14 February 2000

Prices Surveillance Act 1983

The Assistant Treasurer Senator Rod Kemp has asked the Productivity Commission (PC) to commence the scheduled Legislation Review of the Prices Surveillance Act 1983 (PSA) and report within nine months.

The PSA allows the Government to ask the Australian Competition and Consumer Commission (ACCC) to examine the prices of selected goods and services. Price monitoring entails ongoing monitoring of prices, costs and profits in an industry or business. Prices surveillance requires the ACCC to be notified before the price of a declared product is increased above its endorsed price or its highest price in the previous twelve months. The ACCC can also be asked to hold inquiries into particular prices.

The PC inquiry forms part of a comprehensive review of existing legislation that the Commonwealth committed to undertake when, along with all Australian Governments, it signed the Competition Principles Agreement in 1995. The Treasurer published the Commonwealth Legislation Review Schedule in June 1996. All Commonwealth legislation that restricts competition or imposes costs on business is being evaluated against the guiding principle that it should be retained only if the benefits to the community as a whole outweigh the costs and if the objectives of the legislation cannot be achieved more efficiently through other means, including non-legislative approaches.

This inquiry will not encompass the specific arrangements to prevent GST price exploitation put in place last year by amendments to the Trade Practices Act 1974.

The PC will shortly release an issues paper and invite expressions of interest from anyone wanting to participate in the review. I encourage all interested parties to make submissions to the Commission and attend its public hearings.

CANBERRA

14 February, 2000

Media contacts: Richard Allsop Assistant Treasurers Office (02) 6277 7360

Peter Greagg Treasury (02) 6263 3872

John Salerian Productivity Commission (03) 9653 2190

Legislation Review of Prices Surveillance Act 1983

PRODUCTIVITY COMMISSION ACT 1998

I, ROD KEMP, Assistant Treasurer, pursuant to Parts 2 and 3 of the Productivity Commission Act 1998, hereby refer the Prices Surveillance Act 1983 to the Commission for inquiry and report within nine months of receipt of this reference. The Commission is to focus on those parts of the legislation that restrict competition, or which impose costs or confer benefits on business. The Commission is to hold hearings for the purpose of the inquiry.

Background

  1. The Prices Surveillance Act 1983 (the PSA) provides for the surveillance of, and the holding of inquiries into prices charged, or proposed to be charged, for the supply of certain goods and services in Australia.

    Scope of Inquiry

  2. The Commission is to report on the appropriate arrangements, if any, for prices surveillance, taking into account the following:
    1. legislation/regulation that restricts competition should be retained only if the benefits to the community as a whole outweigh the costs; and if the objectives of the legislation/regulation can be achieved only by restricting competition. Alternative approaches which may not restrict competition include quasi-regulation and self-regulation;
    2. where relevant, effects on the environment, welfare and equity, occupational health and safety, economic and regional development, consumer interests, the competitiveness of business (including small business), and efficient resource allocation;
    3. the need to ensure that regulation achieves its objectives, using the most appropriate means;
    4. the need to promote consistency between regulatory regimes and efficient regulatory administration, through improved coordination to eliminate unnecessary duplication;
    5. compliance costs and the paper work burden on business should be reduced where feasible, particularly for small business; and
    6. the potential for increasing competition in those markets to which the provisions of the PSA have been applied.
  3. In making assessments in relation to the matters in (3), the Commission is to have regard to the analytical requirements for regulation assessment by the Commonwealth, including those set out in the Competition Principles Agreement. The report of the Commission should:
    1. identify the nature and magnitude of the problem(s) that the PSA seeks to address;
    2. clarify the objectives of the PSA;
    3. identify whether, and to what extent, the PSA restricts competition;
    4. consider alternative means (including non-legislative approaches) of achieving the objectives of the PSA, including changes to the operation of existing price oversight arrangements and alternatives to prices oversight;
    5. analyse and, as far as reasonably practical, quantify the benefits, costs and overall effects of the PSA and alternatives identified in (d);
    6. identify the different groups likely to be affected by the PSA and alternatives;
    7. list the individuals and groups consulted during the review and outline their views;
    8. determine a preferred option for regulation, if any, in light of objectives set out in (3); and
    9. examine mechanisms for increasing the overall efficiency (including minimising the compliance costs and paper burden on small business) of the PSA and, where it differs, the preferred option.
  4. In undertaking the review, the Commission is to advertise nationally, consult with key interest groups and affected parties, and produce a report.
  5. The Government will consider the Commissions recommendations, and the Governments response will be announced as soon as possible after the receipt of the Commissions report.

ROD KEMP