Hodgson: Competition Law and Regulation speech
Monday, 21 February 2005
Hon Pete Hodgson: Competition Law and Regulation speech
Speech to fifth annual Competition Law and Regulation Review, Duxton Hotel, 170 Wakefield St Wellington, 14:35, Monday, 21 February 2005.
It's a pleasure to take this opportunity to speak to you today on the topic of harmonisation of trans-Tasman Competition law and policy.
Your conference is timely for two reasons. Firstly, the recent publication of the Productivity Commission’s final report into Australian and New Zealand Competition and Consumer Protection Regimes and secondly, last week's visit by Peter Costello. Indeed Prime Minister Howard is here today as well.
Work on developing closer economic links between the two countries has reached a new high and there is much to update you on.
The goal of a single economic market is not a static target or a defining end point. Rather it is an organising principle around which Australia and New Zealand can jointly pursue sustained economic growth. Our goal is to further improve the conditions under which businesses on both sides of the Tasman operate. It is to create a seamless business environment.
The relationship between the two countries goes further than trade. We have shared foundations, similar values and norms, similar legal and political institutions.
Last year the Productivity Commission was charged with looking at just how far those links go. It was tasked with studying the potential for extending and deepening those links and the scope for further harmonisation of competition and consumer protection regimes in particular.
This wide brief reflects the ambitions of Dr Cullen, Mr Costello, and myself that all options be explored, from taking simple steps to improve co-ordination across existing laws and bodies, to full integration.
In giving the Commission such a wide brief it was hoped that a wide ranging and open discussion of the options would ensue. It did and I'd like to thank the many of you here today that contributed to it. I know that your contribution was valued by the Commission.
While there were many diverse views given, a common theme emerged. That closer relations with Australia were a very good idea, but that they should not be read as the adoption by New Zealand of Australian laws, or vice versa, at the expense of national interests.
The concern that New Zealand's interests could become subsumed is one this government shares and that our Australian partners appreciate.
A blanket adoption of Australian laws would not be the best option for New Zealand. Rather, the challenge is to meld the different regimes to make doing business across the Tasman as simple as possible while at the same time looking after the best interests of both nations.
Some times this may mean sticking with single national institutions, other times this may mean looking at joint oversight.
The good news is that the depth of our similarities and our sharing of a common purpose mean that these are not mutually exclusive goals.
Indeed, one of the main outcomes of the Commission's work was to confirm that there is already a high degree of harmonisation between our consumer protection and competition regimes. Our laws are similar and there is already considerable cooperation and coordination between the two competition authorities.
This really can be no surprise. The commitment of our two governments to the coordination of business laws is reflected in the CER Memorandum of Understanding on Co-ordination of Business Law. This MoU, (which was initially set in 1998 and later updated in 2000) provides a framework for the consideration of the benefits of coordination.
Having a clear picture of the similarities provides the starting point for making further improvements. The Commission's final report has made some useful recommendations.
As was said last week, it is our intention to implement the Commissions' recommendations. But that will not be the end of our efforts to increase harmonisation. Their implementation will be another, significant step, but by no means the last. Further integration and harmonisation beyond the scope of the Commission's report is our goal.
Those recommendations came under two main headings.
The first is a package of recommendations that provide the immediate building blocks of greater cooperation. Some of the recommendations give a green light to initiatives already underway such as those to information sharing and cross-appointments between our main competition bodies.
A second set of recommendations was made concerning areas of our two competition regimes that are distinctly separate. Often the reasons for this revolve around the protection of national interests. The question that needs to be asked in this case is whether we could or should look to harmonise them. Would the benefits of doing so outweigh the costs?
Currently, much of the work of each country's competition and consumer protection regimes has a distinctly national focus. Each body considers each case in the context of its host nation's laws and market circumstances. How then do you reconcile national interest as we pursue a single economic market?
These are difficult issues for both countries. But that difficulty will not stop us from making progress. And as the Commission's report points out, there is already a high degree of harmonisation between the regimes on both sides of the Tasman.
A key Commission recommendation was that the Australian Competition and Consumer Commission (ACCC) and the New Zealand Commerce Commission should cooperate further with each other. This may include efforts to conduct joint investigations and to harmonise guidelines and work practices across the two bodies where it is beneficial to do so. It also extends to policy co-ordination, information sharing and cross appointments.
In some of these areas work had already begun and policy is currently being formulated on information sharing.
One of the challenges we face is determining the optimal level of institutional interaction. As you are aware an effective competition regime can be costly to run. We're taking a hard look at our institutions to see where we can eliminate unnecessary duplication and at the opportunities for joint oversight.
We have broadly endorsed the Commission's recommendations but see them very much as first steps toward the greater goal of establishing a joint regime rather than as ends in themselves.
Generally we se a two-step process: harmonisation leading over time to joint supervision.
We are keen to improve the process for businesses that require authorisation or clearance for trans-Tasman activates. The report recommends that a single track process may be advantageous in such cases.
Officials have already started work examining options about how this might be progressed. Options being looked at include some form of institutional integration to consider such applications on a case by case basis.
In the case of trans-Tasman securities offerings, we should have a treaty finalised within the next two or three months to allow mutual recognition of a single disclosure document. This is the sort of progress we want to see more of.
It should be stressed, however, that we will not be waiting on trans-Tasman developments before strengthening domestic institutions. Our commitment to strong institutions stands independent of any developments in the trans-Tasman arena. We will not put work to strengthen our institutions on hold while waiting for further harmonisation work to be completed.
Our making progress on the single economic market is by no means limited to closer harmonisation in the areas of competition and consumer protection.
Last week we committed to establish a Joint Trans-Tasman Council on Banking Supervision comprising the two Treasuries, the Australian Prudential Regulation Authority and the Reserve Bank of New Zealand. But let me stress, this is not a commitment to a single trans-Tasman banking regulator.
The Council will look at:
ways to enhance cooperation; review trans-Tasman crisis response preparedness; provide policy advice on the principles of policy harmonisation; and report on possible legislative changes to ensure the Australian Prudential Regulation Authority and the Reserve Bank of New Zealand can support each other in the performance of their current regulatory responsibilities.
We also undertook to explore what legislative changes may be necessary to ensure APRA and the RBNZ can support each other in the performance of their current regulatory responsibilities at least regulatory cost.
Substantial progress is also being made towards the alignment of accounting standards. This work is being led by the Trans-Tasman Accounting Standards Advisory Group which was established at last year’s bilateral in Melbourne.
Australia adopted international accounting standards at the start of the year and we have adopted them voluntarily from last month, with full uptake from 01 January 2007. The establishment of a permanent trans-Tasman accounting standards institution remains a long term goal.
We have also decided to investigate the possibility of adding an investment component to the Closer Economic Relations agreement.
I've spoken a lot about officials and Ministers. But this is about creating a better environment for business. Business will always play a key role in policy development and provides the ultimate test of the changes governments make.
Your contribution is essential for success. And our success can only be measured in terms of business success. Thank you for all your help to date and I trust that together, we'll be able to achieve a lot more over the years to come.