Over the last decade, productivity growth has slowed across all Australian jurisdictions. This is significant, as productivity growth is the key driver of economic growth improved and living standards.
Government policies that support competitive markets are fundamental to enhancing productivity. They ensure that the economy is open to trade and investment and that entry and exit barriers in markets are as low as possible.
Competition policy is a key arm of economic policy, falling under the portfolio responsibility of the Treasurer. NSW Treasury advises on matters affecting competition in New South Wales.
Intergovernmental agreements on competition policy
The 1995 Competition Principles Agreement was made between Australia’s Commonwealth, States, and Territories Governments in 1995 (amended 2007). This agreement promotes consistent competition policies for all Australian businesses regardless of ownership.
The agreement sets a guiding principle that legislation should not restrict competition unless it can be demonstrated that the benefits of the restriction to the community outweigh the costs, and the objectives can only be achieved by restricting competition.
In December 2016, the NSW Premier signed the Intergovernmental Agreement (IGA) on Competition and Productivity-Enhancing Reforms, along with the Governments of Australia (Commonwealth), Western Australia, Tasmania, the Australian Capital Territory and the Northern Territory. The IGA supports the development of reforms to drive Australia’s economic performance and improve living standards.
NSW Government agencies should contact NSW Treasury for guidance on applying the principles of these agreements.
Competitive neutrality policy
The NSW Government promotes competitive outcomes through its competitive neutrality and procurement policies.
The competitive neutrality principles aim to promote efficient competition between public and private businesses. Specifically, they seek to ensure that government businesses do not enjoy competitive advantages over their private sector competitors by virtue of their public sector ownership.
A review of the NSW Government’s competitive neutrality policies and processes was recommended in the 2021 NSW Productivity Commission White Paper. The NSW Government has accepted this recommendation and tasked the NSW Independent Pricing and Regulatory Tribunal (IPART) with undertaking the review. Further details are available on the IPART website.
The Government has assigned to IPART partial responsibility for investigating and reporting on Competitive Neutrality complaints. Read more about this on the IPART website.
NSW procurement policy
State Governments are responsible for procuring goods and services on behalf of the public. Policies that create distortions in competitive markets will detract from productivity growth. The promotion of competition is a key consideration in the procurement activities of NSW Government Agencies.
The NSW Government Procurement Policy Framework (the Policy) sets out the policy and operating framework for the NSW public sector procurement system, and provides a single source of guidance on the rules for procurement.
As outlined in the Policy (see page 10 of the framework document), a key objective of the NSW Government is to improve procurement outcomes through fair and open competition, as well as facilitating access to government procurement business by the private sector, especially small, medium, and regional-based enterprises.
Competition and regulatory policy
Effective regulatory policy balances the need for market safety and competition. Regulation can create barriers to entry and restrict competition. It can also ensure market participants are adequately protected and compete on a level playing field.
NSW Treasury has responsibility for regulatory policy in NSW. The NSW Government Guide to Better Regulation outlines how to apply the seven Better Regulation principles when designing regulatory proposals.
The NSW Productivity Commission website provides further information for assessing the impacts of regulation on competition.
Advice on competition and regulatory policy matters may be sought by contacting: [email protected].