Competition creates some strange bedfellows. It is not often that someone like Hugh Morgan seeks wider Commonwealth powers and a greater role for a government instrumentality.
That is what he did last week.
Mr Morgan is managing director of Western Mining Corporation. He has been an outspoken critic of Federal Government environment policies. He says government red tape is holding business back. But last week it was different. He was wearing the hat of chairman of the Business Council of Australia’s business law and regulation panel.
He sided with the Federal Government in calling for a wider role for the Trade Practices Commission. He attacked State Governments yesterday for not following the initiative of the Prime Minister, Paul Keating, in cutting state and professional monopoly powers. He said the states should reconsider Mr Keating’s call for an open inquiry into whether the Trade Practices Act should apply to government trading enterprises, marketing authorities, unincorporated bodies, government procurement and the professions.
At present the Act applies only to trade by private-sector corporations, interstate trade and trade within the territories because of the limits the Commonwealth’s constitutional power.
The commission itself wants a wider role. Whether the states join Mr Keating’s call for an open inquiry or not, the commission is to do its own study over the nest 12 months.
The thing began last year with the former Prime Minister, Bob Hawke, calling for a more competitive Australia. Remember that. Or is it, too, to go the way of “”the clever country” and “”the billion trees”.
The trouble is the states won’t co-operate. Many of their government business enterprises are immune or partly immune from the Trade Practices Act. They can engage in conduct that would otherwise be illegal: retail price maintenance, collusion, unfair preferences and other restrictive practices.
The professions, too, are immune, except those that practice in the Territories. One or two shopfront solicitors, accountants or surveyors are neither here nor there on the Australian competitive business scene. However, some of these professional practices are becoming huge. Moreover, they get exemption from the general principle of company law that business partnerships with more than 20 partners must form a company. It was thought that the professions should remain partnerships (which have as their legal foundation a principle of complete trust and probity between partners) rather than companies (where shareholders have no such relationship).
The trouble is, if they are not companies, they are immune from the Trade Practices Act which applies only to companies because it relies on the Commonwealth’s power over companies. It has no power over the business practices of individuals and partnerships operating within state boundaries.
Mr Morgan, Mr Keating and the chairman of the commission, Professor Allan Fels must either keep trying to persuade the states (or at least the main ones) to pass mirror legislation so their enterprises are subjected to the Commonwealth Act or something similar of the states’ own making or they must consider whether the Commonwealth Act should be amended to embrace state enterprises and the professions and run the risk of a High Court challenge which could defeat the whole purpose of building a competitive Australia.
The Commonwealth, relying on its tax power, has already intruded into the states governmental heartland by applying the training and superannuation levies to state employees. There seems little reason why the Commonwealth cannot therefore regulate the states’ enterprises by using the corporations power.
The professions are different. The High Court has as good as held the Commonwealth has no power to force professional partnerships (or any other kind for that matter) with more than 20 partners to form a company and thereby become subject to the Act because that would be a law with respect to corporations yet to be formed, and the corporations power applies only to corporations already formed.
Often the Commonwealth gets its way because it holds the purse strings, but in this case the states can persist with allowing anti-competitive conduct in the professions. That they are doing so, and are being bloody-minded about their own enterprises coming under the Act, is forcing Mr Morgan into the unusual position of supporting wider Commonwealth power and more regulation. That’s competition for you.