National Competition Policy and its Implications for Local Government

Two aspects of National Competition Policy (NCP) are likely to be the catalyst of change in Australian local government (LG): competitive neutrality and the reform of public monopolies. Competitive neutrality will be achieved in LG through the imposition of tax equivalents, removal of debt guarantees and cross-subsidisation deemed not to be in the public interest. The reform of public monopolies will open more functions to competition.
But other items of the NCP are also of significance to LG. The imposition of prices oversight of LG services will make these more cost reflective. Legislative reviews at LG level will produce deregulation in some cases and greater uniformity in others while the issue of allowing private access to LG assets has competitive potential in relation to the services and provision of roads, parks and sewerage treatment.
We emphasise the importance of recognising the present benefits of current LG operations and cite the current proposal to privatise Tasmania's water and sewerage services as an example. NCP has the potential to produce further LG boundary amalgamations, or to accelerate regional cooperation as an alternative. The role of cross-border and competitive tendering in this respect are highlighted. Finally, we analyse the implications of the NCP for the Local Government Grants Commission process.     

National Competition Policy

Economic reform in Australia certainly did not start with the Hilmer Report — it has been underway for the last 15 or so years. It began with financial deregulation and floating of the Australian dollar in the 1980s and the reduction of tariff protection, and includes more recent initiatives such as moving from the centralized wage fixing system to more flexible enterprise bargaining arrangements, restructuring of government business enterprises, developments in public administration and most recently the focus on competition policy.     

National Competition Policy: The Downside

Identifying the ‘downside’ of competition policy raises the question of whether there is an ‘up-side’. Competition is supposed to drive the organisers of commodity production to minimise the costs they have to bear in some short to medium term, within environments more or less circumscribed by government regulations. The actual period tends to be that for which the providers of finance are prepared to wait for returns after a poorly performing company is restructured. Economists used to say that cost minimisation requires an industry structure in which there are many independent producers. Nowadays, more enlightened writers speak of ensuring that the market positions held by existing producers are contestable by prospective new producers. The question of what government in Australia may do to establish competition in this sense of competition has recently focussed on the desirable re-organisation of public enterprises, perhaps especially those that exist at the level of the states. So what are the dimensions of the ‘downside’ of opening the market positions occupied by public enterprises to contestation by private companies, especially those which are monopolies? The answer takes a large measure of the gloss off the Hilmer promises. The problems to be addressed are: the limit put on contestability where there is an element of natural monopoly; the tendency for cost minimisation to depend on the tighter management of labour; and, the difficulty of insisting simultaneously on both ‘competition’ and the satisfaction of ‘community service obligations’ (CSOs).     

Why National Competition Policy?

Strategies to enhance Australia's international competitiveness need to embrace reform of key infrastructure service industries, reform of the regulatory environment, industrial relations reform and taxation reform. Key aspects of this reform agenda can only be addressed through a shared commitment by all levels of government. Ownership of the public utilities responsible for the nation's key infrastructure networks and services is divided among commonwealth, state and territory (and local) governments. Achieving a substantial lift in the productivity of these industries and ensuring the emergence of truly national infrastructure networks relies on agreement by all governments to public utility reform and the removal of barriers to cross-border competition. Moreover, the regulation of industries, occupations and businesses is primarily the responsibility of state and territory governments, hence regulatory reform also requires a cooperative approach by all governments.
While most jurisdictions have taken some steps to reform public utilities and to deregulate certain product markets, to date reform has been piecemeal. A more systematic approach to removal of impediments to competition across the board is likely to be necessary to lift the overall competitiveness of the Australian economy. The agreement by the commonwealth and all states and territories to implement the National Competition Policy (NCP) not only provides the necessary shared commitment to reform across the board, it also provides the rewards and sanctions needed to sustain that commitment in the face of certain resistance from vested interests.     

National Competition Policy: Progress and Prospects

National Competition perspectives Policy — contending perspective.
The Hilmer Report is to competition what fertiliser is to grass (Ian Salmon, BCA 1995).
These reforms are good for the Australian economy and community. They hold the promise of helping to deliver more growth, more jobs and lower inflation but with higher real wages and a better standard of living (Hon. George Gear MP 1995).
The legislation has the potential to be very far reaching and may have implications far broader than originally intended (General Evidence — Australian Senate Economics Legislation Committee 1995).
The process of putting detailed legal and administrative flesh on the bare bone of the principles was not going to be easy. The resolution of issues. at times came down to the balance of power rather than good sense (Christine Charles, South Australian Dept of Premier and Cabinet 1995).
The practical failure to deliver on the claims about competition and efficiency are becoming increasingly evident (Professor Frank Stilwell 1995).
The Commission has a number of concerns on the impact on rural and remote communities and how the competing demands of increased competition and maintaining levels of community service obligations will be balanced in a newly competitive environment (ATSIC 1995).     

National Competition Policy and the Australian Taxi Industry

This article outlines the Australian Taxi Industry Association's (ATIA) perspective on the development of the National Competition Policy (NCP). The ATIA has been actively involved in the issue since the establishment of the Hilmer Inquiry into National Competition Policy in 1992.
The Australian taxi industry is regulated by state and territory governments. Taxi industry regulations are designed to facilitate the provision of high-quality and comprehensive taxi services to the community and disadvantaged groups. One element of this regulatory structure involves the sale, or lease, of taxi plates by state and territory governments as a revenue-raising measure.
This revenue-raising by governments produces two different effects. On the one hand taxi plate owners having purchased taxi plates from the government (or leased) have an interest in the value of the plate, as well as in continuing to provide quality services. On the other hand some observers see taxi plate values as inherently unacceptable and needing to be reduced, or abolished, by allowing unrestricted access to the taxi industry.
These competing views have provided much of the impetus for the debate associated with the taxi industry and the NCP. The industry believes that NCP has the potential to impact adversely on taxi 'markets' and consumer interests.     

Consumers/Citizens and the National Competition Policy

NCP provides a framework for reform ranging from the introduction of competition in energy and water services to the dismantling of agricultural marketing boards. The effects on consumers will depend upon whether their interests are narrowly construed as preoccupations with price and choice of services or whether they extend to broad social justice and equity considerations. The 'marketisation' of government services is not concerned with distributional equity, and budget funding of CSOs is necessary to address distributional inequities. But domestic consumers will remain captive to monopoly franchises and competition objectives add pressure for the 'contracting out' of government services and the winding back of cross-subsidies which have traditionally operated in favour of household consumers.
NCP will transform the public from 'citizen' to 'consumer'. Consumer advocates have risen to these new challenges and grasped the opportunity presented by industry restructuring to propose a range of mechanisms for consumer empowerment. This article will briefly identify some of the key issues for consumers in the implementation of the NCP and demonstrate the complexity of any attempt to assess the threats and opportunities for consumers. Particular attention will be given to the reforms to the electricity industries in NSW and Victoria.     

The Potential for Local Diversity in Implementation of the National Competition Policy

Australian governments have embarked on a major effort to improve the competitiveness of the economy by adoption of a national competition policy (NCP). The policy extends the scope of trade practices legislation to encompass the public sector and professions, modernises policy in the areas of pricing and access powers, and is intended to revitalise the microeconomic reform agenda. The intended result is an integrated national economy, more uniform and consistent business regulation across the country and improved levels of competitiveness. But, there is an inherent tension between the imperatives for harmonisation, uniformity and reduced regulation on the one hand and tendencies for local diversity and increased regulation on the other. This article explores this tension with illustrations taken from three key aspects of the policy — opportunities for institutional diversity, treatment of the public interest and the prognosis for an integrated national, competitive market. The potential for each jurisdiction in Australia to take diverse and problematic approaches to the implementation of competition policy is then re-examined through the mechanism of a specialised case study involving the regulation of access to gas pipelines in Western Australia.     

The Greening of the Grey: National Competition Policy and the Environment

Concern for environmental degradation is now widespread, and has penetrated key policy institutions such as the National Competition Council (NCC) - the body overseeing National Competition Policy. While the NCC's primary focus is on promoting competition, it acknowledges the importance of environmental considerations. Such a body thus represents the contemporary Ecological Modernsiation approach to environmental policy-making. Ecological Modernisation posits that there can be a reconciliation and synthesis between economic and ecological goals. This paper investigates this claim by exploring the relationship between competition and the environment in the three areas of electricity, regulatory review and rural water.     

National Competition Policy,Regulatory Reform & Australian Federalism*

Changes are afoot in Australia's federal arrangements concerning competition policy. While many of the proposals to enlarge the Commonwealth's sphere of influence are played out in the media, other shifts are more subtle. This article examines one of those areas of change. It looks at National Competition Policy and in particular, its regulatory reform components. It argues that the approach adopted in the 1995 agreement, which was characterised by broad principles, meticulous monitoring and substantial financial carrots, has provided the Commonwealth with a useful tool for effectively intervening in areas that have been until now, matters of state responsibility.     

Microeconomic Reform and National Competition Policy: Misconceptions and Problems

Microeconomic reform and the so-called National Competition Policy (NCP) have entered political discourse but often with little discussion of their specific meaning. The terminology tends to be emotionally and intuitively appealing. It implies that any microeconomic reform per se is necessarily 'good' for the achievement of economic efficiency. Moreover, misconceptions about the meaning of economic efficiency frequently result in the belief that a higher level of competition is always 'good' for the achievement of that objective.
While there are many features in the new competition policy which deserve the wide acceptance and support it has been given, there are also aspects of it which do not stand up to closer scrutiny. It is those aspects, including the problems which will arise when ambitious but vague principles are put into practice, which will receive attention in this article.     

National Competition Policy: Key Lessons for Policy-making from its Implementation

This article will first briefly describe the National Competition Policy, then set out some of the major results achieved to date, before focusing on the key lessons that can be learned from the experience of its implementation.     

In Defence of Competition: The Successful Application of Competition Policy in NSW Rail

This paper argues that recent rail reform in NSW has been successful. NSW rail is now not only more cost effective, but also offers improved service and safety levels to its customers. As such the NSW rail reforms have been of benefit to the community as a whole, and have laid the groundwork for a resugence of the rail sector. Despite the criticism surrounding recent job losses, it is argued that the reforms have reinvigorated an industry that had been caught up in an ever decreasing vicious circle. The success of the 1996 reforms have been dependent upon a reform model that mixes factors such as vertical separation and independent regulation with government provision of targeted community service obligation payments. This paper argues that the most important ingredient for rail's future is the removal of the enormous bias in government tax and user charging policy against rail and towards road transport. In addition to keeping faith with the traditional National Competition Policy agenda, nothing is more important than that Australian governments address this continuing and debilitating bias against rail transport.     

Interstate Competition and Welfare Policy

In 1996, the federal government terminated the Aid to Familieswith Dependent Children (AFDC) program and replaced it withthe Temporary Assistance for Needy Families program (TANF).Many powers once held by the federal government are now beingused by state governments. Will welfare assistance be redesignedand expanded or will states "race to the bottom?" This issueis investigated by examining state welfare policy choices duringthe latter years of AFDC(1976–1994). Because each stateunder AFDC had the authority to set the level of its welfareguarantee for families that had no income, it is possible toestimate the effects of interstate competition on AFDC guaranteelevels. By estimating a spatial autocorrelation coefficientwhile controlling for theoretically relevant variables and statefixed effects, this study finds evidence that states are sensitiveto the welfare policies of their competitors.     

National Competition Policy — Its Evolution and Implementation: A Study in Intergovernmental Relations

The second reading speech on the Competition Policy Reform Bill 1995 described the policy as 'the most important single development in micro-economic reform in recent years'. The speech went on to describe the vision of the Hilmer Report 'for a national competition policy in which the commonwealth, states and territories cooperated to ensure that universal and uniformly applied rules of market conduct apply to all market participants regardless of their form of ownership'. This article considers how this vision was translated into reality.     

The Postcapitalist Transition: Policy Implications for the Left

The postcapitalism thesis asserts that open source and collaborative non-profit organisations represent a new, non-market sector in which the profit motive and monetary exchange no longer drive economic activity; in Marxist political economy terms, they are a new means for suppressing the law of value . Information technology has produced four systemic dysfunctions, limiting capitalism’s ability to function as a complex adaptive system: the zero marginal cost effect, the tendency to delink work from wages, positive network effects, and information asymmetries. In response, in addition to the traditional remedies of social democracy for a stagnant neoliberal economic model, left parties must adopt a programme of transition: aggressively breaking up technological monopolies; promoting universal basic income and basic service solutions; outlawing rent-seeking business models; and promoting data democracy.     

The National and International Context of French Policy Communities

There are numerous, well-organized policy communities in France, based upon specialized corps of senior administrative officials in symbiosis with the environment they are responsible for regulating and managing. They also derive their strength from the integration of the groups concerned in the policy process, allowing them to compensate for the weakness of their organization and social base by the privileged access and legitimacy they acquire. Nevertheless, the traditional way in which the policy process is structured is modified by the territorial shift (both local and international) in the arenas in which public policies are made.