Why Australia needs a new competition policy revolution

As market concentration increases and reforms stall, Australia’s outdated competition system is driving up prices and reducing productivity, writes Professor Vince Hooper.

AN AUSTRALIAN FAMILY of four now spends $12,480 a year shopping for groceries in supermarkets (up $3,000 since 2021) Australian Competition and Consumer Commission (ACCC) is among the most profitable in the world.

In a market dominated by two firms with revenues exceeding $30 billion, more than 60% of shoppers now visit two or more stores each week, looking for specials like discount seekers in the market. This is not what a competitive economy looks like. But that’s what you get when a country allows its competitive architecture to atrophy for three decades.

academic in 1993 Fred Hilmer He gave the Keating Government a plan that would reshape the Australian economy for a generation. National Competition Policy Review dismantled sheltered workshops in public services, professions and state commercial enterprises. created the ACCC and National Competition Council. extended Trade Practices Act to commercial activity that has been operating out of reach for a long time.

Productivity Commission later concluded that the reforms supported sustainable productivity growth throughout the 1990s and 2000s; This growth carried Australia into the 2000s. Asian financial crisis largely undamaged.

I knew Fred Hilmer. He was my Vice-Chancellor at UNSW and I found myself tracing his career path. McKinsey director AGSM From presiding over the 1993 competition review to the competition itself, the Dean reshaped the national economy fairfax and then leading one of Australia’s largest research universities is truly inspiring.

What impressed me was that Hilmer never treated competition policy as an abstraction. He understood this as an enforcer, a strategist, and ultimately a reformer operating on both sides of the markets he sought to open. The combination of intellectual rigor and real-world credibility is exactly what is missing from the current reform agenda.

This was 33 years ago. The economics Hilmer investigates: state monopolies in electricity, gas and water; professions that are not subject to scrutiny; An industrial base still struggling to adapt to tariff liberalization bears only a passing resemblance to the 2026 economy. Market concentration increased. Markings increased. Company dynamism decreased. Real GDP growth has slowed to 1.1% per year from a forecast of 1.8% over the past four decades; Labor productivity growth fell from the long-term average of 1.6% to 1.2%.

The Productivity Commission estimates that a revitalized competition policy could increase annual GDP by up to $45 billion (about $5,000 per household) and reduce prices by up to 1.5 percent.

In financial parlance, Australia faces a huge unprofitable buying option for its own productivity. The premium has already been paid after years of reforms. The question is whether anyone will implement it.

Ten years lost to inertia

The last serious attempt at reform on the Hilmer scale was Harper ReviewThe report was published in March 2015, making 56 recommendations covering competition policy, laws and institutions. Professor Ian Harper It proposed a permanent Australian Competition Policy Council, a reformed access regime, an impact test for abuse of market power and institutional mechanism designed to create what the panel called a “self-sustaining process” for continued reform.

Council of Australian Governments (COAG) “noted” the report. Productivity Commission’s Peter Harris It has been memorably observed that bureaucratic escape from the fate of being “considered” by COAG is rare. He was right. The only reforms that progressed were changes to competition laws. The broader institutional vision (permanent institution, revitalized principles, modernized access regime) was shelved.

Ten years were lost. This decade is now visible in every indicator of competitive health published by the Treasury.

The world has moved, Australia hasn’t changed

While Australia was registering the reports, the rest of the world was taking action. Watchdog obligations under the European Union Digital Markets Act Entered into force in March 2024 previously requirements on designated platforms – tech giants whose market power is structural, not cyclical.

of the United Kingdom Digital Markets, Competition and Consumers Act It received Royal Assent from the Competition and Markets Authority in May 2024 (CMA)’s new digital markets regime will be operational from January 2025 and strategic market situation studies are currently being initiated. The CMA can now impose fines of up to 10% of global turnover for consumer law breaches and has the power to provide interoperability, data portability and structured solutions.

Australia? I’m still consulting. The Treasury has proposed a digital competition regime in which the Minister will identify key platforms and impose obligations, prioritizing app markets and advertising technologies. The framework is broadly logical. However, this remains a consultation document, not a statute. In a world where data monopolies, algorithmic pricing and network effects are reshaping markets in real time, Australia brings a talking point to the regulatory arms race.

Albanian reforms: Necessary but insufficient

Give credit where credit is due. The Albanian Government has brought competition policy back to the national agenda with more energy than any administration since Keating. The mandatory and suspension merger notification regime, effective from January 2026, is the most significant overhaul of merger control in half a century.

The proposed ban on non-compete clauses for workers earning less than $183,100 (affecting roughly one in five employers who use such clauses) removes the real barrier to workforce mobility and wages. New regulations banning excessive pricing by supermarkets with revenues of more than $30 billion come into force from July 2026. The National Competition Board has been revitalized with new appointments and tasked with carrying out its first independent assessment in more than 20 years.

These are meaningful interventions. But they remain a portfolio of discrete fixes rather than a coherent, transformative architecture. What made Hilmer powerful was not a single recommendation but a system: principles of competition binding all levels of government, fiscal incentives for states to reform, independent monitoring with the power to withhold payments, and a common intellectual framework that treated competition as the engine of efficiency and consumer welfare.

There are some parts of the Albanian agenda. It lacks machinery.

What Hilmer 2.0 needs to address

The true successor to the 1993 framework must face four structural challenges that Hilmer could not have predicted.

The digital economy is the most obvious. Platform markets create competitive dynamics Competition and Consumer Law It was never designed to appeal. Both the EU and the UK took action previously regulation of gatekeepers. Australia needs to stop consulting and start legislating.

The services economy is the most important. Services currently dominate Australia’s manufacturing, but many of the most significant competition challenges in professional services, financial services, health, education and the care economy are in sectors where regulations are fragmented by jurisdiction and professional bodies exercise quasi-legislative powers. Competitive neutrality principles have never been seriously applied to these sectors. It must be so.

The transition to net zero is the most urgent. Decarbonization will require major investments in energy infrastructure, grid access and carbon markets. Without strong competitive frameworks, incumbents will catch up with the transition by retaining market power through early mover advantages in renewable assets. The access regime, which has barely been reformed since the 1990s, is not fit for purpose.

Competition in the labor market is the most tangible. The non-compete ban is welcome, but it remains separate from the still fragmented mutual recognition of professional qualifications across state borders. The NCC’s assessment of mutual recognition programs planned for July 2026 is a start, but addressing labor market constraints (non-competition, occupational licensing, qualification barriers) in an integrated manner will far exceed the sum of the parts.

Enterprise open

Hilmer’s most enduring legacy was institutional. Intergovernmental agreements, competitive payments, and independent monitoring have created a self-reinforcing reform dynamic. States reformed because they were paid to reform and because an independent body held them accountable.

900 million dollars National Productivity Fund Supporting the current ten-year reform plan is a start. But without binding conditionality and genuine independent oversight—a revitalized NCC with the power to conduct market research, recommend structural solutions, and publicly evaluate government compliance—there is a risk that reform momentum will dissipate as state governments face the political costs of liberalizing without the financial rewards that encouraged compliance in the 1990s.

In terms of option pricing, the Government bought the option but set the strike price too high. The payoff structure needs to be recalibrated so that states face a real cost of inaction, not just the opportunity cost of foregone productivity gains realized over longer election cycles.

Apply option

Hilmer’s reforms were successful not because they were popular (which they were not), but because they were comprehensive, institutionally well-founded, and supported by fiscal incentives that aligned federal and state interests. Every serious analysis of Australia’s productivity slowdown points to weakening competition as a contributing factor. Productivity Commission, Treasury, Reserve Bank And OECD That’s all he said.

Hilmer 2.0 is not a slogan. This is the most significant structural reform available to halt Australia’s productivity decline, deliver sustainable relief in the cost of living and position the economy against the competitive pressures of a crumbling global order.

The Albanian Government put the pieces together. What remains is the ambition to build the machine and the political will to make it work.

Professor Vince Hooper is a proud Australian-British citizen and professor of finance and discipline at the SP Jain School of Global Management, which has campuses in London, Dubai, Mumbai, Singapore and Sydney.

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