Transcript – David Speers Sky Agenda – Competition Policy Review
Tuesday 31 March 2015:
I want to return to this competition review that has been released this afternoon. We have just been talking to the Chair of that review process, Professor Ian Harper.
I want to bring in now the Small Business Minister, Bruce Billson for some initial reaction to this.
Thank you for your time, I know you have said the Government is going to take its time in responding to this, but I am going to try and get some early indications from you at the very least.
I will start with…
You are in good form David.
Yeah…the low hanging fruit before we get to the tough stuff. Importing second hand cars, you cannot do it at the moment in Australia. Once the local car industry has shut up shop, surely we should be allowed to import second hand cars.
Well that is the recommendation from the Harper panel and it reinforces a similar recommendation from the Productivity Commission with an important caveat that there needs to be thoughtful transition where those vehicles may meet Australian design standards or our own design standards might be better aligned to International standards.
Harper and the Productivity Commission thought there was some upside there for Australian consumers, the caveat being there is a lot invested in the current network that supplies, retails, and services.
And leasing plans as well David where there is some value embedded in those existing transactions so they were pointing to the goal of opening the door for those vehicles but recognising there are other parts at play that need to be taken into account.
All of these things are a balancing act and, I mean, pharmacies is a good way because we all have a lot of trust in our local pharmacy but are the restrictions around them, in your view, and who can own a pharmacy, specifically Coles and Woollies cannot own pharmacies.
Are they holding back a more productive sector?
Well, there is a theory that says they are.
There is also the field evidence about what kind of detriment is raised with me as a Member of Parliament and others – Most people love their pharmacies and really value their existence and the fact that they are spread right across the continent which then underpins the effectiveness of our Pharmaceutical Benefits Scheme so they are not just a retailer of medicines.
They are actually a supply channel out to all corners of our continent and the rules are introduced to have that goal in mind so that is where the Harper panel says have a look at these regulatory arrangements that, on the surface, may appear to be anti-competitive and risk causing detriment to our consumers and our citizens, but if there is a public policy case to retain them, make sure you know what it is and evaluate the current approach or whatever anti-competitive regulation you might put in place against other possible options.
And that is what Harper has urged State, Federal and Local Governments to do as part of a renaissance in a commitment to Competition Policy and the benefits that it offers our economy and our consumers.
And what is your view on the taxi industry Minister? I mean taxi drivers, or owner drivers will pay thousands of dollars for their licence but you have got the arrival of Uber now which is really eating into their business. What is the answer here?
Well the answer here through Harper’s eyes is to not stand in between transport services that consumers want and the consumer.
That the consumer will find ‘work arounds’, if I could use that term, to get to what they need at a price they are prepared to pay for it and some of the old ways of regulating the supply of that service might be quite anachronistic to what consumers can do today empowered by apps and the like.
I think what Harper was pointing to is that there are so many things changing our economy. You know, what seemed right and appropriate 22 years ago when the last review of this kind was undertaken now looks a little klunky in today’s environment.
What I am seeing though is the traditional taxi operators taking up the challenge, realising that passengers want to know when the car is going to turn up, they want to be able to offer a commentary on the quality of the service, they want to be able to identify drivers that they trust and if they want to pay a bit extra, they wouldn’t mind getting a coffee in the console when they get there.
So you can see this crab walk of a new entrant disrupting a traditional model of offering services and then seeing standards being lifted across the board.
The other thing, David if I could, it highlights how this report is not completely within the domain of the Commonwealth Government to implement because this area of co-regulation around Competition Policy and the like requires us to collaborate with States and Territories and Local Government to see what appetite there is for recommendations so we can do, on our own, some of the fine tuning of the law that is recommended.
Others are actually calling on other level of Government to renew the appetite of….. economic reform if we are to lift our productivity, levels of income and economic opportunities in the future.
That is a good point. Finally, let me ask you perhaps one of the toughest recommendations here, and this is around the abuse of market power. Now essentially we are missing an effects test to make it easier to prove that market power has been abused. Is this something the Government is willing to consider?
Very much so. I think you have interviewed me before where I have referred to that provision of the law as a hunting dog that will not leave the porch. You know, it looks good, it talks a good game but in effect it has not actually played out the way some law makers and some participants in the economy anticipate.
That is why Harper and his Panel, supported by one of the most eminent competition lawyers, Michael O’Brien have said – well let us look at our experience with the misuse of market power provisions, they had one idea they put forward in their draft report.
Lots of submissions in response to that, they have fine-tuned and recalibrated that recommendation, pointing to it as a really serious one of 56 recommendations so we have an appetite for these recommendations.
Now it has got the concentration and collaboration that is needed to see what we can get implemented and in what time frame.
Small Business Minister Bruce Billson, we look forward to talking to you once you do get through all of that. We will see what the Government is going to take forward. Appreciate your time this afternoon.
You are welcome David.