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Monday, 24 May 1999
Page: 5225

Senator GIBSON (9:50 PM) —I rise tonight to speak about national competition policy and its advantages for the Australian community. In 1995 the Labor government, supported by the coalition in opposition and all state and territory governments, implemented the most broad ranging program of micro-economic reform ever attempted in Australia to that time. It was designed to improve Australia's economic performance by bringing higher productivity to the government sector, in particular, and also to the non-corporate sector. The encouragement of competition in Australia has been a bipartisan policy in order to encourage efficiency and fairness in the community.

The 1974 Trade Practices Act is the statute which oversees this competition. It originally only applied to incorporated business—that is, to companies only. But since 1995, through the national competition policy, the Trade Practices Act now applies to government businesses and to unincorporated businesses through the competition principles agreement and the conduct code agreement. The aim of this policy was to introduce competition to virtually all sectors of the Australian economy. Why? Because competition means reduced prices and better service for consumers and increased welfare for everybody. This is another area where some key policies and practices had been preventing Australia from reaching its economic potential. The results were inappropriate regulation and red tape and government monopolies which provided poor service and kept prices high. Those policies had weakened the incentives for people to be innovative and self-reliant.

The 1995 national competition policy reform package was a breakthrough. It provides Australia with a chance to harness resources more effectively, more efficiently and more productively. Higher productivity and economic growth are the only ways to get higher sustainable wages and better job prospects. These policies will give consumers an idea of the true cost of providing services and are also an essential guide to investments by both the private and government sectors for the benefit of all. All state and territory governments showed they were committed to it in 1995, including the coalition opposition in Canberra. We supported this policy because it was good for Australia in the long run.

Contrast this with the situation today. I remind the Senate that when Labor were in power we supported each of their four major economic reforms: freeing up the Australian dollar, freeing up the finance markets, lowering tariffs and competition policy. None of these policies were taken to the electorate before they were actioned but we, the coalition, supported them because they were good for all Australians. Contrast that with the position today and tax reform. Tax reform has been a long-term issue—Asprey in 1975, Hawke in 1986 and Hewson in 1993. Both sides of politics know that tax reform is needed in Australia. Yet, unlike our attitude when Labor were in power, they do not want to act in the long-term interests of Australia, for our children and our grandchildren. They oppose tax reform for their short-term political goals. What a shame.

But I digress. Back to competition policy, the projected gains from national competition policy are impressive. The estimates at the time were that the annual gain in real GDP would amount to about 5.5 per cent—about $30 billion a year in today's dollars. Wages were projected to be three per cent higher than they would otherwise be and it was predicted that an additional 30,000 jobs would be generated. After three years, the results are already impressive. Electricity bills in contestable markets of Sydney and Melbourne have fallen by around 30 per cent, the price per kilowatt hour is half that of non-contestable markets in Hobart and Perth, the national electricity market has been working since December last year and all users in the eastern states will be able to choose their own supplier by the year 2001.

Gas prices for major industrial users fell by 50 per cent after deregulation of the Western Australian market in 1995. Gas access charges are set to fall by 60 per cent by the year 2000 in New South Wales. The cost of international telephone calls has fallen by 50 per cent in real terms in the past six years and the cost of STD phone calls has fallen by 40 per cent over the same period. Last week Telstra announced further drops in call prices for both STD and international calls. Consumers in New South Wales have saved at least $86 million as conveyancing costs fell by 17 per cent between 1994 and 1996 when the legal profession's monopoly was removed. In Queensland, 10 of the 17 largest councils have implemented two-part tariffs for water, resulting in an average saving in water usage of 20 per cent in the first year. Rail freight rates for the Perth-Melbourne route fell by 40 per cent and service quality and transit times improved after the introduction of competition. Freight prices for grain in Western Australia dropped by 21 per cent in real terms after deregulation in 1992-93. Freight rates for coal in the Hunter Valley dropped by 25 per cent over three years and a further 10 per cent fall is scheduled in the next 12 months.

Despite the success of competition policy reforms, there are still some people, some interest groups and some politicians who would choose to abandon it. As the Productivity Commission draft report on this topic—published this month—says, there is general confusion about the causes of rural decline in both population and economic activity. The decline has been in progress for many regions of Australia for many years. The key factors behind this have been, firstly, declining terms of trade for agricultural and mining products. In agriculture, the real prices of products have been down by over half over the past 40 years. For mining products, the prices are down but by nowhere near as much as for agriculture. The second factor has been greatly increased productivity. I remind the Senate that Bert Kelly, the modest member, used to say that if you want to stop rural population decline you should ban tractors. Hence the share of agriculture and mining has dropped from 20 per cent of GDP 50 years ago to eight per cent today.

National competition policy brings the Trade Practices Act to government monopolies, such as energy and transport, which had been characterised in the past by poor management, overmanning, poor service and inappropriate pricing. It also provides for access reform for common infrastructure such as rail and pipelines. It also proposes, and is implementing, structural reform of government businesses. For instance, New South Wales rail is broken up into seven parts and the Victorian ports authority has also been broken up. Another key direction is the review of anticompetition legislation.

As both the National Competition Council and the Productivity Commission have pointed out, better communication of the aims of national competition policy are required. The results are often forgotten. The lower prices and the better service are just taken for granted. It behoves all of us as politicians to make sure that we take every opportunity to let the community know of the benefits of competition and its extension to government and other enterprises. Everyone will be better off.

Australia must continue to adapt to change. We are a small fish in a big ocean and if we want our children and our grandchildren to prosper we must have a more competitive economy. Finally, where changes are necessary, governments must strive to be compassionate with people or groups that are affected by change. In conclusion, I commend to the Senate the annual report of the National Competition Council and the draft report of the Productivity Commission on the impact of competition policy and reforms on rural and regional Australia. I congratulate both of those organisations on the work they have done.