Tax Value MethodAugust 7, 2000
Potential GST Avoidance Activity in the Insurance Industry to be StoppedAugust 17, 2000
Government Responds to Productivity Commission and Senate Select Committee Reports
on National Competition Policy
The Government is today releasing its response to the Report of the Productivity
Commission inquiry into the Impact of Competition Policy Reforms on Rural and Regional
The interests of rural and regional communities are an important consideration in the
development of Government policies. Many of our rural industries are highly competitive
internationally and comprise a significant proportion of the economy. The
Governments prime focus in assisting Australias regions to realise their
potential has been to deliver sound macro and microeconomic management of the Australian
A competitive, flexible economy will allow more rapid and less costly adjustment to
changes in the domestic and international environment, such as the recent Asian slowdown.
Reducing the structural rigidities in the economy and developing a competitive market
environment enables Australia to increase its level of productivity growth. Increases in
productivity growth are the best means of achieving higher real incomes and greater
employment opportunities. However, competition policy permits restrictions on competition
when it is in the public interest.
The Commissions Report is a comprehensive examination of National Competition
Policy and provides a strong endorsement of this policy. The Commission found that, in
addition to benefiting the Australian economy overall, competition policy benefits rural
and regional Australia as a whole, with both consumers and the business sector benefiting
from reforms. The Commissions modelling of selected competition policy reforms
estimates that these will continue to provide a sustained increase in Australias
income and in the living standards of Australians.
The Commission also found that the direct costs of some competition policy reforms have
tended to show up more in country areas than in the cities and there has been more
variance in the incidence of benefits and costs of competition policy reforms in rural and
regional Australia compared with metropolitan areas.
The Commission found that many parts of rural and regional Australia are growing, with
increased employment and rising living standards. Regional Australias population has
increased in the past three decades and maintained its share of the total population. The
decline of population in some regional areas largely reflects non-economic factors such as
demographics and changing lifestyle preferences. As the benefits of competition reforms
continue to flow through the economy, the Commission anticipates that virtually all
regions will gain through increased income as a result of competition policy reforms.
Communities in rural and regional Australia are being affected by a range of
influences, such as the long-term decline in global commodity prices, technological
innovation and changing consumer preferences.
The Government endorses the thrust of the Commissions recommendations, which are
directed at improving the way in which competition policy is implemented, and believes
that measures adopted will increase community understanding of competition policy, and
improve its implementation and operation, ensuring that the full benefits of reform are
realised across the whole country.
The Government accepts the Commissions recommendation that generally available
assistance measures should be the principal means of assisting people who are adversely
affected by competition policy reforms. However, special circumstances can exist that
require governments to consider specific adjustment assistance of a time-limited and
targeted nature to facilitate the necessary change.
The Government is also releasing its response to the Report of the Senate Select
Committee on the Socio-economic Consequences of the National Competition Policy
Riding the Waves of Change.
The Government welcomes the contribution of the Committees report to the
discussion and understanding of competition policy. Evidence provided to the Committee
supported the Productivity Commission finding in its Report that, overall, competition
policy has brought benefits to the community.
At the same time, the Committees deliberations also revealed that there is some
misunderstanding of the benefits of competition policy since it is often associated with
economic changes which are due to other factors such as social and technological change or
other Government policies. The Committee concluded that governments have at times
contributed to the confusion by citing competition policy as a reason for the reduction of
funding for an activity, for the rejection of infrastructure projects, and for policies
such as compulsory competitive tendering. The Government agrees with the Committee that
such actions contribute to misunderstanding and confusion.
Much of the implementation of competition policy is the responsibility of State and
Territory governments. The Prime Minister will write to Premiers and Chief Ministers,
asking them to consider the issues raised in the Reports.
Copies of the Governments responses to the Reports will be released today.
Government Response to the Report of the Senate Select Committee on the Socio-Economic
Consequences of the National Competition Policy
Government Response to the Productivity Commission Report on the Impact of
Competition Policy Reforms on Rural and Regional Australia
10 August 2000
Contact: Niki Savva
(02) 6277 7340