Jurassic Park? Freight infrastructure was not sufficiently reformed during the 1990s The defining feature of a successful wave of restructuring was the Report of the Independent Commission of Inquiry into Competition Policy in 1993 – chaired by Professor Fred Hilmer, and commonly known as ‘the Hilmer Report’. In a speech in 2002 – a whole decade after the restructuring began, the then-chairman of Australia’s Productivity Commission used this report as shorthand to describe part of the intent and impact of those early efforts: ‘Twenty years ago, Australia’s key infrastructure services – such as energy, water, transport and telecommunications – were delivered by a few publicly-owned corporate behemoths. They were unassailable by competition because their position was statutorily entrenched and many were natural monopolies. Their governance structures were antiquated, their orientation was often technical rather than customer-focused and their costs often inflated by inefficiency. These were the industrial dinosaurs waiting for the Hilmer meteorite’V. On reflection, perhaps this sense of achievement was a little premature: for freight outcomes in particular, a lot of ‘dinosaurs’ survived the market reform meteorite: the freight sector and its supply chains in particular were never fully restructured to attract private capital and improve scale and scope efficiencies across different freight modes. Twenty years later, this remains perhaps the greatest barrier to creating better deal pipelines and structures for private investment in these asset classes (although there is also the important lingering problem that much of Australia’s third party access reforms remain in thrall to litigation as the only effective remedy for dispute resolution. In the case of the Fortesque/Rio Tinto mine rail access dispute in the Pilbara, this approach is reputed to have cost the commercial proponents hundreds of millions of dollars and over a decade in various courts and competition tribunals).
Juturna P/L
Train your dinosaur: bureaucratic resistance to reforms is real Another challenge appears to be whether government agencies are really willing to take up the baton of further meaningful restructure on competition lines – even when it is expressly recommended by independent statutory advisers: in 2005, the Productivity Commission called for ‘national coordination of further competition reforms’ and expressly identified further effort in freight as a priority in this respect: ‘…these areas — many of which have been encompassed by National Competition Policy, should be brought together in a new reform program with common governance and monitoring arrangements. Priorities for the program include… developing coordinated strategies to deliver an efficient and integrated freight transport system…’VI Following Hilmer, rail, ports and airports in particular underwent significant changes: assets were sold, railways were opened to private sector access. But in practice, ‘Hilmer era’ restructuring efforts of the late 1980s and 1990s amounted to reforms sector by sector, asset class by asset class. If a more holistic treatment of competition reform in the freight sector had occurred, there might have been more effort spent in examining how competition reform and market access could be applied to roads, sea channels and across whole freight supply chains: in other words, a solution might have been found to delivering the competition-reformed, ‘integrated freight transport system’ that the Productivity Commission alluded to.
The game has changed, but not yet the rules
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