Competitive Neutrality: OECD Recommendations and the Australian Experience.

This article analyzes the OECD’s May 2021 Recommendation on Competitive Neutrality, focusing on its practical implementation through the established Australian framework as a case study. Competitive neutrality, defined by the OECD as ensuring no entity operating in an economic market faces undue competitive advantages or disadvantages due to government ownership, regulation, or activity, aims to create a level playing field among enterprises. Australia’s policy, introduced in 1995 following the Hilmer Review, applies primarily to significant government-owned businesses and seeks to neutralize net competitive advantages arising from public ownership through measures such as corporatization and full cost recovery. While Australia’s approach is regarded as comprehensive, challenges remain, including inconsistent application across jurisdictions, limited transparency, absence of enforceable penalties for non-compliance, and complexities in balancing competitive neutrality with overriding public policy objectives, especially in privatization and infrastructure reforms. The article suggests that these Australian experiences offer valuable insights for other jurisdictions seeking to implement the OECD Recommendation while highlighting the need for clearer guidance, stronger enforcement mechanisms, and greater transparency.