Former head of the ACCC, Graeme Samuel, has today blasted the growing queue of rent seekers looking to cash-in across Australia, as well as the dismal recent record of structural reform:
They [rent seekers] included proponents of a “food bowl” in northern Australia and other “vested interests” whose ideas did not pass the basis test of public versus private interest, Mr Samuel told a Committee for Economic Development of Australia (CEDA) lunch in Melbourne…
“They are vested interests,” the former Australian Competition and Consumer Commission chairman said.
He said he had applied his five-part test of public-versus-private interest and efficiency to the proposals and “in every case they failed dismally”.
…there had been “no significant” economic reform in Australia for almost a decade.
As a result, the five-year rolling average of annual productivity growth had dropped from an impressive 2.5 per cent at the end of the 1990s to minus 0.6 per cent in 2011.
Middle-class and business welfare or handouts imposed a “massive burden” on taxpayers and, except in rare cases, represented political solutions to problems rather than real public-interest solutions, Mr Samuel said.
The only solution was for political leaders to have pro-reform conviction and values, courage in the pursuit of their convictions against the strong opposition of powerful vested interests, and be able to communicate the reasons for reform to the public.
All fair enough criticism, and aligns with what we have been arguing on MacroBusiness for quite some time. As Houses and Holes remarked a few month’s back, “in every sector of the Australian economy we have an effective duopoly or oligopoly at work. These have arisen as global pressures, practices, capital and ideologies have concentrated power in every sector”.
Unfortunately, the situation is unlikely to be arrested by the new Federal Government, which seems intent on rolling-out the red carpet for rent seeking big business.
In the lead-up to the Federal Election, the Coalition’s Andrew Robb declared that “Australians should not be opposed to creating national champions in key industries” and asked that we “accept that the nation is an ‘oligopoly economy'”, as “it was important that Australian companies were allowed to expand to achieve ‘critical mass'”.
Similar sentiments were expressed last week by Maurice Newman, the head of the Prime Minister’s Economic Advisory Council, who claimed that “we are lacking economies of scale and that Australian companies find it hard to acquire the necessary critical mass in a small domestic market without running up against trade practices issues”. Newman also argued that “the opportunity for Australian companies to become national champions at home must be considered by rebalancing the interests of consumers and businesses”, which is another way of saying that Australia should roll-out the carpet for rentiers.
As long as such views are held within the Government, opportunities for genuine structural reform are likely to go missing and the conga line of rent seeking will continue, to the longer-term detriment of Australian productivity and living standards.
