The House Standing Committee on Economics has released its report from the inquiry into promoting economic dynamism, competition and business formation. The report’s name, Better Competition, Better Prices, emphasises the outcomes the Committee is seeking through its 44 recommendations.
Dr Daniel Mulino MP, Chair of the Committee, said: “The Committee’s wide-ranging and comprehensive report is the culmination of 14 months of evidence gathering and analysis from numerous sectors of the economy. The Committee received more than 60 submissions from stakeholders across industry and government and followed up with many stakeholders and other experts at a series of 18 public hearings.
“Thanks to this evidence and interaction with industry and regulators, the Committee has pinned down some of the key factors that have led to the stalling of productivity growth in Australia over the past decade.
“Australia has had one of the highest standards of living in the world thanks to decades of high productivity. However, the data is showing declining competition and dynamism as measured by the high market share of leading firms, the profit margins in key sectors, and a declining rate of firm entry and exit in some sectors.
“Australia needs to lift its game when it comes to competition and economic dynamism because together they drive innovation, which in turns drives productivity. In the short term, this will put downward pressure on prices, thereby improving the cost of living – and it will place a check on poor corporate behaviour towards consumers.
“If we don’t tackle this challenge, future generations will also be far poorer than they might have been,” Dr Mulino said.
Dr Mulino said it was pleasing that there had been action in relation to a number of issues raised throughout the inquiry. “This includes progress on mergers law; the regulation and measurement of non-compete clauses; the regulation of landing slots at Sydney Airport; and the announcement of a regulatory grid for the financial services sector.”
Dr Mulino said the report put forward practical steps that would help turn things around, including changes to the regulatory settings regarding mergers law and non-compete clauses.
“Furthermore, government spends tens of billions of dollars procuring services. The efficiency and effectiveness of this procurement could be improved by including more social enterprises and SMEs and through better designed auctions and panels.
The report also sets out options for introducing behavioural prods in the banking sector, as outlined by the ACCC’s Retail Deposit Inquiry report, to ensure fairer outcomes for consumers.
“Additional mortgage products for consumers could also be considered, such as tracker mortgages and residential backed mortgage securities,” Dr Mulino said.
Some of the key outcomes included in the Committee’s 44 recommendations are:
- Recommendations aimed at bolstering the economic and market data collected by government agencies, the ability for those agencies to use that data, as well as access to that data by appropriate third parties, with appropriate controls;
- Recommendations to improve competition law and policy, including reforms to the mergers framework and non-compete clauses;
- Recommendations to reduce red tape for growing businesses and endeavours and to reduce regulatory impact or enable better analysis of potential impact, as well as enable the Government to stimulate market growth in areas of need and improve access to government procurement, services and data for wider market players;
- Recommendations for pilot programs and improvement in mortgage and deposit products from banks, as well as improved regulation of the financial services market; and
- Recommendations for improvement in digital platforms, the aviation sector, retail markets, and interoperability of markets within the economy.
“Australia is at a crossroads. This report identifies the many opportunities – at an economy-wide level and at a sectoral level – for meaningful reform that not only produces immediate benefits for consumers but that also delivers higher standards of living for future generations. I commend the recommendations and the information that informed them to both governments and the market for a way forward for the betterment of the Australian economy,” Dr Mulino said.
Further information on the inquiry as well as a copy of the report can be obtained from the inquiry website.
