National Competition Policy (Australia)

The term National Competition Policy refers to a set of policies introduced in Australia in the 1990s with the aim of promoting microeconomic reform.

In 1992, an independent committee of inquiry, the National Competition Policy Review Committee, was established by Prime Minister Keating to inquire into and advise on appropriate changes to legislation and other measures in relation to the scope of the Trade Practices Act 1974 and the application of the principles of competition policy. The Committee was chaired by Professor Fred Hilmer and also comprised Mr Geoffrey Tapperall and Mr Mark Rayner.

The report was commissioned against a backdrop of major microeconomic reforms led by the Keating Government, but slow progress on areas of the economy sheltered from competition as a result of constitutional limits on the application of the Federal Trade Practices Act or of other actions by Federal or state governments. The report thus had important implications for state-owned enterprises, many of which had begun entering into commercial activities; the professions, which were excluded from the application of Federal law; certain agricultural marketing entities granted monopoly rights; and certain infrastructure entities.

The report was prepared through a consultation process that included public solicitation of submissions, public meetings, and extensive discussions with State governments. The Committee presented its report, commonly referred to as the 'Hilmer Report', in 1993. The principal recommendations were:

The report's recommendations were endorsed in their entirety by Federal and State governments but opposed by a range of other parties such as the Greens and the Democrats and independents. The recommended changes to the Trade Practice Act were implemented quickly, and the report was also used as the basis of the Competition Principles Agreement reached at the 1995 meeting of the Council of Australian Governments (COAG). The term 'Hilmer reforms' is now used to refer to processes arising from the intergovernmental Competition Principles Agreement and the associated Competition Policy Reform Act 1995 (Cwlth).

The stated objective of National Competition Policy, as it applies to the public sector, is to achieve the most efficient provision of publicly provided goods and services through reforms designed to minimise restrictions on competition and promote competitive neutrality. The principal reform required under the policy is the application of a public benefit test to justify the maintenance of any public policy which prima facie restricts competition. Policies for which a public benefit cannot be demonstrated must be repealed or modified so that they do not reduce competition.

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