Competitive Neutrality

​​​​The underlying purpose of the competitive neutrality framework is to ensure publicly owned and private businesses compete on equal terms.

The National Competition Policy competitive neutrality principles requires all significant government business activities to:

  • ​be corporatised unless corporatisation is not feasible; or otherwise
  • apply a 'full costing' approach for their services, to offset any competitive advantage arising from public ownership, with

prices to take into account these costs, unless it is demonstrated that the public interest is better served by not applying this approach, or a Community Service Obligation has been established. 

More information about the competitive neutrality principles is provided below.

Businesses or other affected parties that believe a prescribed body[1] has not correctly applied the competitive neutrality principles must, in the first instance, discuss their concerns with that body.

If the person considers that the complaint remains unresolved after that discussion the person may wish to take the matter further by lodging a formal complaint with the Regulator.

Potential complainants are encouraged to contact the Regulator's Office to discuss whether the matter can be considered under the competitive neutrality complaints framework.


Making a complaint

A person may make a complaint to the Regulator if that person:

  • ​believes that a prescribed body has contravened any of the competitive neutrality principles and that person is adversely affected by that alleged contravention; and
  • has discussed the alleged contravention with the prescribed body against which the complaint is made.

The Regulator does not accept complaints considered vexatious, frivolous or not made in good faith.

The Regulator has published a competitive neutrality complaint guideline, setting out the process for reviewing complaints about alleged breaches of the competitive neutrality principles:​

 Competitive Neutrality complaints process guideline (PDF 888Kb)

The Regulator will consider a written complaint containing the following information:

  • a description of the nature of the business affected, including any special features that the Regulator needs to be aware of;
  • the business activity of the government body which is the subject of the complaint;
  • a summary of the complaint and description of the action of the prescribed body that the complainant considers breaches competitive neutrality principles;
  • information that supports the complaint (for example, sales data and pricing information for similar products or services); and
  • details as to how the complainant has been adversely affected by the failure to apply the competitive neutrality principles.

A complaint must be submitted using the competitive neutrality complaint form:

 Competitive Neutrality Complaint Form (PDF 417Kb)

A fee of 110 fee units​ is payable when making a complaint. This fee is refundable if the Regulator finds that the complaint is justified.  Advice as to the current value of the fee may be obtained by contacting the Office of the Tasmanian Economic Regulator.


Policies and Application Statements

The Regulator's Guideline should be read in conjunction with the following Application Statements, policy and guidelines:

 Application of the Competitive Neutrality Principles under National Competition Policy (June 1996) (PDF 114Kb)

 National Competition Policy: Applying the Principles to Local Government in Tasmania (December 2013) (PDF 650Kb)

 National Competition Policy Applying Competitive Neutrality Principles to public camping in Tasmania (January 2019) (PDF 469Kb)

 Community Service Obligation Policy and Guidelines for Local Government in Tasmania (DPAC November 2000) (PDF 23Kb)

The Regulator's role

The Regulator is responsible for investigating competitive neutrality complaints in Tasmania under Part 6 of the Economic Regulator Act 2009 (the Act).

The Regulator will conduct a complaint in​vestigation when the complaint meets the legislative requirements and the Regulator considers it necessary or appropriate to conduct an investigation. The Regulator's annual reports​ set out the outcomes from competitive neutrality investigations conducted during the previous financial year.​

Competitive neutrality principles

In 1995, as part of the National Competition Policy, State, Territory and the Commonwealth Governments of Australia agreed that government businesses should not enjoy a competitive advantage simply as a result of their public ownership. The competitive neutrality principles are contained in the Competition Principles Agreement:

Competitive Neutrality Principles (Competition Principles Agreement) (National Competition Council, April 1995 - as amended)

If a government business is corporatised, to operate sustainably it is generally required to set prices that reflect all of its costs. If the business is not corporatised but operates within a government agency, a council or a similar body, it may be exempt from some costs, such as some taxes, and some inputs may be provided by the relevant government at no cost or below the costs that private businesses would incur. Furthermore, they may not face the same regulations as a private business.  

For this reason, to ensure that these non-corporatised businesses compete on equal terms with private businesses, they are usually required to estimate all the costs that would be incurred producing their goods or providing their services (even if they do not incur some of these costs) which should be the same as if the business were privately owned, and set prices that reflect these costs.

The exceptions are:

  • where the relevant government has demonstrated that it is in the public benefit to set prices that do not reflect these costs, which may include making the service available at no cost; and
  • where the relevant government has established a Community Service Obligation (CSO) that enables the service to be provided at prices that are less than the full cost.

    In both cases, there are processes to be followed and requirements that must be met. These are set out in the Application Statements (see links under Policies and Application Statements above).

Importantly, if there is a complaint lodged with the Regulator, there will be insufficient time for a government to conduct a public benefit test or establish a CSO before the Regulator has completed its investigation. ​

[1]    A prescribed body means an Agency, a statutory authority, a local government body, a Government Business Enterprise or a State-owned company.​

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