Harper Review: The industry response

In late November the federal government released its response to the Competition Policy Review (Harper Review). The Review made 56 recommendations, 44 of which were supported by the government.

In announcing the government’s response to the Harper Review, Federal Treasurer, Scott Morrison, said that increasing choice and delivering better services for consumers is central to the Turnbull Government’s plan for driving growth and jobs in the Australian economy. And important component of that plan is accepting many of the recommendations made in the Competition Policy Review.

“Our response to the Harper Review sets out a productivity and competition agenda that, combined with our efforts to create a better tax system, will boost innovation, open up new markets, strengthen our budget and achieve real improvement to how we run our federation, amongst other initiatives and see Australia prosper in the years ahead,” said the Treasurer.

“As our economy transitions from the construction phase of the mining boom, driving productivity growth and diversifying our economy is essential to enable Australians to earn more and maintain our living standards.”

Of the 56 recommendations put forward in the Harper Review, 44 have been accepted either full or partially by the government, with the remaining recommendations taken on notice. No recommendations were rejected outright. You can read the full Harper Review government response here.

Industry Group response to the Harper Review

Following is a selection of industry group responses to various Harper Review recommendations.

Australian Competition and Consumer Commission (ACCC)

The ACCC has announced that it supports the Government’s new micro economic reform agenda, which strongly affirms competition principles as a basis for action. In particular, the removal of regulatory barriers to competition across a variety of sectors.

“These reforms are the most significant of their kind in over 20 years and once implemented should boost economic growth significantly,” said ACCC Chairman Rod Sims.

“The ACCC is also pleased to see recommendations that will simplify the Competition and Consumer Act 2010 which will make it easier for businesses to understand their obligations as well as reforms improving merger assessment processes.

“Further recommendations regarding the introduction on a prohibition on concerted practices and reforms to the collective bargaining process are also welcome.”

Independent Senator for South Australia, Nick Xenophon

In a media conference after the release of the government’s response, Independent Senator for South Australia, Nick Xenophon, was critical of the Government for walking away from the ‘effects test’ reform proposed by the Harper Review, which could have acted as a check on the power of big business in squeezing out smaller competitors.

“By the Government rolling over for the big end of town with the ‘effects test’ back down, it will allow big businesses to continue to steamroll over small and medium businesses,” said the Senator.

Senator Xenophon said that the absence of an effects test and proposed changes to pharmacy location and remuneration rules could see the eventual takeover of the pharmacy sector by big pharmacy chains, and Coles and Woolworths gobbling-up large sections of the sector.

“Given the very nature of the pharmacy business is a community focus, the approach by the Government won’t deliver the best outcomes,” said Senator Xenophon.

Australian Chamber of Commerce and Industry

The Australian Chamber of Commerce and Industry has responded positively to the government’s response, claiming that the government’s decisions will  make Australia a more competitive place to do business.

The key reforms supported by the Australian Chamber include opening human services, such as the health, to competition, changes to road user charges, reform of misuse of market power, secondary boycotts, and trading restrictions in industrial agreements.

“Moving forward productivity growth will need to do the heavy lifting, and the main driver of productivity growth robust competition in free and open markets” said Australian Chamber CEO, Kate Carnell.

“Secondary boycotts are often used by unions to bully businesses to achieve better outcomes in agreement negotiations,” she said.

“There must be strong deterrents in place so we welcome the Government’s intention to increase the maximum penalties for secondary boycotts and the encouragement it has given the ACCC to more vigorously pursue this unacceptable and illegal activity.”

Business Council of Australia (BCA)

Similarly to the Australian Chamber, the Business Council of Australia (BCA) praised the government response to the Harper Review, labelling it a transformative agenda and a defining moment in Australia’s economic journey.

“The national competition reforms of the 1990s left Australia a more competitive and stronger economy, delivering robust real wages growth and a sustained lift in productivity. The comprehensive reform agenda announced by the Treasurer today has the potential to do the same,” said BCA Chief Executive Jennifer Westacott.

“The primary beneficiaries will be consumers, who will receive greater choice and lower prices.

“We welcome the government’s intention to pursue much-needed reform in areas essential for business competitiveness, such as planning and zoning, retail trading, infrastructure regulation and road pricing.

“In particular, injecting contestability into the delivery of human services will build on significant effort already invested by states and territories, and will make a significant difference in delivering higher quality and more efficient health outcomes.”

Council of Small Business Australia (COSBOA)

The Council of Small Business Australia (COSBOA) expressed disappointment that the government has decided to delay the implementation of changes to Section 46 (regarding misuse of market power) of the competition regulations pending a review.

“The fact is that the biggest companies Australia has ever seen and their union, the Shop Distributive and Allied Employees’ Association (SDA), use their influence and resources to control competition policy to the detriment of productivity, retail diversity and innovation,” said CEO of COSBOA, Peter Strong.

“Minister for Small Business, The Hon Kelly O’Dwyer has contacted COSBOA and other key groups and industry bodies to set up a series of round tables to discuss the issues of Section 46 and determine the right changes to make. An outcome is anticipated to be achieved by March 2016.”

National Farmers’ Federation (NFF)

Similarly to COSBOA, the National Farmers’ Federation (NFF) is disappointed that reform to s46 will be further delayed, although heartened that further consultation will take place.

“We support an open and transparent marketplace that drives a healthy level of competition. Australian farmers need competitive supply chains to improve farm-gate returns and drive long-term growth,” said NFF President Brent Finlay.

“The NFF, together with a broad coalition of other Australian businesses, have significantly contributed to the Harper Review process, particularly on the need to amend Section 46 as a mechanism to promote fairer competition in the marketplace.

“We recognise this is a complex issue, and also understand the importance of collaboration across the food and fibre supply chain where all players – such as farmers, processors and retailers – have the opportunity to grow and innovate.

“This is not, and should not, be an issue that pits big business against small business. Fair markets are in everyone’s interests: for farmers, this means delivering greater certainty, fairness and transparency.”

Infrastructure Partnerships Australia (IPA)

Infrastructure Partnerships Australia (IPA) has called the government response to the Harper Review “brave” – and the first public commitment by a national government to fix road and rail transport.

“Everyone can see that our road and rail systems are broken, because they are supported by a dying funding model,” said IPA Chief Executive Brendan Lyon.

“The Government’s commitment to use incentive payments is also the best way to drive national reform across sovereign states.

“Australia’s motoring clubs and infrastructure sector both support a process to scrap fuel taxes and registration charges in favour of a fairer system based on time, distance and location of their road use.”

Australian Automobile Association (AAA)

The Australian Automobile Association (AAA) also welcomed the Australian Government’s response, saying that the package of economic reforms would provide increased choice and competition for Australian motorists.

“The AAA is particularly pleased that Government has committed to work with consumer groups to allow consumers to access and use their own vehicle data to improve choice in the marketplace,” said AAA Chief Executive Michael Bradley.

“From a motorist’s perspective, communications and telematics technologies have progressed rapidly in recent years and there is a need to ensure that vehicle manufacturers are not able to restrict access to data or leave consumers worse off.

“The AAA believes that data captured and stored within a vehicle’s own electronic systems should be made available to the owner of that vehicle, or a third party nominated by the owner, such as their preferred vehicle repairer or roadside assistance provider.”

“We are also pleased that the Government has supported a number of other recommendations including those related to cost-reflective road pricing and a review of the taxi industry.”

Australian Industry Group (Ai Group)

According to the Australian Industry Group (Ai Group), the government’s response to the Harper Review will boost national productivity, investment, and economic opportunities for Australian businesses, their employees and the broader community.

“It is pleasing that the Government has expressed support for the Harper Review’s recommendation on secondary boycotts (Rec. 36). Secondary boycotts have no place in Australia’s modern economy. The  fact that unions still resort to these unlawful practices demonstrates that the laws need to be tightened and strengthened as recommended,” said Ai Group Chief Executive, Innes Willox.

“Ai Group would have confirmation of the Government’s strong support for the Harper Review recommendation (Rec. 37) that trading restrictions in enterprise agreements be outlawed. As the Harper Review report states, competition should be favoured over restrictions and employers should be free to supply and acquire goods and services, including contract labour, should they choose to do so.”

“There is a transformation taking place in our economy and Professor Harper’s review, I think, has seized very much on understanding those transitions and where the growth and opportunities are for our future,” said the Federal Treasurer when launching the government’s response.

“The Harper Review makes a strong case for putting users at the heart of service delivery, by giving them greater control over the services they use, and who provides them.”