ACCC & AER annual report 2016-17

Performance reporting framework

This chapter reports on our performance for 2016–17 using the framework in both the 2016–17 ACCC Portfolio Budget Statements (PBS) (contained in the Treasury portfolio PBS) and the ACCC and AER Corporate Plan 2016–17. The ACCC and the AER jointly report against one outcome, with the ACCC reporting against Program 1.1 and the AER against Program 1.2, as shown in table 3.1.

Table 3.1: Performance reporting framework

Drivers

Competition and Consumer Act 2010 (Cth)

ACCC Portfolio Budget Statement

ACCC and AER Corporate Plan 2016–17

Outcome 1

Lawful competition, consumer protection, and regulated national infrastructure markets and services through regulation. These include enforcement, education, price monitoring and deciding access terms to infrastructure services.

Program 1.1

Australian Competition and Consumer Commission

Program 1.2

Australian Energy Regulator

Purpose

Competitive markets increase the prosperity and welfare of Australian consumers. Our role is to protect, strengthen and supplement the way competition works in Australian markets and industries to improve the efficiency of the economy and to increase the welfare of Australians.

This means we will take action where it improves consumer welfare, protects competition or stops conduct that is anti-competitive or harmful to consumers, and where it promotes the proper functioning of Australian markets.

The AER is the national energy market regulator. The AER’s roles encompass the retail and wholesale electricity and gas markets and energy network infrastructure.

The objectives of the national energy legislation guide the AER’s priorities and work program. The common objective through the legislation is to promote efficient investment in, and efficient operation and use of, energy services for the long-term interests of end users of energy with respect to price, quality, safety, reliability and security.

Note: This purpose from the 2016–17 Corporate Plan is consistent with the objective in the 2016–17 PBS.

Strategies to achieve our purpose

To achieve our purpose, we focus on these strategies:

  • maintaining and promoting competition (Strategy 1)
  • protecting the interests and safety of consumers, and supporting fair trading in markets affecting consumers and small business (Strategy 2)
  • promoting the economically efficient operation of, use of, and investment in infrastructure; and identifying market failure (Strategy 3)
  • promote efficient investment in, and efficient operation and use of, energy services for the long-term interests of consumers with respect to price, quality, safety, reliability and security (Strategy 4).

How we deliver the strategies that achieve our purpose

Below are deliverables we use to progress each strategy as we work towards achieving our outcome and purpose. Performance indicators underpin each of these. In our Annual Performance Statement we provide:

  • the targets and results for each deliverable under each strategy
  • some highlights that demonstrate how our performance in a specific area contributes to our strategy and thus to achieving our purpose.

Program 1.1 ACCC

Strategy 1: Maintaining and promoting competition

To maintain and promote competition, we:

Deliverable 1.1

Deliver outcomes to address harm to consumers and businesses resulting from anti-competitive conduct

Deliverable 1.2

Assess mergers to prevent structural changes that substantially lessen competition

Deliverable 1.3

Make decisions on authorisation, notification and certification trade mark applications in the public interest

Strategy 2: Protecting the interests and safety of consumers and supporting fair trading in markets affecting consumers and small business

To protect the interests and safety of consumers and support fair trading in markets affecting consumers and small business, we:

Deliverable 2.1

Deliver outcomes to address harm to consumers and small businesses resulting from non-compliance with the Australian Consumer Law

Deliverable 2.2

Enhance the effectiveness of the ACCC’s compliance and enforcement initiatives through partnerships

Deliverable 2.3

Identify and address the risk of serious injury and death from safety hazards in consumer products

Deliverable 2.4

Support a vibrant small business sector

Deliverable 2.5

Empower consumers by increasing their awareness of their rights under the Australian Consumer Law

Strategy 3: Promoting the economically efficient operation of, use of, and investment in infrastructure; and identifying market failure

To promote the economically efficient operation of, use of, and investment in infrastructure; and identify market failure, we:

Deliverable 3.1

Deliver network regulation that promotes competition in the long-term interests of end users

Deliverable 3.2

Provide industry monitoring reports to government in relation to highly concentrated, newly deregulated or emerging markets

Deliverable 3.3

Improve the efficient operation of markets by enforcing industry-specific competition and market rules

Program 1.2 AER

Strategy 4: Promote efficient investment in, and efficient operation and use of, energy services for the long-term interests of consumers with respect to price, quality, safety, reliability and security

To promote efficient investment in, and efficient operation and use of, energy services for the long-term interests of consumers with respect to price, quality, safety, reliability and security, we:

Deliverable 4.1

Provide effective network regulation

Deliverable 4.2

Build consumer confidence in retail energy markets

Deliverable 4.3

Support efficient wholesale energy markets

Structure of Annual Performance Statement

This Annual Performance Statement separately covers Program 1.1 (ACCC) and Program 1.2 (AER). The performance reporting sections for each program are organised according to the strategies and deliverables outlined above.

For Strategy 1 we have divided our performance reporting into three areas of activity:

  • taking enforcement action to promote competitive markets (Deliverable 1.1)
  • ensuring competitive arrangements between businesses, including through merger and authorisation review (deliverables 1.2 and 1.3)
  • other work we do that promotes and enhances competition.

For Strategy 2 our reporting aligns directly with the four deliverables under this strategy.

For Strategy 3 our reporting is organised by industry, noting the deliverables as they apply.

For Strategy 4 our reporting aligns directly with the three deliverables under this strategy.

We have provided a ‘Summary of performance’ for each strategy. These sections:

  • outline our role and functions, powers and priorities
  • present our results against the performance indicators for each deliverable
  • outline the factors that affected our performance during the reporting period.

We have also provided an ‘Analysis of performance’ section for each strategy where we discuss our work in more detail, including examples that demonstrate how we carry out the strategies to achieve our purpose.

Figure 3.1 provides a guide to the structure of the Annual Performance Statement.

Figure 3.2: Structure of Annual Performance Statement

Regulator Performance Framework

In November 2016, the ACCC published its inaugural self-assessment (for 2015–16) under the Australian Government’s Regulator Performance Framework. The self-assessment is available on the ACCC website.1

The framework requires regulators to assess their performance against six key performance indicators:

1. Regulators do not unnecessarily impede the efficient operation of regulated entities

2. Communication with regulated entities is clear, targeted and effective

3. Actions undertaken by regulators are proportionate to the regulatory risk being managed

4. Compliance and monitoring approaches are streamlined and coordinated

5. Regulators are open and transparent in their dealings with regulated entities

6. Regulators actively contribute to the continuous improvement of regulatory frameworks.

These KPIs are concerned with how regulators administer regulation, with the aim of encouraging regulators to undertake their functions with the minimum impact necessary to achieve regulatory objectives. The framework does not seek to measure the performance of the ACCC in relation to the outcomes we achieve for Australian consumers and the economy.

The ACCC’s self-assessment drew heavily on the results of a survey of over 1000 of the ACCC’s business stakeholders conducted independently by market research firm ORC International. Results of the survey were published in conjunction with the ACCC’s self-assessment. We also relied on other evidence, such as quantitative performance data and descriptive information that provides stakeholders with a greater appreciation of the systems and processes the ACCC has in place to support our engagement with businesses.

The draft self-assessment report was reviewed and externally validated by the ACCC Performance Consultative Committee, which comprises 15 business, legal and consumer representatives who collectively cover the broad range of stakeholders that the ACCC engages with in undertaking its various functions.

The 2015–16 self-assessment found that the ACCC is generally achieving the six KPIs to a satisfactory or good standard across the entire organisation. However, we identified various areas where our performance could be improved and have implemented a range of strategies to enhance how we engage with regulated businesses and other stakeholders. This will contribute to minimising the burden imposed on businesses from regulation while still achieving our purpose of improving the welfare of all Australians by making markets work for consumers.

The ACCC’s self-assessment for 2016–17 will be published in November 2017.

Statement of preparation

I, as the accountable authority of the Australian Competition and Consumer Commission, present the 2016–17 financial year annual performance statements of the ACCC, as required under paragraph 39(1)(a) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act). In my opinion, these annual performance statements are based on properly maintained records, accurately reflect the performance of the entity in the reporting period, and comply with ss. 39(2) of the PGPA Act.

Rod Sims

Chairman, ACCC