Politicans seem to have been constantly making a hash of
competition policy in Australia. The idea behind such policy is to
smooth the way of competition, and allow markets to improve the lot of
consumers. It's pretty simple stuff, but in many markets in
Australia, there's very little competition.
Take, for example, private health insurance. If you earn more than
a certain amount, you're effecively forced to have it. So you want to
find out which plan suits your needs, but it's almost impossible to
work that out. Health insurers use all kinds of sneaky tricks to
exclude certain benefits, restrict you to specific care providers and
make it difficult to claim. Sneaky tricks like allowing private
doctors to decide, case-by-case, whether they'll work with your
insurer or not mean it's impossible to make an informed decision when
you're choosing a policy.
It doesn't have to be like this. What's needed is for the
government to set a common set of criteria that companies operating
in the market must disclose to enable direct comparisons. The former
government had a half-hearted stab at this with private health
insurance, offering a database of available
policies. But because it doesn't cover the sneaky tricks, it's
virtually useless.
This is an approach that could be taken across industries. I work
for a telco and see the marketplace swamped with conflicting offers
using sneaky fine print to con consumers into thinking they're getting
a good deal, when of course they aren't. The offers change
constantly, with some providers offering genuinely good deals to build
market share, before switching to sneakier deals that aren't anything
like as good.
This means that comparison services like Choice really can't offer simple
advice. Instead, consumers are left to try and make up their mind
without adequate information.
Common criteria for comparison
The ACCC should be empowered to act in markets that aren't
working. They should be able to direct industries to come up with
their own common criteria for comparing products, and force them to
disclose the information in a machine-readable form with an
open-access license, which will enable the data to sliced and diced to
help consumers make informed choices. Even better, industries where
online billing is the norm should be forced to allow consumers to
extract their bill data in a standard format, so they can upload it to
comparison sites and be recommended the best offers based on past
usage.
Coming up with common criteria would be hard, there's no doubt, and
you can just imagine the cries of "stifle innovative offers" from the
industries. That's the cry of people scared of competition. With a
decent review mechanism, new pricing models could be easioly
incorporated into the standards.
Easing the switch
The other are that will improve competition is easing switching
between providers. This can be applied in just about every market.
Banks are likely to be forced to make switching accounts easier, with
direct debits carried across. The big ones are screaming about it,
because they like their cosy little lock-in on consumers. If they're
screaming, the policy must be doing something right.
Other areas that desperately need work include the
telecommunications sector. To switch ADSL1 or ADSL2+ providers can be
incredibly complex. To do it smoothly, both providers need to have
signed up for the "fast churn" process, and there's a different
agreement for ADSL1 and ADSL2+. Telstra, of course, haven't signed up
for ADSL2+, which means consumers wishing to transfer from Telstra
ADSL2+ can be without their internet connection for weeks when
switching providers.
The solution here is simple: force all providers to support a fast
churn mechanism. If they don't want to, it's clear they fear
competition. What other reason could there be?
