Margetts BA (Hons), Graddiped, Mphil
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A Critique of Australia’s National Competition Policy: Assessing its outcomes in a range of major sectors Diane Elizabeth (Dee) Margetts BA (Hons), GradDipEd, MPhil This thesis is presented for the degree of Doctor of Philosophy of The University of Western Australia Management & Organisations Business School 2012 Abstract This thesis analyses the policy assertions of National Competition Policy (NCP) in relation to the actual outcomes in the following key sectors of the Australian economy: Dairy, retail and water. Reference is also made to the relationship between NCP and outsourcing. The research was driven by an awareness of a gap between policy claims and the actual transformations, which have never been assessed by government, despite the substantial nature of the changes ushered in by NCP. In this respect, the thesis reflects a characteristic of Australian political processes since the mid -1980s where neoliberal policy change is also not assessed in terms of outcomes. The thesis contends that in this regard the public interest reflecting the needs of society (families/communities) has not been properly applied. This analysis is theoretically informed by a political economy approach, which gives due weight to the relationship between the economic sphere and society. The Dairy Case Study examines the impacts of the forced removal of the Statutory Marketing Authorities due to NCP and the impacts of increased corporate market dominance of the major retailers over dairy producers (family farms), dairy manufacturers and consumers. The Retail Case Study analyses the role of the large retail companies in pressurizing the state to deregulate the retail market and considers the impacts of NCP on retail suppliers, manufacturers, corporate and independent retailers and consumers and critiques the lack of adequate assessment of the impacts of NCP. The Water Case Study shows how and why the NCP Water ‘Agreement’ was made prior to the main NCP ‘Agreement’ and investigates the outcomes, the impacts of climate change and inadequate data that was available on Australia’s water use and water availability prior during the major push for water privatisation/water trading. This analysis of NCP policy prescriptions and their impacts uncovers the shallowness of claimed social gains. In so doing, the thesis makes a modest contribution to de- legitimating the neoliberal project. i Preface As an elected member of the Australian Senate at the time that National Competition Policy (NCP) was being debated, I both participated in these debates and critically observed the nature of the political process in advancing competition policy. I came to the realisation that these changes were likely to have a significant impact on the Australian economy and society. Hence, while I was a politician, I attempted to promote public debate on the likely effects of these changes. This thesis is an extension of that journey, for I became convinced that this logic could only be challenged through analysing both the theoretical modelling of competition policy and researching the actual empirical outcomes of the restructuring. The political phase of this journey is now briefly recounted, as it formed the foundation of the analysis that follows. This brief recall of my parliamentary experience reveals how NCP and the ideology of ‘contestability’1 became dominant, both in the minds of key policy makers and in subsequent policy. Prior to my election to the Australian Senate,2 the Australian Federal Government had already begun deregulating the banking and financial sector in accordance with the Uruguay Round of the General Agreement on Tariffs and Trade (GATT)3 by responding to the Campbell Committee under Treasurer John Howard in the 1979 Fraser Government (Margetts 2001: 24). Framed by this event, my maiden parliamentary speech heralded an interest in the impacts of government economic policy: Many people in Western Australia know me as a lobbyist for peace and disarmament. However, like many people who have been drawn into the Green movement because of their concern about particular issues, I began to see the connections between issues of world peace, social justice, environmental responsibility and grassroots democracy. In my last two years as a research masters’ student in economics, I travelled extensively around Western Australia. I opened my eyes to the huge gap between the stated goals of government economic policy and the reality at the community and regional level. I will speak out, wherever possible, about the lunacy of a blind faith in the benefits of financial and economic deregulation (Margetts 1993: 256).4 1 The ideological basis of ‘contestability’ is explained in the Retail Chapter 6. 2 I was elected to the Senate in March 1993 and my Senate term was from mid-1993 to mid-1998. 3 The Uruguay Round of GATT had taken seven and a half years of negotiation and, in the end, 123 countries were ‘taking part’. It covered almost all kinds of trade and was considered the largest ever trade negotiation in history (WTO 2012). 4 In the 1970s, after my first year at UWA, where I commenced a BA degree with majors in English and Anthropology (my double major), including Economics, I began working on land for Qantas. While working for Qantas (which I did for six years), I continued studying part-time and began working as a ii In this speech, I also expressed concern about the lack of scrutiny over the ownership and control of Australia’s primary resources and of the level of public resources that were being used to subsidise this industry by way of royalty deals, infrastructure, subsidised electricity and access to other resources:5 Some forms of investment wind up costing us more than the benefits they bring to our economy, and yet we are now planning to voluntarily surrender any last threads of economic sovereignty (Margetts 1993: 256). This position diverged significantly from the mainstream political thinking of the two major Federal parties because, by the mid-1990s, the ‘economic rationalist’6 policy change was a ‘done deal’. At the time of my formally entering the Australian Senate, the Hon Paul Keating had become the Australian Prime Minister (1991-1996). While an acute thinker, Keating had, in my view, become vulnerable to the lobbying by Treasury officials regarding the free trade ideological agenda, which promotes economic deregulation. Keating had developed such enthusiasm for Australia’s commitment to the Uruguay Round of GATT that he considered Australia should make unilateral domestic free-market globalisation changes prior to the signing of GATT to encourage other countries to follow (IAC 1989, Vol 1: 102). For example, in announcing an inquiry by the Industry Assistance Commission (IAC) to investigate the impacts of significant government charges other than taxation, Keating stated that the inquiry would assist the Australian Government’s GATT negotiations (Margetts 2001: 29). The subsequent report, Government (Non-Tax) Charges (IAC 1989), focussed on how to reduce the regularity and other (non-tax) government costs for big business, to assist corporations to become internationally competitive and to open up more of the Australian economy to overseas volunteer anthropology library assistant. Facilitated by this latter role, I became very interested in Development Studies through my reading, including of the Australian media articles by JK Galbraith. In 1979, I left Australia to enrol in the School of Development Studies at the University of East Anglia, one of the few universities in the world that taught Development Studies in an undergraduate Honours degree. Economics and Anthropology were my majors in my Honours Degree, and the School’s methods in teaching economics helped me to investigate and assess the impacts of economic policy directions. 5 Some years later, a report commissioned in 1994 by the Federal Environment Ministry from the National Institute of Economic and Industry Research (1996) was released, entitled Subsidies to the Use of Natural Resources. This provided data on a significant range of resource subsidies. 6 The basis of Australia’s term ‘economic rationalism’ is explained on page 9 of Chapter 1. iii investment (Margetts 2001: 10),7 thus indicating the ‘thinking’ within the Hawke/Keating Government.8 The Hilmer NCP Inquiry was subsequently established in 1992, following what Keating described as an agreement, reached through the Coalition of Australian Governments (COAG), ‘on the need for such a policy’ (Hilmer et al. 1993: iii). The Hilmer Report was published in 1993, which was my first parliamentary year. Neither of the two major parties opposed this general COAG proposal for the Competition Principles Agreement (COAG 1995a), and it was completed on 11 April 1995. Given the complementarities in the policy directions of the two major parties, there was little parliamentary debate on NCP, except by the Greens (WA), the Australian Democrats and some independents. As a result of this co-operative approach between the major parties, the general community remained largely uninformed about the significance of the policy, leading to limited public discourse. It was also apparent that, since both major parties appeared to agree, the media tended not to question this major policy position.9 However, it should not be assumed that the ‘agreements’ reached by the Australian States and Territories with the Federal Government on NCP indicate their full understanding of the implications of these ‘agreements’. Susan Churchman (1996: 97), former Senior Executive of the Competition Policy, Policy and Cabinet Division of the South Australian Department of Premier and Cabinet, in her article ‘National Competition Policy—Its Evolution and Implementation: A Study in Intergovernmental Relations’, published in the Australian Journal of Public Administration, clearly shows that during the NCP negotiations, the States and Territories were not easily able to appoint representatives ‘with all the necessary skills and the time’ to fully and effectively focus on the task of understanding the impacts of the ‘intergovernmental agreements’ based on the Hilmer Report and ‘draft legislation’.