Monday, 21 August 2017

No cheap cars please, we're Aussies

What a bestiary Aussie politics is these days - and I don't mean the dogfights over second citizenships, though it would be nice if some of the oddballs who got in at the last election have at least one Irish grandparent, making them Irish citizens by descent and ineligible to keep their seats.

Away from the citizenship headlines, some of the pollies have been up to an unpleasantly protectionist bit of business which has seen the Aussie government rat on its previous commitment to consumers to allow some second hand car imports into Australia.

Infrastructure Minister Paul Fletcher's media release, 'New Road Vehicle Standards Act to Better Protect Consumers and Provide More Choice' (!) was dolled up in the dress of consumer welfare ("appropriate consumer awareness and protection arrangements") but none of the arguments he made looked convincing. The world Fletcher painted - of high administrative costs and no big net benefit to consumers - bears no relationship to the reality we've experienced in New Zealand. A reference to "price reductions estimated to be less than 2 per cent across the market" in particular looks a very lowball number, and I suspect the "across the market" reference, decoded, means "not a lot of change for some, but quite large reductions for others". As well as not conforming to the facts as we have actually lived through them, maintaining the ban flew in the face of advice from a variety of Australian bodies including the Harper review of competition policy.

Perhaps, despite their flimsiness, the Aussie government believes its justifications, but that may not all that is going through its mind. For the Aussie Financial Review, "It is understood that heavy lobbying by politically influential car sellers - as well as backbenchers such as John Williamson, Warren Entsch, Andrew Broad and Ian Macdonald - prompted the government to dump the option" (in  'Car buyers lose out as government backflips on parallel import rules', which may be paywalled, but if you haven't got a sub, get one).  Whatever the government's possible mix of intentions, an end effect was to do a big favour for a small, and, let's face it, rather unloved set of characters at the expense of doing a big favour for many millions of car buying households. And where, incidentally, were those tribunes of the people, Australia's Labor Party? They went along, too, as quoted in the AFR article.

A week earlier, by the way, the ACCC had come out with its draft market study into the selling of new cars. The media release said that "Complaints to the ACCC about new car manufacturers have risen to more than 10,000 over the past two years. Our draft report highlights the urgent need to address widespread issues in the industry". Not, in short, a sector that deserved ongoing favourable treatment, and I'd argue that the protectionist moat they're allowed to live behind is precisely the source of those "widespread issues" the ACCC found.

This latest proactive ACCC market study was another good example of the progress market studies can make to advance consumers' interests and promote more effective competition. So it's a shame that our own Commerce Commission isn't going to be able to do the same thing. As MBIE has said (at the foot of this webpage) the Commission isn't going to be able to start ones off its own bat: "The Commerce Commission’s market studies power will only be exercisable at the direction of the Minister of Commerce and Consumer Affairs", and then only after the Minister has satisfied an (as yet to be defined) "I smell a rat" test.

Still, it's something, and I suppose we should be somewhat grateful for the half a loaf we've got, or might eventually get. " Parliament", MBIE says, "will need to legislate for change to the Commerce Act for the market studies power to be introduced".

Oh goody. The most recent change to the Commerce Act - the Commerce (Cartels and Other Matters) Amendment Bill - took only five years, ten months and one day to go through the sausage factory.

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