The AFR’s Alan Mitchell has written a well-argued article today imploring the Abbott Government to become a champion for greater competition:
Rod Sims of the Australian Competition and Consumer Commission undoubtedly is right when he says Australia has lost a lot of its pro-competitive culture over the past 20 years – and it is Tony Abbott who needs to take the lead in restoring it…
It is depressing but not surprising that state governments have privatised ports with inadequate safeguards against the new owners abusing their monopoly power…
Abbott should use the leverage provided by his infrastructure subsidies to ensure that privatisation is consistent with the promotion of competition and efficiency…
Unfortunately, the Coalition’s recent track record suggests that it is intent on stifling competition in favour of rent seeking big businesses.
During the previous Government’s reign, we witnessed the Coalition oppose nearly every reform targeted at big business – whether it was opposing the mining tax, carbon pricing, or changing fringe benefits taxes on leased cars. While some may disagree with the merits of each of these reforms, the fact is big business become increasingly accustomed to getting its own way.
And in the lead-up to last year’s 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 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 code for saying that Australia should roll-out the carpet for rentiers.
The Coalition’s advocacy of the Trans-Pacific Partnership (TPP) – the proposed regional trade deal between 12 Pacific Rim countries – is another red flag. As noted previously, Trade Minister Robb has enthusiastically flagged that the Government would sign Australia up to the TPP, labeling it as a “platform for 21st-century trade rules”. However, if the TPP does go ahead, it will effectively establish a US-style regional regulatory framework that risks handing market power to US pharmaceutical and digital firms, at the expense of Australian sovereignty and consumers.
Australia does need genuine broad-based structural (micro-economic) reform in the interests of facilitating competition and driving productivity gains. But based on its recent track record and current trajectory, there is nothing to suggest that the Abbott Government will place the interests of consumers and the broader economy ahead of its big business mates.
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