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Hamstrung by regulation

By Mark Christensen - posted Monday, 3 September 2007


They got it half right by allowing Telstra to remain vertically integrated, but now won’t allow it to capitalise on its efficient structure by rolling out a national broadband network which can be accessed on commercial terms only. The institutionalised fragmenting effect of the managed competition overseen by the ACCC condemns telecommunications to perpetual inefficiency. Telstra are prevented from making holistic decisions because that could kill off competition, while the industry can’t achieve commercial unity because non-Telstra players see the divisiveness of regulation as an easier option.

Regulation works as a similar barrier to coal supply chain efficiency. BBI, the private sector owner of Dalrymple Bay Coal Terminal, promotes the fact it receives a regulated price for providing capacity regardless of whether coal is actually moved through the port. It has no skin in the main game. DBCT’s key commercial risks are with the regulator and BBI is happy to keep it that way on behalf of its shareholders.

If the business community wants better access to Australia’s booming infrastructure sector through organic growth and acquisition, it needs to tackle the difficult philosophical issues concerning competition policy and the balance between corporate self-interest and those of the wider group - be that other parts of a coal export chain or the general public.

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Ironically, some of the current political hurdles facing privatisation are actually manifestations of legitimate concerns over achieving absolute efficiency.

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About the Author

Mark is a social and political commentator, with a background in economics. He also has an abiding interest in philosophy and theology, and is trying to write a book on the nature of reality. He blogs here.

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Creative Commons LicenseThis work is licensed under a Creative Commons License.

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