ACCC CHAIRMAN BLASTS GOVERNMENTS OVER BAD PRIVATISATIONS AND PORT PRICE HIKES

In a wide-ranging speech at the Committee for Economic Development of Australia in Brisbane recently, Australian Competition and Consumer Commission (ACCC) Chairman, Rod Sims, commented on the contents of the recent Harper report and then spoke against the anti-competitive impact of recent privatisations. Mr Sims outlined “concerns” about how governments sold “significant” assets without “appropriate” market structures and/or regulatory arrangements being put in place. Two examples cited by Mr Sims were the right of refusal being granted over the development of a second Sydney airport and the sale of the ports of Botany and Kembla to the same owner. Mr Sims was also concerned over the proposed rental increase at the Port of Melbourne. “This proposed price increase apparently reflects the rent bid by a new third stevedore in Melbourne. An economic regulator would not allow the Port of Melbourne to increase prices on this basis. If the new bidding party saw their bid price being reflected in the rents of the existing players then it means their bid came at no risk. In addition, if the higher rent of one player sets the benchmark for others, we risk an upward rent spiral at all Australian ports that will significantly add to Australia’s cost structure and hurt both exporters and consumers. We need to be careful to ensure that privatisation boosts economic efficiency rather than detracts from it, otherwise we risk giving privatisation a bad name because consumers will continue to associate privatisation with higher prices.”