Speech – Competition Policy Review International Conference, Canberra
Thank you for your warm welcome.
I would like to thank and acknowledge Professor Ian Harper and the Competition Policy Review Panel for the work they’ve been undertaking and for the opportunity to be with you today.
While my official title is Minister for Small Business, I have portfolio responsibility for Competition Policy and Consumer Affairs.
That the Abbott Government elevated this role to a Cabinet level is indicative of the importance we place on it.
This is a responsibility I have carried for the Coalition, both in Opposition and now in Government, for just short of five years.
It is an area of policy which, with the policy right settings, can do so much to promote innovation and choice, to energise enterprise in our economy and deliver real and durable benefits for consumers.
This is why a ‘root and branch’ review of our competition policies, laws and institutions is a central element of the Government’s Economic Action Strategy.
My advocacy of this review has continued over many years. It hasn’t been without its opponents and critics but I have remained steadfast in my view that this is necessary and timely.
Our economy is changed greatly from a generation ago when the Hilmer reforms mapped a pathway to a more competitive, nimble and productive economy.
These reforms have benefited consumers and boosted economic growth by 2.5%.
We know some of Hilmer’s reform pathways are yet to be fully travelled.
Unlike Hilmer, its respected predecessor, this Harper review is not the result of a bureaucratic initiative from deep within the Commonwealth public service advocated by learned policy wonks.
It has been advocated, instigated and implemented by clear eyed and forward looking political leadership, in recognition of its important potential contribution to economic and consumer wellbeing.
So much has happened in the generation since Hilmer.
For example, there have been profound and changes and disruptions in our economy, new commercial strategies and tactics, learnings and insights arising from the actual application of our law and the lived experiences with our institutions, persistent anti-competitive choke points that risk economic and consumer detriment.
And international examples that are capable of contributing to our ambition of making sure we have a ‘fit for purpose’ competition framework.
These are all key and valuable inputs and components of the Harper review’s work. And these are just some of the reasons why a ‘set and forget’ approach to competition policy is unacceptable.
Our predilection for codified black letter law, the relative lack of private enforcement action, the heavy dependence on regulator enforcement have combined to deny us the evolving interpretation of competition laws, such as in the US experience.
Since Australia first introduced competition laws in the 1970s, we have continued to add volume to the legislation but not necessarily clarity and utility.
This compares to the more broadly defined laws in other jurisdictions, including the principles-based approach in Europe which is tempered by defences of legitimate commercial conduct.
The challenge for parliamentarians is enacting legislation that seeks to anticipate the innovation and dynamic nature of our future economy and business conditions.
Alas, we parliamentarians have not always delivered on this high ambition and displayed such perspicacity.
Yet the details of the laws gifted by the legislature have not always nurtured the fair and healthy competitive, merit-contested markets and pro-consumer outcomes hoped for.
And there is no limit, no limit to the vested advocacy urging ‘no change’.
Assertions about a single ‘silver bullet’ that will ‘fix’ alleged shortcomings in the law, or institutional performance, inevitably generate much legal commentary.
Yet this is a policy area that, in the first instance, should not be the battle ground for lawyers.
It should be the policy imperatives of economic and consumer benefit that drive our work and deliberations.
Success is best judged by the advancement of our policy objectives. Not our familiarity or comfort with the tools enacted and deployed.
This is why I framed the panel’s work through the terms of reference to focus on the competition tool kit’s fitness for purpose, assessed against economic vitality and productivity, and durable consumer benefits.
While I of course have a commitment to the well-being of the small business sector, I understand that competition policy should be focussed on nurturing fair and healthy markets, working for the ultimate benefit of consumers.
For me, this is about policy settings that allow efficient business – big and small – to thrive and prosper, where the contest for market share and margins is based on merit, not on the exercise of muscle.
Government interventions in markets should be limited to where it is really required, to provide the framework for open and effective competition.
It is no secret, as a Government, we have an ambitious reform agenda.
We do not shy away from this.
We are committed to implementing reform, not for reform’s sake, but for policy renovation and innovation. Reform that enables our nation to achieve its full potential.
We are committed to implementing reform that actually drives real productivity growth, and will raise living standards for Australians in the next decade and beyond.
With the right policy settings and institutional arrangements, competition is a great driver and commercial discipline contributing to a strong, prosperous and innovative business sector that ultimately benefits all Australian consumers.
The Harper Review will help us to identify ways to build our economy and promote investment, growth, job creation and durable benefits to consumers.
And today, at this conference, you can help shape the future direction of the competition framework of our country.
Before I talk more about the Harper Review, I’d like to provide some context about the key challenges Australia is facing.
Productivity growth is so important for the future living standards of all Australians. We are taking a number of approaches to boost productivity.
This includes wide-ranging reviews of our tax and federation systems, our comprehensive deregulation agenda, undertaking reforms to assist small business and of course, commissioning the review led by Professor Harper.
As a country, we’re facing significant challenges over the next few decades, with some big changes to our competitive landscape.
Perhaps the greatest potential impacts will be brought about by the digital revolution and changes in consumer behaviour; and the growth of truly globally accessible markets, and we need to meet these challenges.
We need to meet them by building a stronger, more productive and diverse economy.
An economy strengthened by a robust and fit for purpose competition framework.
Many of you will know resources investment was the major driver of economic and income growth in recent years.
Now that the contribution of that investment to growth is falling, we need to rebalance growth towards the non-resources sector in order to sustain it.
Our exchange rate has retreated from the highs of early 2013.
Combined with low interest rates, this will, in part, support activity outside the resources sector, but only in the short to medium-term.
We face other challenges beyond what we can immediately see.
Further falls in the terms of trade and the ageing of our population will place additional pressure on our economy.
In the 70s, around the time of the implementation of the Trade Practices Act, and 20 years prior to the Hilmer Review, there were seven people working for every person in retirement.
Today there are five people working for every retiree.
By mid-century there will be less than three people working for every retiree in our economy.
We are going to have to be spectacularly productive, in ways we have never been if we are to generate the wealth, the economic growth and the vitality to produce the income to sustain continuing improvement in our quality of life.
With this in mind, the Government is laying the groundwork for future reforms that will enhance our productivity to sustain the wellbeing of our nation and our citizens.
This is a long-term policy agenda with a number of initiatives, including the tax and federation white papers.
We are not going to rush into making changes before we have considered fully the implications.
As we are going through the Harper Review process, we will responsibly canvass, evaluate and implement reforms in a genuinely collaborative and consultative way, capable of delivering real outcomes.
Since federation the Commonwealth has been increasingly involved in matters that were traditionally the responsibility of the states and territories.
Sometimes, this was necessary.
But at other times this overlap has reduced accountability and increased duplication of activities, creating confusion in service delivery.
The federation paper will be closely aligned with the tax white paper.
This means that issues surrounding various governments’ responsibilities in both expenditure and revenue-raising can be considered together.
We have an obligation to ensure government runs efficiently and is best able to provide an efficient and effective operating environment for Australian businesses, consumers and its own works and services responsibilities.
Regulation is another area where we need to better balance our country’s objectives for growth, prosperity and our citizens’ wellbeing against the costs imposed by over-reaching and unnecessary red tape.
That is why the Government has a comprehensive deregulation agenda, and it is why we particularly asked the Harper Panel to consider areas of the economy where regulation is impeding effective competition and consumer benefit.
As Small Business Minister, I am passionate about implementing our comprehensive policy agenda that is benefiting small business. My work in this aspect of my role will be done when Australia is the best place to start and grow an enterprise – we are not there yet.
We need our business community to have the confidence to invest and innovate and to take considered commercial risks. We want our businesses – big and small – to thrive and prosper.
We have implemented many of our election commitments that support the Economic Action Strategy.
But there is more work to be done.
I want to touch on a related white paper process that has relevance to the Harper Review.
Many of you will have seen the release of the Agriculture Competitiveness Green Paper this week by my friend and colleague Minister Joyce this week.
It is important to point out that the Ag Green Paper is presented as a discussion of possible options for improving competitiveness of the agricultural sector, as proposed by the sector’s stakeholders.
The issues raised are not a Government endorsement of this input, but a faithful record of what stakeholders have proposed.
It is the Harper review that will rigorously and objectively analyse and interrogate views from a much broader range of stakeholders on a whole-of-economy and durable consumer benefits basis.
The Government will consider the competition policy related issues canvassed in the Ag green paper when it responds to the Harper Review Final Report next year.
I want to emphasise though, that we are absolutely committed to competition reform, and we are hoping that the Harper Review’s final recommendations are as robust as possible.
This will help to ensure that the Government and community is fully-briefed on problems needing solutions, the economic and consumer benefit drivers that shape the case for change.
As I mentioned earlier, there are many challenges that our economy faces now and in the future.
This is a once in a generation opportunity to shape the competition policy foundation for the next generation and beyond.
Twenty years have passed since the landmark Hilmer Review, so this review is both timely and essential.
Our aspiration is for the reforms coming out of the Harper review to achieve similar outcomes for the productivity of this country.
The Government recognises that there will be a wide range of reactions – hasn’t there been – to the Panel’s draft recommendations.
This is a good thing to promote debate and discussion. The Draft Report after all, is just that, a draft – albeit well-considered – ‘work in progress’.
It needs to be thoroughly tested in public consultations before final recommendations can be put to the Government by the end of March next year.
We will need to work together to make sure any competition reforms are effective and stand the test of time.
With your support and input, I am sure we can do that.
The Government’s vision for competition is one where efficient businesses, big and small, can thrive.
Where there is reward for astute entrepreneurship.
Where there is confidence and predictability in the law and institutions.
Where this healthy competitive environment delivers durable benefits to consumers in terms of value and choice.
To encourage innovation that drives the development of products and services that meet the needs and ambitions of the market here and abroad.
Today, you have the opportunity to contribute to this goal that we have for our nation.
You have the opportunity in a practical way to help with shaping the competition landscape for the next ten years and beyond.
Your great minds were brought here to reflect on, to critique, to percolate, to advocate and to contest ideas to help reinvigorate our competition framework in light of the Draft Report and to help ensure its fitness for purpose.
On behalf of a grateful nation and our Government, I thank you for your contribution up to today and beyond, to nourishing ideas and debate about how best to ensure Australia reaches its full potential as a vibrant and competitive economy – now and into the future.
Thank you for the opportunity and honour of sharing a few thoughts with you at this international conference.
Good morning and good deliberations to you all.