National Competition Policy: Some Issues

Abstract

I ntroduced as part of the Hilmer reforms of 1995, national competition policy (NCP) is a cooperative Federal-State attempt to broaden the scope of competition and develop a more coordinated approach to reform. The main provisions are set out in the Competition Principles Agreement (CPA). Some competition reforms were already in place before NCP was introduced. For example a few individual governments had earlier opened up infrastructure monopolies such as gas, electricity, water and transport to wider competition. The NCP framework took these reforms under its wing and embraced many new initiatives which sought to: This paper is an amended version of a talk given to an FMC Conference on the Future of Competition, September 2001. The author is indebted to Gary Banks, John Cosgrove, John Quiggin, Denise Leslie and two anonymous referees for helpful comments, but the views expressed are entirely his own.

National competition policy: Effective stewardship of markets

“…Questions have also been raised about the very idea that competition can be successfully introduced into some of the key industries addressed by the NCP. The 'distorted' markets in the network utilities sector may not be so much the consequence of ideology, interests, public ownership or anachronistic regulation as much as a reflection of the intrinsic challenges of managing natural monopolies and optimising 'imperfect markets' (Argy 2002). By their nature, the transmission and distribution of electricity, for instance, do not lend themselves to multiple providers and thus genuine competition.…”

Some Thoughts on Economics and Regulation

“…In aggregate, efficiency gains have been made. Argy (2002), in a review of national competition policy, makes the point that it is not easy to evaluate the actual progress on efficiency and costs. In particular, factors such as cyclical recovery effects and timing of reformand the specific reference here is to electricity, and the effect of excess capacity on measured efficiency gainshave made it difficult to calculate precisely the gains of reform.…”

Declarations Under Part IIIA of the Trade Practices Act: The Case for Abolishing the Public Interest Criterion

“…100 A veritable 'smorgasbord', yet some commentators assert that clause 1(3) is weighted too heavily in favour of competition and efficiency! 101 In its Final Report, the Productivity Commission did not take up the suggestion of explicit guidance in respect of criterion (f). All that it noted was that if the package of criteria were to be revamped in the future, the test ought to be retained, 'to assess whether there are non-efficiency considerations that should have a bearing on the declaration decision.'…”