Review of the National Competition Council annual report 1996-97

Press release, 29 June 1998

PRIORITIES IN COMPETITION REFORM FOR THE NCC

'The need for better public education about the contents and outcomes of competition policy was highlighted in a Committee report to Parliament today.'

The Financial Institutions Committee today tabled its report on the National Competition Council annual report 1996-97. The report addresses several important aspects of the operation of the Council, one of the key national competition agencies, and national competition policy.

David Hawker MP, Chairman of the Committee said, 'Since the Committee's hearing with the NCC earlier this year, it has become apparent that the failure to properly communicate with the broader community on competition policy is prejudicing the implementation of the policy and its benefits.'

'The community needs to know more about competition policy and needs to understand that it should only being introduced where the benefits outweigh the costs. It is in those circumstances that Governments chose to implement the reforms. It is not a decision that they take lightly.'

'Accordingly, the Committee has recommended that the Commonwealth, State and Territory Governments and agencies involved in the implementation of national competition policy devote resources to ensure community understanding and debate about the contents of the policy and its outcomes. This includes the NCC' said Mr Hawker.

Mr Hawker said 'Other important matters addressed in the report are:

• the concept of net community benefit (which focuses on the benefits to the community as a whole rather than to particular interest groups) vs the public interest test;

• the benefits, outcomes and implications of competition reform;

• whether those benefits are flowing through to rural and regional Australia and the study supported by the Treasurer looking at the benefits of competition for rural and regional Australia;

• the NCC's first national review on Australia Post;

• support for national reviews, especially of the professions;

• progress jurisdictions have made in implementing the reforms;

• the NCC's resolve in withholding Competition Payments where reform is being delayed;

• Government strategies for resolving the issue of Commonwealth agreement to grant 'tax equivalent regimes' to local government business activities which may be candidates for corporatisation; and

• ongoing tensions in the dual role of the NCC as adviser to the Commonwealth, State and Territory Government and assessor of their progress.'

Ends
29 June 1998
Email: EFPA.Reps@aph.gov.au

Further information:
David Hawker, MP (Chairman) Parliament House (02) 6277 4100
Bev Forbes (Inquiry Secretary) (02) 6277 4587

A copy of Mr Hawker's tabling speech follows.

An index to the report and a copy of the report in PDF format are available on this site. The report is also available by contacting the Committee secretariat.

TABLING SPEECH: DAVID HAWKER MP, CHAIRMAN

Mr Speaker this is the Committee's first review of the National Competition Council annual report.

The NCC is one of the key national competition agencies. It advises the Commonwealth, State and Territory Governments on implementing the national competition reforms, as well as assessing their progress.

The Council is in the unique position of reporting to all those governments as a group, and as such the Committee's review provided a rare opportunity for detailed public scrutiny.

National competition policy was endorsed in April 1995 by the Commonwealth Government in cooperation with all State and Territory Governments operating through COAG. The NCC commenced operation in November of that year.

The potential benefits arising from competition reform have been recognised by all levels of government and all major political parties. Implementing competition policy will impact across the whole economy and right across the community.

Governments have not supported the implementation of this policy lightly. The reforms are only implemented to the extent that the benefits outweigh the costs - it is a very flexible policy.

In its report the Committe addressed the following significant matters.

First, while the NCC is taking the public education process about content and outcomes of competition reform seriously and collaborating with the State and Territory Governments in addressing this, more needs to be done.

During the past few months it has become more apparent that the failure to properly communicate with the broader community on competition policy is prejudicing the implementation of the policy and its benefits. Accordingly, the Committee has recommended that all Governments and agencies involved in implementing the policy devote resources to ensure community understanding and debate about the contents of the policy and its outcomes.

Second, over the next 12 months or so governments will start getting into the meat of competition policy reform as the big infrastructure reforms, such as electricity and gas, phase in, and major legislation reviews get underway. While the benefits from competition reform are coming through now and some are outlined in our report, they will be more significant next year.

Some of the benefits already experienced are lower prices for STD and international telephone calls; discounts on local telephone calls; 22% reduction in real airfares; reductions in electricity costs for Victorians of around 10%; 40% reduction in freight rates for rail transport between Melbourne and Perth; and 15% reduction in real terms in the prices of government trading enterprises.

More macroeconomic benefits expected for ordinary Australians include price reductions, lower inflation, more growth, more jobs, and uniform protection of consumer and business rights across the whole country.

Third, throughout this Parliament an ongoing concern of the Committee has been where these benefits of competition fall, particularly the distribution between metropolitan and regional areas. This inequity is well recognised by the Council and it stressed the need for government policies, such as community service obligations or universal service obligations, to address this.

In response to a recommendation in one of the Committee's previous reports, the Government has agreed to a study of the extent to which the benefits of competition are flowing through to rural and regional Australia. The Committee expects that the results of that study will have a significant impact on all government policies in regional Australia.

Fourth, an issue of particular concern to rural and regional Australia is their postal service and the outcomes of the NCC's national review of Australia Post. The Minister for Communications will be making an announcement on that review shortly.

Fifth, the Committee also examined the assessment process and the associated Competition Payments of which some $217 million is involved in 1998-99 and about $16.1 billion over the next nine years or so.

The Council is clearly seeking a performance based assessment system, one of the Committee's recommendation from its previous report on competition policy, and it can no longer be taken for granted that the States will receive their full Competition Payments. The Committee expects that the NCC will not shy away from responsibily exercising its discretion on making recommendations to the Treasurer on the dividend payments.

Other matters addressed by the Committee include: net community benefit; ongoing tensions in the dual role of the NCC; the Government's strategies for addressing the taxation of local government businesses; and legislation reform of the professions and the statutory marketing arrangements.

I thank the NCC and our secretariat staff for their assistance with the inquiry, and the members of the Committee for their professional approach to the public hearing and for their contributions to this report.

I commend the report to the House.

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