Parliamentary Committee looks at building a resilient and dynamic economy

BUILDING a stronger and more resilient economy is the focus of the House of Representatives Standing Committee on Economics’ new inquiry into promoting economic dynamism, competition and business formation.

The inquiry will examine how encouraging healthy competition, stimulating the creation of more businesses and fostering entrepreneurship can enhance the well-being of Australians.

Committee chair Daniel Mulino MP said there had been two significant inquiries into competition over the past few decades – the 1993 Hilmer report and the 2015 Harper review.

"The committee does not plan to go over old ground," Dr Mulino said. "The economy has changed significantly over the past decade or so, particularly in digital technology and disruptive new technologies. We need to ensure we are harnessing this technology in the best way in the interests of consumers."

Dr Mulino said that while new digital technologies and approaches could be a very effective way to increase competitive tension, they could also create regulatory challenges.

"The committee will also investigate the continued market power of the Big Four banks, especially in the area of mortgages, retail deposits, and loans to small and medium enterprises, and whether more can be done to encourage competition through changes to macroprudential arrangements or other measures.

"In recent decades Australia’s productivity growth has stalled. The committee will examine the extent of market concentration, the fall in the establishment of new enterprises, the increase in mark-ups, and reduction in job mobility—and whether these have contributed to a decline in economic dynamism," Dr Mulino said.

The pandemic and the war in Ukraine had challenged supply chains and a diverse and dynamic business environment was one answer to that problem, he said.  

"It is also timely that as a committee we explore economic plans that better equip Australia in the face of global uncertainty. As the nation emerges from the pandemic it is critical that we renew our focus on competition and business dynamism, to boost our productivity and for the benefit of all Australian workers and consumers."

Dr Mulino said the committee "would scrutinise the extent to which the consolidation of market power had undermined productivity, stifled wages, created more fragile markets and led to higher mark-ups".

The committee will also examine:

• the degree to which anti-competitive behaviour and economic barriers — regulatory, as well as restrictions on access to finance, infrastructure, suppliers, customers, and workers — contribute to rising market concentration, and
• international examples of best practice and innovative policies that demonstrate how Australia could lower economic barriers to competition and business formation, further limit anti-competitive behaviour, and better manage changes in industry structure that affect market power.

The committee is seeking submissions addressing some or all of the inquiry terms of reference from interested groups and individuals by Friday March 31, 2023. Submissions can be made online via www.aph.gov.au/economicdynamism.

More details about the inquiry, including the full terms of reference, are available on the committee’s website.

 

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