Just why depends on who you talk with, but those around him stress the Treasurer’s commitment to competition policy.
Last year’s merger reforms were a positive step, enabling Chalmers to tick the box, but meaningful competition policy reforms offer the most concrete steps to better productivity.
Chalmers’ lack of public focus on the issue can only raise question marks over the level of his commitment.
As things stand now, if the opposition wins control federally, given all his work on the building blocks, Chalmers will simply hand the Oxford scholar Angus Taylor a massive free kick as a competition reformer.
Back in the Hawke-Keating days, Keating was the big macroreformer, floating the dollar, allowing foreign banks’ entry, etc, but it was the individual ministers like John Button, John Dawkins and John Kerin who pushed the micro-economic reform with Hawke’s backing.
Keating famously noted ironically in a 1989 speech, “if you walk into any pet shop in Australia, the resident galah will be talking about micro-economic policy”.
This time around it is Competition Minister Andrew Leigh who is doing the heavy lifting in pushing for change.
The states in November agreed to look for changes and are now working on their agenda, while Chalmers has set the Productivity Commission a range of tasks to help formulate policy.
These include how best to build a skilled workforce, use digital technology, deliver quality care better, and invest in clean energy.
The list is full of motherhood objectives. Far better for Chalmers to actually make the changes.
There is also a list unfinished changes, including whether to abolish or restrict non-compete clauses, which stop workers from getting new jobs in the same sector.
Kerry Schott’s competition policy advisory task-force, which runs until August, has looked at merger reform and since its establishment in 2023 looked at national competition issues such as uniform standards for trades and others across the country to allow an electrician with Victorian qualifications to work in Queensland.
From a federal perspective, one problem is policy execution, which relies on the states – 22 of the Productivity Commission recommendations in its 2019 Shifting the Dial report are state-based initiatives.
Chalmers said in November: “Every state and territory has today joined the Albanese government to implement the expanded National Competition Principles, which will support and empower consumers and fix the barriers businesses face to moving goods, providing services and finding labour.”
Now we need to see results.
When Fred Hilmer’s national competition policy was implemented from 1994, there was $16bn in funding made available for a decade to the states in return for implementing a raft of policies. This was under the threat of losing the funding if the reforms were not implemented.
Just how Chalmers plans to proceed now is unknown and so far he just has a $900m fund available.
If this is a cost-of-living election, the benefits of a national competition policy are clear – all that is needed is some high level of political commitment.
The RBA has found that if the 1995 Hilmer review reforms were continued, GDP would be 1-3 per cent higher – the equivalent of $3500 for every household.
Technology will also help, as outlined last week, with low earth orbit satellites providing the path to mobile phone-led emergency services, allowing the government to stop wasting money on Telstra subsidies for mobile black spots and universal service obligations.
But governments need to flick the switch on issues such as better targeted user pricing on roads, which would help boost cities by keeping cars out and also negating the free ride that electric vehicles now enjoy.
Insurance and risk
Insurance premiums are not far from the headlines in the wake of natural disasters such as Cyclone Alfred in Queensland.
Peter Dutton has warned the insurance oligopoly if it doesn’t play ball on prices he will force the industry to divest assets – a dumb, meaningless news grab that omits to provide basic details such as what and how would the industry divest assets. More to the point, the Opposition Leader needs to explain just how divestments would actually cut prices.
This weekend’s storm highlights the biggest impact on insurance premiums, namely risk – if you cut risk, insurers can cut premiums. Question where Dutton is on climate change.
Then comes taxes, which are the next biggest impact on prices.
NSW is the only state in the country still adding an emergency service levy to insurance premiums, but it says it is working to remove this.
The taxes are a proportion of premiums, but by way of example if your house premium is $4178 then the NSW government adds on an ESL levy of $574.56, stamp duty of $470.64 and GST of $475.44, bringing the total bill to $5699.
Excluding the ESL, stamp duty and GST account for 16 per cent of your bill and if they were scrapped your cost would be closer to $4753, which is a fair whack but considerably less than what you pay now.
Next time a politician says we will force insurance companies to divest assets, apart from explaining how this will help, ask what he or she will do about taxes.
The best way to stop industries being so concentrated is to stop them consolidating in the first place.
The ACCC has before it cases of two behemoths wanting to snap up state royal automobile associations – IAG in Queensland and Allianz in South Australia – to boost market power.
Barrenjoey is trying to drum up interest on its mandate to sell the WA equivalent, and the ACCC decisions due on April 24 will have a big bearing on that campaign.
The timing of the decision may mean the regulator gets some clean air post the election to make its decision.
The ACCC will be on centre stage when it comes to supermarkets and cost-of-living increases, with its supermarket report now with Chalmers.
In Queensland, Suncorp has the market share lead in general insurance with about 30 per cent of home and motor policies, and IAG’s NRMA has about 10 per cent. RACQ has about 20 per cent.
Nationally, IAG and Suncorp have at least 50 per cent market share and the ACCC should draw a line in the sand blocking any further consolidation of general insurance.
It may let Allianz off the hook in SA and indeed in WA, where it is the lead candidate, but at least a statement of issues is warranted.
While on matters ACCC, the regulator started banging the drum this week on its new merger regime that comes into effect formally early next year but on a voluntary basis from July 1.
All good except we are yet to learn what thresholds will apply to the mandatory notification rules and we still are awaiting Treasury guidance on just when these will be known.
Nature credits guide
Amid ongoing carbon credit criticism, the Clean Energy regulator has stepped forward with the first nature repair method for gaining credits.
Certificates will be granted for planting trees on farmland, re-establishing vegetation along waterways and encouraging the use of biodiversity Indigenous knowledge, guided by the knowledge owners. This follows last year’s release of the environmental planting method and is the first step towards a biodiversity market.
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