We'd be poorer without the NCC

Recently, Scott Balson, a high profile supporter of the One Nation Party, and major Labor government figure, David Hamill, both attacked National Competition Policy in this journal. These attacks variously allege that NCP is an instrument of conspirators and bureaucrats gone mad.

Yet the NCP is a central plank in the economic reforms which have seen this country keep its head above water in times when it might have drowned.

Attacks of this kind are born of fear: either the fear of the attacker or the fears of others on which the attacker seeks to play. Fear is almost always a function of ignorance, and here there is no exception to that rule.

The economic reforms of the past fifteen years have been difficult, scary and highly disruptive, but they had to happen.

There are plenty of people to tell you what’s wrong with NCP. I’d like to look at where we gain.

Just about everyone understands that when the government spends money, it has to get that money from somewhere. It does that (usually) by taxing us more. So the principle is pretty simple – if you want the government to spend more, you’ve got to pay more. We often forget this – especially when we want something ourselves – but most of us understand the basic truth of that statement.

Economics is not so very different. Just as someone must pay for every government expense, so someone must pay for every economic inefficiency. Every time we maintain a tariff or engage in some other form of protection, prices are inflated and we pay more for things which should cost us less.

That is where NCP comes in.

NCP seeks to make our economy more competitive and hence more efficient.

It seeks to ensure that government enterprises don’t have any unfair advantages over private sector businesses so that competition in the marketplace is fair.

It seeks to ensure that where people use resources, it is they, not the rest of the country, that pay.

It seeks to ensure that companies which own essential infrastructure allow access to that infrastructure so that other companies can enter markets and make those markets more competitive.

In other words, it seeks to make sure that every dollar in our pocket can be used as effectively and valuably as possible. That applies whether you’re a millionaire or a battler.

Here is an example of what I mean.

A couple of years ago, the first Howard Government embroiled itself in the debate over the textile, clothing and footwear industry’s tariff protection. That industry sector is one of the most protected in Australia. Every time someone brings up the possibility of removing that protection, there is a lot of screaming and yelling about job losses, but no-one talks about the people who are losing because the protection continues. No-one talks about the parents who have difficulty affording school uniforms for their kids because the prices are inflated. No one talks about the fact that people have to spend more on clothes and shoes and so have to skimp on food.

Let’s look at another example, the car industry. It’s another highly protected industry, and again, when we talk about removing that protection, the balloon goes up about job losses. No one considers that because new cars are so expensive, more of us are forced to drive old cars which cost us more to maintain. No one speaks up for the damage this is doing to the environment.

You might say, well these problems are nothing besides a job loss, and I’d be the first to agree. The problem is, the people who suffer the most because of these difficulties are the unemployed and those on the poverty line. Rich people have disposable income. Poor people don’t.

Economic policy – popularly badged "Economic Rationalism" – has caused a lot of people a lot of grief over the last fifteen years. There is no denying that. People have had to change and people generally don’t like to do that.

What has to be remembered is that it’s a cost-benefit game. If we hadn’t gone down this path, we’d be a far less attractive investment centre than we are, so the flourishing technology industries, which will take us into the next century, would have gone overseas. We’d be paying a lot more for the every day essentials of life like food and clothing and books. Our unemployment rates would be higher and our export earnings would be much, much lower.

In amongst all that, NCP has been blamed for things which would have happened anyway. NCP didn’t screw Australia’s farmers. The El Nino effect and years of falling commodity prices did. Likewise, NCP hasn’t forced the banks to desert regional Australia. Advancing technology and the rising obsession with shareholder value over commitment to the community did.

NCP was just a convenient lightning rod.

Yes, there has been change, and no, not all of it has been good, but it could have been a lot worse. NCP stopped it from being that way.