As market concentration grows and reform stalls, Australia’s outdated competition system is driving up prices and dragging down productivity, writes Professor Vince Hooper.
AN AUSTRALIAN FAMILY of four now spends $12,480 a year on groceries – up $3,000 since 2021 – at supermarkets the Australian Competition and Consumer Commission (ACCC) has identified as among the most profitable in the world.
Over 60% of shoppers now visit two or more stores each week, hunting for specials like bargain-seekers at a bazaar, in a market dominated by two firms whose revenue exceeds $30 billion apiece. This is not what a competitive economy looks like. It is, however, what you get when a country lets its competition architecture atrophy for three decades.
In 1993, academic Fred Hilmer handed the Keating Government a blueprint that reshaped the Australian economy for a generation. The National Competition Policy Review dismantled sheltered workshops across utilities, professions, and government business enterprises. It created the ACCC and the National Competition Council. It extended the Trade Practices Act to commercial activity that had long operated beyond its reach.
The Productivity Commission later concluded that the reforms underpinned sustained productivity growth through the 1990s and 2000s — growth that carried Australia through the Asian financial crisis largely unscathed.
I knew Fred Hilmer. He was my Vice-Chancellor at UNSW and I found tracing his career path – from McKinsey director to AGSM Dean, from chairing the 1993 competition review that reshaped a national economy to running Fairfax and then leading one of Australia's great research universities – genuinely inspirational.
What struck me was that Hilmer never treated competition policy as an abstraction. He understood it as a practitioner, a strategist and, ultimately, as a reformer who had operated on both sides of the markets he sought to open up. That combination of intellectual rigour and real-world credibility is precisely what the current reform agenda lacks.
That was 33 years ago. The economy Hilmer surveyed – state-owned monopolies in electricity, gas and water; professions ringfenced from scrutiny; an industrial base still adjusting to tariff liberalisation – bears only passing resemblance to the economy of 2026. Market concentration has risen. Markups have increased. Firm dynamism has declined. Real GDP growth has slowed to a forecast 1.1% per year, down from 1.8% over the past four decades, with labour productivity growth falling to 1.2% from a long-run average of 1.6%.
The Productivity Commission estimates that a revitalised competition policy could boost annual GDP by up to $45 billion – roughly $5,000 per household – and reduce prices by up to 1.5 percentage points.
In the language of finance, Australia is sitting on an enormous out-of-the-money call option on its own productivity. The premium has already been paid through years of foregone reform. The question is whether anyone will exercise it.
A decade lost to inertia
The last serious attempt at Hilmer-scale reform was the Harper Review, which reported in March 2015 with 56 recommendations spanning competition policy, laws and institutions. Professor Ian Harper proposed a standing Australian Council for Competition Policy, a reformed access regime, an effects test for misuse of market power and institutional machinery designed to create what the panel called a “self-sustaining process” for continual reform.
The Council of Australian Governments (COAG) “noted” the report. The Productivity Commission's Peter Harris memorably observed that it is rare to recover bureaucratically from the fate of being “noted” by COAG. He was right. The only reforms that progressed were amendments to the competition laws themselves. The broader institutional vision – the standing body, the reinvigorated principles, the modernised access regime – was shelved.
A decade was lost. That decade is now visible in every indicator of competitive health the Treasury publishes.
The world moved — Australia didn't
While Australia was noting reports, the rest of the world was acting. Gatekeeper obligations under the European Union's Digital Markets Act became enforceable in March 2024, imposing ex ante requirements on designated platforms — the tech giants whose market power is structural, not episodic.
The United Kingdom's Digital Markets, Competition and Consumers Act received Royal Assent in May 2024, with the Competition and Markets Authority (CMA)'s new digital markets regime operational from January 2025, already launching strategic market status investigations. The CMA can now impose fines of up to 10% of global turnover for consumer law breaches and has powers to order interoperability, data portability and structural remedies.
Australia? Still consulting. Treasury has proposed a digital competition regime under which the Minister would designate significant platforms and impose obligations, with app marketplaces and ad tech prioritised. The framework is sensible in outline. But it remains a consultation paper, not a statute. In a world where data monopolies, algorithmic pricing and network effects are reshaping markets in real time, Australia is bringing a discussion paper to a regulatory arms race.
The Albanese reforms: Necessary but insufficient
Credit where it is due. The Albanese Government has returned competition policy to the national agenda with more energy than any administration since Keating. The mandatory and suspensory merger notification regime, operative from January 2026, is the most significant overhaul of merger control in half a century.
The proposed ban on non-compete clauses for workers earning below $183,100 – affecting roughly one in five employers who use such clauses – tackles a genuine drag on labour mobility and wages. New regulations banning excessive pricing by supermarkets with revenue above $30 billion take effect from July 2026. The National Competition Council has been revitalised with fresh appointments and tasked with its first independent evaluation in over 20 years.
These are meaningful interventions. But they remain a portfolio of discrete fixes rather than a coherent, transformative architecture. What made Hilmer powerful was not any single recommendation but the system: competition principles binding all levels of government, fiscal incentives for states to reform, independent monitoring with the authority to withhold payments, and a shared intellectual framework that treated competition as the engine of efficiency and consumer welfare.
The Albanese agenda has the parts. It lacks the machine.
What Hilmer 2.0 must address
A genuine successor to the 1993 framework must confront four structural challenges that Hilmer could not have anticipated.
The digital economy is the most obvious. Platform markets create competitive dynamics that the Competition and Consumer Act was never designed to address. Both the EU and the UK have moved to ex ante regulation of gatekeepers. Australia needs to stop consulting and start legislating.
The services economy is the most consequential. Services now dominate Australian output, yet many of the most significant competition problems – in professional services, financial services, health, education, and the care economy – sit in sectors where regulation is fragmented across jurisdictions and professional bodies exercise quasi-legislative power. Competitive neutrality principles have never been seriously applied to these sectors. They should be.
The net-zero transition is the most urgent. Decarbonisation will require massive investment in energy infrastructure, grid access and carbon markets. Without robust competition frameworks, incumbents will capture the transition — locking in market power through early-mover advantages in renewable assets. The access regime, barely reformed since the 1990s, is not fit for purpose.
Labour market competition is the most tangible. The non-compete ban is welcome, but it exists in isolation from the still-fragmented mutual recognition of occupational qualifications across state borders. The NCC's evaluation of mutual recognition schemes, due by July 2026, is a start, but integrated treatment of labour market restraints – non-competes, occupational licensing, credentialing barriers – would deliver far more than the sum of its parts.
The institutional deficit
Hilmer's most enduring legacy was institutional. The intergovernmental agreements, the competition payments and the independent monitoring created a self-reinforcing reform dynamic. States reformed because they were paid to reform and an independent body held them accountable.
The $900 million National Productivity Fund backing the current ten-year reform plan is a start. But without binding conditionality and genuine independent oversight – a revitalised NCC with the power to conduct market studies, recommend structural remedies and publicly assess government compliance – the risk is that reform momentum dissipates as state governments face the political costs of liberalisation without the fiscal rewards that drove compliance in the 1990s.
In option-pricing terms, the Government has bought the option but set the strike price too high. The payoff structure needs to be recalibrated so that states face a real cost for inaction, not merely the opportunity cost of foregone productivity gains that materialise over electoral cycles longer than their own.
Exercise the option
The Hilmer reforms succeeded not because they were popular – they were not – but because they were comprehensive, institutionally anchored, and backed by fiscal incentives that aligned federal and state interests. Every serious analysis of Australia's productivity slowdown points to weakening competition as a contributing factor. The Productivity Commission, the Treasury, the Reserve Bank and the OECD have all said as much.
Hilmer 2.0 is not a slogan. It is the single most important structural reform available to arrest Australia's productivity decline, deliver sustained cost-of-living relief and position the economy for the competitive pressures of a fragmenting global order.
The Albanese Government has assembled the pieces. What remains is the ambition to build the machine — and the political will to switch it on.
Professor Vince Hooper is a proud Australian-British citizen and professor of finance and discipline head at SP Jain School of Global Management with campuses in London, Dubai, Mumbai, Singapore and Sydney.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
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