“The way we have gone about some reforms over the past four or five years has not been ideal,” he notes. “The lesson is do reform properly, not that it is too hard.”
That means discussing the options and coming up with a consensus about the best way to move forward. “Too often,” he says, “the way ideas are put out there is like throwing seeds on concrete.”
Sims is arguing, essentially, that reason can win the day. And it’s a view he puts in a very reasonable manner – so that as he rolls it out, all calm bespectacled enthusiasm, you find yourself nodding and thinking “sure, that would work”.
That same very reasonable style has, over the years, convinced everyone from prime ministers to the heads of Australia’s largest companies. Sims advised former PM Bob Hawke on economic policy in the reform heyday of the late 1980s. And he helped convince the Business Council of Australia to engage with the Rudd government on climate change policy back when a consensus on climate change looked a real possibility.
In fact, Sims – chairman of the ACCC since 2011 – is the Australian economy’s Mr Reasonable. Behind the scenes, he has been nudging forward Australian economic policy over three decades in his trademark rational but people-friendly style.
Before and after joining Hawke’s office, Sims worked in the Department of Prime Minister and Cabinet. There, in the early 1990s, he hired ex-McKinsey boss Fred Hilmer to chair the National Competition Policy Review Committee – the most extensive review of competition and consumer policy up to that time – and then argued relentlessly for its success. The Hilmer Review is now widely considered the last great economic policy triumph of the Hawke/Keating years and is a model for the current Harper Review of competition policy.
Hilmer and Sims ended up opening a consultancy together, Port Jackson Partners. In an interview last year, Hilmer described Sims’ matter-of-fact approach. “He asks, ‘What are the facts? What are the arguments? How do you know what you know?’ He’s quite creative …”
Hilmer credited Sims with being able to take the jargon out of the policy issues and communicate the benefits of competition law reform to the Labor caucus, thus ensuring the success of many of the Hawke/Keating reforms.
Sims’ natural ease with social justice ideas aligns with his early work as a development economist in Papua New Guinea.
Now that he is a regulator, Sims might be expected to keep his nose out of policy discussions. Instead, he argues that the ACCC’s real-world experience gives it a role in the reform process.
For instance, Sims’ ACCC has been broadly pro-privatisation. He argues that New South Wales and Queensland could have cut power prices by privatising their commercially oriented energy networks, and that public transport and water should go private, too.
But he is equally firm about where to draw the line. “When you get to health and education, they are more complicated,” he says. “If the objective you want to solve is really complicated, then you may be better off leaving it in the public sector.”
When Sims took on the job at the ACCC, he said one of his objectives was to make the commission less risk-averse and more prepared to test the law where outcomes were uncertain. “We have done that and it has had an effect,” he says now. “Companies have recognised that they should be taking the competition and consumer law more seriously.”
He credits this risk-accepting stance with helping the ACCC achieve better outcomes on issues like shopper dockets and information sharing in relation to petrol pricing, supplier issues in relation to Coles, misuse of market power by Pfizer and Visa, and consumer matters in relation to Apple, TPG and Hewlett-Packard.
Plus, of course, Sims put all supermarket chains on notice that their market power would be more closely scrutinised, particularly their supply arrangements involving small and medium businesses.
For this, the ACCC is frequently criticised. Sims reminds staff that criticism comes with the territory and urges them to be comfortable with that. “The big companies might be critical, but most everyone else – especially small business – thinks we are not doing enough,” he says.
Having said that, Sims doesn’t accept that there is a lot of business criticism of the ACCC. After years as a business consultant, he reckons he gets along well with business people, respects their managerial skills and understands how companies make their decisions and how competition affects their behaviour.
“Companies have a natural desire to push up against the boundaries,” he says. “The most attractive merger is the one with your closest competitor. You do your advertising and it is awfully tempting to cross the line and say something that isn’t quite true. “But most businesses, when they really understand the boundaries, will comply, so there is no point in having unclear laws or having it
unclear whether we will regulate.”
Sims believes that business appreciates the certainty of knowing where the line is that they shouldn’t cross. “We are trying to make those lines as clear as we can make them.” Sounds reasonable, surely?
The IPA on competition policy
When it comes to small and medium businesses, the focus of the Competition Policy Review should be on the unconscionable conduct and unfair contract terms and provisions of the Australian Consumer Law (ACL), which do not adequately protect small and medium businesses from being the victims of gouging and price squeezes when dealing with suppliers of customers that have superior bargaining power. The shortcomings of these two key elements of the ACL are the core of the Institute of Public Accountants’ discussion of competition policy in its Australian Small Business White Paper and also its submission to the current competition review. The IPA wants the ACL amended to make it clear that it is unconscionable conduct for a firm to use its superior bargaining power to force either a customer or a supplier to accept an unfair price. It argues for the inclusion of ‘price’ in the list of matters that a court might consider when deciding whether conduct can be called unconscionable. The IPA also argues that the parts of the ACL dealing with unfair contract terms should be amended by deleting references to ‘consumers’ and ‘consumer contracts’, so that the unfair contract provisions can apply to business-to-business contracts. This is a move that groups like the Business Council have been suggesting for years.
