Cabinet throws support behind effects test 12 months after it was recommended by the Harper Review

The Turnbull government has decided to throw its support behind introducing an effects test into Australian competition law, twelve months after it was first recommended by the Harper Review.

Treasurer Scott Morrison announced this afternoon the Government will adopt what has been proposed by Professor Ian Harper, rather than a watered-down version of the effects test.

“Competition is at the heart of ensuring our economy succeeds,” Morrison said.

Speaking at the same press conference, Small Business Minister Kelly O’Dwyer said the introduction of an effects test will “give all businesses the chance to have a go”.

Deputy Prime Minister Barnaby Joyce has been a particularly strong advocate of the effects test, arguing it will make big business think twice about taking advantage of farmers and primary producers.

Joyce said in a statement the Coalition has listened to the overwhelming view of agricultural and small business stakeholders.

“These reforms will address a long-standing weakness in the existing competition rules and will ensure that we have a more transparent and competitive marketplace that treats all supply chain participants fairly,” Joyce said.

Tony Abbott shelved the effects test indefinitely shortly before losing the prime ministership.

The Turnbull government revived the issue, but pushed back the deadline for making a final decision until this year.

Today’s decision is a big win for small business groups, which have been campaigning furiously for the effects test.

The Council of Small Business of Australia, the Australian Chamber of Commerce and Industry, the Pharmacy Guild and the Independent Grocers Association – among others – have all teamed up to press the issue.

Greens want the effects test to become law during this term of government

The effects test is likely to have a smooth passage through the Senate thanks to the Greens.

Greens small business spokesperson Nick McKim said in a statement today’s announcement is a “great step forward” for the small business community.

However McKim says the Turnbull government needs to commit to introducing the effects test during this term of government.

“The Greens stand ready to make this happen,” McKim said.

Labor, meanwhile, is opposed to an effects test – arguing it will create a “lawyer’s picnic”.