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The Forum > Article Comments > Competition policy evaluated > Comments

Competition policy evaluated : Comments

By Saul Eslake, published 7/12/2005

Saul Eslake argues competition is only desirable if it furthers the welfare of the Australian people.

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What a load of Academic goby gook.
I bet the author of this article does not own a small business, nor would he survive if he did!
NPC is destroying small business.
NCP is destroying volunteering
NCP is destroying the very society it is designed to protect.
Too many people are working their guts out to have time for family or community that Service groups in decline, Scouts are looking at going under by 2020 and the traditional family unit is under huge pressure just to make ends meet.
But the Shopping Centre magnates and Banks with close contacts to the Federal Government are doing a roaring trade.
It is generally agreed in retail the last 10 years under NCP have been the hardest on record.
Hundreds of smaller community based businesses have gone under as the Big National Retailers have taken over Petrol, Liquor & Grocery and regional centres.
One National retailer has risen to dominate entire furniture and electrical market to the point suppliers fear to deal with him because they know they will make a loss.
This is contrary to the underlying principals of the fair competitive market but the ACCC wont lift a finger unless they have a whistle blower.
In Britain the once “Nation of Shop keepers” under NCP many of the regional centres have been officially classed as “Clone Towns” as the big retailers move in and strip them of their local identity. The same process is happening in Australia with locals protesting in the streets because they don’t want the construction of another clone supermarket to destroy their local businesses but the jugernaught backed by the federal NCP government policy rolls on and the Prime minister who says small business are the back bone of Australia dosent give a toss that it is his governments NCP that is destroying family business he claims to protect because economists have dehumanised the whole equation and redefined citizens simply as mindless consumers
Posted by Trev, Wednesday, 7 December 2005 2:49:03 PM
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Yes,'Trev', it's true that I don't own a small business. Rather, I work for a large one. It may even be true that I "wouldn't survive if I did". I have no particular desire to test that hypothesis.

Perhaps for that reason, I don't believe, as 'Trev' appears to, that consumers exist to serve the needs of businesses, rather than the other way round.

National Competition Policy, in its essence, is about allowing consumers to decide who they do business with, where and when, rather than having those choices circumscribed by governments passing laws and regulations stipulating who can do particular types of business in what places and at what times. Those laws and regulations are usually imposed at the behest of existing businesses who want to be exclude potential competitors, thus allowing them - rather than their customers - to decide the prices at which they will sell their merchandise or services, and the hours at which their customers can buy them.

No-one - least of all National Competition Policy - is forcing 'Trev' to stay in business. If 'Trev' can't make a decent living - by which I mean a reasonable return on his capital and for the hours he works, and have time to do the other things he wants to do - then perhaps full-time consideration of another endeavour might be in order.

He certainly doesn't have the right to expect governments to prevent others from going into competition with him, from selling stuff at lower prices than he can, or from opening at times that he doesn't want to.

'Trev' sounds like the sort of guy who would never let facts (or anything else that he can pass off as 'academic goby-gook'(sic)) interfere with a strongly-held opinion, but just in case I'm wrong about that, I should point out that full-time employees have worked an average of 40.5 hours per week in each of the past two financial years, less than in any year since 1995-96. All the more reason to suggest that 'Trev' should be thinking about a career-change.
Posted by Saul Eslake, Wednesday, 7 December 2005 3:41:24 PM
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The Mission of the NCC was to
Improve the well being of ALL Australians through growth Innovation and rising productivity by promoting competition that is in the public interest.
It would be apparent to me that if people are protesting in the streets against National retailers building more supermarkets that the NCP has failed its primary mission.
Contrary to popular opinion in Sydney and Melbourne there is civilised life west of the Murray and when South Australia and Western Australia tried to reject the change in trading hours the NCC was quick to drop multi million dollar fines on the states contrary to the NCC policy “The Council does not set reform agendas or implement reforms; these are the responsibility of the various governments.”. The South Australian Parliament had to go to dead lock conference to pass legislation a few hours before the NCC dead line.
Clearly the Melbourne based NCC has no respect for SA or WA retail trading hours culture and deemed the objections put forward by both parliamentary committees and local traders as “outspoken minorities”.
My attempts for find out the logic behind the NCP change by state government via Freedom of Information and direct requests to the SA Premier and SA Ministers and NCC have come up against a brick wall.
Clearly it is a hidden agenda by the Governments and it is not in the governments interest for a decision that is meant to improve the well being of all Australians should be made public.
Maybe Andrew Evans has got a point all major legislation should have a public family impact statement so the Ministers cant hide behind cabinet privilege.
Re your work hours 40.5? My research shows while the Average Australian may be getting Paid 40.5 they are working 50-60 hours per week including unpaid overtime. Small business are working 60-80 hours per week for less income when they are trading 10 years ago.
Tell me Saul how many new small retail business jobs have been created in South Australia since the NCP Change in retail trading hours and how many have been lost?
Posted by Trev, Wednesday, 7 December 2005 4:29:20 PM
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Well apart from mega profits that are sucked into an exponentially expanding derivatives bubble, exactly what benefits are we supposed to have seen from all this national competition?

What a flawed outlook! What a sad set of premises from Chicargo school of economics! A world of rubber numbers and figures.

One hour a week and yes you are not counted amongst the unemployed. Money supply numbers embarrassing? well just stop reporting them.

This is NOT a world of consumers and producers. That is the world you have made in your own head! Or its been put in your head by Milton Freidman and his associates.

Let me put it this way. A person is BOTH a consumer and at the same time a producer. You cant simplify things to a line on a piece of paper and ignore the physical world. What works is to organise society such that education , health, power, water, transportation, communication is provided such that there is maximum potential for population growth and an environment for scientific discovery, entrepreneurship and industry.

Lets raise tarrifs and create jobs for everyone by building infrastructure. We can then take on as anaional mission helping the rest of the world develop by helping them do the same.
Posted by Jellyback, Wednesday, 7 December 2005 5:03:28 PM
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Trev... I don't think you read the article: You appear to have missed this quote from ACCC chief Samuels:

<<As ACCC chairman Graeme Samuel said earlier this year, “a society that relies purely on market forces to distribute the benefits of change will inevitably sow the seeds for polarisation and resentment. Ultimately, this feeds into social dislocation and political instability”.>>

Now, I ask 'HOW HAS COMPETITION GIVEN BETTER BANKING SERVICE' ?

-They CLOSE branches.
-They OUTSOURCE 'IT' and other work.
-They pay their chief exec MILLIONS. (Robber Barons)
-They make BILLIONS in after tax profit
-They INCREASE fees and charges (CBA recently introduced a 50c per transaction charge for 3rd party payments via netbank. previously free)
-The GOUGE fees from EFTPOS use.

This has helped the consumer ? NOOOOOOOOOOOOOOOOOOOOO it has helped executives and share holders. It has BLUDGEONED the battling banking public into a despairing sense of hopelessness.

A prophetic perspective (from Isaiah, with some name changes)

Chapter 1
2 Hear, O heavens! Listen, O earth! (and how about listening in Canberra)
For the LORD has spoken: (against the above)
"I reared children and brought them up, (gave them competition)
but they have rebelled against me. (used it for greed)
3 The ox knows his master,
the donkey his owner's manger,
but Israel does not know,
my people do not understand." (BANKS dont know their customers any more)

4 Ah, sinful nation, (BANKS)
a people loaded with guilt, (BANK EXECUTIVES/BOARD MEMBERS)
a brood of evildoers, (AS ABOVE)
children given to corruption! (YEP..THAT TOO)
They have forsaken the LORD; (AND FORSAKEN THE CUSTOMERS)
they have spurned the Holy One of Israel (AND THE PEOPLE)
and turned their backs on him. (ON US)
Posted by BOAZ_David, Wednesday, 7 December 2005 8:14:53 PM
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Saul, I think that anyone who studies the evidence would have to agree with the great merits of competition. Could you please come to Queensland, and repeat your message? Again, and again, and again ...
Posted by Faustino, Wednesday, 7 December 2005 10:00:00 PM
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'Trev', I have no doubt that there is 'intelligent life' west of the Murray - and lots of it - as indeed there is south of Bass Strait where I grew up. So please take the 'big city' chip off your shoulder (and the 'academic' chip off the other one, while you're at it).

The NCC did not impose 'fines' on South Australia for refusing, prior to 2003, to deregulate its retail trading hours. It simply withheld money that would have been paid if South Australia had chosen differently. The whole point of payments to State Governments under NCP is to return to State Governments some of the additional tax dollars that flow to Canberra as a result of the boost to economic activity that flows from pro-competitive reforms. If States choose not to implement those reforms, as is their right, then why should they get any payments?

ABS figures show that there are, on average, about 12,300 more people employed in the retail sector in South Australia thus far in 2005 than there were in 2002, the year before shopping hours were finally de-regulated (although I'm certainly not suggesting that all of that increase, or even most of it, can be directly attributed to deregulation).

The figures don't show (and I'm not aware of any which do) the extent to which these extra jobs have been created in large or small retailers. But I don't see why that matters. There's nothing sacred about employment in small as distinct from large retailers. And it's not the job of government to preserve or promote employment in any particular sector, or size of business - particularly if doing so is at the expense of jobs in other sectors.

The fundamental point is that businesses exist to serve the needs of consumers, not the other way round, and that businesses who cannot serve the changing needs of consumers have no right to remain in business at the expense of consumers, or at the expense of other businesses which can meet their needs.
Posted by Saul Eslake, Thursday, 8 December 2005 9:49:47 AM
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What is the Difference between a Fine of $50 Million and a Permanent
Deduction of $50 Million, the effect is the same.
The Annoying thing is the NCC is denying they threatened the SA government with a $50 Million Permanent Deduction which flows into the report by the Federal Parliament Joint Committee that The Committee has received evidence that the legislative reviews undertaken by State Governments are not always being undertaken in an open, transparent manner with the views of all interested parties taken into consideration. The Committee agrees with the NCC's view that there is a requirement under NCP for transparency in the review process.
And
The Committee is concerned by the application of NCP as a `one model' approach to all sectors. A flexible outcome ought to be sought by an application of the `public interest' test that allows for changing concepts of what is in the `public interest'.
And
The lack of hard evidence can be blamed for much of the suspicion of NCP, as the community should not be expected to accept NCP as an article of faith. The Committee is concerned that where estimates of benefits have been provided, these estimates may have failed to identify the social impacts of the reforms or may not accurately measure the economic benefits. There were a number of differing views on the actual outcomes of NCP. The committee heard evidence that whilst the national reform and co-ordination in areas such as gas and electricity have delivered some benefits that the overall benefits have not been as large as was anticipated. There is clearly a need for proper quantification of the benefits – both social and economic – of the reforms.
Given I haven’t been able to get any hard evidence from the SA Premiers Office on how the decision to implement the NCP retail trading hours was put in place and given the effect of NCP on retail has been to force out smaller retailers it has lead to fewer retailers and hence less competition in the marketplace.
?
Posted by Trev, Thursday, 8 December 2005 4:01:00 PM
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'Trev', the difference between "a fine of $50 Million and a permanent deduction of $50 million" is that if I, having no obligation to give you (say) $10, nonetheless promise to give you $10 if you do something that I want you to do, and you decide not to do it, I then don't give you the $10. That represents a 'permanent deduction' of $10 from what I promised to give you if you did do it. If on the other hand I had (for some peculiar reason) promised to give you $10 even if you did nothing, and then withheld the $10 from you when you did nothing, that would be a 'fine'.

The point here is that States are only entitled to payments under National Competition Policy if they implement National Competition Policy. If they don't, they have no right to get paid. Simple as that.

And the extent of competition in the retail industry is not necessarily measured by the number of retailers. There is, for example, pretty intense competition between TV stations even though there are at most five TV stations operating in any given Australian market.

To repeat, it is not the objective of National Competition Policy to guarantee small retailers - or anyone else - a continuing profitable existence. Business people like to portray themselves as 'taking risks', 'having their houses on the line', and so forth. To the extent that they are successful, and the value of their businesses increase, they now pay less tax on the value thereby created than those of us who merely earn wages and salaries.

But it's not the responsibility of government to eliminate the downside risks facing business proprietors. The only guarantee they should have of continuing existence is their ability to meet the needs of customers, at prices customers are willing to pay whilst covering their costs. If they can't do that, then they have no right to remain in business - and no right to expect governments to protect them against competition from others who can.
Posted by Saul Eslake, Thursday, 8 December 2005 4:16:35 PM
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Jellyback asks “what benefits are we supposed to have seen from all this national competition”. The answer: faster growth in real wages and living standards, 30-year lows in the unemployment rate, unprecedented household wealth and strong consumer confidence. S/he says “Lets raise tariffs and create jobs for everyone by building infrastructure”. Fact is, tariffs don’t create jobs, they destroy them – Australia’s unemployment rate was far higher before it started cutting tariffs in the 1980s. And make-work schemes create government debt not sustainable employment in the longer term.

Of course, economic success is not the only thing that people value and governments should aim for. But many of the ills blamed on NCP have nothing to do with it (“destroying volunteering”, for example). And some of the things that people call adverse effects others regard as benefits. I for one find it morally offensive that the government should forbid me to shop when and where I like in order to line the pockets of Trev and his like. Saul is spot on to say that businesses exist to serve the needs of consumers, not the other way round. Trev, I don’t owe you a living
Posted by Rhian, Thursday, 8 December 2005 5:10:36 PM
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Have a Soul Saul.
If it’s not the Governments Job to protect small business then why did the government waste
Time and Trees with TRADE PRACTICES ACT 1974
- SECT 46
Misuse of market power
(1) A corporation that has a substantial degree of power in a market shall not take advantage of that power for the purpose of:
(a) eliminating or substantially damaging a competitor of the corporation or of a body corporate that is related to the corporation in that or any other market;
(b) preventing the entry of a person into that or any other market; or
(c) deterring or preventing a person from engaging in competitive conduct in that or any other market.
(1A) For the purposes of subsection (1):
(a) the reference in paragraph (1)(a) to a competitor includes a reference to competitors generally, or to a particular class or classes of competitors; and
(b) the reference in paragraphs (1)(b) and (c) to a person includes a reference to persons generally, or to a particular class or classes of persons.
I believe last year the ACCC Commissioner was doing the lecture circuit talking about a particular National Retailer who had issued a fax to its employees warning of visits by ACCC officials and demanded staff take photos of the officials under the guise of “Customer of the Week” and email them to HQ. The lecture and anything else negative rarely gets to the mainstream media because they know the National Chains will pull their advertising budgets.
Where would you draw the line defining the difference between Misuse of Market Power and fair competition?
Rgs Trev
Posted by Trev, Thursday, 8 December 2005 5:11:33 PM
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Trev

The answer to your two questions is the same: the role of government is not to look after the welfare of businesses, but of their customers. That is what the Trade Practices Act is for, and that is how to differentiate between misuse of market power and fair competition. Misuse of market power restricts competition and may drive a competitor out of business in order to allow the supplier to charge higher prices and provide poorer service; this is bad for consumers and is illegal. Fair competition may drive a trader out of business because consumers prefer the prices, range or quality of goods offered by a competitor; that is good for customers, and should be encouraged. In practice, of course, telling the two apart can be hard, but the underlying principle is quite clear, and it aims to serve consumers, not to “protect” small business.
Posted by Rhian, Thursday, 8 December 2005 6:06:28 PM
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I thought the article started off brilliantly, substituting the word "competition" where Gordon Gecko used "greed". That pretty well sums up the situation.

Competition is without doubt an improvement over its opposite in the same way that democracy is an improvement over the totalitarian state. Unfortunately actions are taken under the banner of competition that are essentially anti-competitive, in the same way that we experience government actions under the banner of democracy that are decidedly anti-democratic.

So whenever I see a presentation such as this, my hackles rise, and my bulldust-detectors go on high alert. What is the agenda here? Why are we being told the obvious? What is the purpose of spreading this kind of soma, at this point in history.

Unfortunately, there is a rise in the number of anti-competitive activities in the marketplace, and it is the result of government action that is careless at best, and possibly even corrupt. Toll roads. Airport services. Sydney's airport rail link. And of course (thank you for pointing it out Boaz) the cosy cartel of the Banking system.

So I'm sorry Mr Eslake, but this brands you as just another fat-cat capitalist stooge, singing for his supper. Or in your case, super.
Posted by Pericles, Thursday, 8 December 2005 6:29:48 PM
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TREV

am I missing something here, or did you not read my post, or Sauls quote of Graham Samuels saying:

<< “a society that relies purely on market forces to distribute the benefits of change will inevitably sow the seeds for polarisation and resentment. Ultimately, this feeds into social dislocation and political instability”.>>

... which seems to be exactly what YOU are saying..so why are u fighting with Saul Eslake ?

One poster made the very crucial remark about 'selectivity' in our appproach to controlling market forces.

We must avoid at all costs an 'all or nothing' approach to deciding the elements of our economic future. Malaysia went against the grain when the economic crisis hit Asia, and pegged the Ringgit to the US dollar at a specific rate whereas all the others (I think) floated them, and then 'free fell'.

Who would think there was an 'Asian meltdown' if they arrived at KL international airport today, and went by 'their' fast train to the heart of the city (do WE have any such infrastructure ?)

So, competition must be 'fair' and for it to be 'fair' it must be based on wage parity. We here the mantra often "We cannot compete with China's wage levels so we must go 'hi-tech'/value added etc.

But what do we find in the real world ? China is ALSO becoming increasingly high tech and value added ! The same people telling us we have no manufacturing future in Australia, are ALSO those who are outsourcing the jobs of

-Customer service
-Sales
-Technical Support
-Back office functions (Invoicing etc)
-Software development
-IT professions

to other countries.

Unions only bleat about 'employee entitlements' each time another 400 workers are made redundant because of the above.

We are heading back to the days of living off the sheeps/cattles back, and a few holes in the ground where resources used to be.

A new approach to politics, outside of 'right/left' is needed and no, I don't mean a theocracy, but I DO mean a society based on a balance of capitalism and social responsibility,
Posted by BOAZ_David, Friday, 9 December 2005 7:51:16 AM
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David, You and I can finally agree on something, COMPLETELY. This is exactly what I have been trying to say all along, but unfortunately, couldn't find the words. This is exactly what this country needs, I don't have the vocabulary that you do, however I understand perfectly what you are saying, and what Saul is saying, and am in harmony with you both. This may be unusual of your opinion of my values, however this is what I call fairness for all, Regards,Shaun
Posted by SHONGA, Friday, 9 December 2005 6:38:33 PM
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"Wot he said."

refering to the above
Posted by Jellyback, Friday, 9 December 2005 6:49:20 PM
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Hi David,
I am trying to argue social responsibility without attracting the wrath of the web master or a deformation case from a National Retailer, but its like nailing jelly to a tree.
For example in the recent WA election the peoples’ referendum voted NO to NPC Policy on Deregulated trading. Clearly it was a decision by the public but the NCC / Federal Treasurer still went ahead with a Permanent NCC Payment deduction of millions of dollars, totally disregarding the “In the Public Interest” test.
To Quote from the NO to Sunday Shopping Web Page
Bob Welch, executive director of the WA Sports Federation, said: "This sends a clear message that West Australians still place a greater value on community-based activities and time for the family unit than convenience for a few and returns for shareholders."
Greg Dean, president of the WA Retail and Small Business Association, which represents 5000 small businesses, described the result as a stunning victory for small business.
"Obviously, the public saw through the multimillion-dollar con by Coles and Woolworths and has protected our lifestyle and economic viability for many years to come," he said.
"We would like to thank the public and particularly our many business partners, the church, sporting and community groups who helped deliver the message."
The Point I am trying to make about NCP is and re-enforced by the quotes from the Senate Committee investigation is that Corporations via their massive PR machines have convinced the government and some of the public that 21st century life should revolve around a Westfield Shopping Centre and to hell with local community, sporting. Volunteering etc.
The WA YES campaign was based entirely on “Your Right to Shop”, and ignored the pleas from community groups who need those people on Sundays to support important community infrastructure.
Thus my anti-NCP movement are not the ravings of a outspoken minority nut but clearly a concern of the SA & WA population.
Anyway Tomorrow’s OAK tree is today’s nut who held its ground
Posted by Trev, Saturday, 10 December 2005 10:17:19 AM
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Saul lives in a fantasy land called economics and doesn't know what the real world is. Tasmania is a good place to see how his form of competition works. Because of NCP, the state has been taken over by 3 companies, food, fuel, alcohol and tourism. Competition has resulted in the closure of thousands of businesses and led to the highest prices in the country for food, energy and services. The rest of the state is run by franchise monopolies

Now they have appointed Saul to take charge of Tasmanian art. We can only guess what will happen there. Art economically rationalised and opened to competition. Result, art by Woolworth/Coles, screen printed in Mongolia. Carvings by Gunns, from epoxy enhanced wood pulp made in china. Collages created by Federal hotels consisting of welfare payments put through their pokies.

Saul couldn't run a small business, economists live in ga ga land and can only economise, not manage. As a small/medium business owner of more than 30 years, I have watched Saul and his elite ilk slowly destroy the heart of this country.

In Tasmania there is competition, IGA, (independent grocers association), that compete with woolworths/coles. IGA is 60% owned by Woolworths. Banks, plenty of competition there, just try finding a branch. How many independent newspapers, radio and TV stations are there in Australia. None, all huge monopolies.

I understand Saul that you refuse to see any of this, thats fine, we understand those who will not see, won't. In the near future, you will discover that you can't have an economy without an environment. You and your ilk have destroyed every kind of environment there is. I hope your lesson is bigger than what you have imposed on the populance and the planet. It is people and the planet that matter Saul, not moronic money slaves.

According to your theory's, competition should reduce costs, prices, and increase jobs. Most jobs that are now created are part time. Bet you couldn't survive on a part time wage like most have to.
Posted by The alchemist, Saturday, 10 December 2005 10:37:06 AM
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No Worries Trev, I see better where you are coming from now.

I just could not see why you were disagreeing with Saul because the tone of his article seemed to suggest in fact you were on the same side, i.e. of avoiding social dislocation and resentment which comes with unfettered allowing of just market forces to dictate policy.

You have my total support for what you put in your last post.. about some social justice over and above the jackboot of the Competition Commission....

Cheers
Posted by BOAZ_David, Saturday, 10 December 2005 11:52:04 AM
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Hi David
Under the BOAZ-SHONGA Federal Government model of balanced capitalism and social responsibility
Would Trev Average small businessman have the same access to your ministers as say the list below who have made substantial donations (sponsorship) to the governing political party?
The Free Enterprise Foundation $265,000.00 (a Liberal Party Trust Company linked to Westfield Earnings)
Croissy Pty Limited $200,000.00 (Westfield Shopping Centres Charged with Unconscionable conduct and the intimidation of small business by the ACCC)
Kingold Group Companies Ltd $200,000.00 (Chinese Property Investment Company)
Pratt Holdings Pty Ltd $200,000.00
ANZ Bank $150,000.00
Meriton Apartments Pty Ltd $100,000.00 (Billionaire Harry Trigaboff)
Ramsay Health Care $100,000.00
(ACCC decided not to oppose Healthscope Limited's proposed acquisition of 14 hospitals from Ramsay Health Care)
Westpac Banking Corporation $85,000.00
National Australia Bank $84,520.91
Coles Myer Ltd $75,000.00 (ACCC took Coles / Liquorland to court $5,000,000 for anti-competitive conduct).
Gerard Industries $100,000 (Rob Gerard ex-RBA Board Member with the $50,000,000 Caribbean Tax Haven)
(NB It was surreal to watch Rob at a John Howard pre-election lunch jump up and shout bravo while all the accountants around me were stony faced at the figures Prime Minster Howard was quoting. Then after Mr Howard’s comments on the need for world peace and cooperation they played they played the sponsors video on a new gun that could kill hundreds of people in less than a second.)

David! Under your model would you feel your Government had been compromised if your party had accepted these donations knowing your government was going to make decisions / pass legislation that would seriously effect the profitability of the donator?
Would you consider the game FAIR competition if the umpires were sponsored by the opposition?
Rhian! Given this is the Current System do you concur that while the theory of NCP may be well and good, in reality it is been used as a vehicle by a select group to expand their market control using “Animal Farm” propaganda
Posted by Trev, Saturday, 10 December 2005 12:52:45 PM
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Post Script to my last post I note in the SMH today billionaire Richard Pratt's Visy Industries is rumored to be part of a major ACCC investigation into anti-competitive behavior, I assume this would be the Pratt Holdings who donated $200,000 to the Liberal Party. One would think it hypocritical of the Liberal Party to be actively pushing NCC free market policy while large number of their major Sponsers are guilty of serious anti-competitive behavior.
Source Notes – Donations for 2004 are on the AEC.gov.au web site, ACCC Actions are on the ACCC.gov.au web site, NCC Policy is NCC.gov.au
Posted by Trev, Sunday, 11 December 2005 12:00:13 PM
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Trev,

I'd agree that businesses small and large use whatever (usually) legal means are available to them in the pursuit of profit. Here in WA the same supermarket franchise which supported an emotive and dishonest campaign against deregulated shopping hours in February has recently run a campaign calling for deregulation of potato marketing (another anachronistic piece of anti-competitive legislation in WA). One set of regulations boost their profits, the other doesn’t.

At the same time, the supermarket chains that call for deregulated liquor trading regulation don't hesitate to oppose their competitors' applications for new licenses as a matter of course. No business lets hypocrisy get in the way of profit, which is why we need strong competition laws and independent regulators such as the NCC and ACCC, to look after consumers’ interests.
Posted by Rhian, Sunday, 11 December 2005 4:45:27 PM
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Those who've posted critical comments on this article might want to ponder the following comments today by Shadow Treasurer Wayne Swan MP: "Supported by the right policies, competition is not the enemy of equity. Competition can open up opportunities for workers and business alike ... Striking the right balance in competition policy may mean strengthening regulation to restrain anti-competitive behaviour in particular markets that could stifle innovation and stop better and cheaper products reaching consumers. On the other hand, striking the right balance might mean removing unnecessary regulation to free up competitive forces and strengthen price signals so that investment is encouraged and innovation is rewarded".

Mr Swan is exactly right, and he's saying (in his own words) exactly what I did.

Some posters (thank you 'Rhiann', 'Boaz_David' and 'Shonga') noticed that I began and ended by article by making the point that competition was not an end in itself, but rather was to be encouraged and welcomed to the extent that it benefited consumers - and was not to be discouraged solely because it might disadvantage existing businesses (who do not have any 'right' to a guaranteed profitable existence). Others appear to have missed or ignored that point, or simply not read the article at all before launching the usual tired old cliches about economists.

To 'Pericles' and 'The Alchemist', I can't be bothered responding to personal insults, especially when hurled from behind the veil of pusillanimous anonymity. I simply see them as evidence of an inability or unwillingness to marshall a coherent argument - which 'Trev', profoundly as I disagree with him, has at least tried to do.

'Alchemist', whoever he or she is, is simply wrong both about the scope of my new role at the Tasmanian Arts Advisory Board and the intentions which I bring to it, and he will be proven wrong by the passage of time. Whether he or she is then willing to admit that he or she is been wrong will be a test of his or her personal integrity.

'Faustino', thanks for your support, I will consider any such invitations.
Posted by Saul Eslake, Monday, 12 December 2005 3:01:27 PM
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>>Mr Swan is exactly right, and he's saying (in his own words) exactly what I did.<<

Well now, you are hardly going to disagree with someone who is agreeing with you, are you?

But back to the point. If you were honest, you would look over your article again, and notice the following.

At the start, you shimmy around the pro- and anti-competition arguments, presumably to establish that you are being "balanced". "...competition is not an end in itself, but rather a means to an end", followed closely by quoting (approvingly? disapprovingly?) Adam Smith “people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or some contrivance to raise prices”

Then another qwik qwote, this time from the OECD “the link between product market competition and productivity growth is positive and robust”.

From that point on, it is all post hoc, ergo propter hoc conclusions that this is absolutely the case for Australia too, so jolly well stop complaining you wimpy lefties.

A sanity check please. Which world economy has grown the fastest over the past fifteen years? And was the regime that created this growth environment i) rabidly pro-market, ii) extremely in favour of red-in-tooth-and-claw competition and iii) scrupulously hands-off in its treatment of companies, shareholders and workers alike?

To attribute Australia's prosperity to "competition" is to gloss over the myriad of sharp anti-competitive practices that appear daily. It like consoling a rape victim by telling her "just think where civilization would be without the male sex drive".

So you can take my "insults" as commentary on an article that said absolutely nothing that is new, contentious, controversial or even particularly interesting, but instead came across as just a bit of pro-government brown-nosing.
Posted by Pericles, Monday, 12 December 2005 3:58:57 PM
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According to the IMF's World Economic Outlook database the country with the fastest rate of real GDP growth over the past 15 years is Equatorial Guinea (based on oil discoveries) but I assume 'Pericles' is referring to China, which ranks second. China is of course an authoritarian dictatorship, but, even so, part of its growth strategy has been to allow greater competition both from within (so that for example the share of urban employment accounted for by State Owned Enterprises has fallen from over 70% in the second half of the 1980s to 25% in 2004) and without (China's average tariffs have fallen from 32% in 1992 to 6% in 2004). Obviously that's not the only - or even necessarily the most important - reason for China's rapid growth, but it has been part of it.

The same is true of Ireland, which has enjoyed the fastest growth rate of any 'Western' economy over this period.

The fact that I am in favour (in most circumstances) of more competition rather than less does not mean that I am against government intervention at all times and in all places, whether it be to promote economic development or to alter the distribution of income (see, on that latter point, my speech on 'Poverty in Tasmania' on my website, www.anz.com/go/economics under 'State Economic Focus'). And, as in Ireland, I'm a supporter of increased government support for education, particularly in the Tasmanian context. I strongly support government action to curb abuses of monopoly power (as this article sought to make clear).

But I am against intervention designed to protect existing businesses from competition where there is no benefit to consumers, whatever form it takes (tariffs, restrictions on trading hours, etc.). And I'm also opposed to governments transferring public monopolies into private hands.

If 'Pericles' thought my article said 'absolutely nothing that is new, contentious, controversial or even particularly interesting', then why didn't he simply say that, rather than calling me a 'fat capitalist stooge'?

And Peter Costello, for one, would be amused, I think, to learn that I was being accused of 'government brown-nosing'!
Posted by Saul Eslake, Monday, 12 December 2005 4:39:09 PM
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Hi Saul,
Thanks for concurring I am trying to stick to factual argument here.
Another One of the points I am trying to allude to here is
“Power corrupts, and absolute power corrupts absolutely.”
Regardless of the efforts of Graham Samuels and his office supported by a multitude of corporate governance rules, the bigger the Corporation that more likely they are to break the rules under the belief
a) They will use the political favours they have gained via party donations to get them out of trouble
b) They have vast legal resources at call to tackle any challenges.
The only thing Corporations fear is bad publicity and they control the media via multi Billion dollar advertising budgets. Coles Myers was fined $5,000,000 for Market abuse, Woolworth are known in the trade as “Woollies the Bullies”..
The ACCC web site infers they will prosecute anyone who engages in anti competitive behaviour even if it’s a nod and wink conversation at the local pub. But there was an article written in an Australian Trade E-Zine dcnews.com.au “HARVEY NORMANS TOUGH TERMS” that laid out in detail names and conversations of how HN dictates to the market place including one example where a computer company decided open their own direct to customer sales outlet. When HN heard about the outlet all of that brand computer was immediately de-ranged from HN stores until the computer company promised not to open a direct outlet.
This is only the tip of the iceberg but the ACCC felt there wasn’t enough had evidence to prosecute? No wonder small businesses are calling out for help from NCP!
The NCP has created a market of Corporate Bullies under the guise of free market.
The ACCC is too quick to dismiss corporate bullying as competition just as once teachers used to dismiss schoolyard bullying as acceptable behaviour, for the same reason people fear retribution from bullies no one wants to dob in the corporate bullies.
How about fair market before free market?
Posted by Trev, Monday, 12 December 2005 4:50:56 PM
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I heard a visiting English academic, bought out to Australia to audit the efficiency of Australian universities, remark at the end of his visit, that Australia had so much competition in the university sector that it was counterproductive. He had come across examples of academics fighting each other for funds rather than devote their energies to improving knowledge.
Posted by billie, Monday, 12 December 2005 5:54:33 PM
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>>but I assume 'Pericles' is referring to China<<

Perhaps, but the example of Equatorial Guinea is perfect. You find some oil, you let the ruling families run riot and voila! A booming economy that benefits only a few of the country's elite. So much for measuring “public good” against a growth index. I assume we can now dispense with the OECD reference, since its yardstick is clearly meaningless on its own.

As for Ireland – another great example. When Ireland joined the EEC (as it was then known) they flooded the place with “development” cash, to the tune of 4% of GDP between 1973 and 1986. The government took advantage of this to attract foreign direct investment through low corporate tax rates and created dozens of new industries, mostly in high-tech. Does this ring any bells in Australia? I thought not.

So the examples you use are only vaguely related – second cousin at most – to competition.

>>The fact that I am in favour (in most circumstances) of more competition rather than less does not mean that I am against government intervention at all times and in all places <<

>>But I am against intervention designed to protect existing businesses from competition where there is no benefit to consumers, whatever form it takes (tariffs, restrictions on trading hours, etc.). And I'm also opposed to governments transferring public monopolies into private hands. <<

On re-reading your article in the light of these later observations, I can only admire the way you have covered each and every angle, so that it is impossible to argue any single point with you. At least one sentence you wrote protects you from contradiction.

I go back to my original point, which is when in doubt, look to the ulterior motive. If there isn't one, I apologize, but it simply leaves me with the question – why bother? What is your point?

Anyway, I said “fat-cat”, not “fat”, referring to your economic standing, not your corporation.
Posted by Pericles, Tuesday, 13 December 2005 7:49:28 AM
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Saul I take it we are agreed on the principal that no Individual or Corporation is above the law or has the right to enchourage people to break the law?
Further to my argument that NCP is used by Corporate Bullies advance their control of the Market.
Quote from the WA Department of Consumer and Employment Protection
“Harvey Norman stores fined - 71 guilty of Retail Trading Hours Act offences
71 Harvey Norman defendants from across Western Australia were today prosecuted and fined in the Perth Court of Petty Sessions for opening on Sunday 22nd June 2003 in contravention to the law.
Magistrate Paul Nicholls imposed fines totalling $310,500 against the companies and directors of Harvey Norman stores across Western Australia that breached the Retail Trading Hours Act last year.
This comes in the wake of two Harvey Norman stores and their directors receiving fines of $15,000 in October last year for the same offence.
“I am very pleased that the Court in sentencing recognised the seriousness of illegal trading giving unfair advantage over those traders who operate within the law”, Consumer Protection Commissioner Patrick Walker said.”
This dovetails with the Harvey Norman Store in MtGambier South Australia who decided to force the issue of deregulated trading hours by illegally opening on Sundays with the backing of Gerry Harvey, Harvey Norman chairman.
Clearly this is a case of a Corporate Chairman openly encouraging people to break the law using the umbrella of NCP as justification!
Further to the Corporate Bullying argument (quoting from Professor Fels when he stepped down as ACCC Commissioner responding to Gerry Harvey’s labelling the departing professor a "smiling assassin" who had inflicted "irreparable harm to the Australian economy”)
"This is just an attempt to put some pressure on us, or an old-fashioned attempt to bully the ACCC,"

Given the above is only a small sample Saul, should we be supporting / rewarding corporate bullies who break the law using NCP as an excuse to quote “giving unfair advantage over those traders who operate within the law “ with total trading hours deregulation?
Posted by Trev, Tuesday, 13 December 2005 11:26:59 AM
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'Trev', I don't advocate or condone the breaking of the law. When people break the law, the community is entitled to expect that those people will, if found guilty, be penalized as prescribed by law.

That said, history is replete with examples of unjust, unconscionable or just plain bad laws. And there are occasions when the judgement of history has been that those who have been willing to break such laws, and to incur penalties for so doing, have nonetheless done their communities a service. They may have been legally wrong, but morally right; and their actions vindicated by subsequent changes in the law.

Were those who refused to pay 'taxation without representation' morally wrong? Was Rosa Parks morally wrong in disobeying laws requiring blacks to give up their seats to whites in America's south in the 1950s? Were those who were jailed for refusing to register for National Service during the Vietnam War morally wrong? Was Frank Penhalluriack, proprietor of a hardware store in Melbourne who in the mid-1980s was fined $500,000 for repeatedly opening his store on Saturday afternoons or Sundays in breach of laws criminalizing such actions, morally wrong?

In each case, the laws which these people broke were subsequently changed. They were changed because a majority of people, or a majority of those elected by the people to govern them, came to see that it was the laws which were wrong, not the people who broke them.

Although I would not elevate laws relating to retail trading hours to the same plane as (for example) laws discriminating against people on racial grounds, I believe that it is wrong for governments to make it a criminal offence for consenting adults to engage in retail transactions purely because of the time of day or of the week at which they do so.

And so, while I don't condone the deliberate flouting of the law, nor do I necessarily condemn those who in good faith are seeking to change bad laws by bringing to public attention the injustice inherent in penalizing people for breaking bad laws.
Posted by Saul Eslake, Tuesday, 13 December 2005 5:05:36 PM
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Saul, Saul, Saul.
Why do you keep quoting American Stuff as if they are the masters of the universe.
You didn’t mention November 1854 which I feel was the defining time for Australia’s peoples rights vs the establishment.
The demands of the Ballarat Reform League (which lead to the he Eureka Stockade miners' revolt) encompassed: Manhood suffrage, Abolition of the property qualifications for members of parliament, Payment of members of parliament, Voting by secret ballot, Short term parliaments, Equal electoral districts, Abolition of diggers and storekeepers licenses, reform of administration of the gold fields, revision of laws relating to Crown land..
Public opinion was rallied around the event it is often referred to as "the Birth of Democracy within Australia”.
Poor Old Henry Seekamp of the Ballarat Times had a charge of “sedition” brought against him.
(Hummm strange how history goes around)
Which ties in nicely to Frank Penhalluriack as it was Frank’s relatives who were involved in the Eureka Stockade and he believed the Stockade was about the rights of small business vs the Establishment.
Back in 2003 Frank was still intent on breaking the laws he put in place so he could trade on Easter Sunday. He did what he did because he believed in a community spirit and went on to become an Australia Party candidate for the federal seat of Chisholm, in 1974 and a Director of the Caulfield Park Bendigo Bank.
You are confusing / deliberately muddying the waters with the work of community minded civil rights activists VS Greedy Corporations who just want to take over the market and bully all the small traders out.
Your Original Paper was condescending of the Peoples' Referendum in WA inferring they had chosen the say in the “Dark Ages” but your entire argument is based on the right of the people to choose surely its double standards to criticise them.
After all the coalface argument I have put before you, I cant help concurring with your “Higher Ups” on Page 9 of your speech that there is a lot of “British Bullocks” in your argument.
Posted by Trev, Tuesday, 13 December 2005 9:31:55 PM
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Trevor, you rightly point out that among the Eureka rebels' demands was: "Abolition of diggers and storekeepers licenses, reform of administration of the gold fields, revision of laws relating to Crown land."

This sounds more linke an anti-regulation than a pro-regulation push to me.

Love him or loathe him, I'd say Gerry Harvey has a better claim to be the inheritor of the Eureka spirit than the bureacurats who prosecuted him for opening his business on Sunday.
Posted by Rhian, Wednesday, 14 December 2005 3:45:42 PM
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I read it as the Miners has a gut full of been bullied and wanted the right to have the voice heard to expose the bullying.
Posted by Trev, Wednesday, 14 December 2005 4:59:44 PM
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