Key takeaways from Competition in Digital Markets – Part III: Driving Productivity Growth in Australia: Challenges and Opportunities for Digital Business and Regulation.
In March 2023, Australia’s Productivity Commission released a nine-volume, 1019-page report aimed at identifying some of the policy approaches that should be reviewed or revisited to keep Australia’s economy competitive and dynamic in the face of rapid digital change.
To better understand the implications of the report’s many recommendations, as well as their potential impact on key productivity drivers and blockers, Access Partnership recently hosted an expert panel to discuss the factors that drive investment and business dynamism, the way competition affects productivity growth, and the potential need for reforming competition laws to address emerging digital business models.
Moderated by Kirsten Webb, Partner at Clayton Utz, the session included Stephen King, Commissioner at the Productivity Commission and Luke Wainscoat, Senior Economist at Houston Kemp. The webinar was supported by Amazon.
The Productivity Commission’s report and its implications for policymakers
The panel emphasised the significance of the Productivity Commission’s report as a guiding document for policymakers. It urged them to consider the report’s recommendations to ensure the regulatory frameworks support competitiveness and drive productivity growth in Australia’s evolving digital economy. While not all 71 recommendations have the same level of urgency, they offer valuable insights to shape future policies for digital platforms and beyond.
Fostering investment and business dynamism for productivity growth
The panel outlined the importance of fostering investment and business dynamism to unlock productivity growth. To this end, it highlighted the need for policies that encourage innovative entrepreneurship, attract investments, and create an environment conducive to dynamic market participation. By promoting healthy competition and supporting start-ups and small businesses, Australia can nurture a vibrant economic landscape that drives productivity growth.
Competition and its impact on productivity growth
The panel engaged in an insightful discussion about the complex relationship between competition and productivity growth. It recognised that for some, increasing concentration hampers competition and productivity, while others do not see that connection as a systematic one. The panel also acknowledged that assessing concentration is complex, as it might vary across local and national levels.
Reforming competition laws for the digital age
The panel questioned the need for sector-specificcompetition laws to address emerging challenges created by digital business models and dynamics of rapidly evolving digital ecosystems. It explored whether current laws are adequate to handle trends like e-commerce and new technology-enabled business models, weighing the pros/cons of introducing sector-specific regulations and the advantages/limitations of keeping uniform competition laws and focusing on improving existing processes.
Addressing productivity beyond competition issues
The panel noted that solely focusing on competition as a solution to productivity growth might distract policymakers from seeing or addressing the real issues. The panel urged policymakers to consider a holistic approach that acknowledges various factors contributing to productivity challenges, including complex socio-demographic dynamics that are not unique to Australia. Such an approach would utilise existing laws effectively, such as the misuse of market power law passed in 2017, and ensure Australia can build a robust regulatory framework that drives productivity growth.
Overall, the Access Partnership webinar offered a thought-provoking exchange of ideas and perspectives on productivity growth in the digital age. With the Productivity Commission’s report as a guiding beacon, policymakers have the opportunity to craft regulatory frameworks that support competitive and dynamic industries, fostering a thriving digital economy for Australia. By addressing productivity challenges from multiple angles and utilising existing laws judiciously, Australia can pave the way for sustained growth and success in the 21st century. The webinar exemplified the importance of collaborative efforts in shaping policies that propel economies towards a more productive and prosperous future.
Watch Competition in Digital Markets – Part III: Driving Productivity Growth in Australia: Challenges and Opportunities for Digital Business and Regulation.