Competitive neutrality and the challenge of social enterprise

Abstract

Globally, the past decade has seen many countries, including the United Kingdom, United States and Canada, introducing legislation that creates distinctive hybrid legal models for social enterprise. Although Australia has no dedicated legal model for social enterprise, its growing salience poses a challenge to competitive neutrality policy regimes. The challenge posed by social enterprise is both conceptual and practical. At the conceptual level, we argue that the underlying analytical framework of competitive neutrality sits uneasily with the premises of social enterprise. At the practical level, we show how the qualitative cost-benefit balancing flowing from the public interest test embedded in the Australian competitive neutrality regime is quite different from the way social enterprises achieve their social objectives, despite some apparent initial similarities. This challenge arises from the implicit baseline of competitive neutrality, which tends to generate analyses that place efficiency values in competition with social, environmental or other ‘non-economic’ values. Articulating and responding to this challenge is important for the enhancement of opportunities for social enterprise to grow and strengthen, and thereby contributes to rising political and consumer demand for more sustainable business models.