It is now just over 20 years since the release of the Report by the Independent Committee of Inquiry into National Competition Policy (NCP).(1) While the recommendations were largely implemented, and produced significant benefits, after 20 years a fresh look at competition policy is warranted, particularly given the different economic and political environment today versus 20 years ago, and the insights provided by experience in implementing and applying the NCP. My starting point is to recap the success of the reforms. NCP has been widely recognised as a model of both competition policy and its implementation by the OECD and many governments considering similar reforms. Examples include Canada, Mexico, India and a number of our South-East Asian neighbours. The impact of NCP on Australian GDP growth, as assessed by the Productivity Commission 2 was that the reforms had lifted Australia's GDP by at least 2.5% over levels that would have otherwise prevailed. Australia's GDP growth-after years of sluggish performance-became one of the strongest in the OECD between 1993 and 2005. There was also a significant increase in productivity since the reforms were implemented. After the late 1980s period of negligible improvements in multifactor productivity (MFP), MFP jumped to almost 2.0% per annum, and held at this level into the 2000s. 3 Many key infrastructure industries including power, gas, transport and telecommunications were restructured, and well over 1,000 anticompetitive regulations and laws were reformed. This is the glass half full, or largely full, side of the story. While tangible results of the policy were evident into the early part of this century, since then progress has stalled. The need to lift productivity growth is back on the agenda as the rate of annual improvement in MFP dropped from almost 2% up to 2003 to below 0.5%. And the global financial crisis and rise of China and Asia have created new challenges and opportunities. Consequently, I welcome the opportunity to deliver the Baxt Lecture, to discuss the experience with NCP and over the last decade, and the lessons that have been learned. My concern is not with the policy framework and overall intent, as set out in Exhibit 1 (see below). Rather, it is with the way in which the policy is supported and applied. More specifically, there are three areas where a new or reinvigorated approach may be warranted, each of which is discussed in turn. These are: The institutional framework, both political and administrative, for adapting and implementing competition policy. The process for removing actual and potential regulatory restrictions on competition. The regulation of access to essential facilities. There are also areas of the economy that have become even more important and more difficult to deal with since the NCP was adopted. The role NCP may play in some of these areas is discussed in the final section.
