The federal government has signalled a new wave of competition reform, supported by incentive payments to the states, as part of an agenda it says would boost living standards and bring down prices for consumers.
Competition Minister Andrew Leigh will on Monday night say the country needs a “good dose of competition”, arguing for a return to the Hilmer reforms of the 1990s and early 2000s that delivered a $50 billion a year boost to the economy.
Competition Minister Andrew Leigh says a new competition agenda will help the economy run better and deliver savings to households.Credit:Alex Ellinghausen
Leigh, an economist, will use an address at the University of Sydney to say competition in everything from the licensing of trade workers to land zoning needs to be part of a program of change led by the nation’s treasurers.
“A new wave of competition reforms will deliver better prices and more consumer choices. It will help improve living standards of Australian households by increasing access to the latest technologies,” he will say.
“It will also help Australia maintain the international competitiveness of its industries. This especially matters for service industries, which often rely on digital competition.”
In 1992, economist Fred Hilmer headed up a review of competition policy. At the time, there were heavy restrictions on many ordinary parts of life, including the time at which bakers in NSW could bake bread to when major supermarkets could offer meat to customers.
A Productivity Commission study from 2005 estimated the reforms permanently lifted Australia’s GDP by 2.5 per cent or about $5000 per household.
A key element of the Hilmer agenda was the payment by the federal government to states and territories to help them absorb the financial impact of some of the reforms. Almost $6 billion was paid to various governments over more than 10 years.
Leigh will argue many of the areas in desperate need for change are at the state level, citing “problematic” privatisations that reduced competition in a sector or that tie a government to ongoing payments, housing taxes that make it expensive for people to move, and occupational licensing rules.
He will say the use of financial incentives, such as those under the Hilmer period, had to be part of a wide-ranging competition agenda, which should be driven by federal, state and territory governments.
“Competition in Australia isn’t just a national issue – it’s a compact between states, territories and federal government. We need to work together to get it right,” he will say.
Last week, the Productivity Commission used an interim report into the labour market to note that despite improvements in the recognition of occupational licences between states, highly skilled migrants could be left “in limbo” because of local licence requirements.
It found that to be a legally certified electrician required a state or territory electrical licence. To qualify, a person must hold a Certificate III in an electrical trade course from a recognised training provider.
Under Australian migration rules, a person has to have their electrical qualifications recognised through the Offshore Skills Assessment Program or the Temporary Skills Shortage Skills Assessment.
But neither of these programs is deemed to be equivalent to a Certificate III, so internationally recognised electricians cannot legally work in Australia without carrying out 12 months of Australian work experience under the supervision of a licensed electrician to apply for a Certificate III.
“The requirement for 12 months of work experience can leave internationally qualified electricians in limbo if they are unable to find an employer that will provide them with supervised work experience,” it found.
Leigh will say competition reform should learn from issues around the Hilmer period, particularly its impact on rural and regional areas. It also needed to increase economic dynamism and environmental sustainability.
“If competition policy could lay the groundwork for another 1990s-type productivity surge, the result would be more innovation and more startups, more opportunities for workers, and more choice for consumers.
“Better use of technology, and household budgets that stretch a little further. In short, a zippier economy.”
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