Battery Eggs Sale and Production in the ACT Research Report

The Productivity Commission was established in April 1998 as the Government's principal microeconomic research and advisory body. It undertakes analysis of a broad range of social and economic issues affecting Australia as a whole. For example, it has recently reported into private charities, public housing, government assistance to industry, health insurance and ecologically sustainable land management. The Commission provides independent analysis and advice, using processes that are open and public and driven by concern for the well-being of the community as a whole. Information on the Productivity Commission and its current work program can be found on the World Wide Web at http://www.pc.gov.au or by contacting Media and Publications. FOREWORD III Foreword This report has been prepared for the ACT Government. It follows a request to the Commonwealth Treasurer that the Commission undertake public benefit tests on ACT legislation banning the production and sale of battery eggs and requiring specific labelling of eggs. These tests are required under the Competition Principles Agreement for any legislation that restricts competition. Public benefit tests require an assessment of all the costs and benefits of a regulation. In the case of battery hen regulation in the ACT, the costs largely stem from higher egg prices for ACT consumers and the costs of adjustment in production, both of which can be quantified. The benefits are much more complex, however, as they relate to expected changes in hen welfare and the effect of such changes on the wider community. This report investigates these matters in detail, drawing on a wide literature and extensive public consultations, and provides a framework for assessing whether the benefits exceed the costs. It does not, however, attempt an overall judgment on this matter, given the inherent subjectivity and ethical considerations in some elements of the benefit calculation. These will ultimately require an exercise of judgment by the ACT community's elected representatives. The Commission would like to thank all of those organisations and individuals who contributed to the study. IV FOREWORD CONTENTS V Contents Foreword III Main abbreviations X Summary XI 1 Introduction 1 1.1 Background to the debate 1 1.2 Why is a public benefit test needed? 4 1.3 What is a public benefit test? 5 1.4 What is the scope of the public benefit test? 5 1.5 Consultative processes 7 1.6 Structure of the report 7