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The Forum > Article Comments > Regulators a headache for market forces > Comments

Regulators a headache for market forces : Comments

By Alan Moran, published 21/2/2007

Very few people within regulatory agencies, such as the ACCC, understand business.

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The regulators should have in mind more than just business desire to cover costs and make a profit. The regulators assume responsibility for the consumers, and the community at large. Corrupt business practices can have a detrimental affect on all areas of community well being, such as health and safety, which will effect business interests in the long run. Regulators should have a birds eye view of the world and ensure that the market remains fair for everyone concerned. That is if the regulators themselves are not corrupt/ corrupted.
Posted by vivy, Wednesday, 21 February 2007 9:42:06 AM
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ďOur over-resourced regulatory agencies fail to recognise thisĒ

Over-resourced my foot! The vast majority of regulatory services are grossly under-resourced. This means that the regulation regime tends to get quite distorted, with unfair treatment dished out to some while others get away with just the same activities.

It also leads to tendency for easy things to get dealt with but issues that are a little harder to be stepped back from. And the easy issues are mostly of a more minor nature than complex ones.

This unfair regulation leads to a bad reputation for regulators in the general community first and foremost and not so much for the governments that run them and donít fund them properly.

And it means that what is written in law or in regulatory documentation and what is practiced and policed can become quite different things, so it becomes extremely difficult in many instance for someone to know just where they stand and what they can and cannot do.

We see exactly this happening in all sorts of ways throughout society where it concerns the police as regulators of the law. The same thing happens with the regulation of business and economic activities.

It becomes all pretty horrible for both those being regulated and those doing the job.

Iíve seen it from both sides. Iíve had plenty to say on this forum about terrible policing, especially concerning road safety, and Iíve been involved in the regulation of vegetation clearing and management for a few years, which has been terribly under-resourced.

Secondly, market forces and the profit motive need strong regulation, and moreso all the time as we come up against ever-more stressed resources and environmental and social impacts from our bad practices and ever-increasing scale of activities.

So a strong regulatory regime is of vital importance, in order to put some balance into a system that would otherwise be driven entirely by aggressive profiteering and market forces.

It is a pity Alan Moran has taken the approach he has. What he should be doing is calling for stronger and more even-handed regulation.
Posted by Ludwig, Wednesday, 21 February 2007 5:33:12 PM
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Vivy, businesses have an incentive to care about health and safety because of insurance premiums. Once an accident happens in a workplace, the insurance premium rises, to match this risk.

I'd also like to ask you what you mean when you say "market remains fair".

Ludwig, I think that almost all agencies will claim that they are under-resourced, it's just the way it is with government agencies. When have you ever heard of an agency saying that it 'has too much funding' ? These agencies just compete for the tax revenue that the government pulls in.

The 'profit motive' is not necessarily a bad one, but so many people are convinced that it is bad, and I feel they don't realise the actual benefits of businesses looking to make profits.

Calling for stronger regulation is only going to weigh businesses down with this baggage, stifling our economic growth. The idea behind this deregulation is that the free market is capable of negotiating around these things that we don't want.

For example, if a firm makes a dodgy product, they will not survive for long, and it's not even in their interests to do this, because they won't be getting customers to come back to them. Businesses care about their reputation and they make many decisions based on this.
Posted by volition, Thursday, 22 February 2007 7:39:20 AM
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Volition, most government agencies are under-resourced, some hopelessly so. But if we had a proper distribution of wealth and equity from this apparent economic boom, then regulatory activities and all other services should be well resourced. I donít believe that we should for one moment accept that it is just the nature of our society or governmental system to have poorly resourced government services.

The profit motive is fine, but not in isolation of several other vital considerations.

ďCalling for stronger regulation is only going to weigh businesses down with this baggage, stifling our economic growth.Ē

Regulation is not baggage, it is of fundamental importance in keeping the whole economic system and society healthy. You can argue about the merits of various rules and regulations, but to label it all baggage is going way too far. You are virtually saying that we donít need government and that we donít need rules or policing of any sort. Well, of course we need a strong rule of law and a strong policing regime. The same applies for the business community as it does for the whole of society.

And letís be very careful about just blithely accepting economic growth as the bottom line here. Itís high time we started seeing the bottom line as sustainability and stability instead of continuous growth.

Sure we should be chasing better industrial efficiencies and alternative methods of doing things, but it is time to stop accepting continuous expansion as good or inevitable. Growth consists of two very different halves Ė the improving-technological-and-efficiencies half, which is good and the continuous-expansion-with-no-end-in-sight half, which is very bad.

By crikey, we need a strong government and regulatory regime to pull us off this absurd continuous growth track and direct us towards genuine sustainability.

I fear that deregulation will lead to a more rapid movement away from sustainability and towards economic and social collapse
Posted by Ludwig, Thursday, 22 February 2007 10:28:13 AM
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In my experience business is too easily turned into a tool for exploitation of ordinary employees, so regulation is not only needed, but essential.
Posted by SHONGA, Thursday, 22 February 2007 12:32:23 PM
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Ludwig, you say that "most government agencies are under-resourced, some hopelessly so." In my experience, most agencies are over-resourced but hopelessly inefficient and ineffective. One example is that the Queensland industry department had 3-4 officers working full time for three months to draft a submission to a Federal inquiry, but failed to do so. When they came to me for help, one of my staff and I drafted a submission in 3-4 days. The Chairman of the inquiry wrote to the industry dept head praising the high quality submission and its influence on the inquiry's outcomes. So we did the work, the no-hopers got the credit, a story which is endlessly repeated. If most agencies were in competition with the private sector, they'd soon be out of business.

In Queensland there has been a massive shift in recent years from use of public schools and hospitals, paid for by taxes, to private providers where the user has to pay again over and above their tax payments, because the former fail to deliver. My son has just mentioned a clinic on Mornington Island which he worked in which was so overresourced that it upgraded its late model plasma screen tv, hardly essential to provision of health services but there was nothing it needed.
Posted by Faustino, Monday, 26 February 2007 9:53:24 PM
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