[Peetwo]

IA chief believes airport privatisation the way to go...

While on the airport development and ownership theme I note the following article from IA Chair Mark Birrell, via the Oz:

Mark Birrell: Privatisation paves the way to prosperity

• Mark Birrell
  
• The Australian
  
• 12:00AM July 21, 2017
  

[url=http://www.theaustralian.com.au/business/aviation/mark-birrell-privatisation-paves-the-way-to-prosperity/news-story/a516f6acac9fdc67e3d5b8ce1eb75615#comments][/url]
Airport privatisation has a great deal to teach us. We know from Australia’s experience that private sector ownership of economic infrastructure has delivered better outcomes for customers and — with the right goals and regulatory structures — we are getting more efficient and responsive services.

As Caroline Wilkie rightly pointed out in her article on airport ownership last week, the privatisation of aviation operations and assets more than two decades ago has more than doubled the passenger capacity at our nation’s major airports and supported the growth of our tourism and freight export industries.

Contrast this with the system up until the mid-1990s where Australia’s main airports were government-owned and run.

Prior to privatisation, airports failed to keep pace with demand, investment lagged and there were few incentives for service improvements. As the Productivity Commission found, this led to productivity at Australian airports’ falling significantly short of international best practice standards.

Under private ownership and an independent regulatory framework, the aviation sector has performed remarkably well. With effective oversight of prices and service quality across our aviation services, there is a higher level of certainty for industry players, and more room for innovation and competition to thrive. There will be legitimate questions by travellers about ancillary services like car parking costs at major airports, but the overall consumer and user experience is vastly improved.

Unfortunately, we have not seen the same success replicated in a number of other infrastructure sectors. There is still a significant task ahead for governments to further reform our energy sector, and commit to a new round of policy and regulatory reforms in water and transport.

Infrastructure Australia has always held the view that markets are the best mechanism at our disposal for delivering effective, efficient and high-quality infrastructure services.
But in the past, our infrastructure sectors — energy, telecommunications, water and transport — have been dominated by public monopolies. This ownership and management structure offers limited incentives to deliver infrastructure successfully and fairly, as governments have conflicting goals when they are simultaneously the user, owner, operator and regulator of services.

The default role of government in the delivery of services from economic infrastructure should be to set the right conditions to ensure the efficient use of the infrastructure. Governments must have the best planning, regulatory and market structures.

In areas where competition within a market is possible, such as electricity generation and retailing, the direct role of government as a market participant distorts outcomes and reduces customer benefits. In these circumstances, governments are better off taking a regulatory role and ensure that at all times the market operates in the long-term best interests of customers.

In the coming decades there will be a need for the Australian economy to harness new technology and service innovations that will also disrupt traditional models of supply.
Under private ownership, the aviation sector is well positioned to take advantage of the coming technological changes — and respond with the right investment decisions.

We should therefore hold up airport privatisation as a model that can be followed in other sectors. And in doing so we should never forget that the original moves to turn the centralised Federal Airports Corporation into a set of locally run, modern private airports were not free of challenges or critics. Some will continue to argue that privatisation is a failed experiment, but I would encourage them to look to our aviation sector for an example of how targeted reform has delivered a better system that facilitates the movement of people and goods quickly, safely and at low cost.

Mark Birrell is the chairman of Infrastructure Australia.

  
MTF...P2