Innovation policy is always popular, especially when the incumbents can rest secure that competition policy works in their favour. In Australia at the moment the Federal Government is plastering TV with ads proclaiming its #ideasboom
Without doubt, disruption occurs most efficiently and effectively when competition is facilitated. It is smothered by direct and by “gray” inhibitors of competition.
The world’s least competitive economy
Unfortunately Australia arguably has the world’s least competitive economy, in the sense of having the most sectors of the economy controlled by monopolies or oligopolies.
For example, for all of Australia:
- 2 port operators,
- 2 media owners supply all newspapers to 6 out of 7 capital cities,
- 2 insurance companies dominate all personal and commercial insurance, and
- 3 all mortgage insurance,
- 2 airlines,
- 3 telcos,
- 4 banks,
- 3 energy retailers (integrated from generation to transmission to distribution to retail),
- 2 supermarket chains,
- 2 variety store chains,
- 2 gas station chains,
- 2 chains sell the bulk of all liquor in the country,
- 1 hardware chain completely dominates, and
- all major airports are monopolies which is why Melbourne Airport was ranked as the most expensive airport parking in the world.
The list goes on.
The lack of success of most of the Australian-owned monopolists and oligopolists in expanding overseas points to their insularity. Banks, insurance companies, telcos and retailers have all failed and retreated leaving plenty of blood for shareholders to mop up.
This makes the incumbents very comfortable. And being comfortable breeds complacency — which is the long-standing deep-seated national business identity.
Competition creates fear
Competition makes the incumbents uncomfortable. It creates fear. Sensing the fear drives the innovators forward. Australia does not need more ideas, it needs more competition.
It’s very very simple — spend more time and money fixing the lack of competition and innovation will look after itself (almost).
How about putting the $28m to be spent on PR for #ideasboom instead to staffing up the Australian Consumer and Competition Commission and the Productivity Commission and legislating to give them some real teeth?