Good morning, everyone. I acknowledge the Whadjuk Nyoongar people, the Traditional Owners of the lands on which we meet. I pay my respects to their Elders past and present and extend that respect to First Nations people taking part in today's event.
Thank you to the Economic Society of Australia for the invitation to address the first Economics on the Swan event for the year.
Economics is not only a powerful policy tool but a rewarding profession. Among other things, economics provides an opportunity to focus on wellbeing and not just dollars, a chance to be bold and a platform for rigorous evidence (Leigh 2023). And when research and reform come together, economics is more fun than it looks.
Fun can be hard
Dr. Rainer Newberry, a geologist from the University of Alaska, came up with the 3‑point fun scale which was adopted by the outdoor adventure community (Strout 2022).
'Type I Fun' is fun in the moment. 'Type II Fun' is unpleasant in the moment but satisfying in retrospect. 'Type III Fun' is not fun at all, even in retrospect. In a Western Australian context, Type I fun might be a pleasant day exploring Rottnest Island.
Type III Fun might be where a four‑wheel drive adventure turns into getting lost in the Gibson Desert, risking the fate of Mr Gibson.
Type II Fun is how I'd think about the Busselton Ironman. Long, hot and gruelling, but satisfying to reflect upon.
Competition reform is like Type II Fun for economists. It is no policy paradise or island stroll. But it is no data desert either. Competition reform is somewhere in between - hard work at the time but worth the effort.
That was the experience of the Hilmer reforms in the 1990s. The process took almost a decade, ideas were contested, and cooperation across governments required constant vigilance. Yet the benefits were massive - equating to a $5,000 boost in average annual household incomes.
New challenges
Today, the Australian economy faces a different set of challenges and a new set of competition reforms are underway.
The Australian Government's establishment in 2023 of a Competition Taskforce within the Treasury reflects the importance we place on competition reform. We gave the Taskforce - supported by an expert advisory panel - a brief to look at whether Australia's competition laws, policies and institutions remain fit for purpose.
Already, we have implemented the biggest overhaul of merger laws in half a century, started a process to revitalise National Competition Policy and initiated reforms to check the monopoly and monopsony power of big supermarkets.
Beyond that, we have also been consulting on a new regime to address the anti‑competitive conduct of large digital platforms. The practices of large platforms are presenting an increasing challenge to competition regulators around the world. We have drawn on the recommendations of the Australian Competition and Consumer Commission in its 5‑year Digital Platform Services Inquiry and the experience of several countries, including the European Union and United Kingdom, which have recently established new laws to regulate platforms on an ex ante basis.
Today's talk will cover how research and reform have intertwined. First, to build the case for reform. Second, to shape our competition settings. And third, to set us up for economy‑wide reforms, which may be more significant than you think. And I will finish with some thoughts on the future for economic research and competition.
Building the case for competition reform
Using bigger datasets, better econometric techniques and updated theories, economists have provided new insights on trends in market concentration and the relationship between competition and productivity.
Australia is not the only nation examining productivity and competition issues. Last September, for example, Mario Draghi - former European Central Bank President - delivered a report on the future of European competitiveness for the European Commission (Draghi 2024).
And we're seeing more empirical studies use unit‑level records to track businesses and households over time allowing more granular analysis (Leigh 2024a).
Here in Australia, economists Dan Andrews and David Hansell, formerly of Treasury, analysed firm‑level data to show broad declines in measures of economic dynamism such as job switching rates (Andrews & Hansell 2019).
Jonathan Hambur, also at Treasury at the time, used administrative tax data to argue that an increase in market power partly explained Australia's slowdown in productivity growth (Hambur 2021). From his analysis, we could see that Australian industries with the greatest increase in concentration also recorded the greatest increases in markups.
In this context, high growth firms play a crucial role in fostering competition, as they drive the majority of turnover and employment growth. These high growth firms grow by more than 20 per cent over a three‑year period, and are typically small and young, often disrupting established incumbents. As key contributors to sales and employment growth, a decline in high growth firms can lead to reduced dynamism in the economy (Majeed et al., 2021).
This analysis, along with traditional macroeconomic data on Australia's declining productivity, helped build the evidence base for the first competition review since the 2015 Harper Review.
Shaping competition settings
Instead of a doorstopper report - which is nobody's idea of fun - we directed the Competition Taskforce to undertake rolling policy projects and consult on specific reforms. This meant research could continue to inform consultations and shape reforms.
Mergers
Take mergers for example. Most mergers do not raise competition concerns. However, there are some that do require scrutiny. But little was known about the number or types of mergers occurring in Australia.
To help fill in the blanks, the Competition Taskforce worked with the Reserve Bank of Australia and the Australian National University to develop a database using administrative data (Competition Taskforce 2023). This will allow researchers to better examine the impact of mergers on wages, productivity, market share and other outcomes.
Tracking worker movements and changes in firm ownership, the Taskforce estimated that up to 1,500 mergers took place annually - significantly more than the 330 mergers seen by the Australian Competition and Consumer Commission under the voluntary notification system.
The database also showed very large firms - those with 500 plus employees - were most likely to undertake acquisitions. Furthermore, large firms had increased their activity in recent years.
We could also see that around 5 to 10 per cent of mergers appeared to be serial acquisitions, where a single acquirer has bought up multiple different small firms over time Within this, the top 5 sub‑industries for serial acquisitions were childcare, aged care, GPs, dental and supermarkets. Interestingly, these are all consumer‑facing sectors.
Analysis and detailed input from the Australian Competition and Consumer Commission led to consultation on possible reform options. This led to refining and more discussion with the business community on the legislation. Ultimately, this will contribute to a faster, stronger, simpler, more targeted and more transparent merger system.
Concentration hot spots
The new merger system comes into full effect from 1 January 2026. But research continues to combine with reform.
As announced as part of the merger legislation, the Competition Taskforce is working with the Australian Competition and Consumer Commission to develop a microdata screening tool to identify concentration hot spots - regions or segments of the economy where further merger activity could pose the greatest risk to competition.
This tool is taking advantage of increasingly detailed geospatial data that the Australian Bureau of Statistics has added to its microdata assets, which will allow more meaningful definition of markets at the local level.
This could help the competition regulator manage the new merger system and it could help inform decisions about the sectors requiring mandatory notification.
While industry concentration is one challenge, restrictive employment contracts pose another by limiting job movement and wage growth.
Worker mobility
Economic researchers have also examined worker mobility - another productivity driver.
Worker mobility is crucial for economies such as Western Australia's, where the labour market continues to be tight (WA Government 2025).
One area ripe for research was the use of non‑compete clauses.
Non‑compete clauses are written into employment contracts to prevent or restrict an employee from joining a competitor, or starting their own business in competition, usually for a set time or within a geographic area.
The e61 Institute published the first Australian evidence on the use of non‑compete clauses (Andrews and Jarvis 2023). Economists Dan Andrews, then at the e61 Institute, and Bjorn Jarvis from the Australian Bureau of Statistics surveyed workers on non‑compete clauses. They found 22 per cent were subject to non‑compete clauses in their contracts. This included many low wage workers - 18 per cent of those in households earning less than $60,000 a year had a non‑compete.
Following this, the Australian Bureau of Statistics published the first employer survey on the use of restraint clauses in Australia. Among other things, the survey told us 1 in 5 Australian businesses in 2023 used non‑compete clauses.
This only confirmed the growing body of international evidence that non‑compete clauses had gone under the radar for too long.
Benefiting from this new data, the Competition Taskforce has been closely examining non‑competes and other work restraints to understand their impact on workers, businesses and the wider economy.
This included undertaking public consultations in April and May 2024. During this consultation, the Taskforce was informed of many areas of the labour market where these clauses were being used to unreasonably prevent workers moving to more desirable jobs. This included childcare and the broader care sector, where the traditional justifications for these clauses, such as protecting intellectual property, seem questionable at best.
Since then, research by the e61 Institute has highlighted the adverse impact that non‑compete clauses have on employees, particularly low‑ and middle‑income workers (Buckley, Rankin and Andrews 2024). They find that workers affected by a non‑compete clause experience a 4 per cent lower wage relative to comparable workers without non‑competes. Averaged across the workforce, this suggests that non‑competes depress the Australian average wage by around $500 a year. The e61 researchers also find that these clauses hamper job mobility. For many workers, being bound by a non‑compete is Type III Fun - that is, no fun at all.
Likewise, recent Productivity Commission modelling suggests reforming non‑competes could permanently lift Australia's productivity and GDP, by allowing workers to move more easily to higher value jobs, and by facilitating firm entry and expansion (Productivity Commission 2024).
Just as excessive non‑compete clauses can restrict worker mobility and stifle competition, limited competition in aviation can drive up prices and limit consumer choice.
Aviation
Aviation is another under‑studied sector in Australia (Majeed, Breunig and Domazet 2024).
This is surprising. Aviation has a unique place in our economic history, especially here in Western Australia, where it helped overcome 'the tyranny of distance' (WA government 2004).
At one stage, the esplanade on the banks of the Swan River acted as a runway for aviators such as Norman Brearley, the founder of West Australian Airways Ltd (Bunbury 2007).
These days, flights take hours rather than days and aviation is affordable for middle‑class families. It brings the diffusion of ideas, supports labour mobility, and acts as a critical input into other industries such as tourism and agriculture (Majeed, Breunig and Domazet 2024).
Competition has shaped and reshaped Australia's aviation sector over the past decade. The Australian Competition and Consumer Commission's 2025 report on domestic airline competition highlights the story in stark numbers. From 1994 to 2014, domestic seat capacity surged. But by the time we came to office, competition had slowed, limiting choices for consumers and pushing up prices.
As former ACCC Chair Rod Sims has noted, 2 key levers can help drive competition in aviation: Sydney Airport's slot system and international air service agreements. We've acted on both. Last year, we passed legislation to reform Sydney Airport's slot management system-ensuring fairer access for new and expanding airlines. At the same time, we signed a record number of bilateral air service agreements, opening new routes with key markets like Hong Kong, Türkiye, Vietnam, and Chile.
By strengthening competition, we're helping bring down prices, improve service, and give Australians more choices in the skies. Because when competition works, consumers win.
The Competition Taskforce's 2024 aviation paper demonstrates the powerful role of competition in reducing living costs (Majeed, Breunig, and Domazet, 2024). Despite being a small industry, competition in aviation saved consumers an estimated $27.2 billion to $35.2 billion (in 2023 dollars) over 14 years. Imagine the savings that more competition could generate across the entire economy.
Feeding into the Aviation White Paper, the Taskforce made the point that competition can deliver significantly more affordable prices, making flying more affordable for more Australians - particularly in Western Australia.
Modelling National Competition Policy
Delivering better prices is also the driving force behind Commonwealth, state and territory treasurers' landmark agreement to revitalise National Competition Policy.
Signed in November last year, the National Competition Policy is not just an abstract exercise - it is about ensuring the goods we buy and the services we rely on remain affordable and accessible (Leigh 2024b).
Treasurers agreed economic modelling would help us understand the benefits of competition reforms, as well as the government revenue impacts.
Economists and policy experts at the Productivity Commission assessed the impact of 26 potential reforms (Productivity Commission 2024).
And, as I said earlier, the benefits are more significant than you think.
The Productivity Commission's modelling, based on 19 of the potential reforms, estimates a revitalised National Competition Policy could result in an ongoing boost to GDP of up to $45 billion, an increase of up to $5,000 for every Australian household each year. The non‑compete reform I mentioned earlier is 1 of these 19 reforms.
Western Australia stands to benefit the most of all the states, as the capital and labour freed up by a more competitive and productive economy allow export industries to expand.
In terms of prices, the Productivity Commission estimates proposed reforms will ease cost‑of‑living pressures, reducing prices by an estimated 0.7 to 1.5 per cent in the long run.
Work is already underway on a first tranche of 5 priority reforms as part of the 10‑year National Reform Agenda. Governments are working towards:
- streamlining commercial planning and zoning systems
- fast‑tracking the recognition of equivalent or superior overseas product safety standards
- supporting modern methods of construction
- boosting labour mobility for care workers
- developing broader rights to repair, including for agricultural products.
State and territory‑based reforms are backed by the government's $900 million National Productivity Fund.
This allows for the fiscal benefits of the reforms - which mostly flow to the Commonwealth - to be shared with the states and territories that choose to implement them.
Western Australia is set to receive payments of up to almost $100 million if it implements all agreed reforms.
And this is just the start of the process. Further reform rounds will be informed by the Productivity Commission's new inquiries.
This set of inquiries will examine:
- creating a more dynamic and resilient economy
- building a skilled and adaptable workforce
- harnessing data and digital technology
- delivering quality care more efficiently, and
- investing in cheaper, cleaner energy and the net zero transformation.
The future for competition analysis
To finish, I want to share some thoughts on where things are headed when it comes to economic research and competition.
Overseas, the OECD's annual Competition Trends report compiles data on enforcement and advocacy initiatives to support better competition laws and policy, and its Product Market Regulation Indicators can help identify areas that could benefit from the removal of unnecessary regulatory barriers to competition (OECD 2024a, OECD 2024b).
Closer to home, I note David Byrne from the University of Melbourne is speaking to you this week about pricing practices. Professor Byrne and his collaborator Nicolas de Roos have provided some insights on the use of high‑frequency data and long panels.
In a Type I Fun paper on Western Australia's Fuelwatch program published in the American Economic Review, Byrne and de Roos (2019) used 15‑years of petrol price data - 1.6 million retail petrol price observations across 687 stations - to argue that price leaders have influenced competition over time.
In a separate paper, Byrne and de Roos joined with Rachel Grinberg and Leslie Marx to analyse Informed Sources - a petrol price sharing platform - and the economic issues at play (Byrne, de Roos, Grinberg and Marx 2025). They concluded that digital information sharing platforms provide a forum for an 'electronic dialogue' that facilitates anti‑competitive conduct. Analysing the competition dynamics of digital platforms is only going to be more frequent.
Professor Byrne, a past winner of the Economic Society of Australia's Young Economist Award, is working to encourage more economists to take up the fun project of competition research. His work shows that it is intellectually interesting and deeply important. I hope that his example draws more young economists into the field, and that the growth of microdata and the interest of policymakers makes Australia a leader in global thinking around the economics of competition, in a way that we have been in other fields, such as macroeconomics.
Automation is also a future research topic when it comes to understanding productivity and competition. It is an area where economists can take an active role as there is not enough evidence for Australia on automation. We need to better understand automation's impacts in Australia so that firms and workers can all benefit.
Closing remarks
Thank you, once again, to the Economics Society for hosting today's event. It is great to talk about what economists do best: explaining the world around us and helping people live better lives (Leigh 2024c).
While there is more research and reform ahead, I would like to credit the economists at Treasury's Competition Taskforce, the Australian Competition and Consumer Commission, the Productivity Commission, the Australian Bureau of Statistics, the Reserve Bank of Australia for their contribution to the competition reform process.
I also acknowledge the contribution from economists working in state governments, industry groups, universities, and the business community. From the outset, consultation has been central to the Competition Taskforce, and we greatly value your insights and submissions.
Without doubt, future competition policy will benefit immensely from a data driven and evidence‑based approach. Competition is critical to our economy and the long‑term prosperity of the Australian people. So be bold, and keep producing rigorous research.
Thank you for hosting me. It has been Type I Fun.
