Table of Contents
The aim of this monograph is to examine successive attempts by the Commonwealth government to improve the quality of the processes by which business regulation is made. Those attempts took place, for the most part, within three broader waves of microeconomic and regulatory reform that have occurred over the last 25 years. The first of these, which is not examined in this book, commenced in the early 1980s under the first of the Hawke ALP governments and was marked by major developments such as the floating of the dollar, substantial reform of financial market regulation (including de-regulation) and the rapid reduction of protective tariff barriers (Kelly 1992). The second wave of reform commenced during the Hawke and Keating Governments of the later 1980s and early 1990s and continued into the twenty-first century, under the auspices of the Council of Australian Governments (COAG) and the Howard Coalition governments. It was marked by two broad sets of reforms: one encompassed by the several hundred reviews of legislation and policy under the National Competition Policy (NCP), focusing on policy content; and the other related to reforms of the processes for making regulation, with the aim of ensuring that, in the future, new and modified regulation was not subject to the weaknesses that stimulated the NCP reviews. It is, as noted above, the ‘process’ reforms that constitute the primary focus on the book, as the NCP has been subject to considerable examination (with regard to NCP see, for example, Hollander 2006; Charles 2001; Deighton-Smith 2001; Butler 1996; Thomas 1996; Churchman 1996; Harman 1996). The third wave of reform commenced in 2006, often described as the National Reform Agenda, so it is somewhat premature to describe it as a major wave of reform, although that is its intent.
The remainder of this chapter is divided into three parts: the first and second parts provide brief overviews of the second and third waves of microeconomic reform in order to give a sense of perspective to the narrower concern with regulatory process that is the major concern of the book; the final section provides a brief description of the chapters of the book.
The 1980s saw a growing concern in OECD countries for their poor economic performance since the early 1970s. It was a concern that found articulate and persuasive voice in the OECD’s publication, ‘Structural Adjustment and Economic Performance’ (1987). The study argued that while the poor economic performance of member states certainly had been adversely influenced by the dramatic rise in oil prices during the 1970s, other major causes could be identified within domestic arenas, especially the failure of national governments to undertake those microeconomic reforms needed if their economies were to become more efficient. The study, in effect, endorsed and gave weight to those in Australia who had begun to push for a systematic program of microeconomic reform. Hence, it is not surprising, for example, that the Industry Assistance Commission (IAC), announced a two year inquiry strategy aimed at enabling it to identify impediments to microeconomic reform and improved national economic efficiency (IAC 1987: iv).
In Australia, in the more general context of economic reforms that had commenced in the 1970s and intensified in what became the first wave of reform under the Hawke Governments of the 1980s and early 1990s, the OECD concerns were reflected in a rising national concern for microeconomic reform (often described as structural adjustment or reform). As well as the more dramatic reforms associated with the floating of the Australian dollar, the rapid reduction in tariff barriers and the deregulation of the financial sector, there was evidence of a concern to ensure that, in future, the quality of regulation would be improved, with less negative economic impacts. This concern took institutional shape in the creation of a number of special purpose regulatory review units at both the state and federal levels, led by the Victorian Government. In 1986, for example, the Commonwealth’s Business Regulation Review Unit (BRRU), was established. BRRU was given responsibility for reviewing existing and proposed Commonwealth legislation with regard to business (Wanna, Forster and Head 1991). This concern for the reform of regulatory processes was noted in Prime Minister Hawke’s ALP Policy speech for the 1987 election and in his address to the Business Council of Australia, where he emphasised the need to re-shape economic institutions in order to meet the challenges of the 1990s (McAllister and Moore, 1991: 147; Hawke 1987: 1598).
It was a concern taken up by then Treasurer, Paul Keating in the same year and took on further significance with the transfer of the Industry Assistance Commission (IAC, now the Productivity Commission), to the Treasury portfolio. The significance lay in the fact that the Commission had begun to emphasise the inefficiencies that resulted from government regulation at both state and federal levels and the need for their reform and, with its transfer to the Treasury portfolio, it now had the ear of that powerful department and its very influential minister (see, for example, IAC 1986: 7, 8, 13-14, 18-19). The IAC made the need for regulatory reform the centrepiece of its 1988 annual report, in which it cited the OECD’s 1987 study as evidence of the need for such reform (IAC 1988). In summary, it argued that the poor performance of the Australian economy was caused, in large part, by excessive protection and too much inappropriate regulation. In turn, protection and regulation were, for the most part, the responsibility of vested interests who ‘sought preferment at the expense of the wider community’, thereby hindering reform (IAC 1988: 4). It also stressed that ‘progress in key areas is dependent on action by the States’, drawing attention to the particular and frustrating difficulties of microeconomic reform in a federal state where much constitutional authority for business regulation lay in the hands of state governments (IAC 1988: iii, 15; 1989: 5-6). It emphasised what it saw as:
… a proliferation of ad hoc groups and permanent agencies advising on policy, each concerned with a particular part of the microeconomy and not always apparently bringing an economy-wide perspective to bear (IAC 1989).
The IAC’s views bore fruit in August 1989 when Prime Minister Hawke announced the creation of a new body, the Industry Commission (IC), based on the IAC but including the BRRU and the Inter-State Commission, with closer coordination between the work of the new IC, the Bureau of Industry Economics and the Australian Bureau of Agricultural and Resource Economics — a coordination helped by the appointment of a senior Treasury official, Tony Cole, as chairman of the IC (IAC 1989: iii).
While greater administrative attention to regulatory reform was important, it needed substantial and public support from ministers at both the national and state levels if it was to be effective. This came in the shape of, first, a special series of Premiers’ Conferences aimed at improving national efficiency and international competitiveness followed by the creation of the Council of Australia Governments (COAG). They signalled what soon came be to called a ‘new federalism’, designed in large part as an institutional mechanism to cope with the demands of widespread regulatory reform (see Carroll and Painter 1995; and Painter 1998 for more detailed elaborations). Within this promising political context three major developments resulted:
one, the National Competition Policy (Productivity Commission 2005: xv for a fuller list of the NCP reforms);
two, a parallel but separate series of reviews of regulations and related institutions, several leading to intergovernmental agreements and new, intergovernmental bodies such as the National Food Authority, National Grid Management Council and National Training Authority; and,
three, the substantial strengthening of the Commonwealth’s processes for making regulation, centred on the regulatory impact statement process (RIS).
While the first two were primarily concerned with reviewing existing policy and institutions, reforms to the process of making regulation aimed to ensure that future new or modified regulation would minimise regulatory burdens on the economy and businesses. Taken together, the three formed the core of what was now a widespread, national process of reform — one that continued into the new century (Fels 1995; Charles 1995; Harman 1996; Painter 1998; Hollander 2006).
There was considerable anticipation that, on coming to office in 1996, the first Howard Government would continue the Hawke-Keating reforms. Howard’s ‘neo-liberal’ governments were not expected to disrupt the general thrust of the national process of reform set in train by the ALP at the state and national levels as, for the most part, Howard had been an ardent supporter of regulatory reform since his period as Treasurer in the last Fraser Coalition Government. More importantly, as Opposition Leader, Howard had criticised the Hawke and Keating Governments for not proceeding more rapidly with reform, albeit with differences in emphasis, rather than general intent (Quiggin 2004: 171). One of the more marked differences in emphasis in the early years of his first government, was in relation to the need to reduce the regulatory burden on small business, a sector he avidly courted in the 1996 election campaign. However, this proved an easy ‘fit’ in the ongoing program of regulatory reform. Greater differences did, of course, emerge in later Howard governments, notably in 2005, with the introduction of ‘Work Choices’, a dramatic change to the industrial relations system in Australia, aimed at freeing up labour markets and reducing the power of trade unions in what Howard proclaimed was one of the last major pieces of unfinished business in transforming the Australian economy (Howard 2005). Howard’s efforts to further deregulate the labour market followed limited moves in this direction by previous Labor governments. The last Hawke Government and by the Keating Government in 1993 introduced measures to decentralise enterprise bargaining and Keating, in particular, had overseen a reduction in the power of the AIRC, the introduction of enterprise bargaining and had permitted registered collective agreements in the non-union sector.