Introduction

Competitive neutrality is achieved when government-owned suppliers of goods and services do not gain a competitive advantage relative to private providers by reason only of their public sector status.

The key principle in competitive neutrality is that public sector providers are compared with private sector providers on an equal footing, net of any regulatory or redistributive mechanisms that may exist as a matter of law or public policy.

For the PSC, this involves estimating and adjusting for competitive advantage that may arise by virtue of public sector ownership. For example, State taxes and charges need to be estimated in order to ensure that the PSC shows the full costs of the public sector provision. This allows a valid comparison of the PSC with private sector bids.