Transcript – Gary Adshead 6PR- Competition Policy Review
Tuesday 31 March 2015:
Now it’s time to hear from the Federal Minister who has received a review; it’s looking at the whole issues of competitiveness in Australia through the Economic Regulation Authority… I think, I might be corrected on that as I talk to Bruce Billson the Small Business Minister.
Now g’day Bruce.
Gary, how are you and your listeners this morning?
Did you hear a bit about what Wade DeCampo had to say as to why they’re protective about it?
Yes I got the tail end of it- certainly I can understand his point of view.
The issue arose though as part of the Harper examination of the competition policy framework that affects our country and the opportunities and value for money available for consumers.
What are the barriers and obstacles for us to achieving our full potential as an economy?
And this was highlighted as one of a number of areas where there are special arrangements in place that may have seemed like a great idea at the time when they were introduced some generations ago.
But were identified by Western Australia’s own economic regulatory authority and then brought forward as part of the Harper panel’s examination as being an example of where it ‘gums up’ the economy, limits opportunities for economic growth and imposes costs on consumers.
It was brought forward as the case study as an example of such an arrangement that the responsible State Government should revisit.
Alright, I was going to say can you override the State Government? Have you got power to actually abolish it?
No we cannot, no we do not, and we would not seek to do that because that is not within our gift.
The Competition Policy Review makes the point that all governments: Commonwealth, state and territory and local government can exercise the powers available to them in such a way that in the longer run can be quite detrimental for our economic and consumer interests.
What the Harper panel report, which I will receive later today; if it follows the path that was outlined in the draft report says is that you really need a mighty fine reason for doing that where there is a net detriment.
Where the restrictions impact on the community in a way where the costs outweigh the benefits and if you cannot achieve whatever the public policy goal is, and that should be clearly articulated, really respecting competition is probably your last choice – And the last option you would reach for and that is what the report’s draft recommended.
Alright but the argument that you hear from Wade DeCampo and others is that what it does do – it might not have an impact on the price et cetera – but what it does do, they say, is protect people who are small family farmers who may not be able to compete in the market with some of the big players around town. And there are some… Tony Galati… a big player…
That is right and that was a point that was put to the Western Australian Economic Regulation Authority (ERA) and the ERA found that that was not a particularly credible argument.
They found that the market generally functions quite well, but what having to get a permit – a licence essentially – to produce table potatoes was doing was limiting the varieties that are available for Western Australian consumers and really inhibiting export opportunities.
The Economic Regulation Authority thought WA was really quite ideal for developing a seed potato export industry because of the ideal conditions for growing seed potatoes climate wise; free of many of the disease in the Middle East and Asia and eastern states where there will be a real demand for that.
But this arrangement that is in place in WA was actually an impediment to the necessary investment and innovation needed to actually grow those market opportunities for potato growers.
That was where your own WA Economic Regulation Authority landed and the Harper Panel report actually draws heavily from that important piece of work.
Wade DeCampo said then, and I know some potato connoisseurs in Western Australia that you speak to, say we don’t have the same variety that they get in the eastern states. But he puts that down to the supermarkets.
He blames the supermarkets for that, for not wanting our growers to produce other varieties. They want to stick to what we see quite commonly in potatoes.
Look, I have got great respect for Wade and all the people that are involved in any kind of enterprise in Western Australia but the question about white to yellow varieties of potatoes, I mean the consumers have made their choices in the Eastern states and moreover if you cannot get them in the market in the first place how can you establish the demand?
So it is a bit of a circular argument and the point that the Harper review report, which I receive later today, is that these restrictions actually have a net adverse impact on Western Australian consumers who cannot even be tantalised by these new varieties.
If you have got potato producers that learn how to produce with efficiency, new innovations in their technology, a new chance to grow their output- they then run into this problem of needing a licence or a permit to actually sell into the marketplace.
And then there is the broader issue of the export opportunities where WA is well placed but these arrangements are actually limiting that possibility as well.
If I can go from potatoes if you don’t mind to the taxi industry here in WA, obviously like elsewhere, they have been battling this thing called Uber. What have you learned from the report on that?
The draft report has had a lot to say about it.
I am keen to get the final report today but the draft report looked at Uber and said where you have got consumers essentially talking with their feet and finding their transport needs met by other platforms – again trying to licence people and forcing them to use a particular model – is just being worked around by consumers.
They are saying ‘It might not work for me, I want to go another way’ and the technology that is around lets them do that.
Even in looking after our pets Gary. We used to have to try and find a kennel to park our pet pooch in when we went away for a while.
Well now you get an app that tells you which neighbours in your neighbourhood are dog friendly and might be happy to look after Lucy the canine for the weekend for you.
This is what is changing the economy and the Harper report says the old ways of regulating and putting controls on intermediaries – the people in between the direct service provider and consumer – are getting really challenged as new technology and consumer choice puts the customer as the king, as the sovereign party and they are finding workarounds where those systems are not meeting their needs.
Encouragingly in this space though I know a couple of trials are being run in some capital cities in Australia, where they have put the Uber product up against the taxi service. And where the taxi service is running well people were pretty happy with it and the performance was much of a muchness.
So it is really making sure consumers get what they want and it is some 20 years since we have conducted a review of this kind. A whole lot has changed and you have touched on a couple of areas.
Yeah well obviously you just said that regulations can get in the way.
That is where the taxi industry says it is not an unfair disadvantage because of course they are subject to all manner of regulations and Uber seems to be able to skirt around most of them.
Yeah they have got to, in some states and in some jurisdictions overseas Uber has been saying we are happy to be involved in a regulatory framework that is essential and necessary. But forcing us to hold a taxi licence – as if that is the only way to move people around – that is where Uber pushes back.
That is also where customers are saying ‘Look I can come up with other arrangements where I know someone who can basically provide me a ride, who I can report on their performance, they can report on me as a customer. I can pay a bit extra and they will have a skinny flat white ready for me in the console when I get in the car’.
These are the changes that are happening and some of the older ways of regulating made sense in that time.
What the Harper review is saying is the world, the customer, technology is changing a lot of those things and we really need to revisit whether we have got the intervention of Government right in the interests of achieving all we can as a country and getting full value and maximum satisfaction for customers.
Alright I’m sure the State Government Coalition here in WA, with their National Party colleagues, will read that report about potatoes and other things very closely.
Good on you Gary and it is a good point too. This is an area of shared responsibility so there is no unilateral wand the Feds can wave- we need to all turn our mind to these things in the longer term interests of our country.
Thanks for that Bruce.
Good to talk.
That is Bruce Billson the Federal Small Business Minister.