Competition Review Panel Findings - No Surprises

On 31^st of March, the Competition Policy Review Panel, announced in December 2013 by the Minister for Small Business, released its final report.  The Panel was made up of four members representing, in my opinion, a very narrow cross-section of the Australian community.  The members (and their bios) are as follows:

Professor Ian Harper (Chair). Professor Harper is a Partner at Deloitte Touche Tohmatsu, a Director of Deloitte Access Economics Pty Ltd and an Emeritus Professor of the University of Melbourne. Professor Harper is an economist whose experience spans academia, government and advising business. In 2005 he was appointed by the Howard Government to be the inaugural Chairman of the Australian Fair Pay Commission.

Mr Peter Anderson is a national business leader. He is a former legal practitioner and senior adviser to governments, including on trade practices. He has experience as a delegate to the International Chamber of Commerce, the OECD, the International Organisation of Employers and in regional business forums. Mr Anderson recently stepped down from the position of Chief Executive of the Australian Chamber of Commerce and Industry.

Ms Su McCluskey is the Chief Executive Officer of the Regional Australia Institute, an independent policy think tank and research organisation. Ms McCluskey's experience spans senior public sector roles, including Executive Director of the Office of Best Practice Regulation, Consultant Specialist Advisor to the Office of Small Business at the (then) Department of Industry, Tourism and Resources and Assistant Commissioner for Tax Reform - Business Education and Communication at the Australian Taxation Office. Ms McCluskey has significant private sector experience and was Director of Tax and Trade Policy at the Business Council of Australia and General Manager of Policy for the National Farmers' Federation.

Mr Michael O'Bryan is a Queen's Counsel at the Victorian Bar. Mr O'Bryan has practised extensively in the area of competition law, previously as a partner of the law firm Minter Ellison and currently as a barrister. Mr O'Bryan is a member and past chairman of the Competition and Consumer Committee of the Law Council of Australia.

In summary, two former senior representatives of business lobby groups (one of which, the ACCI, is at the forefront of the push to totally deregulate retail trading hours while simultaneously reducing penalty rates payable in the retail industry), a Queen’s Counsel and an Economist chosen by the Howard Government to oversee wage increases for the low paid. 

Anyone expecting any surprises with respect to their findings / recommendations on retail trading hours will have been disappointed.  The relevant section of the Panel’s report is as follows:

“Retail trading hours

State and territory governments have deregulated retail trading hours to varying degrees over recent years. This has generally widened choices for consumers. Yet consumers continue to seek greater diversity in how and when they shop, as seen in the rapid take‑up of online shopping.

The growing use of the internet for retail purchases is undermining the original intent of restrictions on retail trading hours. When consumers can switch to online suppliers outside regulated trading hours, restrictions on retail trading hours merely serve to disadvantage ‘bricks and mortar’ retailers relative to their online competitors.

In any event, as more bricks and mortar stores opt for an online presence to counter this disadvantage, the notion of restricted trading hours becomes less meaningful. Customers are already deciding when and how they wish to make purchases. Retailers should be given freedom to respond by deciding for themselves when to open and close their bricks and mortar stores, referring after‑hours customers to their online portals.

Regulation of retail trading hours varies across Australia. The Australian Capital Territory, Northern Territory, Victoria, Tasmania and New South Wales have almost completely deregulated retail trading hours, whereas Western Australia, South Australia and Queensland retain significant restrictions.

The Panel believes that deregulation of retail trading hours is overdue, and that remaining restrictions should be removed as soon as possible. To the extent that jurisdictions choose to retain restrictions, these should be strictly limited to Christmas Day, Good Friday and the morning of ANZAC Day. Any public holiday trading restrictions should be applied as broadly as possible to avoid discriminating among different types of retailers.

The Panel notes that a general policy of deregulating trading hours should not prevent jurisdictions from imposing specific restrictions on trading times for alcohol retailing or for gambling services in order to achieve the policy objective of harm minimisation. As noted in Section 10.4, it is certainly not the Panel’s view that promoting competition should always trump other legitimate public policy considerations. Instead, regulatory restrictions should be subject to a public interest test to ensure that the benefits of the restrictions to the community as a whole outweigh the costs, and the objectives of the regulation can only be achieved by restricting competition.

The Panel emphasises that deregulation of trading hours does not mean that retailers are obliged to trade 24 hours a day, seven days a week or that all retailers will adopt identical trading hours. Rather, deregulation allows retailers to decide for themselves when to open for trade (with the limited exceptions noted above), as is currently the case in those jurisdictions where retail trading hours are already deregulated. In making this decision, retailers will take into account customer demand and other factors such as labour costs, and requirements of tenancy agreements.

In terms of the justification for its findings, the panel draws heavily on the conclusions in a report prepared by the Productivity Commission in 2014 entitled “The Costs of Doing Business in Australia – Retail”. In my view, this Productivity Commission report contains questionable (at best) methodology and, in making its conclusions about the impacts of both regulated trading hours and the deregulation of those hours, provides no evidence for those conclusions.  In reading it, I was reminded of what has come to be known as “Hitchen’s Razor” – “what is asserted without evidence can be dismissed without evidence.”  On this basis, the report deserves no more than a cursory glance.  However, it appears to have been a major factor in the Panel’s determination.

Nevertheless, as the push for deregulation gains momentum, it is my intention to carry on the SDA’s opposition to further changes to trading hours in WA.  Although I suspect, given the state of trading hours in New South Wales, Tasmania and Victoria, that the fight will be difficult, it is an issue that deserves committed opposition and so committed we must be.

Regards

Peter O’Keeffe

WA BRANCH SECRETARY