National Competition Policy*

National competition policy is having a major effect on Australian industry. The Hilmer committee recommendations on infrastructure access, competitive neutrality, restructuring of public enterprises and legislative review have been accepted by all Australian governments. The underlying economic principles, however, are not necessarily reflected in the reforms. The process of negotiated infrastructure access established under national competition policy may lead to monopoly rather than competitive pricing. Structural reforms of government business enterprises have ignored the benefits of integration and the relevant market characteristics. Legislative review has resulted in considerable political controversy. In some cases, competition policy can be improved by simple amendments to legislation while in other cases a clearer understanding of the relevant trade‐offs may improve the reform process.