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<br><BLOCKQUOTE ALIGN="CENTER">September 1998</BLOCKQUOTE><B>
<BLOCKQUOTE>Introduction</B> </BLOCKQUOTE>
<BLOCKQUOTE>The Australian Council of Professions (ACP) has, over the years, been closely involved in the public processes, culminating in the Hilmer Report, which have addressed the position of the professions in the context of national competition policy. Generally, the Council has always accepted the Hilmer proposition that the Trade Practices Act should have universal coverage, a position acknowledged in the Hilmer Report itself. In its submission to the Hilmer Inquiry, however, the ACP said that it endorses the principle of competition on the basis of merit for the provision of any specific service and supports the removal of unnecessary barriers to competition - but the key word is 'unnecessary'. It is crucial not to abandon those barriers which, whilst perhaps appearing to be anti-competitive, can be shown to be in the public interest. "The public interest and the protection of consumers should be the paramount criteria in assessing the need for any change." </BLOCKQUOTE>
<BLOCKQUOTE>Against this background, the ACP's primary focus is on those aspects of the Senate Select Committee's terms of reference that relate to the broader socio-economic consequences, including costs, arising out of the impact of the national competition policy in the area of social welfare and in respect of the clarification of the definition of public interest and its role in the national competition process. </BLOCKQUOTE><B>
<BLOCKQUOTE>Social Welfare</B> </BLOCKQUOTE>
<BLOCKQUOTE>In May 1995, the Senate Economics Legislation Committee took evidence on the provisions of the Competition Policy Reform Bill; a copy of the ACP's submission to the Committee is attached. The submission deals, inter alia, with the genesis of the professions and the development, over time, of the tenets of 'professionalism'. </BLOCKQUOTE>
<BLOCKQUOTE>More recently, the ACP's President, Ms Joycelyn Morton, in the foreword to a joint publication with The Institution of Engineers, Australia on National Competition Policy and the Professions, commented as follows: </BLOCKQUOTE>
<BLOCKQUOTE>"In pursuing the interests of its constituency, the Council is concerned to play a positive role in the affairs of the nation. It is a reality not often understood or acknowledged that many of the issues of immediate concern to the professions have a larger dimension extending to the health and welfare of the community at large and the Council readily accepts a responsibility to tell this story in an as objective a fashion as possible. We hold strongly to the view that there is a significant public benefit in the maintenance of the highest levels of professional practice in this country and that the concept and pursuit of 'professionalism' is essential to meeting the needs and aspirations of each and every citizen, thus contributing to the preservation of the social fabric. </BLOCKQUOTE>
<BLOCKQUOTE>"These are lofty ideals often, I regret to say, trivialised by critics of one or other of the professions. That sets the parameters of our challenge. Programs of government, instituted in pursuit of broad ideological objectives and with an undoubted electoral mandate, can sometimes impinge on the efforts of the professions to preserve for the community all that is best in professional practice. In consequence, the Australian Council of Professions seeks actively to promote dialogue with legislators, administrators and within the community at large to ensure that a balanced view of policy outcomes is developed and that results inimical to the maintenance of professionalism in this country, usually unintended, are avoided to the greatest extent possible. ….…. Our basic tenet is that professional standards involve many criteria, for instance professional ethics and service to the community, which are of far greater importance than the price at which a professional service is provided and we will continue, in the public interest, to keep this thought alive in the minds of the regulators of competition policy as they go about their important task."</BLOCKQUOTE>
<BLOCKQUOTE>For the ACP, the distinguishing characteristics of a profession include a requirement for special knowledge and skills exercised in the interest of others (with due regard to the asymmetry of knowledge usually obtaining between professional practitioner and client) and enforceable standards of competence and conduct of the highest order. In consequence, the ACP continues to hold strongly to the precept that 'professionalism' is a social good unlike any other and that its preservation and enhancement deserve the close attention of the professions, the legislators and the community at large. </BLOCKQUOTE><B>
<BLOCKQUOTE>Public Interest</B> </BLOCKQUOTE>
<BLOCKQUOTE>It follows that the Australian Council of Professions is concerned that the defining of what constitutes the 'public interest' for competition policy purposes should give appropriate weight to the social benefits flowing from the maintenance of the highest professional standards. The issues involved are complex and require a qualitative rather than a quantitative view of what is beneficial in a socio-economic context. </BLOCKQUOTE>
<BLOCKQUOTE>In June 1997, the House of Representatives Standing Committee on Financial Institutions and Public Administration tabled its Report of the Inquiry into Aspects of the National Competition Policy Reform Package entitled "Cultivating Competition". Amongst other things, that report gave recognition to the pivotal need for the public interest test to be applied in a coherent and consistent manner across jurisdictions; its observations were formulated against the background of the review of legislation flowing from the Competition Principles Agreement of 1995 involving in excess of two thousand pieces of legislation and nine separate jurisdictions. The Standing Committee's insights into the issues involved were welcomed by the professions. </BLOCKQUOTE>
<BLOCKQUOTE>At that time, the ACP and The Institution of Engineers, Australia jointly published "National Competition Policy and the Professions" (a copy of which has been supplied to the Select Committee's secretariat) essentially to articulate the concern of the professions about the way in which the legislative review process as it affected the professions was being conducted. In the words of Dr John Webster, Chief Executive of IEAust and Chairman of the ACP's Competition Policy Committee, "The legislative review process requires those responsible for the reviews, and there are different reviewers for each piece of legislation, to make a judgment on the public interest aspects including social, environmental, or safety standards, against the gains from the introduction of a more competitive environment. For the professions generally this has meant a questioning of the barriers to entry, barriers to practice, licensing restrictions and ownership of practice. This process demands a shared understanding and definition of what constitutes the public interest. The debate necessary to establish such a shared understanding has yet to occur in Australia." </BLOCKQUOTE>
<BLOCKQUOTE>Reflecting a common interest, the ACP/IEAust publication was launched by Mr David Hawker MP, Chairman of the House of Representitives Standing Committee on Financial Institutions and Public Administration, who, in his comments on the public interest process, said that, "the major principles jurisdictions should follow in the process are transparency, objectivity, analytical rigour and achieving a balance of input from relevant and interested parties." In pursuit of similar aims, the ACP is presently engaged in close consultation with the President and staff of the National Competition Council, which is seen by the professions as having a vital and pursuasive role to play in influencing the various jurisdictions to reach coherent and satisfactory outcomes in respect of the reviews of legislation impacting on the professions. Basically, the ACP is arguing that, to avoid adverse outcomes in terms of the maintenance of professional standards and the mutual recognition of professional standards in Australia (with likely repercussions in the area of international trade in professional services), national reviews of legislation affecting the professions should be implemented in place of the separate reviews currently being undertaken by the various governments. There appears to be support in principle for the concept of national reviews but the challenge remains to translate that support into positive outcomes. </BLOCKQUOTE>
<BLOCKQUOTE>If the objective of national reviews is to be achieved, there will need to be a willingness on the part of the various jurisdictions to subject parochial interests to the greater national good. In this regard, the role of the inter-governmental committees of officials oversighting the legislative review process is critical and it is the hope of the ACP that the work of those committees can, from its perspective, become more transparent than has been the case to date. The ACP will be endeavouring to bring this about. </BLOCKQUOTE><B><I>
<BLOCKQUOTE>Joycelyn Morton</I> President</B> </BLOCKQUOTE><FONT size=2>
<P><B>
<P></P></FONT><B>
<BLOCKQUOTE>Attachment</B> </BLOCKQUOTE>
<BLOCKQUOTE>30 May 1995 <BR>Mr Robert Diamond<BR>Secretary<BR>Senate Economics Legislation Committee<BR>Room SG 64<BR>Parliament House Canberra ACT 2600 </BLOCKQUOTE>
<BLOCKQUOTE>Dear Mr Diamond, </BLOCKQUOTE>
<BLOCKQUOTE>I am writing in response to the recent inquiry by Ms Merrilyn Pyle as to whether the Australian Council of Professions would wish to make a submission to the Senate Economics Legislation Committee with regard to the Competition Policy Reform Bill 1995. </BLOCKQUOTE>
<BLOCKQUOTE>While the Australian Council of Professions has always accepted the Hilmer recommendation that the Trade Practices Act should have universal coverage, including the professions, it would be true to say that there exists within the professions a pronounced degree of uncertainty about the evolving processes of implementation of the Hilmer recommendations in respect of their application to professional occupations. This uncertainty has led in some instances to concern that there was a lack of understanding on the part of the Hilmer Committee, which may still be present in the implementation processes, about the essential nature of professionalism in the context of the Australian social structure. I can perhaps best illustrate the nature of this concern by drawing extensively on a response some twelve months ago by the New South Wales Council of Professions, a constituent member of the Australian Council, to the Hilmer recommendations. </BLOCKQUOTE><B>
<BLOCKQUOTE>The Nature of Professional Services</B> </BLOCKQUOTE>
<BLOCKQUOTE>As the NSWCOP commentary shows, the ordinary citizens who see doctors, dentists, physiotherapists, solicitors and other professionals have expectations as to the nature of the service that they are going to receive which embrace different criteria than those taken into account in the consideration of the application of a national competition policy to the professions. The nature of the services provided are often highly personal and are provided as part of a relationship involving elements of integrity, trust, honesty, diligence, competence and concern for the interests and welfare of the person receiving the service. </BLOCKQUOTE>
<BLOCKQUOTE>The ethic of most professionals is not to treat the consumers of the services they provide as a means for making money. It is wrong to equate the provision of services by professionals with the sale of goods. Such an approach does not accord with the ordinary experience of either the providers or the receivers of those services. At the same time, it should be stressed that all professions work in a highly competitive atmosphere. </BLOCKQUOTE>
<BLOCKQUOTE>The Hilmer Report contained an observation which operates as a premise to support the conclusion that professions should not be treated differently from any commercial activity. This is to be found in the proposition that, "there is no legal or universally agreed definition of the professions." The conclusion that is invited is that there is nothing special about professions which distinguishes them from business. There is, in fact, an identifiable class of professional services and persons providing those services. The work of members of professions has distinguishing characteristics which makes it qualitatively different from the work of persons engaged in trade or business. </BLOCKQUOTE><B>
<BLOCKQUOTE>The Meaning and History of Professions</B> </BLOCKQUOTE>
<BLOCKQUOTE>The history of the development of professions provides an important perspective on their functions in society. The early meaning of the word "profession" was a declaration or promise or vow made by a person entering a religious order. By the late middle ages, its meaning had changed to identify that class of persons who professed knowledge of some department of learning or science and used that professed knowledge in application to the affairs of others. With the development of that "professionalism", associations of such persons formed together for the purposes of controlling the conduct and standard of behaviour of those persons professing to provide and providing those services. As society became more complex, the numbers of such associations increased. </BLOCKQUOTE>
<BLOCKQUOTE>The elevated position of the professionals in the community did not occur by accident. It was because of the function of individual professionals in banding together and agreeing amongst themselves to adopt high standards of entry and to observe high standards of performance that the community came to respect and trust persons providing those services. Self-regulation and autonomy were an integral part of the development of those standards. It was in the interest of the members of the professions that those standards be maintained. From the point of view of the community, it ensured the quality of the services being provided. </BLOCKQUOTE>
<BLOCKQUOTE>The public interest in maintaining the highest standards in the provision of professional services and in the behaviour of those professionals was given effect to by statutes empowering professional associations to control entry, conduct of members and, where appropriate, exclusion from professional practice by those whose standards fell below acceptable levels. </BLOCKQUOTE>
<BLOCKQUOTE>There is, of course, a second and wider sense in which the word "profession" is used to refer to any calling or occupation by which a person habitually earns his or her living. It appears that the authors of the Hilmer Report have confused the latter meaning with the former meaning as evidenced by their inclusion of real estate agents in their analysis and their treatment of members of professions as indistinguishable from any business undertaking or trade. The unspecified assumption underlying the analysis of professions in the Report is that the professions operate like any commercial activity. </BLOCKQUOTE>
<BLOCKQUOTE>In the passage in the Report equating the services of lawyers, accountants, engineers and architects with those of real estate agents, the observation is made that together all are "an important sector of the economy". What the Report fails to observe is that professionals frequently provide services to members of the community who cannot pay for the service or who pay less than what in the circumstances would be a reasonable fee for the service. </BLOCKQUOTE>
<BLOCKQUOTE>The professions and the vast majority of professionals operate in this way. They do so because they have "professed" the occupation or calling that they practice and because they operate in a culture where the values surrounding the way in which they operate place emphasis upon their skill, integrity, public service, diligence, competence and concern for the welfare and well-being of their clients. These notions and concepts, which are fundamental to the way in which professional persons in fact earn their living, do not sit well with the nature of the analysis contained in the Report. </BLOCKQUOTE><B>
<BLOCKQUOTE>Errors and Misconceptions</B> </BLOCKQUOTE>
<BLOCKQUOTE>The errors and misconceptions referred to are reflected in the Report's recommendations. For instance, the authors say: </BLOCKQUOTE>
<BLOCKQUOTE>"The application of the competitive conduct rules would not undermine the self-regulation of the professions. In conformity with relevant State and Territory law, professional bodies can continue to determine and enforce ethical and other standards for their respective professions. However, self-regulation could not be used to restrict competition in a way that was not justified in the public interest."</BLOCKQUOTE>
<BLOCKQUOTE>No doubt this last sentence basically means, "in a way that just controlled prices". The Australian Council of Professions accepts this but the reference fails to recognise that the "commercial" aspects and the "non-commercial" aspects of the way in which a professional man or woman practises their profession cannot be divorced in such a way that one can be controlled by a government instrumentality and the other can be left to independent professional associations. Because professionals are professionals in the way above described, they have duties to themselves, to their professional colleagues and to the public they serve in the way in which they provide those services and that includes the price they charge and to whom they charge it. It is in the public interest that those services be of a proper professional standard. This necessarily means restricting the persons who provide the services to those certified to be of the requisite high standard and properly compensating those persons for years of study and application necessary to reach and continue to maintain that standard. </BLOCKQUOTE>
<BLOCKQUOTE>Maintenance of standards also has an important effect on the potential for export of professional services. </BLOCKQUOTE>
<BLOCKQUOTE>If "price competition" for services were to become the accepted mode of conduct, how would the "client" know what was involved in the performance of the task which he or she has asked the professional to undertake on his or her behalf ? The very nature of the skill and knowledge of professionals means that they and their professional colleagues know what is involved in providing the service at a proper standard. It is no answer to say that market forces will operate so that the reputation of the professional will suffer if he does not give proper time and attention and consideration to his work when providing it at a cheaper price because the client will often not know the adverse result until many, many years after the service has been provided. The danger is that price competition frequently promotes poor quality of service which is not readily recognised. </BLOCKQUOTE><B>
<BLOCKQUOTE>Conclusions</B> </BLOCKQUOTE>
<BLOCKQUOTE>In essence and by reference to the foregoing argumentation originating from NSWCOP, the professions' main concerns turn on the perceived failure to understand what "professionalism" means with the result that criteria are being applied which bear no relationship to the expectations of recipients of services or the values and methods according to which professional persons provide their services. A high degree of competition within each of the professions already exists. The removal of the autonomy of the professions by taking away control of professions from professional bodies will not increase that level of competition but instead will lower the standards of services provided. The ethics of professionalism will be damaged, if not destroyed. This is not in the public interest. </BLOCKQUOTE>
<BLOCKQUOTE>The nature of the concerns of the professions having thus been identified, the question remains as to how they might best be addressed in contemporary circumstances. </BLOCKQUOTE>
<BLOCKQUOTE>The Australian Council of Professions has firmly held, and continues to hold, the view that members of professional associations should participate in the process of developing appropriate machinery arrangements on an on-going basis. Amongst other things, there is a lack of definition on such matters as the meaning of the term "professional occupation" and what constitutes a "business activity" in the context of professional pursuits, say, in the field of education. </BLOCKQUOTE><B>
<BLOCKQUOTE>Representation</B> </BLOCKQUOTE>
<BLOCKQUOTE>The Bill before the Senate deals, inter alia, with the establishment of two bodies, the Australian Competition and Consumer Commission and the National Competition Council, both of which will, in the course of pursuing their functions and powers, be addressing and determining issues of vital concern to the professions. The Bill stipulates (clause 35 and clause 50) that, in respect of the former, at least one of the members must be a person who has knowledge of, or experience in, consumer protection and, in respect of both, members shall not be appointed unless they have knowledge of, or experience in, industry, commerce, economics, law, public administration or consumer protection. Notwithstanding the wide coverage of potential appointees these tests would allow, the Australian Council of Professions is concerned that the Bill as drafted would not necessarily lead to the appointment to either body of a person capable of identifying issues impinging on the professions, such as those mentioned earlier in this submission, and of providing informed advice upon them. The absence of such a person on one or other of the two bodies would, in the Council's view, lead to a decision-making process that would be deficient and, in all likelihood, one predisposed towards the formulation of 'lowest common economic denominator' decisions affecting the professions. </BLOCKQUOTE>
<BLOCKQUOTE>Obviously, the Council would strongly support any action arising out of the Senate Committee's deliberations that would rectify, by legislative means, this perceived short-coming in the Bill as presently drafted. Short of that, the Council will be pursuing remedies by representations to the Government. </BLOCKQUOTE>
<BLOCKQUOTE>Yours sincerely, </BLOCKQUOTE><I>
<BLOCKQUOTE>(John Southwick)</I><BR>President </BLOCKQUOTE><FONT size=2>
<P><B>
<P></P></FONT></B></B>
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