Time to get serious about competition


Members of the Legislative Council have begun to take a close clause by clause look at the government's Competition Bill. The Deputy Minister responsible, Mr Greg So, extolled the merits of the Bill in these columns just last week.

No doubt the deliberations will quickly get bogged down in a lot of detail, and public interest may wane. But we should try not to lose sight of the main issues which are whether or not we need any such legislation at all, and - if we do - whether the draft as presented takes the right approach and is adequate for the job.

Different people will have different views on these matters and we can all follow the debate through the media as the differences get thrashed out by the interested parties.

But there is one issue on which I think we can all reach a unanimous view fairly quickly: the Government has included within the Bill clauses which completely exempt itself and all statutory bodies from its provisions unless the Chief Executive decides they should after all be included. Mr So's Op Ed piece was curiously silent on this aspect.

This is a major omission and surely wrong.

Now there is a constitutional argument that legislation cannot bind the Government itself unless it chooses to opt in, as it were. But whether the Government should have hidden behind that principle is at least arguable in this case. Some Government Departments are engaged in commercial or quasi commercial activities where the private sector is also active. Does anyone remember the Post Office? Vehicle repair work by the Electrical and Mechanical Services Department?

And what is true for the Government is even more true in respect of statutory bodies, many of which are up to their elbows, and in some cases their necks, in the business world. For example the Trade Development Council gets some 80% of its revenue from commercial activities. (The balance is by way of Government subvention). As de facto owner of the Convention and Exhibition Centre in Wanchai, it gets a percentage of gross revenue from the operator, and is a competitor of other exhibition facilities such as Asia World-Expo, the Hitec Centre in Kowloon Bay and to some extent the major hotels. As an owner of many shows, it competes directly with other exhibition organisers. It also provides exhibition services, and publishes marketing magazines, all in direct competition with other service providers.

There are many other examples. The Hong Kong Mortgage Corporation offers similar services to some privately owned finance houses. (The headline "QBE pushes into mortgage insurance" appeared in the Business section of this newspaper just a few months ago. The ensuing article made specific reference to competition with the HKMC.) The Productivity Council undertakes consultancy studies which private companies also conduct. The Urban Renewal Authority is to all intents and purposes a property developer. The MTRC competes in both transportation and property development.

Against this background, it is absurd to start from the premise - spelled out in the Legislative Council Brief - that "the activities of the public sector are almost invariably non-economic in nature".

The competition legislation is controversial. The Government would have been wiser, to avoid the further controversy it will engender with this exemption proposal, to begin with the presumption that all Government Departments and public bodies are caught by the Bill, and then justified exclusions in a separate schedule subject to LegCo scrutiny.

When the whole purpose of the legislation is to ensure fair economic behaviour, it would have been seen to be fair.

We must now rely on our legislators to put the matter right. As a minimum, they should demand a full set of the Administration's proposals with respect to Government Departments engaged in quasi commercial activities, and all statutory bodies, as a condition precedent for allowing the legislation to come out of the Bills Committee.

That way, what is going - rightly or wrongly - to be sauce for the private sector goose would also be sauce for the public sector gander.


 
Mike Rowse
email: mike@rowse.com.hk