It is the foundation of the “capture theory” of regulation
that the regulated capture the regulators. One corollary of this is that no regulation remains on the books
that does not suit the regulated.

My lifetime of experience in the regulatory framework in
Australia is that both these observations hold always.

Sometimes an innovative regulator will get control
of a regulatory agency – usually the driver behind its establishment – and can
make an initial impact clearly in the public interest. However, it is all down
hill from there as the regulated with too much to lose (and recover) exert
their political muscle.

In my immediate and historical experience it is
salutary to reflect on the sheer regulatory power wielded by some
industries – by the racing industry in the different states; by the retail
banking industry (especially the payments system cartels) and by the
superannuation industry. Unbelievably, the prime minister regards financial
planners as the quintessential small business, as lobbying only in the public
interest.

I am sure others can testify more credibly than I to
similar abuses of the political process in almost every other
industry. If the ALP is to reorient itself to serving the public
interest it could start here – wary of course that employers and associates will
recruit their dependants in the cause of self-serving
regulation.

CRIKEY:
The challenge is on folks. Let’s try and name Australia’s genuinely
tough and independent regulators which have managed to avoid industry
capture. Send your entries to [email protected]

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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