9 May 2014
Speech - #2014011, 2014

Speech to Committee for Economic Development of Australia lunch, Melbourne

Check against delivery


Thank you for your warm welcome.  It’s a pleasure to be here. I’d like to thank David and CEDA for the opportunity to address you today.

Today I want to talk about the Government’s Review of Competition Policy, and about why it’s so important for Australia’s productivity, growth and living standards that we get Australia’s competition settings right.

As we head into the Budget I want to talk a bit about Australia’s productivity challenge and why it’s critical for current and future generations.

And rounding out my 20 minutes here today, I’ll speak about some of my Government’s other key reforms to increase Australia’s productivity; in particular the deregulation agenda, which is vitally important to small business.

1.  The Competition Policy Review

On 27 March 2014, we announced the final terms of reference for the Competition Review – now known as the Harper Review.

The Review will be the first comprehensive review of competition laws and policy in more than 20 years. We commissioned this review because we know it can deliver substantial benefits to the Australian community, including enhancing the productivity of Australian businesses and improving living standards for Australian households.

Along with monetary policy, fiscal policy and taxation policy, competition policy is a key plank of the government’s regulatory environment.

Competition policy influences the day to day decisions made by Australian businesses and the day to day choices faced by Australian consumers.  As such, it is critical that government gets competition policy settings right.

The Review will look at ways to build a competitive economy and promote investment, growth, jobs and durable benefits for consumers. We want a competitive environment where efficient businesses – big and small – have an opportunity to thrive and prosper.  An economy based on merit, not muscle.

For these reasons, the review has a broad remit.  This will allow the Review Panel to be bold and prioritise those reforms that really matter.

At the broadest level, the Review Panel has been asked to look at three things.

First, I have asked the Review Panel to look at our competition law toolkit within the Competition and Consumer Act.

Our economy is a different ecosystem now to what it was when the previous Hilmer Review of competition came forward in 1993. The Review Panel will look at our changing economy and how competitive pressures have evolved.

This includes thinking about how key markets have evolved – in traditional areas like groceries or petrol, and new areas like digital delivery of services – and whether the laws are driving long-lasting benefits for all Australians.

The competition provisions of our law should function as effective economic levers to maximise the efficiency of Australian businesses both large and small.

Second, the Review Panel has been invited to take a closer look at Government involvement in markets. They have been asked to look for regulations or other impediments across the economy that restrict competition and reduce productivity; and which are not in the broader public interest.

There is a need to consider whether competitive forces can be harnessed to deliver better outcomes, both in taxpayer dollars spent, and in the quality of services delivered.

The time is also right to re-examine the effectiveness of competitive neutrality policies.

Third, the Review Panel has been asked to look at how our regulators and other institutions work to support competition, while keeping the regulatory impost on business low.

Small business will be important to the Review.  Australian small business is optimistic, motivated, diverse and distinctive.  I want to herald and encourage their work.  And I know that the review will be looking to ensure that Australian small businesses have every chance to thrive and grow in a competitive economy.

The Review has been asked to consider whether provisions that seek to deal with unfair and unconscionable conduct are adequate, accessible and response to encourage reasonable business dealings across the economy, particularly in relation to small business. Concerns about supermarket chains’ conduct towards smaller businesses continue to receive close public attention, and we can expect to see more such attention in the coming months, in light of the allegations being made by the ACCC in legal proceedings against Coles.

The Review has also been asked whether the misuse of market power provisions are effective. Market power is a luxury enjoyed largely by big business. When misused, market power undermines competition, and leads to unfair outcomes for small business and higher prices for consumers.

Ensuring an open, competitive economy is the best way to make sure all Australian businesses have the chance to succeed and grow.

This isn’t just about kicking the tyres. The Review is an opportunity to look beyond spends and saves, to the future direction of this country. We need to think about where the evidence points to a need for changes to competition law and policy today, but also how best to maintain focus and momentum for reform into the future.

The Review is led by Professor Ian Harper.  He is joined by an independent, expert Panel: Ms Su McCluskey; Mr Michael O’Bryan SC; and Mr Peter Anderson.

The Harper Review will be thorough, with a comprehensive consultation process. The Panel is making every effort to make sure they engage with all interested parties via public hearings and submission processes to the review.  Consumers, businesses of all sizes and governments at all levels are encouraged to be involved.

The Review Panel released an Issues Paper on 14 April.  It seeks feedback on key issues, such as the
ones I’ve outlined, and provides simple, clear guidance on making a submission.

Submissions on the Issues Paper are due by 10 June 2014.  Formal submissions are welcome, but there is also an online comment facility to ensure all feedback can be easily submitted. This means that consumers and small businesses can easily make their thoughts known and share their insights and field experience and have their voices valued as part of the panel’s analytical program.

You can also subscribe to receive email updates from the Review - about when and where the panel is holding consultation meetings.

Public and private forums will be held around the country, in cities and in the regions in the second half of the year.

Professor Harper and the Panel will publish a draft report later in 2014, after which there will be further opportunities for consultation.

Make your voice heard during this extensive consultation period.  For us to get the best, well evidenced, objectively evaluated and balanced outcome from the review it is important that the Panel hear from you.

2.  The competition framework - its link to productivity, growth, and living standards

The Harper Review is a key plank of this Government’s agenda for enhancing productivity and growth.
Effective competition in our economy is a key part of its strength and dynamism.

Competitive markets benefit consumers by putting downward pressure on prices, promoting value and choice.

Over time, competitive pressures also drive innovation and investment in new technologies and the development of new products that meet consumers’ needs.

This process of innovation is what drives economic growth and improvements in living standards in the long term.

During the 1970s and 1980s in this country, barriers to competition were impeding performance across the economy. Creativity was too often stifled by regulation, and too rarely pursued by government-owned or government-protected monopolies

Structural reforms, like those undertaken following the Hilmer Review, enabled markets to function better, and allowed businesses to flourish. They drove the take up of information technologies in the 1990s and drove businesses to reorganise their work practices to take advantage of new opportunities, in response to heightened competition.

With the National Competition Policy reforms of the 1990s, government businesses were restructured to make them more commercially focused, the electricity, gas, water and road sectors were transformed, and legislation was reviewed so it enhanced rather than restricted competition.

The Productivity Commission found that productivity improvements in key infrastructure sectors in the
1990s — that were targeted by national competition policy and related reforms — increased Australia’s
GDP by 2.5 per cent.

There is no doubt that good competition policy enhances growth and productivity.  G20 countries recently agreed to lift their GDP by more than two per cent above the expected growth under current policies over the next five years.  Good competition policy will clearly be an element in Australia and the G20 meeting this target.

3.  Australia’s productivity challenge

While Australia has done well on productivity in the past, looking forward we face a greater productivity challenge.

The idea of productivity growth may seem technical and obscure to many, but it is simply doing better with the resources available.

Improved productivity growth is not just an ambition relevant to technocrats obsessed with national accounts.  As the key long term driver of real wages and profits, it is relevant for everyday workers and businesses across Australians.

The imperative to improve productivity growth may not be clear to all in our community.  Relatively poor productivity growth from the early 2000s was masked by the strong growth in our nation’s terms of trade.

However, the terms of trade peaked in 2011-12 and have fallen since, and are expected to fall further over coming years.

Moreover, like many developed economies, Australia is facing structural shifts arising from the population ageing.  Between 2010 and 2050 the number of people aged 65 to 84 is expected to double, and the number of people 85 and older is expected to quadruple. This will detract from labour force participation, which in turn will detract from economic growth.

We need to do all we can to improve productivity growth.  To do things better and to do better things. Productivity growth is primarily driven by the enterprise and innovation of the private sector.  It arises from the drive, ideas, initiative and energy of individual workers and firms.

Government supports private sector productivity growth through activities such as infrastructure provision. By improving the efficiency of public service provision, we can limit the productivity-sapping impact of taxation over the long-term.

Government also has significant influence through incentives for private enterprise to pursue productivity gains. We recognise the importance of a flexible and dynamic economy.  In the Prime Minister’s words, we won’t “chase failing businesses waving blank cheques at them, because the end of the age of entitlement should start with the end of business welfare”.

Each of these themes will feature in the Budget on Tuesday night. Wealth isn’t a gift; it should be earned from hard work, innovation and risk-taking. Our living standards are not a birth-right. We need to work for them as a nation.

But the Government is also fully aware that the task of boosting productivity growth is one for the long haul.

4.  Enhancing productivity and growth – the microeconomic reform and deregulation agenda

As well as getting our whole-of-economy settings right, this Government has a broad microeconomic reform agenda.  Central to this is making sure that Australians, individuals and businesses have more control over their own lives.

To promote national competitiveness and productivity, late last year the Prime Minister established an Industry Investment and Competitiveness Taskforce. The Taskforce is focussing on potential measures such as options to reduce the costs of energy and regulation on Australian businesses, and options to encourage innovation, including more effective use of employee share schemes.

A competitive economy shapes a productive economy. We need to get the right settings now for the future. Let’s use the economic strength and horsepower we have, as well as we can, to build an economy and a nation that we can all be proud of.

With our long-term policy agenda to improve our wealth and prosperity, we’re implementing a reform process that is staged, consultative, deliberate and will deliver real outcomes.

As well as competition reform, we will produce a comprehensive White Paper on Tax Reform to look at options for delivering taxes that are lower, simpler and fairer, and work with the States and Territories to produce a White Paper on Reform of the Federation.

The Review of our competition framework is also flanked by a strong deregulation agenda.  Both of these are important microeconomic reform processes that will increase Australia’s productivity.

Let’s face it, the behaviour of our businesses can be greatly affected by the decisions that Government takes.  So let’s get rid of regulatory obstacles and roadblocks on businesses that shouldn’t be there.

This Government is prioritising the removal of unnecessary red tape, which will improve our economy. Unnecessary red tape hinders innovation, investment and job creation.

As part of the broader deregulation agenda, the Government committed to cut at least $1 billion of red and green tape each year.  You shouldn’t have to be a lawyer or accountant to navigate Government requirements on your business.

Small businesses feel the burden of regulation more keenly than large ones do, as their compliance costs are spread across a smaller revenue base. I want to make sure small businesses can focus on innovation and management, not paperwork, and do what they do best: create wealth and jobs. I want to support entrepreneurship in this country.

The Government’s parliamentary Repeal Day in March showed this Government’s commitment to rid the economy of unnecessary regulation.  But there’s more to be done. These commitments will result in more productive businesses and competitive markets.


Our Government knows that the path to sustained economic success for this country is best supported by sensible policy-making.

Sound competition policy will ease cost of living pressures and raise living standards for all Australians. And by enhancing our competition framework we can ensure that Australia is prepared to meet future challenges.

I’m passionate about progressing our competition and broader microeconomic reform agendas and I want to encourage you all to engage actively with our reform processes. We want to work together with business to ensure better outcomes for all.

Thank you.