Government responds to Harper Competition Review – December 2015

Filed under: Australian Politics, Competition, Consumers,

Treasurer Scott Morrison has released the Government’s response to the Competition Policy Review – the Harper Review – saying it sets out a new frontier for Governments at all levels.

“Increasing choice and delivering better services for consumers is central to the Government’s plan for driving growth and jobs in our economy,” Mr Morrison said.

On one of the Harper Review’s most contentious proposals, to rewrite Section 46 of the Competition and Consumer Act and introduce an “effects test” which would increase protection for small business by allowing the ACCC to act where behaviour “has the purpose or likely effect of substantially lessening of competition.”

Mr Morrison said the Harper Review would lead a new phase of change that would deliver better services and more choices for Australians that in turn will help to support higher living standards.

“Our response to the Harper Review sets out a productivity and competition agenda that, combined with our efforts to create a better tax system, will boost innovation, open up new markets, strengthen our budget and achieve real improvement to how we run our federation.

“As our economy transitions from the construction phase of the mining boom, driving productivity growth and diversifying our economy is essential to enable Australians to earn more and maintain our living standards.

“After the boom in commodities prices and the peaking of our terms of trade …our economic success will depend more critically on our ability to drive productivity gains, in the public and private sphere alike.

“Competition policy is one of the surest ways to lift long-term productivity growth and generate economic benefits that can be shared by everyone.

“Increased productivity driven by a more efficient market will drive innovation, entrepreneurship and more productive investment.

“Previous National Competition Policy reforms in response to the Hilmer Review in the 1990s and early 2000s delivered efficiency improvements that boosted Australia’s GDP by 2.5 per cent.

“We will now build on this legacy as we seek to reboot competition reform policy.”

The Treasurer said the Government would support in whole or in part 44 of the 56 recommendations of the Harper Review – “and we remain open to the remaining 12 recommendations, depending on the outcome of further review and consultation with the states and territories and other stakeholders”.

“The Government has already announced reform in a number of areas consistent with the Harper Review: simplifying the regulation of coastal trading; tasking the Productivity Commission with a back-to-basics review of intellectual property laws; and reviewing remuneration and location rules in the pharmacy sector.

“We will expand our Regulatory Reform Agenda to incorporate a competition regulation review.

“If we are to deliver greater choice and give a boost to our economy — all levels of government must be on board. Many areas involve shared responsibility, such as roads and human services.

“Areas that are the sole terrain of the states and territories, including regulation of retail trading hours or taxis and critical areas like planning and zoning, are where reform can deliver real benefits, making our cities more liveable, letting Australian business people who want to set up new businesses back themselves and compete on their merits.

“The Harper Review also makes a strong case for putting users at the heart of service delivery by giving them greater control over the services they use and who provides them.

“We need to find innovative ways to meet the growing demand for high-quality services. Here, the Government will help lay the path for reform by asking the Productivity Commission to take stock of what has worked already and make practical recommendations to empower consumer choice.

“To support a new competition reform agenda the Government has supported the recommendation to put in place a new institutional structure with the states and territories, including the potential for productivity payments for delivery of reforms. “This process is inextricably linked with the broader discussion currently underway in relation to creating a better tax system.

“Under the previous National Competition Policy, the Commonwealth made incentive payments to States and Territories that did drive reforms, but there were also many lessons from this process that the Government will seek to incorporate in new mechanism to be developed in consultation with the states and territories.

“We are also taking forward a significant package of competition law reforms.

“As part of this, we’ll be streamlining the process for firms seeking to merge to remove unnecessary restrictions and requirements that may have deterred their use.

“As well, we’ll remove industry-specific price signalling laws and instead outlaw the kinds of ‘concerted practices’ among competitors that substantially undermine competition, similar to the approach taken internationally.

“And we’ll simplify the authorisation and notification provisions, meaning that only one application is required for a single business transaction or agreement.

“Regarding Section 46 of the Competition and Consumer Act, the Government acknowledges concerns about the operation of the misuse of market power provision and the need to ensure these provisions enhance rather than inhibit competition.

“We note the Harper Review’s recommendations for change and will be embarking on a further and final round of consultation on this issue with the release of a discussion paper that will canvas a spectrum of options for change beyond the proposition currently before the Government.

“Comments on this discussion paper will be due by 12 February and I will submit a proposal for Cabinet consideration in response to this issue by the end of March, at which time we will announce a final position.

“This is an issue on which many people have strong views, and I encourage people to engage in the consultation process so we can find the best way forward.

“Reforming competition is one of the best options we have to boost growth and productivity in the years ahead, and this is why it’s at the heart of the Government’s economic plan.

“The Government wants to unleash a spirit of competition, to put Australian consumers and choice front and centre, because it is the economy and all Australians that ultimately will be the winners.”

The full Government response to the Competition Policy Review is available at:

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