience in public administration issues through his holding of a full-time position on the Trade Practices Commission and his involvement with a large range of relevant organisations such as AUSTEL, and the OECD Committee on Competition Law and Policy.

Professor Fels has been appointed for five years.

DEPUTY CHAIRPERSON

Mr Allan Asher of Canberra, a full-time member of the Trade Practices Commission since 1988 is to be the Deputy Chairperson of the ACCC. He is a barrister and solicitor (admitted in New South Wales) who has been a strong consumer advocate since the 1970s. Between 1979 and 1983 he was the Chief Executive and Public Affairs Manager of the Australian Consumers' Association (publishers of Choice magazine), while between 1980 and 1995 he was a Council Member of the International Organisation of Consumer Unions. Since 1993 Mr Asher has been the Chairman of the Consumer Policy Committee of the Organisation of Economic Cooperation and Development (OECD). Further, Mr Asher has been involved in the business community and was Executive Manager, Corporate Relations of the Overseas Telecommunications Commission from 1984 to 1988.

Mr Asher has been appointed for five years.

FULL TIME MEMBERS

Mr Sitesh Bhojani of Perth, has been a Trade Practices Commission associate member since 1994. Mr Bhojani holds a Bachelor of Laws from Monash University and is a barrister with a general commercial and civil litigation practice in Western Australia. Between 1986-1992 he was a barrister and solicitor with the Commonwealth Attorney-General's Department and also the Trade Practices Unit of the Australian Government Solicitor/Federal Court and Tribunals Registry. He is Deputy Chairman of the Law Council of Australia, Business Law Section's trade practices committee.

Mr Bhojani has been appointed for three years.

Mr David Lieberman of Sydney, is a director and a consultant. He was admitted as a solicitor in 1967 and from 1979, until his retirement in 1994, held numerous positions within the IBM Group in Australia, Japan, the United Kingdom and USA. Between 1981 and 1988 he was General Counsel and Secretary to IBM in Australia and from 1991 was Director, Law and External Relations. He is a consultant on Information Technology with the law firm Deacons Graham and James and Deputy Chairman of ACTEW Corporation Ltd. Mr Lieberman is also a Member of the Business Law Reference Group, Business Council of Australia, and has been a Trade Practices Commission associate member since 1994. Mr Lieberman holds a Bachelor of Arts and a Bachelor of Laws.

Mr Lieberman has been appointed for three years.

Ms Rhonda Smith of Melbourne, is a consultant economist in trade practices and prices surveillance matters and has been a Senior Lecturer in Economies at the University of Melbourne since 1981. She is also a member of the Copyright Law Review Committee. Ms Smith has been an expert witness in major trade practices litigation. and has acted as a consultant for both the Trade Practices Commission and the Prices Surveillance Authority. She holds a Bachelor of Commerce and Master of Arts with Honours.

Ms Smith has been appointed for three years.

PART TIME MEMBERS

Ms Liza Carver of Sydney, has been a Trade Practices Commission associate member since 1994. She has been a senior solicitor with the Public Interest Advocacy Centre since 1993 and is an Executive member of the Australian Consumers' Federation. She has been an Honorary consultant for the Australian Law Reform Commission and was appointed to the NSW Premier's Council for Women in 1995.

Ms Carver has been appointed for three years.

Mr John Eddey of Melbourne, has been a part-time member of the Prices Surveillance Authority since 1991. He has been an Executive Director of ICI Australia Ltd; Chairman of ICI New Zealand Ltd; Director of Incitec Ltd; Assistant Treasurer of ICI UK worldwide group; and Chairman of Megatec Pty Ltd. He is also a fellow of the Australian Society of Certified Practising Accountants and of the Australian Institute of Company Directors and a member of the Finance Committee of the University of Melbourne.

Mr Eddey has been appointed until 31 December 1995.

Ms Teresa Handicott of Brisbane, has been a Trade Practices Commission associate member since 1994. She was awarded Bachelor of Laws (Hons) in 1986 and admitted as a solicitor in Queensland in 1987. Ms Handicott is currently a solicitor and a partner in Corrs Chambers Westgarth and practices exclusively in areas of commercial and corporate law, particularly mergers and acquisitions, capital raisings and securities industry law. Ms Handicott is also a member of the Queensland Cultural Centre Trust and a member of the Company Committee, Queensland Law Society.

Ms Handicott has been appointed for three years.

Associate Professor Elizabeth Harman of Perth, has been a part-time member of the Prices Surveillance Authority since 1993. She is Associate Professor in Public Policy (Murdoch University) and has held senior positions on the executive and boards of public agencies and private companies, including the Water Authority of WA and the WA State Planning Commission.

Associate Professor Harman has been appointed until 31 December 1995.

Mr Jeffrey Hilton SC of Sydney, has been an associate member with the Trade Practices Commission since 1992 and a Senior Counsel since 1993. From 1976-78 he was a legal officer with the Attorney-General's Department and from 1979 worked as barrister, advising on trade practices, commercial, administrative, equity and constitutional cases. Mr Hilton is on the editorial board of the Australian Business Law Review.

Mr Hilton has been appointed for three years.

Professor Brian Johns of Canberra, is a former Deputy Chairman of the Trade Practices Commission. He has also been a member of the Trade Practices Tribunal. He has acted as an economic consultant to the Office of the Commissioner of Trade Practices and the Trade Practices Commission and was the Director of the Bureau of Industry Economics from 1977 to 1989. Brian Johns is a Professor Emeritus at the University of Newcastle.

Professor Johns has been appointed for three years.

Mr Rodney Overall of Melbourne, has been a part-time member of Prices Surveillance Authority since 1990. He is a former research officer at the ACTU, member of the Bureau of Labour Market Research Advisory Council and member of the Australian Statistics Advisory Council. He has established a consultancy business providing research and advocacy services.

Mr Overall has been appointed until 31 December 1995.

Associate Professor David Round of Adelaide, was first appointed as an associate member of the Trade Practices Commission in 1986. He is an Associate Professor of Economics at the University of Adelaide with research and teaching experience in trade practices and industrial organisation. He has held various positions teaching economics at universities in Australia and the USA. Professor Round was appointed as an Associate Member of AUSTEL in 1989.

Associate Professor Round has been appointed for three years.

Mr Don Watt of Perth, is a lawyer and company director. Mr Watt was admitted as a barrister and solicitor in 1964. In 1974 he established and taught the first trade practices course at the University of WA. He is a former commercial partner of Mallesons, Stephen Jacques, and in recent years has been advising the State of Western Australia in relation to various commercial matters.

Mr Watt has been appointed for three years.

Mr Warwick Wilkinson of Sydney is a retired pharmaceutical industry executive director. He was formerly a member of the Economic Planning and Advisory Council and President of the Australian Council of Professions. Since 1989 he has been a lay member of the Disciplinary Committee of the Australian Society of Certified Practising Accountants.

Mr Wilkinson has been appointed for three years.

'EX OFFICIO' MEMBERS

Mr Neill Tuckwell

Mr Tuckwell is the Chairman of the Australian Telecommunications Authority (AUSTEL). He has held a series of management positions with several telecommunications companies, including being part of the founding management of CLEAR communications in New Zealand. He holds a Diploma of Financial Management and a Master of Economics.

Mr Tuckwell has been appointed until 30 June 1997.

Professor Thomas Gregory Parry

Professor Parry is part-time Chairman of the NSW Government Pricing Tribunal and Chairman of the Gas Council of NSW. He has previously been Dean, Faculty of Economics, University of Wollongong and a Principal Economic Adviser at Price Waterhouse. He is also Adjunct Professor of Economics at the University of NSW.

Professor Parry has been appointed until 6 June 2000.

Mr Robin Davey

Mr Davey is the Victorian Regulator-General, a position he has held since July 1994. He was previously the Chairman of AUSTEL and an associate member of the Trade Practices Commission. Prior to that he held senior positions at the Attorney-General's Department and in the Trade Practices Commission.

Mr Davey has been appointed until 30 June l999.

Mr Peter Webb

Mr Webb is the Chairman of the Australian Broadcasting Authority and was appointed as an associate member to the Trade Practices Commission in 1993.

Mr Webb has been appointed until 4 October 1997.

NATIONAL COMPETITION COUNCIL

PRESIDENT

Mr Anthony Bowen Daniels

Mr Daniels of Sydney, is presently Managing Director, Tubemakers of Australia Ltd, a Director of ICI Australia Ltd and several other companies. He has been a Member of the Business Council of Australia since 1987 and Chairman of its Benchmarking Advisory Group since 1991. He has been Chairman of Council, Joint Accreditation System of Australia and New Zealand for the last four years and is a Member of the Trade Policy Advisory Council.

Mr Daniels has been appointed for three years.

COUNCILLORS

Mr Michael Easson

Mr Easson of Sydney, is Adjunct Professor at the Australian Graduate School of Management, University of NSW. He is an adviser, Corrs Chambers Westgarth, Solicitors. His current directorships include NRMA Insurance Group, Industrial Property Trust (Macquarie Bank), UNICEF Australia and ACT Electricity Water. He was awarded a Bachelor of Political Science (Hons 1) (NSW) in 1976 and completed the Trade Union Program, Harvard Business School in 1981. From 1989-93 he was a Director, NSW State Rail Authority. From 1989-94 he was Secretary of the Labor Council of NSW and in 1993-94 he was Vice President, Australian Council of Trade Unions. In 1991-92 and 1994-95 he was an Associate Commissioner, Industry Commission.

Mr Easson has been appointed for three years.

Mr Stuart Alexander Hohnen

Mr Hohnen of Perth, is a resource sector management consultant. In 1966 he was awarded a Bachelor of Engineering (Hons) and in 1970 a Master of Business Administration (Stanford, USA). He is a member of the Institution of Engineers and a Fellow of the Australian Institute of Company Directors.

From 1982-87 he was Chief Executive, WA Department of Resources Development. In 1992-93 he was a member of the WA Energy Board of Review, and in 1993-94 was a member of the WA Energy Implementation Committee. He is Deputy Chairman of the Gas Corporation of Western Australia (Alinta Gas).

Ms Elizabeth Ann Nosworthy

Ms Nosworthy of Brisbane, is a consultant to the legal firm of Freehill Hollingdale & Page, a Director of Telstra Corporation Ltd and David Jones Limited and a Board Member of Queensland Treasury Corporation. She was awarded a Bachelor of Arts (Qld) in 1966, a Bachelor of Law (Qld) in 1970, and a Master of Law (London School of Economics) in 1971. She was admitted as a solicitor in 1970. She was a Director of the Federal Airports Corporation during 1991-94. In 1986-87 she was President of the Queensland Law Society, and during 1988-89 was a member of the Companies and Securities Consultative Group appointed by the Commonwealth Attorney- General.

Ms Nosworthy has been appointed for three years.

Mr Graeme Julian Samuel

Mr Samuel of Melbourne, is a company director and corporate strategist consultant at Grant Samuel & Associates. He is Chairman of The Australian Opera, Vice President of the Australian Chamber of Commerce and Industry and a Commissioner of the Australian Football League. He was awarded a Bachelor of Laws (Melbourne) in 1968 and admitted as Solicitor in Victoria in that year. He gained a Master of Laws (Monash) and won the Law Institute of Victoria Solicitor's Prize in 1971. He held the position of Executive Director, Macquarie Bank Ltd from 1981-86 and was a Partner, Phillips Fox & Masel, Solicitors from 1972-80.

Mr Samuel has been appointed for three years.

[Source: Parliament of Australia]

Fostering an appetite for change: address to the Fourth Annual Micro-Economic Reform Conference, Ritz-Carlton Hotel, Sydney, 11 September 1995 [Speaker: Peter Cook]

Thank you for inviting me to address the fourth annual conference of the Business Council and the Minerals Council on micro- economic reform.

For four years now, my portfolio's research arm, the Bureau of Industry Economics, has made a significant and utilitarian contribution to intelligent debate on micro-economic reform.

It has done so by monitoring and reporting micro-economic reform progress and benchmarking the performance of our key sectors against their best performed counterparts in the world.

In this we have assumed the role of an impartial auditor. To build respect and authority we have endeavoured to get our methodology right and accepted by each of the business units that constitute the non-traded goods sector of the economy.

In all of this work the BIE and the BCA have been partners.

In the Working Nation Statement last year, the Government announced that it would continue this project and increase the funding to cover two new areas.

First, in benchmarking government services - something Sir Humphrey might label as a "courageous" decision, but one which I am sure business applauds.

Second, the BIE will be taking micro-reform to the individual firm and industry level. They are, for example, working with the automotive industry to look at costs and impediments right through the production chain.

We have now published an impressive range of studies in areas such as electricity, rail freight, telecommunications, road freight, waterfront, coastal shipping, aviation and gas supply.

These studies are not undertaken to create a stick to beat ourselves with. Rather, they are an indication of progress and a tool to plan how to bridge the gap between where we are and where we want to be.

If they become propaganda fodder for the political debate, or are used destructively to condemn various of the sectors they are meant to help, then their purpose will be debased. They may even work against real reform rather than for it.

I mention all this because I feel I come here as a partner with you in the reform process. A partner who can speak to you directly and with candour.

Several things worry me about the micro-reform debate.

One is the importance of the balance between, on the one hand, the speed of and momentum for change - including the meeting of numerical targets or goals - and on the other hand, the quality and irreversibility of change - including the maintenance of a consensus for change within a broadly cohesive society.

The nations that will fare best in the world of the future will be those that have learnt this art. They will be supple and adaptive enough to manage continuous reform without renting the fabric of their society.

If reform is seen as a threat, if in pushing for it we unwittingly incubate an outgroup or underclass who bear the costs without the benefits, then it is doomed to be reform that will not last.

Getting the balance right between the speed of reform and the quality of the change is critical.

The community must be along for the ride and they will only come if they understand what is being sought, and how it will benefit them, and if they have a say in the process. A Government has to give leadership here.

Working Nation was important in this respect. Not only did it do practical things to upgrade the skills of our workforce. It stands as a massively important symbol to the long-term unemployed. Its message is that, as the economy changes and grows, they will not be left behind.

Another thing that worries me is the weakening of the consensus for change.

Political polling tells us that there is a mood emerging which is against change. Some are genuinely frightened by it; others simply want to take a breather.

And this is not just in Australia. Look at the United States, Europe and New Zealand.

Poll-driven pundits tell us Oppositions should do nothing - that they should make themselves small targets, that they should never declare their policies. That way they will harvest the dividends uncertainty and dislocation bring, and defeat the Government.

Our Opposition parties seem to have taken this advice.

Policy is replaced by warm and fuzzy platitudes.

Goals are enunciated, without any kind of strategy to achieve them or even an indication that the complexities have been thought through.

What has evolved is a cynical, risk-averse strategy for exploiting negative sentiment to win an election, not a program for government.

Geoff Kitney wrote in last Friday's Sydney Morning Herald: "The most frequently asked questions about the Opposition are 'Will it really be bold in government?' and 'Does (Mr) Howard have the strength to carry through a bold reform agenda?" He went on to say: "(Mr) Howard's strategy is pitched at the voters, not business."

These are dangerous times for the Business Council, and the micro-economic reform agenda. They are dangerous times for reforming governments as well.

The Prime Minister made this Government's sense of purpose clear when three weeks ago he told the National Press Club:

"The modern economic contest is a long distance race - a very long distance race. It is like the modern marathon, it gets faster and faster. But unlike the marathon, it has no finish line."

He continued:

"...I wish I could say all the reform was over and that we don't need to change any more. But we do. We need the culture of 'continuous initiative' which John Prescott talks about.

...If we are to keep up we need to continuously improve.

...(But) if we are to continuously improve, we have to keep everything together."

Many of you will have views on particular reforms this country needs if we are to further encourage successful business.

I would be surprised if in many cases we did not agree.

But I have to say I favour the bicycle view of progress. If forward momentum stops then you fall off. Maintaining momentum is essential but to maintain it, the case must be compelling and everyone must be a stakeholder.

This is why John Prescott's words about the need for 'a culture of continuous initiative' are so important. And it is why the Government is focusing on an Innovation Statement as an essential policy plank for Australia's future.

Let me now present a quick stocktake of how far we as a nation have come down the reform road.

Many of you may have heard this before. But I believe we need to be clear about the record. It underlines the Government's continuing capacity for and commitment to reform.

When this Government took office in 1983, we inherited an inward-looking, inefficient and internationally uncompetitive economy.

Our exports consisted mainly of primary commodities. Our highly protected manufacturing sector was largely unable to compete in export markets.

The services sector was mostly under-developed, and we had an over-regulated financial sector which stifled growth.

The tax system had deteriorated to the point where playing games offered better returns than building a competitive and productive business.

The labour market was inflexible, racked by industrial disputes and producing largely unsustainable wage outcomes.

We had double-digit inflation and double-digit unemployment.

The previous conservative Government had not had the courage or the dedication to Australia's economic future, to tackle the difficult reform issues that confronted us.

It is well to remember those things.

And to remind business newcomers about what it was like.

In those dark days, the BCA was a voice of leadership in Australia.

And this Government listened.

We chose to be bold, to free and open up the economy - a move that still has its opponents in the Opposition.

Because of our policies of systematic reform, the level of protection has been greatly reduced, business is more internationally competitive and the nation has become more export-oriented.

Exports of elaborately transformed manufactured goods have grown at an average annual rate of around 16 per cent over the past decade.

And services exports at over 13 per cent a year since the mid 1980s.

And, having diversified our export mix, we are less susceptible to international commodity price cycles.

In 1981-82, primary commodities were 66 per cent of our exports. Today they make up 50 per cent.

We opened up the financial system.

Australian overseas investment has grown from just $16 billion in 1981-82 to $131 billion today - lifting our importance in the global economy.

The Government has reformed the tax system and broadened the tax base.

We brought in full dividend imputation which ended the double taxation of equity and removed a major distortion in the financing of business investment.

The Accord has seen an end to unsustainable wage outcomes and widespread industrial disputes.

In 1981, there were 797 days lost per 1000 employees due to industrial disputes.

In the 12 months to April 1995, that figure had fallen to 73 - the lowest level in 55 years.

The index of Australia's per unit labour costs has fallen sharply over the past few years. On the basis of labour costs alone we are now more competitive than the US, Japan and Singapore.

Under workplace bargaining, industrial parties at the enterprise level have greater flexibility to collectively manage their own industrial relations - employers and employees are able to negotiate workplace agreements which best suit both parties.

To digress for a moment, I can't help but note the continuing argument that industrial relations reform still excites.

It is an area where the lines are drawn the sharpest. It need not be so. To this point, the advantages of the workplace flexibility we have created have not been fully taken up. Almost 60 per cent of workers under Federal awards have workplace agreements. In the State jurisdiction the figure is around 25 per cent. In the States that are most strident, the performance is the worst.

Reform comes not with the enactment of laws, but with the embrace of the actual opportunities for change that exist. Only two-thirds of BCA members have reached workplace agreements with their employees. Even those who had started down this track appreciate the greater flexibility they have and the opportunity to go further. When there has been a more comprehensive uptake of these reforms, then their true magnitude will be fully appreciated.

I could go on to the cost savings to business from deregulation of the aviation and telecommunications sectors. But I think the message is clear.

In short, this Government has embraced micro-economic reform as a key underpinning of sustainable growth.

But it is not the only strategy. Nor should it be seen in isolation or without regard to the importance of other policies. Micro-economic reform is just one part of an overall mix of policies aimed at increasing our competitiveness: a mix of the best macro-economic management, trade and industry policies, education, skills and training, best practice and innovation, and infrastructure development.

Macro-economic management has positioned Australia to enter a new stage in our economic history.

We are moderating the previous boom-bust pattern of growth and replacing it with sustained low inflationary growth.

The recession is behind us; we have had four years of continuous growth - equal to the record since quarterly estimates commenced in 1959.

The recovery has been marked by strong employment growth, improved productivity performance, low inflation, strong productive investment, minimal interest rate increases and increasing real incomes.

Historically, these have been difficult to achieve simultaneously or in a sustained way. But we have now reached a genuine turning point.

Although the current account deficit remains a constraint, it is not a critical one. We have grown and diversified our exports - a fundamental structural shift. Moreover, our debt-service ratio now averages about 11 per cent of GDP, well within our capacity. It has almost halved since its peak. Again, a major structural change.

It is not the current account deficit as such we should focus on, but rather how to stay on the path of sustained long-run, low- inflation growth.

Low inflation remains a paramount objective. We have had four successive years of underlying inflation in the very low rate of two to three per cent. Uniquely in the world, the trade union movement - through the Accord - has committed itself to the Reserve Bank's inflation target.

We have a sustainable level of wages growth - set to be covered by productivity gains.

And our budget surpluses and superannuation measures will boost national savings and address the underlying cause of the current account deficit.

We see a virtuous circle being created. One that cuts Australia out of the worst aspects of the historical loop of recurring boom/bust cycles. I am not saying the business cycle has gone. We will still have some ups and downs. The ups and downs will be shallow, oscillating around a rising trend line. But we are at a sophisticated new stage in our economic history that economic commentators are only now starting to recognise.

The potential rewards for the nation are enormous:

high growth in employment;

high growth in productivity;

high growth in exports;

low interest rates;

low inflation;

low industrial disputation.

And international commercial decision makers are noticing our performance and basing investment decisions on this very positive outlook.

Recently, Ford announced its decision to remain as a vehicle producer and to invest one billion dollars in its Australian manufacturing operation. That takes investment in the auto industry to two billion dollars over the last 12 months.

Last Thursday, I announced with Cathay Pacific their new $110 million training centre in Australia for its Asian operations. This Wednesday, I open their $250 million data processing operations in Sydney.

Since the RHQ campaign was launched in September 1993, a further 63 companies have re-located to Australia - with a total investment approaching two billion dollars and over 5500 new jobs. We have beaten the regional competition from Singapore and Hong Kong for this investment.

Over the past three months, 21 information technology companies have invested more than 1.6 billion dollars in manufacture and further strategic development. In the next three months, another two billion dollars we know about will be committed in IT investment.

These kinds of investments are based on technology, skill, innovation and the information economy. The micro-reform debate sometimes seems to ignore much of the services sector which makes up 80 per cent of our economy.

When you start to think about services - financial services, education, health, information technology, design, engineering - it refocusses attention on the absolute necessity to invest in the skills and intellectual abilities of our workforce. This is the competitive advantage of the future.

This Government has created the vocational training system. Year 12 retention rates have gone from 36 per cent in 1983 to 75 per cent this year. Commonwealth-funded higher education student places have gone from 250,000 in 1983 to 411,000 now. The participation rate in higher education has gone from 36 per cent in 1983 to 51 per cent now.

These are critical improvements in our productive capacity as a nation, and vital to positioning us for the fastest growing markets in the world economy.

The other vital step is the liberalisation of trade and removal of market entry barriers.

The success of the Uruguay Round and the APEC Leaders' Agreement at Bogor last November for a free-trade APEC region by 2020 has set a new benchmark for the economy.

The stakes are high in a liberalised trade and investment environment.

A bigger market stemming from trade liberalisation increases the rewards for greater efficiency, productivity and innovation.

This Government has a vision for Australia as a nation well positioned to reap the benefits of closer global and regional economic integration.

But as a country, we should not complain about other economies growing, catching up in development and aspiring to higher living standards.

It is this growth in other markets that will provide the impetus for future development of Australian industry.

Australia will be a premier location in the Asia-Pacific region for the production of a whole range of knowledge-intensive goods and services.

And the Australia of the future will boast a technologically literate, information rich, inclusive and productive society.

As the BCA's own Australia 2010 outlook infers, we will not achieve this vision by simply accelerating the program of micro-economic reform.

In any case, it has to be acknowledged that we are facing a rising marginal cost curve here. The first bits were easier but later steps are harder. And one can't simply gloss over the limits of Federal constitutional reach and the responsibilities of the States.

Nevertheless, micro-economic reform will continue to be an essential part of our overall economic strategy.

Despite the constitutional complexity, we have negotiated the new national competition policy regime through the system.

The first stage in implementing the Competition Policy Reform Act has just begun.

Under the second stage, the Australian Competition and Consumer Commission and the National Competition Council will commence operation in October this year.

The third stage will begin in July 1996, and will see the application of the competitive conduct rules to the whole Australian economy.

In the important area of business regulation, the Government has established a new Council on Business Regulation to look at Commonwealth regulations which affect business costs, and to identify priorities for review.

We will release the schedule for the review by mid-1996 and complete all reviews by the year 2000.

The Government will continue to pursue reform of some sectors such as electricity and gas, with the States under the COAG umbrella.

In gas reform, the Government has appointed Mr Ric Charlton, former Chairman and CEO of Shell Australia, to chair a task force to oversee the implementation of free and fair trade in natural gas by mid-1996.

In electricity reform, the National Grid Management Council has been doing much work behind the scenes and competition in the electricity market of South-east Australia is likely to commence next year.

The Government has further advanced rail reform by announcing a proposal to establish Track Australia, a new authority to bring interstate rail track under single management.

The business community has regularly raised the issue of unfair dismissal with me and my colleagues.

In June this year, we responded by announcing proposed changes to make the handling of unfair dismissal applications simpler, more effective and less legalistic.

Along with these and other continuing steps in micro-economic reform, we will also continue to work hard to maintain the macro-economic settings that have made such a difference to Australia's new economic outlook.

We will also continue the focus of industry policy on building competitive firms and a highly-trained workforce.

This Government understands that innovation is vital to continued competitiveness and is a key driver of economic growth.

We are only a matter of weeks away from the Government's Innovation Statement. We are building on the BCA's own work on innovation but hope to take it further.

At the firm level, sustained innovation and new approaches in design and manufacture, in financing, technology acquisition, training, organisation, management and marketing will be crucial to our success.

It is important that in addressing these issues of innovation we recognise that the quality and capability of Australian management has been identified as a constraint on our future performance.

The recent Karpin Report on the leadership and management skills of Australian business was sobering.

While it found that the best of the nation's managers are among the best in the world, it also found that there are just not enough of them.

A survey of Asian business executives in Indonesia, Singapore, Malaysia, Taiwan and Japan found that when comparing Australian managers to managers from Japan, Germany, USA, UK and Taiwan, Australia's managers rated very poorly for technical and conceptual skills, formal education qualifications, concern about customers, obtaining commitment from their employees, delegation, organisation, communication and international business skills.

There are many things we all need to work on to improve this nation's performance.

I have talked tonight about a broader range of issues than the standard icons in the micro-economic reform debate.

This is because it is important that we focus on the objective of micro-reform. That is, increasing the efficiency of the economy and developing the competitive edge we need to

survive in the global marketplace. Something which requires us to use every economic lever we have.

It is also because the new economic agenda of innovation and building up our skills has much - if not more - to contribute to this objective. Moreso, as we move even further into the services and information economy of the future.

The reform challenges now before us are subtler, more complex and more difficult than in the past.

We will not shirk the issue.

But the challenge of the 1990s is broader. It is to enhance Australian skills, technology and entrepreneurship. It is about Australians developing an appetite for change. It is about innovation and continuous initiative.

This challenge requires strategic cooperation between business, Government and the workforce.

It requires vision. Equally, it demands an ability to lead and manage change. To develop policies and programs that can carry people along with change and not place them against it.

This Government has the capacity, the boldness and the determination to do this.

[Source: Parliament of Australia]

 

 

 

Related material

Council of Australian Governments Meeting 11 April 1995 Communique

Includes the following:

The fifth meeting of the Council of Australian Governments completed today has been the most important since its establishment. In a spirit of co-operation Heads of Government have signed major agreements that will boost the competitiveness and growth prospects of the national economy and improve the effectiveness of public housing and health and community services so they better meet the needs of clients. As a result, the Australian federation will be economically stronger and more equitable as it approaches its centenary in 2001.

The Council supported the national competition policy reform package and signed agreements implementing these reforms. The reforms involve extending trade practices legislation to State and Local Government business enterprises and unincorporated businesses, providing access to essential facilities and encouraging competition in the business activities of governments and other sectors of the economy through a program of regulation review, enhanced prices oversight, application of competitive neutrality principles and procedures for structural reform of public monopolies.

...

Competition Policy

The Council agreed to a national competition policy legislative package providing for uniform protection of consumer and business rights and increased competition in all jurisdictions. The Prime Minister, Premiers and Chief Ministers signed two Inter-governmental Agreements to implement the package. The Council reaffirmed its commitment to continuing microeconomic reforms in key industries, and this was reflected in a third Agreement which also provides for financial arrangements, including a series of competition payments.

The Council emphasised that the competition policy reform package would enhance the national economic interest by improving Australia's international competitiveness as well as enhancing the interests of Australian consumers. Consumers will benefit from lower prices for government services as a result of the implementation of the package over time.

The national competition policy package incorporates changes resulting from widespread public comment following release of the draft package in September 1994. These changes more clearly reflect the fact that competition policy is an integral part of the broader policy concerns of Governments and the community.

The Competition Policy Reform Bill was introduced into the Commonwealth Parliament on 29 March 1994. The two Inter-governmental Agreements which complete the package were tabled at the same time. Further amendments to the Bill were agreed by the Council and will be incorporated in the Bill following the Council meeting.

The Council agreed on a mechanism for voting on amendments to the Competition Code. The Commonwealth will have two votes and a casting vote with each of the other parties having a single vote. This will provide meaningful State and Territory participation in changes to the competitive conduct rules while maintaining a consistent national scheme.

The Council supported the Commonwealth's Competition Policy Reform Bill, with further amendments as agreed. The Bill provides for:

  • the revision of the competitive conduct rules of trade practices legislation and their extension to cover State and Local Government business enterprises and unincorporated businesses;
  • a legislated right to negotiate access to services provided by means of facilities of national significance; and λ amendments to the Prices Surveillance Act to enable price surveillance of Government businesses and to formalise the prices monitoring functions.
  • The Prime Minister, Premiers and Chief Ministers signed three Inter-governmental Agreements:
  • the Conduct Code Agreement, which sets out the agreed basis for the extension of the Trade Practices Act and consultative processes on modifications to the competition law and appointments to the Australian Competition and Consumer Commission (ACCC);
  • the Competition Principles Agreement, which establishes agreed principles on structural reform of public monopolies, competitive neutrality between the public and private sectors, prices oversight of utilities and other corporations with significant monopoly power, a regime to provide access to essential facilities and a program of review of legislation restricting competition. This Agreement also deals with consultative processes on appointments to the National Competition Council (NCC);
  • appointments to the ACCC and NCC will be a matter of close consultation between the parties and will require the support of the Commonwealth and a majority of the parties; and
  • the National Competition Policy and Related Reforms Agreement which provides that the Commonwealth will maintain the real per capita guarantee of financial assistance grants to the States and Local Government on a rolling three year basis, and for further financial assistance to the States in the form of competition payments. The per capita element will have an estimated annual cost to the Commonwealth of $2.4 billion by 2005-2006. The Competition Payment will be provided in three tranches which, together with the per capita component of the FAGs pool, are dependent on States meeting agreed reform objectives as assessed by the NCC. The first tranche of the Competition Payment will commence in 1997-98 and will be $200 million in 1994-95 prices. The payment will be indexed annually to maintain its real value. The second and third tranches will commence in 1999-2000 and 2001-2002 respectively. The second tranche will be a payment of $400 million in 1994-95 prices and the third tranche, $600 million in 1994-95 prices. The Agreement is at Attachment A . The Competition Payments will be quarantined from assessment by the Commonwealth Grants Commission.

The Premiers and Chief Ministers agreed to pass the required application legislation to apply the Competition Code within State and Territory jurisdictions within 12 months of the Competition Policy Reform Bill receiving the Royal Assent.

The ACCC will be responsible for the enforcement of the competition and consumer protection provisions of the Trade Practices Act, making determinations under the access regime, and prices surveillance. The NCC will exercise recommendatory powers on access and price surveillance issues and will have advisory powers on matters determined by governments, including compliance with the National Competition Policy and Related Reforms Agreement.

The Council agreed to the following timetable for implementation:

  • subject to passage in Commonwealth Parliament, the amendments to the competitive conduct rules will commence in July 1995. The new institutional arrangements and the access regime will commence in the second half of 1995 or shortly thereafter; and
  • under the Competition Principles Agreement, Governments agreed to publish policy statements on competitive neutrality and the application of the Competition Principles Agreement to local government (in consultation with local government) by June 1996. Governments agreed to develop a timetable by June 1996 for the review and, where appropriate, reform of all existing legislation which restricts competition by year 2000.

[Source: Parliament of Australia]

ALP, 'Shaping the nation: achievements of the Labor Government' (1 January 1995)

Section on competition policy from page 37

Since 1983, the Federal Labor Government has transformed a complacent Australian economy - an economy which relied on commodity exports, politically determined tariff walls and a fixed exchange rate. The dollar was floated, the financial system was modernised, unfair and rort-driven tax laws were reformed and sustainable jobs were created in world-class competitive industries.

More Australians now have jobs than ever before - almost 2 million jobs have been created since 1983.

The economy is more robust, Australia is able to compete in the international arena and is less vulnerable to the whims of world scarcities, exchange rates and price shocks.

The economy is more sophisticated - manufacturing technologically advanced goods which compete with the best in the world. We are now almost 40 per cent more competitive than we were a decade ago, and our exports are growing faster each year than the rest of the world. We are taking advantage of the growing demand for our goods and services, especially in the Asia Pacific region.

The modernisation process is not over. The rest of the world is not standing still, and neither can we. The national competition agenda is the latest step in the transformation of Australia's economy.

If we are to achieve the Prime Minister's target - to lower unemployment to around 5 per cent by the turn of the century - we cannot stand still. We must lower the costs of production, we must use our resources more efficiently, and we must produce more of what the world needs.

Competition is the key.

  • The national competition policy is based on the 1993 report by Professor Fred Hilmer following a comprehensive inquiry. It removes the power of monopolies, gives consumers a better deal and delivers more jobs and better living standards.
  • Competition reforms must embrace social welfare and equity issues; they must be economically sustainable; they cannot override awards and existing conditions and they must be in the interests of consumers.

...

[Source: Parliament of Australia website]

Australian Democrats, 'A record of action' (1 January 1995)

Several references to competition policy, including:

[page 51] Senator Cheryl Kernot moved 16 amendments to the Government's Competition Policy Reform Bill on behalf of environment, consumer, welfare, local government, public sector and trade union organisations who had been ignored in the consultation process. Her amendments were defeated by the combined vote of Labor and the Coalition.

[Source: Parliament of Australia website]