The competition regulator is pushing the government to sell off assets including Australia Post, Medibank Private and to privatise the state-owned energy companies.
The Australian Competition and Consumer Commission chairman, Rod Sims, has indicated he expects the federal government’s review of competition laws to recommend the government relinquish long-held assets to maximise productivity and benefit consumers and businesses.
“Government ownership versus private ownership massively affects the incentives people have to drive productivity change,” Sims told The Australian Financial Review.
“There is no doubt in my mind that energy prices, particularly in NSW and Queensland, would now be lower had the private sector owned those network business rather than them staying in the public sector,” he said.
Bob Baxt, partner at Freehills and former chairman of the Trades Practices Commission, told SmartCompany relinquishing assets such as Australia Post, Medibank Private and the state-owned energy companies made sense.
“This is one of the problems with Australian competition law over the years, until the Hilmer report was embraced by the government, you had a lot of government businesses which were given unfair advantages,” he says.
“By all means we should try to remove any protection that government businesses have, whether they sell them or not they should try to make sure they are not protected in any particular way.
“Frankly, I don’t think the government should be in business. They can’t run a business the way the private sector does, but there are some dangers particularly when hedge funds get involved in buying and selling businesses, and they are not particularly concerned with keeping businesses afloat just in making a quick profit.”
The genesis of the competition review was looking at what could be done for small business, but Melissa Monks, special counsel at King & Wood Mallesons, says the chairman’s comments indicate the review will be more in-depth than may have been initially expected.
“There is a very clear pro-consumer sentiment to Rod Sims’ comments. The thinking behind it seems to be that doing so will increase productivity,” she says.
“His comments clearly reflect the essence of the scope of the root and branch review, which includes removing impediments to competition and the government not being a substitute for the private sector.”
Monks says Sims’ comments come at a very early stage in the competition review.
“We don’t even have a panel yet but [the ACCC] is coming out early and swinging, pushing a clear agenda about what competition reform should look like,” she says.