The Prime Minister has taken to calling the Middle East a “witch’s brew” in his national security sales pitch, but Ian Harper and his (mostly male) competition review panel have delivered something very similar to the government in this week’s draft report on competition law.

This was the review that started as a means for the National Party to pursue its hostility to Coles and Woolies and its obsessions with protecting small business and farmers at the expense of consumers — remember the bizarre and legally incoherent “Birdsville amendment” Barnaby Joyce succeeded in getting the Howard government to add to competition law. The Right of the Liberal Party also saw in the review a means to implement an anti-free speech agenda in which critics who urged boycotts of powerful companies could be prosecuted.

Instead, Harper and his panel have taken the opportunity to outline a long list of issues where politicians of all sides have failed consumers in the 20 years since the Keating government championed national competition policy. And they all look every bit as politically toxic as they ever have.

Perhaps it’s not so much a witch’s brew as a shit sandwich.

One of the areas targeted by the review, for example, is intellectual property: the draft report recommends that the current exemption from competition law that is afforded intellectual property transactions in the Competition and Consumer Act should be removed. Removing the exemption is backed almost universally, except by the copyright industry, whose bidding the government is undertaking at the moment in relation to its war on file sharing. And this isn’t the first time that recommendation has been made — a number of previous reports have recommended the exemption be amended or significantly curtailed in the interests of consumers.

And on intellectual property, the draft report urges the removal of parallel import restrictions, those noxious protectionist measures that (like all protectionism) serve merely to line the balance sheets of, usually, large multinational companies at the expense of consumers. The Rudd government famously had a big internal stoush before deciding to leave parallel import restrictions (mostly) intact on books, but they also remain in place for some other forms of intellectual property and even for second-hand motor vehicles. Like the IP exemption, parallel import restrictions have been examined repeatedly and their removal has been recommended repeatedly, but few governments have been willing to take on the creative industries — a rare exception was the Howard government, which removed restrictions for CDs (the music industry, with Peter Garrett as its standard bearer, had defeated a push by the Keating government to remove them) and software.

Removing parallel import restrictions are probably the lowest-risk option for the government — though not on second-hand cars: Industry Minister Ian Macfarlane has already said “the government has no intention of allowing Australia to become the dumping ground for other countries’ old second-hand vehicles”, which makes Australian consumers getting the benefit of lower-priced cars sound like some despicable foreign plot. But the government won’t go near much of the rest of the recommendations in the draft report, and nor will the opposition.

“The draft report shows an economy where many sectors and industries continue to rely on artificial restrictions on competition and innovation as a key part of their business model, and do so with the connivance of politicians.”

Health Minister Peter Dutton, in a rare public outing, has already pre-emptively rejected the recommendation that the cosy monopoly the retail pharmacy sector has been handed by successive governments is in no danger of being reformed to benefit consumers. Can’t have pharmacists telling one of the Liberals’ core constituencies, the elderly, that that nasty Mr Abbott is going to make their medicines more expensive, and imagine having to go to the supermarket to get your webster pack, dear!

Even more painful would be the draft report recommendation that road pricing be introduced to enable more efficient investment in and usage of road infrastructure. News Corp’s tabloids have already run this as (the plainly logistically impossible) “Every road in the nation would be tolled“, although that coverage was considerably less hysterical than what Gemma Jones served up in the Telegraph when road pricing was mentioned when Labor was in government. The draft report says current indirect road pricing mechanisms like registration (for vehicles) and registration and fuel excise (for heavy vehicles) should offset direct charging via electronic tolling. But even that wouldn’t be enough to enable a sensible debate on our current inefficient road pricing system, which in urban areas relies heavily on Soviet-style queueing (AKA congestion) to manage demand.

The draft report also recommends changing planning laws to enable greater consideration of competition — something that opponents of Coles and Woolies will be happy to hear, but which local councils and residents are unlikely to be happy about given the report specifically singles the “overly localised focus” of current planning processes. Liberalisation of the absurdly anti-competitive taxi licensing laws of most states will drive the taxi industry into a fury, while small businesses in those remaining time warp states where retail trading hours are stuck in the 1970s will go nuts about the trading hours recommendation.

The political toxicity of many of these recommendations aside, there’s a broader picture here that Ian Harper has explained. The draft report shows an economy where many sectors and industries continue to rely on artificial restrictions on competition and innovation as a key part of their business model, and do so with the connivance of politicians. It is consumers and other business who pay the price for this, through higher costs, poorer, less flexible service and the lower economic growth occasioned by these sorts of inefficiencies. Harper’s draft report provides a glimpse of a more competitive economy, one harsher for business, but one likely to benefit consumers and drive greater innovation by our businesses — something with which Australia has long struggled.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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