Competition Policy: Not Always Good, Not Always Bad!

The Competition Policy Review Report has adopted some commendable principles, particularly the emphasis on placing the consumer at the centre of all services, writes David Crosbie CEO of Community Council for Australia.

The Harper ‘Competition Policy Review’ Final Report released this week has adopted some commendable principles, particularly the emphasis on placing the consumer at the centre of all services, and highlighting the need for Governments to separate out policy objectives from service delivery.  

The recommendations relating to Governments needing to develop more outcomes based contracting are consistent with many submissions made by CCA and others across the sector.

While CCA is not concerned about the notion of competition itself, it is concerned about the way competition policy is interpreted and imposed by governments, particularly the impact it has on Not for Profit organisations and the communities they serve.

The current approaches many Governments have adopted to tendering of programs based on competition principles has often been counter-productive to the best interests of the consumers the tendered programs are meant to be serving.  Badly applied competition policy can effectively undermine good practice in human service delivery.

As the Harper report itself highlights: “ïf managed well, moving towards greater diversity, choice and responsiveness in government services can both empower consumers and improve productivity.”  The key line here is; if managed well.

Encouraging collective and collaborative approaches to service delivery have been shown to achieve better outcomes for consumers.  Encouraging more consumer empowerment and choice based on a well-informed consumer market will also increase the public benefit generated through government funding and investment.  

These two measures combined can drive significant improvements in productivity within the Not for Profit sector and provide greater benefits to the communities they serve.  These two approaches are also not inherently inconsistent with a more considered approach to competition policy.  Unfortunately this more considered approach that is required to achieve these goals in applying competition principles to government tendering and procurement are still the exception rather than the rule.

For some Government departments, competition is simply a way of driving down costs for services by pitting provider against provider.  There is no evidence that this approach to human services delivery improves outcomes or improves productivity.

CCA also has some concerns about the notion of competitive neutrality and the themes in the Harper Report and in this week’s tax white paper that relate to levelling the playing field between for-profits and Not for Profits.  As a fundamental principle, CCA does not accept that generating wealth for private individuals should be treated the same as generating wealth that is directed towards public benefit.  At the same time, allowing all parties access to similar information and support in developing service provision approaches seems consistent with good practice.

The Harper Report is particularly good at highlighting some of the special industry protections that are actually not serving consumer interest such as the pharmacy location rules which, coupled with a closed multi-billion dollar agreement between pharmacy owners and the Government, clearly work against consumer health, the public interest and good Government policy.

There is much work to do before the positive principles of consumer empowerment and outcomes focused contracting espoused in the Harper Report are applied in a way that benefits the community, but it is clearly a good reference point for discussion of further reforms to the way Governments interact with the Not for Profit sector.

About the Author: David Crosbie is the Chief Executive Officer of the Community Council for Australia (CCA), and a member of the Advisory Board to the Australian Charities and Not-for-profits Commission (ACNC).

Download the Competition Policy Review’s Final Report