Thursday, 11 October 2018

I've tried to stop...

...writing any more posts about market studies, but events have intervened. The government announced that it's going to fast track the Commerce Amendment Bill, which will give the Commerce Commission the powers to do studies, and also that the first one will be an inquiry into the petrol industry (which was always on the cards anyway).

So I headed smartly to the Transport and Infrastructure Select Committee's website to see where the Bill had got to, and found its final report (published on September 12). Market studies - or "competition studies" as we've elected to call them - have got the tick, though the Committee members divided on party lines on who should be allowed to initiate them. The majority backed either a Minister or the Commission (I'm with them), in line with MBIE's advice in its advisory report on the bill. The National members would have let the Commission initiate only with ministerial approval.

The Committee also went with another good MBIE recommendation. The Committee said (p3):
We consider that it would be appropriate for the legislation to require a government response to the final report. We do not consider it necessary to specify a time frame or process for the response. We recommend inserting new section 51E to require the Minister to respond to the commission’s final report on a competition study within a reasonable time frame.
I was really pleased about this. Of the 15 market studies submitters on the Bill (6 for, 6 broadly neutral, 3 against), only two folks had pushed for it - ASB Bank (submission here, the Ministerial response bit is on p7) and me (ditto, pp18-19). But MBIE thankfully saw enough merit in the idea to run with it. To my mind, it made no sense to set up a studies regime but not address the risk that they would be ignored.

There is also a useful focus (again following MBIE's sound advice) on following up what actually happens after the studies come out. As the Committee put it (p3)
We would like to see evaluations carried out to assess the effectiveness of each study and of the regime as a whole. We do not propose any legislative amendment in this regard. However, we suggest that, as part of the commission’s accountability arrangements with the responsible Minister, one of its performance measures should be to evaluate each competition study and report the results in its annual report.
I also learned from para 20 of MBIE's report to the Committee that "Cabinet has directed MBIE to carry out an evaluation of the competition studies regime after it has been in operation for five years". That's good practice. As I mentioned in a telco context ('Regulation done right'), it's easy to set up regulatory regimes and processes, and then forget to go back and check whether they've done any good or are still needed.

It's a pity in a way that it needed soaring petrol prices to be the catalyst that propelled competition studies up the legislative queue: they deserved a faster track than they'd got up to now. But that's realpolitik, and there's no point being naïve about it. If it took politicians' squirming to get a faster result, let's bank it and get the Commission underway that much quicker.

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