Imagine a future where Australian shoppers buy their products at fair prices, businesses thrive on healthy competition, and our economy stands resilient against global challenges.
Recently, the federal and NSW treasurers and I took the first step toward this by releasing a consultation paper on revitalising National Competition Policy.
There is consensus that this is something worth doing and we're aiming for agreement by the end of the year.
The original NCP underpinned a generation of growth from the 1990s. At the end of that period, the Productivity Commission estimated that the gains from the policy reforms led to a permanent increase of 2.5 per cent in Australia's GDP. In contemporary terms, that lift equates to around $50 billion a year, or around $5,000 per household.
While it left us in a good position to withstand downturns, the economy has changed, and the nation now faces new challenges that the original NCP could not have anticipated.
The 1993 Hilmer review, which was the genesis of the NCP, aimed to develop a national economy so Australia could take on the world as we opened up to it. Much of the reform effort focused on making the non‑traded sector more competitive so it didn't drag our exports down.
Today, the structural challenges facing the economy are even more significant. Revitalising the NCP isn't just an abstract exercise - it's about ensuring that the groceries you buy and the services you rely on remain affordable and accessible. Governments need to step up - not just to manage markets, but to reduce carbon emissions, embrace digital opportunities, and guarantee that people who need it receive highquality care.
What kind of Australia do we want to build: a nation that thrives by adapting to change, or one that clings to outdated policies at the cost of its future? The Hilmer reforms were built around a handful of principles for competition reform, such as allowing third parties access to infrastructure, reviewing anti‑competitive regulation, requiring competitive neutrality between government and private business, and structural reform of public monopolies.
Updating these principles isn't just a good place to start, it's a necessity if Australia is to keep pace with a rapidly changing world. The principles have been in effect for the past 30 years, so we know how they work.
Consider the third‑party access principle - an essential rule that provides a pathway for businesses to use existing critical infrastructure, such as railways and ports, instead of each building their own. This principle has helped keep our economy efficient and competitive, but it's time to ensure it still works in a modern context.
When the Hilmer reforms were in full swing, the states and territories reviewed more than 1,000 pieces of legislation for anticompetitive provisions. But it's not just legislation that can raise barriers to competition - government policies and decisions can too. It's worth considering whether the principle should be extended to ensure government policies and processes do not raise barriers to competition.
Rather than merely avoiding competitive harm, perhaps governments should seek to do good by directly promoting competition. For example, ensuring we have the right settings in place to encourage governments and businesses to invest in and share data as we increasingly become a digital economy.
With governments taking an important role in shepherding through transformational change, competitive neutrality becomes even more important. It helps ensure that the most efficient business wins on merit, not just because they are owned or supported by government. The principle might need updating to account for new business and funding models.
The commitment to structurally separate public monopolies, coupled with price oversight of government business enterprises, brought significant benefits. However, privatisations have not always been undertaken in a way that fosters entry from competitors. Some governments locked in higher prices when they privatised their assets, effectively sanctioning privatised businesses doing what they couldn't do under government ownership.
The Hilmer review also aimed for greater consistency between states and territories, especially where differences in approach undermined competition across borders. While there were huge benefits - we all know the story of trains having to change tracks as they crossed state borders - there is still unfinished business. Where we can adopt the same standards across state borders without compromising outcomes, this can free up the movement of goods and services. This is important in the context of today's cost‑of‑living challenges.
The principles are a statement about what kind of economy Australians want, and should expect.
The modern economy has an increasing share of value created in areas such as net zero, digital services, and care and support. Competition policy needs to evolve to help these areas. Often this will involve careful market design to drive innovation, improve quality and produce better outcomes. People aren't just consumers, and policy should aim to improve individual wellbeing.
None of the principles are rigid. Governments can deviate from them where this is in the public interest - they just need to explain why. NCP helps Australians understand the decisions business and government make, providing incentives to do the right thing for the community rather than special interests.
Regardless of how governments choose to amend them, the central Hilmer goal for the principles will remain. Together the principles aim to build a single national economy. Every Australian should be able to work, consume or invest anywhere in the country without facing unnecessary barriers. This means more value‑add done in Australia, more jobs, lower prices and higher wages.
As the philosopher Seneca put it a couple of thousand years ago: 'Principles are seeds; from them, big things grow.' It's time to plant the seeds of competition reform to ensure a flourishing future for all Australians.
