A new brave Australia - competition

Another reference article, by Ross Gittins "Competition is the key to a brave new Australia", the Canberra Times, 15/08/2015.

To quote the first two paragraphs to give us an idea what this article is about:

"Under its newish secretary, John Fraser, Treasury has a new slogan. It is proud to be "fiscally conservative, market-oriented and reform-driven". So just what reform does Treasury advocate?

Well, in a speech last week Fraser spelt it out. But first he noted that the key element of market-oriented reform is that it almost always involves heightening competition. He illustrated the point by summarising what happened during the golden age of micro-economic reform in the 1980s and '90s."

Read more: http://www.canberratimes.com.au/business/the-economy/competition-is-the-key-to-a-brave-new-australia-20150814-giyzok.html#ixzz3iybsq0yG

Why are retail prices for many goods and services so high in Australia?

Comments on Caron Beaton-Wells "Supermarket monsters can be agents of change", 7/07/2015

We need to acknowledge that something is not working well in Australia retailing sector, given that its very high mark ups and the high prices for many goods sold in Australia as opposed to those in the US. In that context, notwithstanding the author's following quotation and statements, those two assessments (ACCC and Harper's) appear to be lacking in conviction or something is lacking and needs further research:

"Throughout, competition experts have stayed cool. Following its 2008 inquiry into retail grocery prices, the ACCC concluded that the sector was “workably competitive”. The 2015 report of the Competition Policy Review headed by Professor Ian Harper reached a similar conclusion. The sector is not unduly concentrated, the review panel concluded. Competition will work, it assured, as long as there are opportunities and incentives for entry.

While there is room for improvement in the regulation of planning, trading hours and liquor licensing, Aldi’s success suggests barriers to entry, and ultimately to growth, are not prohibitively high. Recent indications that another German discounter (Lidl) may be approaching our shores and South African-owned David Jones is considering launching upmarket food stores appear to strengthen such a case."

Why there are few indigenous Australia discount stores entering into the retailing sector as opposed to German discount stores such as Aldi and the other one considering coming to Australia and entering the retailing?

Perhaps any assessments or studies need to compare the Australia case with the US case, that is, including international comparison, so that Australia can become internationally competitive in the retailing sector.

Leaving aside the two major grocery retailers, the strange and funny situations with petrol stations seem to suggest that even the ACCC is not effective in overseeing competition policy in Australia. Of course those two major grocery retailers have their own petrol stations at which they have some discounts from their own sale docs.

There may be some fundamental shortcomings in the approaches in Australia. Every consumer will benefit from an effective competition regime and practice in Australia.

Assisting farmers requires fine balancing act by ACCC

Comments on Michelle Grattan "Government to beef up ACCC to assist farmers", 5/07/2015

You have made a very good point Mr Arnold. The ACCC will have a dilemma on its hands. It has to balance the interests of consumers as its traditional mandate implies and that of farmers that is the government now wants it to do.

Consumers benefit from lower prices of agricultural goods through lower costs of supermarketers on the one hand. On other hand, the task that the government has given the ACCC to look after the interests of farmers would force up the prices that those supermarketers pay to farmers, that ultimately will be reflected in higher prices that consumers have to pay.

It will be interesting to see how the ACCC will handle and act with such diabolically opposite objectives. Of course, there is a possibility that the heavy weight supermarketers may not pass the lower costs to consumers but profiteer it for its own profits.

I guess in that case the ACCC should and can easily force the supermarketers to act in a competitive way as opposed to using their market power in front of consumers.

Why Australian have to pay higher interest rates and higher retail prices?

Comments on David Uren "Politicians make lousy bankers" 7/02/2012, http://www.theaustralian.com.au/business/opinion/politicians-make-lousy-bankers/story-e6frg9qo-1226264125617
I've lost the copy of my comments but will get it when it is available from the Australian.

High time for ACCC to use plan B

Comments on Stephen Bartholomeusz “Plan B for the ACCC”, 21/01/2012, http://www.businessspectator.com.au/bs.nsf/Article/ACCC-Rod-Sims-Metcash-Franklins-Austar-Foxtel-take-pd20120120-QP4CX?OpenDocument&src=sph&src=rot

It was an interesting case by the ACCC bordered on bizarre, considering the Wesfarmers acquisition of Coles was done, while the ACCC had objected the Metcash' Franklin case.

For a market regulator to rely on theoretical argument without putting into a proper practical and commercial environment reflects how out of touch government organisations can be.

The ACCC should adopt a similar approach to the Productivity Commission in using applied model in testing and determining its decisions. The PC, from its predecessor, the Industry Commission, has been using models, including CGE models to study complex economic cases for policies.

The sort of models the ACCC would need to use may be different from those used by the PC, but modern contemporary merger and acquisition cases can only properly understood by informed studies from using practical models.

ACCC must have a clear overall goal to ensure market competition, efficiency and consumer welfare and use the best applied models available to measure it. Otherwise it will fail in its regulation of the market to enhance Australian welfare.

I would argue that many of ACCC decisions did not have a clear measure how much gain/loss should that case be or not be allowed.

In that context, it is high time for the plan B to be used!

ACCC's disdainful stance on the NBN Co monopoly

Comments on Henry Ergas “Regulate the regulators”, 15/04/2011, http://www.theaustralian.com.au/national-affairs/commentary/regulate-the-regulators/story-e6frgd0x-1226039354279

The stance of the ACCC on the issues of NBN monopoly and Telstra reflected a strong revengeful body as a result of its past experience dealing with Telstra, not too dissimilar to the government's.

It used its power to do so, but was probably abused its legal position and betrayed the public and particularly the shareholders of Telstra unfairly.

That has been very unfortunate for the ACCC and the nation.

In a sense, the whole drama showed the ACCC has not acted in the interest of the public and consumers by agreeing the NON Co. monopoly.

We've already heard the NBN Co. has used its legislated monopoly position to unfairly deal with a number of issues, including delays of construction of homes due to its requirement that have to be done in a particular way and its inability to have sufficient flexibility to empower other companies to meet technical standard with their won creativity to minimise costs.

How will the NON Co monopoly be better and not worse than Telstra’s dominant market position is an open question and anyone’s guess.

Under the current market conditions, other companies could build their own facilities to compete with Telstra in terms of infrastructure and market shares, such as those that have already been built fibre or hybrid ones to homes, e.g. TransacACTEWAGL lines in the ACT.

Under the NON Co monopoly, no one will be allowed to do so, in their words, for cheery picking!

How could the ACCC endorse such a poor arrangement, apart from its what the government has wanted to do.

Swan's 'reforming' the banking sector

Comments on Michael Stutchbury “Package gives policy a bad name”, 13/12/2010, http://www.theaustralian.com.au/business/opinion/package-gives-policy-a-bad-name/story-e6frg9p6-1225969800721
Is this another grocery watch idea, RSPT idea or pink batts idea?

It is likely to increase the costs to consumers and mortgage holders in the longer run, because of the propping up of smaller non-banking organisations using taxpayers' money.

With Mr Swan at the helm of the nation's economic policies and reforms, how much can you expect, if the RSPT dramas and fiascos were of any guide?

Among the most recent Commonwealth Treasurers, where would people rant him in terms of competency, style and achieving good outcomes for the nation?

But I am not sure how to comment on Swan's legacy. To fair to him, he has been on the position for just three years by now.

Emerson's approach to economic policies better

Comments on Michael Stutchbury “Labor the competition party?” 1/09/2009, http://blogs.theaustralian.news.com.au/currentaccount/index.php/theaustralian/comments/labor_the_competition_party/

Craig Emerson's approach is a much better one among Labour ministers including PM. We need more Labour politicians like Craig Emerson to keep Australia's economic reform on track and the Australian economy competitive internationally and Australian businesses competitive domestically too. Australia and Australians will benefit from such an approach as Emerson's.

This is especially important given what has occurred in Australian government spending that has been shown as inefficient and wasteful.

Both businesses and governments need to be competitive and should subject to effective and rigorous competition. Australia needs competition. Media, especially economic editors and reporters/journalists should scrutinise them very rigorously too.