2 October 2001

Review of Section 2D of the Trade Practices Act

The Assistant Treasurer Senator Rod Kemp has asked the Productivity Commission (PC) to commence the scheduled Legislation Review of Section 2D of the Trade Practices Act 1974 (TPA) and report within 12 months.

Section 2D of the TPA exempts the licensing decisions and internal transactions of local government bodies from Part IV of the TPA. Part IV of the TPA regulates restrictive trade practices.

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.

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.

The terms of reference for the review, which have received the agreement of all State and Territory Governments, are attached.

MELBOURNE
2 October 2001

Media contacts:
Richard Wise, Assistant Treasurer's Office (02) 6277 7360

 

Legislation Review of Section 2D of the Trade Practices Act 1974

Productivity Commission Act 1998

I, ROD KEMP, Assistant Treasurer, pursuant to Parts 2 and 3 of the Productivity Commission Act 1998, and in accordance with the Commonwealth Government's Legislation Review Schedule, hereby refer section 2D of the Trade Practices Act 1974 to the Commission for inquiry and report within twelve months of receipt of this reference. The Commission is to hold hearings for the purpose of the inquiry.

Background

  1. Section 2D of the Trade Practices Act 1974 (TPA) exempts the licensing decisions and internal transactions of local government bodies from Part IV of the TPA. Part IV of the TPA regulates restrictive trade practices.

Scope of Inquiry

  1. The Commission is to report on the appropriate arrangements for regulation, if any, taking into account the following:
    1. legislation/regulation which 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. in assessing the matters in (a), regard should be had, where relevant, to effects on the environment; employment, social welfare, access and equity; occupational health and safety; economic and regional development; consumer interests; the competitiveness of business including small business; and efficient resource allocation; and to identifying the likely impact of reform measures on specific industry sectors and communities, including expected costs in adjusting to change.
    3. the need to promote consistency between and within regulatory regimes and efficient regulatory administration, through improved coordination to eliminate unnecessary duplication. Particular attention is to be paid to the need for the consistent regulation of the licensing decisions and internal transactions of the Commonwealth, the States and Territories, and local government bodies.
    4. compliance costs and the paper work burden on small business should be reduced where feasible.
  2. 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 social, environmental or economic problem(s) that the exemption seeks to address.
    2. clarify the objectives of the exemption.
    3. identify whether, and to what extent, the exemption restricts competition.
    4. identify relevant alternatives to the exemption, including non-legislative approaches.
    5. analyse and, as far as reasonably practical, quantify the benefits, costs and overall effects of the exemption and alternatives identified in (d). Consideration should be given to the compliance costs and paper burden on small business of the exemption and alternatives.
    6. identify the different groups likely to be affected by the exemption and alternatives.
    7. list the individuals and groups consulted during the review and outline their views, or reasons why consultation was inappropriate.
    8. determine a preferred option for regulation, if any, in light of objectives set out in (3).
  3. In undertaking the review, the Commission is to advertise nationally, consult with key interest groups and affected parties, and produce a report.
  4. The Government will consider the Commission's recommendations, and will consult with States and Territories prior to making its response, which will be announced as soon as possible after the receipt of the Commission's report.

ROD KEMP