Reform planning laws to stamp out monopolies, assistant minister for competition says

Planning laws that are stifling competition and protecting the supermarket giants by making it difficult for new businesses to enter the market must be reformed, the assistant minister for competition says.

The Albanese government has secured a commitment from state and territory treasurers to revitalise national competition policies, and as part of that Andrew Leigh wants planning ministers and local governments to promote competition when making rezoning decisions.

Assistant Minister for Competition Andrew Leigh wants planning laws to prioritise competition. Credit: Alex Ellinghausen

“If you have a look at supermarket competition, a lot of that comes down to planning laws,” Leigh said. “It’s important that states and territories bear competition in mind when zoning the land.”

A Treasury-based taskforce is conducting a two-year review of the nation’s competition policies amid increased scrutiny of a handful of big firms dominating their respective industries and the impact it has been having on productivity growth, which has slumped to a 60-year low over the past decade, as well as the price consumers are paying.

Key issues to be examined by the taskforce led by Danielle Wood, Rod Sims, Kerry Schott and Sharon Henrick include an Australian Competition and Consumer Commission push to clamp down on mergers and acquisitions, as well as an examination of how non-compete clauses are suppressing employees from switching jobs.

Leigh has echoed the sentiments of former ACCC chief Allan Fels who sounded the alarm decades ago about the constraining effect of planning laws on competition. Fels produced a report in 2008 arguing many NSW consumers were paying 20 per cent too much for their groceries because laws prevented new supermarkets from opening or existing ones from expanding.

“My big fear is that Australia becomes the land of the duopoly,” Leigh said.

“We’ve seen in recent decades a rise in market concentration ... and we’ve seen an increase in mark-ups – the difference between the cost and price of the goods. Decreasing competition has been deployed to the disadvantage of Australians.”

Leigh has been increasingly vocal about the economic damage caused by monopolies and their lack of innovation.

In a wide-ranging interview about his portfolio last week, Leigh said successive state and federal governments’ privatisation of assets had also stifled competition and hampered productivity.

“Assets have been privatised with little thought to the impact on competition,” the assistant minister said. “It has just been about maximising the sale price. But you impose, effectively, a tax on citizens who end up paying more in the long run [because you have reduced competition].”

Earlier this month, in a review for the Australian Council of Trade Unions, Fels found Australians were paying too much for everything from energy prices to groceries and childcare. He noted a range of sectors were either not competitive or sufficiently regulated, leading to poor consumer outcomes and higher prices.

Fels said the federal government had an opportunity to reform the nation’s competition laws and bring the public on board amid heightened pressure over the cost-of-living crunch and interest in tackling industry monopolies.

“The planning laws and regulations need to include explicit priorities for competition questions,” Fels said. “Typically, they’re the opposite. They protect established property interests and inhibit competition.”

He also noted that when governments decide to privatise public assets, they should place competition ahead of maximising revenue.

Former ACCC boss Allan Fels ran an inquiry into price gouging.Credit: Alex Ellinghausen

In 2013, the NSW government privatised two of Australia’s biggest ports for $5.07 billion, with the deal including compensation for the new owners of Port Botany and Port Kembla if container traffic at the Port of Newcastle is above a minimal specified cap.

It was a deal Grattan Institute’s economic policy program director Brendan Coates has described as a government effectively greenlighting a monopoly that taxpayers would be slugged for.

“They set up a monopoly, so the new owner would be able to generate monopoly profit in order to maximise the profits of the sale,” Coates said. “Which means higher prices charged for consumers.

“We should think about whether the ACCC should be given a role in vetting privatisations. That’s been proposed by former ACCC chair Rod Sims and that would be a way to make sure governments are not maximising short-term budgetary positions at the expense of hurting taxpayers and consumers in the long term.”

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