OECD Product Market Regulation (PMR) Indicators: How does Australia compare? ___________________________________________________________________________________ Competitive product markets foster economic growth and can improve the living standards of citizens. OECD’s Product Market Regulation Indicators assess the alignment of a country’s regulatory framework with internationally accepted best practices. The Economywide Indicator measures the distortions to competition that can be induced through the involvement of the State in the economy, as well as the barriers to entry and expansion faced by domestic and foreign firms in different sectors of the economy. This indicator is complemented by a set of Sector Indicators that measures regulatory barriers to competition at the level of specific network and service sectors.
Overall PMR Indicator Index scale 0 to 6
Australia
1.16
OECD average
1.38
5 Most competitionfriendly countries 5 Least competitionfriendly countries
1.00 1.82 0.0
2.0
4.0
6.0
Economy-wide PMR Indicators: a breakdown by major components Index scale 0 to 6 from most to least competition-friendly regulation
6
Australia 5 Most competition-friendly countries
OECD average 5 Least competition-friendly countries
5 4 3 2 1 0 Public Ownership
Involvement in Business Operations
Simplification and Evaluation of Regulations
Admin. Burden on Start-ups
Barriers in Service Barriers to Trade & Network sectors and Investment
Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2018. When the regulatory issues included in the PMR are not determined at the federal level, the information refers to New South Wales. Source: OECD 2018 PMR database.
ECONOMY-WIDE HIGHLIGHTS Regulatory barriers to competition are lower in Australia than in most OECD countries, particularly in network sectors. There are few administrative requirements for starting up a new business and limited public ownership in large network operators. However, there is scope for reducing barriers to entry in some service sectors, making the licensing system less burdensome, as well as ensuring transparency in the interaction between interest groups and public officials during the regulatory process.
Economy-wide PMR indicators: a breakdown by sub-components Index scale 0 to 6 from most to least competition-friendly regulation Distortions Induced by State Involvement Simplification and Evaluation of Regulations
Complexity of Regulatory Procedures
6 5 4 3 2 1 0
Interaction with Interest Groups
Involvement in Business Operations
5 Least competition-friendly countries
Assessment of Impact on Competition
6 5 4 3 2 1 0
Price controls
Governance of SOEs
Direct Control
Scope of SOEs
Gov’t Involv. in Network Sectors
Public Ownership
6 5 4 3 2 1 0
5 Most competition-friendly countries
Public procurement
OECD average
Command & control regulation
Australia
Barriers to Domestic and Foreign Entry
Barriers to Trade Facilitation
Barriers to Trade and Investment
Treatment of Foreign Suppliers
6 5 4 3 2 1 0
Tariff Barriers
Barriers in Service & Network sectors
5 Least competition-friendly countries
Barriers to FDI
6 5 4 3 2 1 0
5 Most competition-friendly countries
Barriers in Network sectors
Licenses and Permits
Admin. Burden on Start-ups
Admin. Requirements for Lim. Liab. Companies and Pers.Owned Enterp.
6 5 4 3 2 1 0
OECD average
Barriers in Services sectors
Australia
Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2018. When the regulatory issues included in the PMR are not determined at the federal level, the information refers to New South Wales. If the blue bar does not appear on the chart for a specific indicator, it means that its value is 0. Source: OECD 2018 PMR database.
SECTOR-SPECIFIC HIGHLIGHTS In terms of sector-specific regulations, regulatory settings in professional services and retail distribution in Australia are among the most competition-friendly in OECD. However, the rules pertaining to the retail sale of medicines pose constraints to competition. Regulations in energy and air transport are among the most competition-friendly in the OECD area, while there is scope to remove regulatory barriers to competition in transport by water and by road, as well as in e-communications.
Regulation in network and service sectors PMR Indicators for network sectors Index scale 0 to 6 from most to least competition-friendly regulation Australia 5 Most competition-friendly countries
6
OECD average 5 Least competition-friendly countries
5 4 3 2 1 0 Electricity
Gas
Rail
Air
Energy
Road
Water
Transport
Fixed
Mobile
E-Communications
PMR Indicators for professional services* and retail distribution Index scale 0 to 6 from most to least competition-friendly regulation
6
Australia OECD average 5 most competition-friendly countries 5 Least competition-friendly countries
5 4 3 2
1 0 Lawyers
Accountants
Architects
Civil engineers
Professional services
Real estate agents
Retail distribution
Retail sale of Medicines
Retail trade
* When comparing the indicators across countries, it should be kept in mind that the activities undertaken by specific professions may vary between countries. Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2018. When the regulatory issues included in the PMR are not determined at the federal level, the information refers to New South Wales. If the blue bar does not appear on the chart for a specific indicator, it means that its value is 0. Source: OECD 2018 PMR database.
OVERALL ASSESSMENT
While in Australia regulatory barriers to competition are among the lowest in the OECD, there is still scope for improving product market regulation in some areas.
Strengths
Challenges
The Australian regulatory impact assessment system requires that potential distortions to competition arising from new laws and regulations are regularly evaluated. Stakeholders are involved in the process of designing new regulations and assessing existing ones. In addition, an independent body has the power to perform market studies and to advocate for competition.
There is a lack of clear rules ensuring transparency and accountability of the interactions between interest groups and public officials vis-a-vis the public and other stakeholders.
Retail sale of pharmaceutical products is subject to numerous regulatory constraints, in particular on the number, location and ownership of pharmacies.
Regulations in professional services are among the most competition-friendly in the OECD. In particular, professionals have freedom to set their fees, advertise for their services, and face limited restrictions on the legal form professional firms can take.
In the water transport sector, there is scope for greater separation between the operators of terminal facilities that offer commercial services and port authorities.
Moving from an authorisation to a notification procedure could reduce barriers to entry in the provision of long-distance transportation of passengers by coach.
The regulatory framework for public procurement of goods, services and public works is transparent, and facilitates firms’ participation in public tenders. For instance, it is a mandatory requirement for all contracting authorities to make all tender documents available online and free of charge and to allow firms to submit bids online for all tenders.
Further information
“What are the 2018 OECD PMR indicators?” PowerPoint presentation on OECD PMR website
Vitale, C., et al. (2020), " The 2018 Edition of the OECD PMR Indicators and Database – Methodological Improvements and Policy Insights", OECD Economics Department Working Papers
Please visit our website : http://oe.cd/pmr Contact us at: PMR2018@oecd.org