Competitive Neutrality
With the objective of improving the efficiency and productivity of the Australian economy, all Australian governments have agreed to adopt a number of competition initiatives with respect to government business activities, known collectively as National Competition Policy. Competitive neutrality is a key element of this policy.
Competitive neutrality requires that public sector business activities which are in competition with the private sector should not have competitive advantages or disadvantages simply by virtue of their government ownership or control.
The advantages which government business activities may have include the absence of:
- full Commonwealth or State taxes or tax equivalent systems;
- debt guarantee fees directed towards offsetting the competitive advantages of government guarantees;
- procedural or regulatory requirements of the Commonwealth, the State or a local government on conditions equivalent to the conditions to which a competitor or potential competitor may be subject, including, for example, requirements about the protection of the environment and about planning and approval processes.
Competitive neutrality does not extend to competitive advantages or disadvantages arising from factors such as business size, skills, location or customer loyalty.
For more information on competitive neutrality see www.treasury.qld.gov.au.
Administration of Competitive Neutrality in Queensland
The two agencies with primary responsibility for the administration of competitive neutrality in Queensland are:
In addition, under the Local Government Act 2009, local governments are required to establish appropriate processes for dealing with competitive neutrality complaints about their relevant business activities. As part of these processes a local government may resolve that the Authority be the referee for its complaints process for significant business activities and roads business activities.
The role of the Authority in the area of competitive neutrality is twofold:
- to accept and, if considered warranted, investigate complaints that the significant business activities of State Government agencies, and certain local government business activities, enjoy competitive advantage over competitors or potential competitors. The results of any investigation or consideration are to be reported to relevant Ministers or local governments for action; and
- to accredit certain State and local government business activities as complying with the principle of competitive neutrality, for a period of up to two years. Provided accredited agencies maintain the terms of their accreditation and continue to comply with the principle of competitive neutrality for the period they have been granted accreditation, they have an effective defence against complaints.
The core requirements for local government and state government competitive neutrality are the same. Competitive advantages or disadvantages due to government ownership need to be addressed to establish a level playing field between government and non-government businesses.
The role of Queensland Treasury is to investigate competitive neutrality complaints made against Queensland Government significant business activities that are outside the Authority’s jurisdiction.
Regulatory Framework
Queensland Government Business Activities
With regards to competitive neutrality, the Queensland Competition Authority Act outlines:
- the definition of competitive neutrality;
- the means by which Queensland Government business activities become subject to oversight by the Authority for compliance;
- the processes and powers which govern the Authority’s investigations; and
- the responsibilities of the Premier and Treasurer in considering the recommendations of the Authority.
Once the Premier and Treasurer declare the business activities of certain agencies for the purposes of compliance, these activities are gazetted, and complaints against them may be received by the Authority. The List of Declared Significant Business Activities is here. (Aug 10) (PDF, 10KB)
Subject to certain criteria the Authority can then investigate the complaint. Ministers consider the recommendations of the Authority and, within 30 days, issue a Decision Notice which must outline the reasons for that decision.
The Queensland Competition Authority Act also allows the Authority to receive requests for accreditation for compliance with the principle of competitive neutrality. Government agencies responsible for significant business activities can seek accreditation for those activities, to support that they are being provided in accordance with the principle of competitive neutrality. Such accreditations provide protection against investigations of complaints for a period of up to two years.
Local Government Business Activities
The Local Government Act 2009 provides the regulatory framework for the application of competitive neutrality principles to local government business activities. The Local Government (Beneficial Enterprises and Business Activities) Regulation 2010 establishes requirements for local government competitive neutrality compliance.
Complaints against local government business activities must be lodged with the local government, which is required to have a process for dealing with them. The local government must designate a referee to investigate a complaint. The referee can be the Authority or a third party. The regulation sets up a detailed process that the referee must follow to investigate a complaint.
The referee must provide the local government with a report detailing whether any relevant allegation has been substantiated and recommendations (including reasons) on how the local government can carry on the business activity in a way that complies with the principle of competitive neutrality. The local government must consider the recommendations and determine by resolution whether to accept them.
The local government must ensure the public may inspect a copy of the referee's report at the local government's public office as soon as practicable after the Authority provides the report to the local government. The local government must also give notice of its resolution to the applicant and referee.
If a referral relating to a significant business activity, building certifying activity, or a roads activity (other than where conducted through a sole supplier arrangement) is made by the local government to a person other than the Authority, that referee's decision not to investigate, or the local government decision on the referee's recommendation, may then be referred to the Authority by the person making the original complaint.
Local governments may ask the Authority for accreditation of their business activities.
