Frequently Asked Questions
The following frequently asked questions are downloadable documents.
Who can make a complaint?
Can I discuss my possible complaint before formally lodging it?
Are all complaints investigated?
Will the Government business know who made the complaint?
How much does it cost to lodge a complaint?
Is the investigation process independent?
Do I need to lodge a formal complaint?
Do I have to provide evidence information supporting my complaint?
What happens after an investigation is complete?
Is the government business required to follow the VCECs recommendations?
Can I get compensation if the government business is in breach of Competitive Neutrality?
What is the role of the Ombudmans?
The following short-papers may be helpful for both government agencies and private persons in understanding specific issues involved with competitive neutrality.
How does Competitive Neutrality apply to childcare?
What is a significant business in the Competitive Neutrality context?
How to calculate cost of capital?
Hints on how to conduct a Public Interest Test?
The benefits to local businesses and communities from application of competitive neutrality policy have become more apparent as a result of complaint investigations undertaken by the Competitive Neutralotu Unit. The Unit has found that proper application of competitive neutrality pricing to government businesses can:
- remedy the unfair competition which threatens the financial viability of small and often local businesses which compete in the same market
- potentially reduce the burden on taxpayers when businesses can provide more effective services and at a lower cost than government.
Case study: Council-owned recreation centre
A private gym in regional Victoria was concerned that the local council-owned recreation centre may not have been complying with the Government's competitive neutrality policy. The recreation centre offered aerobics, gym, creche facilities and a pool, while the private gym provided aerobics and gym facilities only.
The private gym was unable to compete with the recreation centre on price and noted that the costs of memberships in the industry were substantially higher than those at the council-owned centre. The private gym was concerned that the lower prices charged by the centre were due to cost advantages attributable to council ownership of the centre.
Management of the council-owned centre had been outsourced on a competitive basis. Under the terms of the contract, the contractor would operate the centre on a fully commercial basis and provide a rate of return to the council. Rather than providing a return to council, the contractor received a substantial subsidy to offset operating losses in one financial year, mainly because the pool activities incurred a cash deficit. This raised concerns that the gym and aerobics activities also may have benefited from the subsidy even though they returned a cash surplus.
The investigation by the Competitive Neutrality Unit revealed that competitively neutral costing and pricing principles were not being correctly applied. The activities the council wished to subsidise, such as the pool, should have been separated from commercial activities such as the gym and aerobics activities. At a minimum, these business activities should have had their own separate operating accounts and rate of return requirements. Failure by the council to correctly implement competitive neutrality resulted in a larger subsidy to the centre than would have otherwise been the case, thereby increasing the cost of the centre to ratepayers.
The lesson that can be drawn from this case study is that the application of competitive neutrality pricing can eliminate unfair competition thereby enhancing the financial viability of local business in regional Victoria.