Overview

Governments agreed in 1992 to establish a National Competition Policy, commissioning the Independent Committee of Inquiry into a National Competition Policy (Hilmer Report), which reported in 1993. On 11 April 1995, leaders of governments signed the three agreements (Competition Principles Agreement, Conduct Code Agreement, Agreement to implement the National Competition Policy and Related Reforms) in which they committed to a program of economic reforms. This program was known as the National Competition Policy.

The National Competition Policy proceeded in three tranches from 1997-98. It concluded in 2005-06. All governments, including the Australian Government, undertook to implement a series of reforms. The National Competition Council conducted multi-jurisdictional assessments of progress in 1997, 1999, 2001, 2002, 2003, 2004 and 2005. These assessments formed the basis of decisions by the Australian Government to make competition payments to the states and territories. The agreed reform commitments and the basis for the competition payments were set out in the intergovernmental Agreement to Implement the National Competition Policy and Related Reforms.

The National Competition Policy is widely recognised as having made a significant contribution to Australia’s welfare. The Productivity Commission Review of National Competition Policy Reforms in 2005 found that the National Competition Policy had delivered substantial benefits to the Australian community which, overall, had greatly outweighed any transactional or adjustment costs.

In its final (2005) assessment of government’s progress in implementing the National Competition Policy and related reforms the National Competition Council found that all governments had made substantial progress in meeting their commitments.

• Legislation review and reform had proven pivotal in removing unwarranted barriers to competition (where there was not a net public benefit from restricting competition) across a diverse range of activities. In aggregate terms, governments completed reviews of some 85 per cent of existing anti-competitive legislation, and there was a material reduction in competition restrictions. All jurisdictions had gatekeeping mechanisms for examining the efficiency and effectiveness of new regulations, though there was scope to further develop the effectiveness of those mechanisms.
• Major government business enterprises had been corporatised, other significant businesses exposed to competitive neutrality principles, and competitive neutrality complaints units established.
• Governments had generally removed regulatory functions from government businesses and reviewed the merits of separating monopoly elements before privatising their public monopolies or introducing competition.
• Australia had introduced a national regime for providing access to the services provided by nationally significant monopoly infrastructure.
• All governments had established independent prices oversight arrangements.
• All state and territory governments had extended the Trade Practices Act prohibitions against anticompetitive behaviour to all persons, including the Crown (in so far as it carries on a business) within a jurisdiction’s reach.
• The objective of national free and fair trade in gas had been largely realised and considerable progress made towards achieving the goal of a fully competitive national electricity market. The agreed road transport reform commitments had been essentially implemented.
• In its 2003 and 2004 National Competition Policy assessments, the National Competition Council found that all governments had made progress towards better water resource management although jurisdictions were at different stages of implementation and there was considerable work remaining.
• The National Water Commission, in the 2005 National Competition Policy water reform assessment, noted that state and territory governments had made considerable progress in improving water resource management, but identified failures by some jurisdictions to sufficiently progress reform in relation to interstate water trading, water planning and addressing overallocated systems.