The Albanese government will appoint a taskforce to provide a rolling competition review in a bid to lower cost-of-living pressures by creating a more productive and dynamic economy.
The taskforce, set up in Treasury, will include an expert panel including Danielle Wood, chief executive of the Grattan Institute, and Rod Sims, former chair of the Australian Competition and Consumer Commission (ACCC). It will engage in “targeted public consultation” and provide continuous advice over the coming two years.
“A key focus of this competition review [is] to put downward pressure on the cost of living,” the treasurer, Jim Chalmers, told a media conference in Sydney on Wednesday.
“Some of the issues which were bedevilling the retail sector around shipping and other input costs have come off quite considerably in the last six or nine months,” he said. “And we want to see those passed on to consumers, to Australians more broadly, when that happens.”
Andrew Leigh, the assistant minister for competition, charities and treasury, said the economy had arguably become less competitive over time, with fewer new companies starting up and a drop of the share of people changing jobs.
“Over the last couple of decades, we’ve seen a rise in market concentration, we’ve seen an increase in margins – the gap between cost and prices,” Leigh said. “All of this suggests the Australian economy may have become less dynamic.”
The taskforce’s launch coincided with one of the two dominant supermarket chains, Woolworths, reporting a 4.6% rise in net annual earnings to $1.62bn. Its operating margins increased to 6% from 5.3% last year, implying Woolworths was able to pass on higher costs and then some to its customers.
The Australia Institute has been among those to argue company greed is generating much of the higher inflation in the economy. The Reserve Bank, however, has dismissed those concerns, saying that corporate profit as a share of the economy had not increased in recent years once the volatile mining sector was excluded.
The competition taskforce appointment also comes a day before Chalmers will formally release the latest Intergenerational Report. Partial releases so far include projections of spending on defence and aged care to swell in coming decades and how the population will grow at the slowest pace since federation, although there are limits to the reliability of 40-year forecasts.
Leigh said the lack of competition disproportionately affected those less well off in the community.
“It’s the most vulnerable who suffer. They may not have a car to drive to another suburb for a better deal,” he said. “If you have a dodgy internet connection, it may be hard to shop around.”
A breakdown on monopsony power in the economy when there is a single buyer would also benefit workers and others. Increased competition was “good for consumers, good for workers, good for farmers, good for small businesses and good for Australia”, Leigh said.
Chalmers said the taskforce’s contribution would be “iterative”, with the government working “through the issues in a sequenced way” rather than waiting for a report at the end of the two years.
The review will look at competition laws, policies and institutions as part of the review. Among the early targets will be proposals put forward by the ACCC on merger reform and other competition law issues.
Also to be tackled will be efforts to coordinate reforms with the states and territories through the Council on Federal Financial Relations, the use of non-compete and related clauses that restrict workers from shifting to better-paying jobs, transition to net zero and the introduction of new technologies that affect competition.
Asked why the government blocked Qatar Airways from increasing flights into Australia, Chalmers said: “That is the government’s position. What we’re talking about is the broader settings.”
