Good afternoon.
I'd like to thank the Monash Law School for providing this opportunity to canvass a number of issues that are central to the Government central to my work as a Minister.
I want to talk about competition policy in Australia - how competition and consumer choices are driving our economy.
And, especially, I want to talk about competition in a modern liberal society.
I want to set the scene by looking briefly at the phenomenon of globalisation and the enormous expansion of information technology in this process.
Ladies and gentlemen, globalisation means many different things to many different people. But in its simplest form, globalisation has promoted competition on a grand scale.
It has been a watershed to the way governments and societies the world over view competition.
For in the past, we understood our place in the world by reference to our national boundaries and our national economic achievements.
While we are confronted with international competition right here within our own border, we also have the chance to compete on an international scale.
And technological advances have facilitated both the challenges and the opportunities of global competition.
For instance, the emergence of the Internet has boosted competition in a way that simply could not have been imagined a few years ago.
And where there is greater competition, we see greater innovation, greater access to a greater range of products, greater focus on individual consumers and, ultimately, reductions in prices.
Put simply, advances such as the Internet have given businesses and consumers far more choice.
Businesses can sell their wares to a global audience while consumers can buy products from a huge number of suppliers.
Linked to this, there are now options to access products that in the past were totally inaccessible.
For instance, right now, with the use of a laptop and mobile phone I could pay my credit card bill, order tickets for a show in any city in the world and send flowers to my Mum - all before this lecture came to an end.
Today, consumers have enormous choice not only in the products they buy, and who they buy them from, but also from where they buy them.
Today's consumers are totally mobile, able to shop in virtual shopping malls set up on the other side of the world.
And the Internet can give Australian suppliers access to a customer base that offers the opportunity to grow and to compete on an international scale.
Niche marketing is very big on the Internet, and this is an exciting prospect for many small Australian businesses.
Suddenly, access to customers is no longer limited by physical location.
And Governments have recognised the need to address the challenges of globalisation, have recognised the need to reposition society through reform.
And some of the biggest recent reforms have been in the area of competition.
Ladies and gentlemen, competition is the tie that binds the three major factors influencing the market today.
First, there is globalisation; second, there is information technology; and third, there is increasing choices available to businesses and to consumers.
As this audience knows, competition at all levels - international, national and local is a mechanism for producing greater choices and for producing lower prices.
In Australia, competition policy provides the environment for Australian businesses to develop the efficiency and the competitive edge to succeed globally.
Effective competition provides the main impetus for businesses to seek productivity improvements.
And it is increased national productivity that facilitates economic growth, employment opportunities and higher real household incomes.
This is an important point
Increased productivity comes from increased competition.
With this point in mind, it is important to consider the role of government in the competition equation.
In a modern liberal society, the greatest threat to competition and its role in maintaining consumer choice, is a paternalistic, interventionist government.
As the renowned liberal philosopher John Stuart Mill said, "a government cannot have too much of the kind of activity which does not impede, but aids and stimulates, individual exertion and development. The mischief begins when, instead of calling forth the activity and powers of individuals, it substitutes its own activity for theirs".
Indeed, a true liberal society is the result of the ways individuals interact with one another in competition.
It is a society in which the right balance has been found between the promotion by governments of the rights of individuals against the individual's own capacity for self-reliance.
I believe that the Coalition Government is committed is committed to this path and is committed to providing an effective framework for competition to flourish in Australia.
And this commitment has created possibilities for faster growth and rapid improvements in living standards.
In fact, against a background of 15 years of market reforms in Australia, a recent Productivity Commission research paper shows that our economy is on a new growth path.
It is even suggested that Australia now has a new economy; that is, a resilient and a flexible economy based on high productivity and based on faster economic growth.
Higher productivity, in turn, influences our capacity as a society to provide effective social services.
And sustained increases in productivity and resource flexibility have insulated the Australian economy from the most damaging effects of a changing global environment.
Productivity improvements and increased competition tend to be found in the same places. And that is because competition focuses the minds of business on what consumers really need.
And it is the Government's commitment to competition policy which provides the economic environment in which costs can be reduced and prices can be cut.
For example, increased competition and restructuring in the electricity industry has resulted in a reduction in the average household's annual electricity bill of around $45 in real terms since 1993.
In the telecomms market, we now have 30 carriers. With this new competitive structure, consumers can now choose their own carrier and call the United Kingdom for as little as 20 cents a minute, compared with 84 cents just 2 years ago.
Also in rail, freight rates between Melbourne and Perth have fallen 40 per cent since 1995.
And domestic airfares are among the cheapest in the world, having fallen by 18 per cent since September 1990.
All this as a result of competition reforms.
With cheaper inputs to production - such as electricity and transport - manufacturers can cut costs and offer goods at lower prices.
This is a cycle that relies on competition to deliver efficient outcomes for businesses and cheaper products for consumers.
But these gains haven't come without their detractors.
There has been criticism of competition policy, most notably in rural and regional Australia.
But this Government does not adhere to the 'Ayn Rand' school of liberalism, that is, the 'every man and woman for themselves' mantra.
We recognise that people in some parts of the country are doing it tougher than other parts.
But we also recognise that competition policy is producing positive results.
The situation of people in country Australia is, unfortunately, affected by other factors, such as commodity prices, technological change, and demographic shift.
And, against this background, it has been difficult to welcome the increasingly open markets that flow from competition policy.
But this situation is not being ignored.
And that is because, in a modern liberalist society, the freedom of the individual to pursue his or her goals should operate in tandem with the obligation to protect the vulnerable.
There are various inquiries now examining aspects of competition policy.
My response is this: I am pleased that people are talking about competition policy and gaining more information about the benefits of an internationally competitive economy.
For example, the Parliamentary Inquiry on the Retailing Sector, chaired by Bruce Baird, is looking at the degree of concentration in the retailing industry, with particular reference to the impact on small independent businesses.
There will also be an interim report out soon from the Senate Committee, which is looking at the socio-economic consequences of National Competition Policy.
And the Productivity Commission will release a final report at the end of August on the Impact of Competition Policy on Rural and Regional Australia.
In its draft report, the Commission demonstrated the benefits of competition policy for country Australia but also showed that some areas will take time to adjust to a more competitive environment.
Ladies and gentlemen, I want to reiterate the Government's commitment to reform on the basis of greater competition. This approach generates greater choices for businesses and greater choices for consumers.
This is a simple proposition that provides a backdrop to the notion of consumer sovereignty this philosophical basis of this Government's approach to consumer affairs.
Essentially, consumer sovereignty is recognition of the innate capacity of most people to make decisions about their own welfare.
It is the result of a shift in consumer policy from one that is predicated almost exclusively on consumer protection.
Instead, this Government believes that, provided they have the best information and that they are protected from shady business practices, each consumer is the person best suited to decided about which goods and services they buy.
This shift recognises that the inalienable rights of the individual are no longer constrained by national borders and that increased competition has lead to increased choice for consumers.
And in a world dominated by rapid change in technology, governments can no longer take a reactionary position when it comes to consumers.
It is crucial that governments empower consumers so they can meet the challenges of an more sophisticated market.
Businesses should be aware of these opportunities and be flexible so they can get ahead in a highly competitive environment.
Because it is such an environment, with its empowered consumers, that fulfils the objectives of competition policy; that is, promoting the efficient use of resources and maximising community welfare.
This is the concept of consumer sovereignty.
Consumer sovereignty involves four key elements.
First, and foremost, consumers must feel protected. They must feel that the Government has in place a legal framework that will protect them from those who choose to break the rules.
Australia has consumer protection legislation that is the envy of the world.
And, it is worth noting that, in the specialised field of financial services, it is now the Australian Securities and Investments Commission that is the responsible enforcement agency.
The ASIC Act now mirrors many of the consumer protection provisions in the Trade Practices Act for these financial services.
So protection is the key element of consumer sovereignty.
Secondly, consumers cannot exercise their sovereignty in the absence of choice.
Competitive markets will develop a range of products and services in response to consumer preferences.
But more importantly, consumers must have a range of choices to suit their needs.
But choice means nothing if consumers don't have access to sufficient information to make an informed decision about the products and services available.
So, relevant and reliable information is the third element of consumer sovereignty. This is particularly important in light of the increasing proliferation of products and suppliers in the marketplace.
To be empowered consumers must have access to the necessary information to enable them to make informed decisions.
But it's not enough to simply provide information. To be useful that information must be relevant and of a standard that allows consumers to make informed decisions about the goods and services they intend buying.
Many complaints to industry dispute resolution schemes can be traced back to inadequate disclosure of key elements about the products sold.
For example, the crucial factor in customer dissatisfaction with investment advice is the lack of proper risk disclosure.
And the Government is taking steps to improve the flow of information.
Our corporate law reforms, for example, propose a consistent disclosure regime for financial products.
So consumers and investors can more easily compare the many products available to them and make a properly informed choice.
Of course, no matter how good the choice of information available to consumers, there will be occasions when disputes arise about whether a deal has been fair.
And when things do go wrong, consumers must have ready access to redress.
In some cases, it will be appropriate for the Australian Competition and Consumer Commission or State and Territory fair trading agencies to take enforcement action.
In others, consumers will be able to use redress mechanisms offered by the original supplier, or by an industry body, or by a government-funded small claims court or tribunal.
Redress is the final element of consumer sovereignty.
So these are the four elements of consumer sovereignty: protection, choice, information and redress.
And, while consumer sovereignty is a neat philosophy, it has also had some very real effects.
Consumer sovereignty has contributed to the strong economic growth in Australia. In fact for the past 6 years, Australia has had average growth above 4%.
Consumer spending is one of the key factors now driving the economy against the downturn in exports or the possible levelling out in business investment.
And consumer confidence remains high.
This confidence is being expressed through consumer spending on cars, consumer spending on clothing, consumer spending on footwear and significantly, consumer spending on technology - particularly computers.
And while consumer confidence remains high, while employment growth stays solid and while household wealth continues at high levels, there is potential for ongoing strength in consumption.
Ladies and gentlemen, the Government has helped develop an environment in which consumers can feel confident about the future.
Interest rates remain low, at around 30-year lows. A sensible level of credit is available for both businesses and for consumers. Household wealth has increased and employment growth continues.
And all of this emerges from the Government's delivery of strong economic growth based on low inflation and low interest rates.
We have delivered on tax reform.
We have delivered on industrial relations reform.
And we have delivered on regulatory reform.
We have also continued on a path of trade liberalisation that has provided massive economic benefits for our economy.
And these conditions have meant that Australia has prospered when our neighbours in the Asia Pacific have been in financial crisis.
Ladies and gentlemen, today I have briefly traversed the landscape facing Australia's consumers.
And it is a landscape that is dominated by globalisation and dominated by technology.
And to survive and thrive in such an environment, I urge you to take action.
I urge you to revel in the opportunities that globalisation provides.
I urge you to build your businesses through e-commerce,
And I urge you to become powerful consumers demanding high-quality products and high-quality services.
And if you do this, I pledge that I will support you by providing a framework in which you can truly succeed.
Thank you