Alan Moran* says businesses and consumers are paying the price for regulations out of control.
Businesses constantly experience frustrations with government regulations. But few areas of government are trying to do something about it.
One attempting to do so is the Commonwealth Government’s Productivity Commission (PC). The PC has issued a handbook for regulatory agencies on Best Practice Regulation. This sets hurdles over which new regulatory proposals must leap before they are even considered by governments.
Similar provisions have been introduced in Victoria.
But in neither case is there evidence of fewer new regulations let alone a rollback.
The problem of regulations is compounded by over-resourced regulatory agencies like the Australian Competition and Consumer Commission (ACCC). These agencies’ self interest makes them predisposed to amplify the reach of regulation.
Commonwealth regulations (other than the tax code) mainly impact on larger businesses. But the effect eventually hits smaller businesses, workers and consumers by adding to costs and reducing employment and business opportunities.
Take for instance the regulations on Telstra. The ACCC refuses to allow Telstra to control the prices it charges for its planned new services and is holding existing line charges below costs. While a short term benefit to customers, this discourages new investment. It has already led to the shelving of a new fibre optic network which means that Australia’s telecommunications services are falling behind those of our overseas competitions and partners. Businesses and consumers pay the price for this.
Sadly the Communications Minister, Helen Coonan, is focussed only on trumpeting the immediate consumer upside. She cannot understand the repercussions of governments taking control of private assets and forcing down prices.
Government regulation can always compel firms to cut their prices or offer more services than they are able to charge for. But, as Telstra is demonstrating, firms cannot be required to invest in projects that regulations have made unprofitable. Regrettably, some Ministers have little understanding of the damage caused by regulations on investment and in generating lobbying costs.
*Alan Moran is director deregulation at the Institute of Public Affairs. This is an edited extract of a comment which appeared in the Herald Sun 11/02/07