Following in the footsteps of ACCC head Rod Sims’ recent criticism of privatisation, former Australian Chamber of Commerce and Industry (ACCI) head, Peter Anderson, has slammed Australia’s growing number of “monopolists and exploiters”. From The AFR:
“Private companies don’t help the cause when they monopolise or cannibalise markets, or structure franchise or labour arrangements that exploit franchisees or workers, and then advocate market freedom”…
Mr Anderson told The Australian Financial Review that the public was suspicious of the power of corporations.
“So the behaviour of the private sector needs to be constantly above a base level, because the reform effort is frustrated by bad behaviour and the public [believing in] that bad behaviour being structurally ingrained,” he said…
“State sponsored doping has no more place in industry or competition policy than it does in sport”…
The recent concerns about market power are welcome, but let’s face it, they are 20 years too late.
Two decades of soft-touch regulation by the ACCC, supported by both political parties, has already over-concentrated most sectors of the economy.
Simplistic “free market” notions always end in monopoly, as Karl Marx rightly observed, putting the lie to political parties that simultaneously claim to support both open markets and small business.
Nor should we expect the Turnbull Government to do anything to remedy the situation.
During the previous Labor 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.
And in the lead-up to the 2013 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 former 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.
More recently, we have witnessed the Coalition oppose sensible reforms to property taxation, oppose a Royal Commission into the banks (despite copious evidence of dodgy conduct and abuses of market power), as well as propose a massive taxpayer gift to multinational companies by lowering the company tax rate to 25%.
The fact is, big business has become increasingly accustomed to getting its way. There is nothing to suggest that the Government will place the interests of consumers and the broader economy ahead of its big business mates.
And for the most part, Australia’s oligopoly firms don’t expand into the global economy, creating so-called “national champions”. There is no need. The rents they extract at home are so fat that they would be mad to try. It’s much easier to take home a big bonus by trading assets with your mates, earning a couple of points of markets share and suppressing competition with a quick call to a sympathetic MP that you have backed. If they don’t listen then put the heat on them with a bogan-baiting advertising campaign.
In any event, there’s not much anyone can do about the lack of competition at this late stage, beyond policing abuses of market power, and supporting genuine free trade with other countries, as well as inviting inwards greenfield investment any way we can.
