Labor hopes to find a competitive edge

Treasurer Jim Chalmers. Picture: NCA NewsWire / Martin Ollman

Improving market competition is the sweet spot for the Albanese government’s economic and political agendas – it’s low risk and consumer friendly.

Competition policy brings together the twin missions of the age: easing acute cost-of-living pressures on households and raising productivity to boost stagnant living standards.

Labor senses it’s on a vote and growth winner and is embarking on a major piece of work to build the evidence base to inform reform that, inevitably, will turn up the heat on big business.

Treasury is now looking to developments in US antitrust law and Europe’s crackdown on the tech titans for lessons on how to enhance our arrangements.

Research shows how market concentration – in brewing, groceries, gas, aviation, digital platforms, building products, banking, insurance, the list goes on – leads to higher prices, a lack of product innovation, and inferior goods and services.

Among several changes, the Australian Competition & Consumer Commission wants a more effective merger regime to ensure deals can be reviewed before they are completed and prevent those that are likely to be anti-competitive, in line with overseas laws.

Emeritus competition watchdogs Allan Fels and Rod Sims have lamented the loss of pro-competition thinking and our ineffective merger laws

Still, this month, the ACCC blocked ANZ’s $4.9bn takeover of Suncorp’s bank, arguing the deal would further entrench a lack of competition between the four major banks.

Jim Chalmers says the latest intergenerational report identifies the key areas where the nation can make the biggest productivity gains in the next 40 years, “including economic dynamism and competition”.

“We are building dynamism and resilience in our economy, including through refreshing and renewing our economic institutions, promoting innovation and boosting competition, including in the payments system,” the Treasurer wrote in our pages on Tuesday.

Competition, Charities and Treasury and Employment Assistant Minister Andrew Leigh has identified a decline in dynamism, marked by a rise in market concentration, price mark-ups, the fall in employing small businesses and fall in job switching by workers.

“We’ve seen over the last couple of decades an economy that has become more concentrated, potentially with adverse impacts on consumers and on workers,” Leigh told Sky News this month.

As the promise goes, lower prices are just the beginning.

According to Leigh, Labor is watching developments in the US, “to make sure we get that sort of vibrant productivity driving competition that we know has been so crucial to Australians’ living standards in the past”.

“The 1990s productivity surge was off the back of the Hilmer competition reforms,” Leigh told Sky News. “We’re very mindful of those reforms as we look to shape up our competition policies to see that we get a more dynamic economy.”

Treasury secretary Steven Kennedy has put regulation of markets at the heart of the productivity challenge, which he says “will require continued investment in the productive capacity of the economy”.

“Responsive policy settings will foster dynamic and competitive markets, encourage the diffusion of best practice in the public and private sectors, and allow workers and capital to flow to their most productive uses,” Kennedy told a post-budget event in May.

It’s possible we’ll see a revival of the national competition policy ethos that paid huge dividends in the public sector in the late ’90s, while market reform may involve more “bespoke” or micro regulation, with Labor trumpeting its recent changes to the payments system, rather than wholesale, macro-style structural policy changes akin to the ’80s revolutions.

As former Labor adviser Tom Cameron says, the government could find this a fruitful area, by refreshing its political branding for a new era: “We need now to evolve to be as much a party of the consumer, or user of things in the economy, as a party of the working man and woman.”