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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
Peter Forsyth

BTRE Colloquium

14-15 June 2006

Summary and Policy Challenges

  • Focus on Issues and policy challenges
  • Not on industries/ sectors
policy challenges
Policy Challenges
  • Public private interface
  • Industry restructuring
  • Regulation-how light?
  • International dimension-aviation
  • Investment appraisal
  • Enduring roles for government
public private interfaces
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?)
getting industry structures right
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?
regulation getting the right balance
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
international constraints aviation
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?
getting investment right
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)
ongoing government role
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)
information and analysis
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