The Unintended Consequences of Joe Hockey

John Durie highlights the unintended consequences of the government’s capitulation to Joe Hockey’s attack on the banks:

Many don’t realise that the proposed changes would also hit staff on the shop floor—consider rival liquor store employees noting that Dan Murphy is offering Boags beer at cheaper prices.

The proposed changes would make such private conversations illegal.

These are just some of the unintended consequences of the price signalling proposals unveiled by Wayne Swan last month as part of the Treasurer’s bank competition package.

What started as a policy discussion on the definition of an understanding got caught up in the government’s attempts to be seen to be setting the agenda on bank competition.

This issue was last considered back in 2007, when changes suggested by Julian Burnside were rejected. Now ACCC boss Graeme Samuel has cynically attempted to boost his powers by exploiting Swan’s perceived political vulnerability.

On a more generous interpretation, Swan has not realised the sweeping impact of his proposed changes, and simply wants to test public opinion. Having realised that the changes would involve overturning basic legal principles such as the onus of proof, Swan can now back off.

He has, after all, raised the issue for discussion, and can now scrap it, having seen the error of his ways.

Even if you believe the law is deficient, at most it requires some tweaking to bolster the ACCC’s armoury.

Instead, we were presented with a revolutionary version from Graeme “Che Guevera” Samuel.

A range of lawyers and economists have privately slammed the proposals as plain bad policy.

posted on 12 January 2011 by skirchner in Economics, Rule of Law

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