Why the National Competition Council should be abolished

Competition reform is not the panacea for each and every perceived economic malady in Australia today. It is not an absolute.

As Queensland Treasurer, I believe very strongly that competition reforms that bring real benefits to the community are reforms that are worth tackling. At the same time, however, the Queensland Government will not pursue reform for reform’s sake. Economic reform, indeed National Competition Policy, is not an end in itself.

The key to successful reform is balance and public benefit, and Queensland Treasury has been particularly successful in implementing worthwhile competition reform in consultation with industry and community stakeholders.

The Queensland Government’s position in relation to competition reform must be distinguished from our views on the National Competition Council. Many of the reforms we have achieved – with the support of all stakeholders – have been in spite of the National Competition Council, not because of it.

There have been significant reforms in a range of primary industries, the energy sector and water. In relation to power, it should be noted that Queensland undertook these reforms in 1994 – before the NCC even existed.

The most recent National Competition Council report represented a gross failure on behalf of the Council, which purports to accurately and fairly assess the State’s progress in achieving the competition reform agenda.

The Council’s recommendations will prevent the legitimate construction of rural water infrastructure in St George, South West Queensland and threaten to penalise the State by $98 million if it does not deregulate farm-gate milk prices.

In both cases, Queensland has acted in accordance with legitimate assessments required under the Competition Principles Agreement, including the independent and extensive Public Benefit Test conducted during the Dairy Review and a comprehensive assessment of economic viability and ecological sustainability undertaken on proposed water infrastructure projects.

In both cases and many others throughout the report, the NCC has fundamentally exceeded its legitimate role and responsibilities, as provided for under the COAG Agreements. Inappropriately, the Council has sought to question the validity of Community Service Obligations (CSOs) and to ‘second guess’ the outcomes of public benefit tests. Effectively, the NCC is an umpire which is seeking to determine the outcome of the game, rather than just enforcing the rules.

For Queensland, the NCC’s second tranche assessment represents a crossroads for the national competition reform process.

The Queensland Government remains committed to appropriate competition reform and has resisted considerable pressure from those seeking to abandon NCP. Instead, Queensland has adopted a responsible approach which is both collaborative and inclusive. This approach is essential, given the uniquely decentralised nature of service provision in this state and the substantial extent to which the competition reform process relies on the participation of the local government sector.

Despite our best efforts to introduce a workable model of competition reform which is both consistent with the COAG agreements and acceptable to the Queensland community, Queenslanders will not accept a process in which difficult reforms are undertaken, due process is followed and yet they are still financially penalised.

As the former head of the Business Council of Australia, Stan Wallis, put it recently: "The community will buy reform if it passes the smell test."