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Competitive neutrality

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info@treasury.qld.gov.au

Treasury is responsible for overseeing the application of competitive neutrality principles to Queensland Government business activities. Under Clause 3 of the Competition Principles Agreement, each Government is required to consider applying competitive neutrality principles to its significant business activities where it can be demonstrated that the benefits to the community would outweigh the costs. Competitive neutrality means that government businesses should not enjoy any net competitive advantage over their competitors simply as a result of their public sector ownership. Each government is free to determine its own agenda for the implementation of competitive neutrality principles.

In Queensland, competitive neutrality principles are implemented through one of the following mechanisms:

Corporatisation of government business activities involves restructuring of these business activities in such a way that they operate on a commercial basis, whilst maintaining government ownership. That is, corporatisation aims to replicate the operating environment of the private sector, without sacrificing government ownership. Examples include electricity, rail and port authority activities.
Commercialisation is a similar, but not quite as extensive, process to corporatisation. The key difference with corporatisation relates to the organisational structure. That is, commercialised entities remain as separate business units within government departments, whereas corporatised entities are separate legal entities with their own boards of directors (as happens in the private sector). Examples include the government's forestry services, car fleet, printing and building services.
Full Cost Pricing involves the application of competitive neutrality principles to pricing of selected government services without the establishment of a separate entity or business unit.

Further resources on the National Competition Policy can be accessed on the knowledge centre including:

Last reviewed 28 July 2008