Privatisation without competition harms the Australian economy and should be avoided, Rod Sims, the chair of the Australian Competition Consumer Commission, has argued in a public speech.
Speaking at the 2021 ACCC/AER Regulatory Conference, Mr Sims discussed the need to either avoid monopolies, or if they are not avoidable, then they need for regulation to prevent costs to the economy arising from unfettered use of their market power.
He argued that governments should either avoid creating unfettered monopolies without a prior competition assessment by a regulatory body, alternatively, they could introduce a market power test as to whether assets with significant levels of market power should face regulation.
Noting that many monopolies, such as gas pipelines, are regulated, he went on to point out that essential gateways for the Australian economy, such as sea ports, are unregulated because of the decisions made at the point of sale.
The lack of regulation of monopolies increases the sale price but ultimately ends up being a multi-decade tax on Australia’s consumers and exporters, it was argued.
“The problem is that, in more recent years, many of Australia’s key economic assets have been privatised without regulation, and often with rules designed to prevent them ever facing competition. This makes us all poorer,” Mr Sims said.
“You regularly hear people calling for microeconomic reform these days. The best way to do that is to expose more of our economy to competition, and by dealing with excessive market power. Through some poorly formulated privatisations, Australia has on a number of occasions been doing the opposite.”
“We should either privatise to improve the efficiency of our economy, which clearly can be done, or not privatise at all,” Mr Sims said.
