Harper review would reduce us from citizens to mere consumers

The draft report of the Competition Policy Review elevates consumer choice above all other considerations. www.shutterstock.com

Are we consumers or are we citizens? Clearly most of us are both. In a capitalist economy people get much of what they need through competitive markets. Yet we also live within a society and have reasonable expectations that governments will provide a range of services and regulations.

Yet upon reading the recently released draft report of the Competition Policy Review one could be forgiven for thinking that governments should treat their citizens solely as individual consumers, and that all services should be provided through markets.

The review elevates consumer choice above all other public policy considerations. In doing so, it has potentially far-reaching implications for the way Australian governments provide services. These services include health care, education, child care and a range of others that most people take to be the basic rights of citizenship.

Competition principles

Guiding the review are the principles of the 1995 National Competition Policy. This policy essentially mandates that government activity should be benchmarked against the principles of competitive neutrality and third-party access.

The argument is the public sector should not enjoy an advantage over the private sector in providing services simply because they are run by the government. They also advocate for the privatisation of public services.

To put it bluntly, competition policy codified neoliberalism as a central logic of government. It also institutionalised a government preference for deregulation, marketisation and corporatisation. Since 1995, around 2000 government regulations have been scrutinised for compliance with the principles of competition policy.

It is therefore little wonder that neoliberal theories, such as the inherent virtues of consumer choice and the desirability of profit-oriented corporations providing basic public services, are at the core of the review’s report.

The report is wide-ranging and covers topics from government procurement to anti-competitive conduct and parallel imports. Perhaps most concerning is its recommendations regarding “human services”.

How the review promotes inequality

The review recommends that:

user choice should be placed at the heart of service delivery.

This sounds good until one realises what this means - a fully marketised system of education, health care, child care, aged care and many other social services.

The problem here is equity. The review does not view access to high-quality public services as a right of citizenship. Rather, it wants to ration social services through the market, where access is determined by an individual’s ability to pay.

Of course, in the utopian vision of the review panel, marketising social services will force private providers to reflect consumer preferences better than government can. Yet markets depend upon inequality.

The reality of marketised service provision is that high-income earners enjoy the luxury of being able to pay for high-quality services. However, the majority of people must make do with lower-quality and cheaper or free services.

The costs of privatisation

There are also other costs associated with moving government services to the private sector. For example, choosing the appropriate provider involves significant search costs.

Australian parents know how hard it can be to find a place for their child in the child-care market. AAP/Lukas Coch

This is especially so in the area of child care where many parents are struggling to find places for their children. The privatisation of this service has also meant that many parents are forced to use centres that have vacancies rather than those closer to home.

Asymmetric information is another problem. For example, in the now-marketised electricity sector, it’s in the interest of the big corporations to make it very difficult for consumers to accurately compare the price of electricity between different companies.

To its credit, the review recognises some of these problems. Yet it largely dismisses them as “transitional”.

One is left wondering when the transition period will end. In Australia we have had three decades of deregulation, marketisation and privatisation. The problems inherent in devolving responsibility for services to the individual consumer haven’t gone away.

Nor does the review do a good job defending its utopian vision of competition and choice. The draft report states that competition “could have” or “may have” benefits. Indeed, the word “may” is used on no less than 302 occasions in the document. Principles so central to its recommendations should have much firmer foundations.

Unfortunately, the idea of “the public” is almost completely absent from the draft report. In its place is the ideology of individual choice. Public provision is relegated to a residual category - a safety net available for those who fall out of the market system.

Decent standards of health care, education, aged care and child care are fundamental to our society. There is a proven alternative approach: fund these services to make them available to everyone, free of charge as a right of citizenship. Those who don’t want to use public services should also then be free to choose a private alternative.