House of Representatives Committees

Standing Committee on Economics, Finance and Public Administration

Report on the National Competition Council's 1996-97 annual report

Government response

(Tabled on 24 August 1999)

This document has been scanned from the original government response. It may contain some errors.

GOVERNMENT RESPONSE TO HOUSE OF REPRESENTATIVES STANDING COMMITTEE ON FINANCIAL INSTITUTIONS AND PUBLIC ADMINISTRATION REPORT ON THE NATIONAL COMPETITION COUNCIL'S 1996-97 ANNUAL REPORT

Recommendation - Raising community awareness of competition policy issues The Committee recommends that Commonwealth, State and Territory Governments and agencies involved in the implementation of National Competition Policy devote resources to ensure community understanding and debate about the contents of the policy.and its outcomes.

Response

Agreed.

The National Competition Council has developed a communications/education package to assist parties affected by National Competition Policy reforms to understand the nature of proposed reforms and their benefits and costs.

The Productivity Commission's review of the economic impact of competition reforms on rural and regional Australia will also serve to raise the public profile of competition policy.

Evidence of the benefits to consumers from competition policy is now becoming available as reforms begin to have impact.

Under a key competition policy reform commitment, the full National Electricity Market (NEM) commenced in December 1998. The NEM allows electricity to be freely traded between New South Wales, Victoria, South Australia and the Australian Capital Territory. Queensland is also soon to join, following the construction of an interconnector with New South Wales.

As a result of competition, Australian residential electricity prices have fallen by 7 per cent in real terms on average since 1993. This equates to a real reduction of around $45 per year on an average household electricity bill. For those jurisdictions participating in the NEM, the price savings have been greater, in the order of $60 a year per household.

Since the advent of open competition on 1 July 1997, the Australian telecommunications market has grown to 28 carriers. This new competitive structure has led to real reductions in prices for consumers. For example, the price of a phone call to the United Kingdom on the Optus network has fallen from 84 cents per minute in June 1997 to 45 cents per minute in June 1999 (based on the least expensive time to call).

According to a study by the Bureau of Industry Economics, Australia's domestic airfares and freight rates are amongst the cheapest in the world - and these lower airfares are a result of competition reforms and not lower service standards. Domestic airfares have fallen by 18.4 per cent in real terms in the period from September 1990 to June 1998.

The Commonwealth Government wishes to make examples of benefits of this kind more widely known to the community.