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TAKING
STOCK
A good
place to
start the
reforms
Ian Davis
none Help
SEPARATELY, the Coun
cil of Australian Govern
ments and competition
policy are pretty abstract r no
tions to get our; heads around.
Collectively, they sound '.like
the answer to the insomniac's
prayer.
Which is a pity, because if
they can be made to work prop-,
erly, the implementation of com
petition policy through COAG
probably offers the single most
significant set of economic're
forms under active consideration
in domestic politics.
According to a paper pre
pared for last Friday's COAG
meeting in Darwin, the competi
tion. policy reforms under con
sideration by COAG could "add
S22 billion to Australia's gross
domestic product: the equivalent
of .an entire year's current'eco
nomic growth.
(That figure is linked . to; the
states' demands for compensa
tion from the Commonwealth
for-agreeing to go along with
the reforms and is not accepted
by the Commonwealth: Friday's
meeting agreed the Industry
1 Commission would come up
with a new figure.)
i Such a benefit should not be
lightly thrown a\vt\y but it was
put in jeopardy by Friday's
shambolic COAG meeting,
i COAG. at which the Prime
Minister, the premiers and chief
ministers try to settle issues in
volving all the governments, be
gan in 1992: a recognition that
the annual premiers' conference
I is an unsatisfactory forum in
which to settle any matter other
than the annual revenue sharing
arrangements. ,
Such was the dynamics of pre
miers' conferences that matters
other than revenue sharing never
received other than the most
cursory examination — if that.
The establishment of COAG-rec
ognised the importance of these
issues but the absence'of a fo
rum for them.
The first COAG meeting-in
October, 1992, established: the
Hilmer inquiry into "national
competition policy". Micro-eco;
nornic reform (industry policy,
.financial deregulation and Vla
bour-market' reform) lVad'Jground
to a halt; the main areas of,the
economy untouched by the eco
nomic reforms of the 1980s were
covered by differing state laws.
There was a concern among
major national businesses, voiced
by the Business Council of Aus
tralia, that their ability to grow
and improve efficiency was ham
pered by the existence of indi
vidual stale markets — rather
than a single national market —
in a variety of areas. :
The vague competition policy
sobriquet covers a multitude of
matters:
• The monopoly position* of
statutory authorities such* as
electricity and water utilities,
their ability to charge whatever
prices they like, and their con
trol of both generation and
transmission and ability to pre
vent other power generators
connecting to the transmission
system.
• The different rules applying to
professions in different states,
which reduces competition by-re
quiring a different licence in
each state.
• The unfair competitive advan
tage (because they pay no tax
and may not pay the real cost
of inputs) of government bodies
which compete with the private
sector.
• The exemption of all these
areas from the reach of the
Trade Practices Act — the main
national guarantee of competi
tive behaviour. "T
The whole process or competi
tion reform is in doubt because
of the debacle of last Friday's
meeting and the attempt by
some states to use the issue to
extract a new financial deal
from the Commonwealth, cover
ing not just compensation for
loss of monopoly profits but the
broader issuer of federal-state fi
nancial relations.
If the national reforms which
can be achieved through COAG
(not just competition policy but
the exchange of powers to re
duce duplication between state
and federal governments, nation
al land rights etc) are to be real
ised. then COAG itself needs re
form. The Prime Minister, Paul
Keating, made a first step, pro
posing the draft communique
(which outlines what is proposed
to be agreed at each meeting) be
finalised by officials at least a
week before the meeting. This is
a start, but is not enough. ■_
What is needed is a body
comparable to the Grants Com
mission. working to guidelines
agreed by state and federal. lead
ers, which comes up with pro
posals on any matter considered
by COAG. Such a formula is
likely to offer the best opportu
nity of preventing last week's
impasse becoming an entrenched
feature of COAG.
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