Good morning and thank you for inviting me along today. The Prime Minister spoke with you this morning and I understand that went extremely well and there was a little low value threshold conversation that took place and I am happy to go over that ground further if you like. My role is to be the envoy, bonding with State Treasurer's to get a shared position where we can advance the work and the business case on how best to respond to that tax anomaly. I welcome all insights; I know Margy hasn't held back on that so if others have other views please let me know.
Just for your information, you might have missed it in the Tax Expenditure Statement. It's a novel statement, Tax Expenditure; most of us would call it tax foregone because of the concessions or anomalies. That report in early January saw the value around $400 million in terms of GST revenue foregone. It was slightly down on earlier estimates, largely because there's been a more granulated examination of the traffic coming into Australia and filleting out business inputs, which you all know are GST debatable - that's why those numbers look a bit different for those that have been watching this issue closely.
I am here to talk about a couple of areas including our 'root and branch' review of competition policy. It's something that's been a long time coming and we've been encouraged by the overwhelming messages of support to undertake this timely and once in a generation examination. It will not only focus on our competition policy and competition law tool kit, but also what else is going on in the economy and anticompetitive choke points. You would know we've got some novel arrangements in terms of coastal shipping.
In other sectors of the economy we feel there is scope for microeconomic reform – so there's two parts to that piece of work that we've been investing quite a lot of time in already and more time will be invested in that to come.
It's important to remember last time this was done was in 1993 and much has changed in the economy since then. The economy is a different animal, the ecosystem within which it operates has transformed and the nature of competitive pressures has also evolved over that generation.
We've also found out law in some respects, not living up to the billing that the parliament envisaged. It's an interesting place this one. We know that commerce is quite diverse and nimble and one that innovates regularly with new approaches, new tactics and business strategies. But in this parliament, we've felt we had wisdom to be able to foresee all of the anti-competitive mischief that was detrimental to our economic interests and consumers.
We've found some of that wisdom that we thought we had hasn't quite lived up to its own ambition. We've seen some court cases giving us jurisprudence insights into how the courts interpret provisions in the law. One thing that I know that happens in all of your organisations and doesn't always happen in this building (Parliament House), is the learning cycle doesn't actually complete a full circle. There isn't a structured process for insight and reflection; for examination on new learnings and new insights to look at court determinations and the interpretations given to the black letter law or to revisit whether they accurately capture the economic imperatives that sit behind our competition law.
I try and remind people that competition law isn't a play thing for lawyers; it's actually an economic instrument. Policy settings are set to encourage competition which gives efficient businesses big and small an opportunity to thrive and prosper and seek to protect the durable interests of consumers. The law tries to codify what those policy ideas are but we need to make sure those policy ideas are sound to begin with.
We have finalised the terms of reference as you would know this is a regulatory space where the Commonwealth does not own the ball. The ball is shared between states and territories and I thought it was good form to engage with these jurisdictions to make sure they were supportive and to hear their insights to help in the development of the terms of reference.
The terms of reference are intentionally broad. They seek to revisit what we have now and pose the question whether the law is behaving in the way in which we anticipated to instil that interest in learnings and what that might bring to revisiting the laws. This will help in the comparative analysis; provide us with further information on other insights that can be drawn internationally that are of use to our economy and to also pose the question whether institutional framework has proven to be effective and responsive.
I've drawn some criticism, which is not a surprise, about pointing to some of the measures which are there to reflect the interests and the bargaining position of smaller businesses. Why have we done that? Well there are some provisions in the law that seek to take account of the particular commercial circumstances of small businesses. They are too difficult to access and too slow in providing a remedy to redress some proven wrong doing and they are largely ornamental. They are nice in theory but in practice not living up to the billing that sits behind them.
We've also seen a change in that institutional arrangement, the National Competition Council let you in on an insight that they are not particularly busy right now. That is quite different to the role they had as an agent of change, driver of reform some two decades ago.
Some of the provisions – you'd all know the merger and acquisitions provisions and the avenues available for authorisation and approval. We've got two avenues – one always used and one never used. The dark art of the informal process is mysterious and is hard to draw insights from in terms of the decision support framework that is being brought to the analysis that is being done within the commission and the arguments and inputs provided from stakeholders.
The Tribunal process is also one that hardly peaked early. We saw a half crack at that in relation to dairy and that's machinery that exists to provide an on the table, open and transparent proposition that people can have a look at. The difficulty is though, that you need to nail it precisely right from the beginning whereas the informal M&A avenues give you a bit of wriggle room to respond, to adapt and to adjust proposals.
Now both have virtues – one is used always, the other not used at all and for those from the outside feeling they have a contribution to make, it's often a difficult action to know how to make that contribution and how to influence the decision process.
We've also touched on those choke points in the economy and I would welcome peoples input in that space. If you see historical policy settings that are frankly unhelpful and represent barriers to competition and an impediment to the economic prospects of our nation, please share those with us. One of the main points of polish is that it is a broad canvas to work with. We've provided a 12 month window to carry out that work and we have some spectacularly gifted people to drive that work at a panel level but we've said to them – focus on where the gains are most substantial.
We will announce the panel in the coming week. I thought it was important to get the feng shui right. I use the words feng shui because many of you know we can all come up with great names that are very active and vocal in this space that would lead many in the economy to think the issues have been prejudged. I thought that was of no interest to anybody and of little benefit to the process - it wouldn't build confidence in the objective, sober, analytical work we are tasking the panel to undertake.
So we've avoided what might be described as some of the usual suspects because many of those views are known as well as their useful input. But in terms of objective assessment it would easily be argued that some important issues could have been prejudged and therefore undermine the analytical rigour and the objectivity we believe we've instilled in the task regarding the terms of reference and the team, in terms of the panel.
They will be supported by a Secretariat which has already been established and is operational within Treasury. For those that aren't aware, I'm actually a Treasury Cabinet Minister. It seems to have been a point of some confusion in some commentary and Treasury is the mother ship for the review.
In regards to the Secretariat - we've drawn expertise from across the Commonwealth and from the private sector to be a valuable resource and provide support to the panel. They are preparing an issues paper that will be available and it is designed to provoke input, manage the submissions process and provide useful insights that will inform our work.
We will also be formally establishing an advisory reference group. The reason behind that is not withstanding the abundance of prejudged barrow pushing that happens in this space, some of those barrows are quite well argued – let's not lose the benefit of that insight.
We want to invite people, some of whom have very clear, settled and fixed views on some of the policy issues that are being considered, to provide their input. The panel can interact with that reference group and draw from that insight and in some cases a long journey in this policy space where certain insights, data and research would be very helpful.
Just to give you a sense, the states basically said it's a once in a generation opportunity to shape an agenda to launch competition reform. That's a very positive message. The States also talked about it being necessary and timely to identify reforms to further drive productivity growth and increase living standards in our nation.
The broad terms of reference are flexible and recognise that the economy has changed. They offer an opportunity to increase living standards in our nation and drive productivity growth. We've also had the Prime Minister's Business Advisory Council provide some input and they were quite helpful in reminding us all that our economy doesn't operate in a bubble and interacts internationally.
On the deregulation front – wasn't yesterday a great day! There was supposed to be a bonfire but I can't begin to tell you how many permits that would require. Just to give you a sense of the regulatory space that we operate within – that $1 billion red-tape reduction commitment is well advanced a with the measures announced yesterday and leading up to yesterday.
But our work isn't finished – just as in your industry and commerce there is an ever receding finish line - but we have to keep going. That's the discipline we bring to our task. We are analysing the stock of regulations – that's what we've got and you'd be aware over the last six years 21,000 new and amended regulations have been added to that stock, a phenomenal amount. It is probably why we have gone from 68th to 128th in the world in terms of regulation. Now our view is that businesses know they need to be world class each day. But so does governance and governing. We as a nation need to lift our game and yesterday was an important opportunity to say there is a cost to regulation and there is a choice about how far and deep we regulate. It does consume resources, quite a number of them, and deflect effort and enterprise away from creating opportunity to complying with what government thinks is a great idea.
Those Ministerial Advisory Councils have this as a key task on their agenda and each portfolio within the government has a deregulation unit and within the Commonwealth each portfolio has a deregulation task of its own. Ours is quite a heavy lift and we are making good progress on it. But again I would welcome any insights you have about that.
Finally, my thank you for all you do. Your efforts and enterprise sprinkle right across our continent. I have a lot of respect and time for the retail industry and I once had my own retail enterprise with my wife. What a character building experience that was.
You create so much economic activity, you are a crucial contributor to so many livelihoods and not only to the central works, services and requirements we need but I am reliably reassured retail is finest leisure activity you can engage in. I thank you for the colour and life and activity you bring.