Harper Review could be improved by treating consumers as the driving force of competition

Consumer Action Law Centre has welcomed the release of the Harper Review into Competition Policy, in particular the finding that the purpose of competition is to make the market economy better serve the long-term interests of Australian consumers.

Gerard Brody, CEO of Consumer Action said, ‘We welcome the finding that promoting the long-term interests of consumers is the central principle behind competition policy. However, the competition principles stated by the Harper Panel could be improved by treating consumers as a force driving competition, rather than passive beneficiaries’.

Consumer Action particularly welcome the recommendation about ‘informed consumers’, and the proposal to allow consumers and intermediaries access and use of data, to better inform decision-making.

‘Competitive markets can be complex for consumers, but information and technology can be harnessed to help consumers make decisions—there is much opportunity to build simple tools to reduce consumer confusion. This must be done for the benefit of all consumers, and not just those that are savvy enough to use modern technology.

‘However, “informed consumers” is as much about consumer protection as it is about information. The Harper Review proposes bringing user choice to the heart of human services delivery, but benefits are not guaranteed. If competition is truly to be effective in benefiting consumers, we cannot simply establish markets with a contestable supply side and consider the work done.

‘More must be done to ensure markets are effective and responsible, and produce efficient and fair outcomes for consumers. This includes consumer protections that empower consumers, and systems that allow for disputes to be resolved quickly and cheaply’, said Mr Brody.

Consumer Action said that the consumer experience of “choice” in the energy and vocational training sectors has not been positive. Rather than responding to consumer needs, suppliers have jostled to take advantage of consumers selling services that don’t suit their needs. ‘The Victorian energy market is held out to be the most competitive in Australia, but it is also where retailers are also making the biggest margins. In private education and training, the current scandal around misuse of VET-FEE-HELP shows that making a bucket of public money available can just attract exploitative traders’, said Mr Brody.

Consumer Action urged caution about the break-up of the Australian Competition & Consumer Commission, and the proposal to abolish the position of Deputy Chairs.

‘Our experience is that the appointment of a Deputy Chair of the ACCC with knowledge and experience for consumer protection ensures consumer protection is held as high a priority as competition within the ACCC. The purpose of competition is to benefit consumers, so it makes little sense to remove this focus from the top of the regulator.

‘Nor do we support breaking up the ACCC to form the proposed Access and Pricing Regulator which risks losing the significant benefits of having one national regulator responsible for the inter-related competition, consumer protection and economic regulation functions,’ said Mr Brody.