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Peter Forsyth

Peter Forsyth. BTRE Colloquium 14-15 June 2006 Summary and Policy Challenges. Approach. Focus on Issues and policy challenges Not on industries/ sectors. Policy Challenges. Public private interface Industry restructuring Regulation-how light? International dimension-aviation

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Peter Forsyth

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  1. Peter Forsyth BTRE Colloquium 14-15 June 2006 Summary and Policy Challenges

  2. Approach • Focus on Issues and policy challenges • Not on industries/ sectors

  3. Policy Challenges • Public private interface • Industry restructuring • Regulation-how light? • International dimension-aviation • Investment appraisal • Enduring roles for government

  4. Public Private Interfaces • PPPs are great- as long as the government is not involved • PPPs and other forms, e.g. privatisation of parts of systems • Create many problems-e.g. Cross City Tunnel (Harris) • Esp with private links in public networks (Ergas, Meyrick) • Actuality- many aspects very unsatisfactory (Ergas, Harris, Mees) • Have governments really tried to get them right? • Grappling with complex issues, e.g. allocation of unknown risks • Better design- how feasible? • How do they compare with the alternatives? • (Inefficiencies are often hidden in monolithic corporations) • Need for careful evaluation of Australian experience (BTRE?)

  5. Getting Industry Structures Right • Enthusiasm for separation (vertical, horizontal) waning (Ergas) • Firm structure very important for investment • Fewer problems of inadequate/excessive investment within integrated businesses (BTRE?)? • E. g. Airlines which own terminals build them to the standard they need • Problem areas with the interface between different operators e.g. rail/truck/port • How effective has separation been in promoting competition?

  6. Regulation-Getting the Right Balance • Just how much regulatory involvement? • Regulators may become deeply involved in industry structure issues (Samuel- Toll) and investment • Sometimes it becomes very detailed- the price of achieving regulatory objectives as set • Handling issues of inadequate capacity (SR) (e.g. coal loaders)- quite good • Investment incentives- a key area of debate • Myopic regulators vs gaming firms • Regulatory compliance costs (Gibbins) • Use of regulation- appropriate to use access regulation as backdoor to airport regulation, when there is a monitoring system in place? • Airport monitoring- a critical experiment • PC inquiry results will be very significant with wider implications for transport industries

  7. International Constraints- Aviation • International aviation different because other countries have a say (Findlay, Miller) • Arrangements are not in Australia's interest (like agriculture-Truss) • What to do? Ownership rules to pull away the supports • A “Red Book” on benefits of European Aviation liberalisation? (BTRE?) • Australia still has a lot of policy discretion • What is in Australia’s interest (BTRE?) • Liberalisation without reciprocity? Bargaining chips? (Dixon) • Issues won’t go away- Singapore request yesterday • Direct flights to secondary destinations (Mel, Bne)? • National hub carriers not keen on direct services, others are • Liberalisation the only way of getting more direct services?

  8. Getting Investment Right • New definition-Investment appraisal: developing a set of numbers to rationalise a previous government decision to spend money • Several entities responsible – govts, regulators, private frirms • Private firms- (mainly pay for their own mistakes) • Regulators are fairly good and transparent • Major public projects a real problem- evaluation has got a lot worse • Dud projects being pushed by governments • Rarely any CBAs, but many “evaluations” which indicate gigantic “benefits” • Some glimmers of hope- AusLink evaluation guidelines (DOTRS, BTRE) • Tough treasuries? (Scrafton)

  9. Ongoing Government Role • International negotiations (air) • Urban congestion measures (Sayeg) • Setting regulatory frameworks • Designing contracts (PPPs) • Interstate issues (COAG) • Handling externalities • Promoting competition (but how much-Davis) • Referee of the intermodal game (Meyrick) • Granting and designing subsidies (Dale, Thomas, Bridge)

  10. Information and Analysis • Institutional reform extensive, though some areas remain (Scrafton) • Need to make the new arrangements work better • Information and analysis critical • Necessary, though sadly not sufficient condition for good decisions (Winston) • Implications: Plenty of work for the BTRE (and others) to do

  11. Thank You

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