Port reform in Australia: regulation constraints on efficiency

Abstract

Privatization and corporatization of ports in Australia has meant the transfer of government-owned monopolies to privately owned monopolies. This has required the introduction of a regulatory regime to protect the interests of users as in some cases the privatized terminal owner or operator is also a customer of that facility. A complex regulatory regime for ports at the commonwealth and state government levels has, as a result, been created. This has meant that pricing policies and reinvestment strategies are constrained by the regulator. Inefficiencies and disruptions are likely to occur. This paper examines the regulatory regimes in place—the role of the state government regulator, the Queensland Competition Authority, and that of the Australian Competition and Consumer Commission, the national regulator. It will examine the impacts and constraints these have imposed on coal terminal expansion and operations. Recommendations have been made suggesting the transfer of state government ports to a single national regulator. This paper examines whether the proposed regulatory overhaul will resolve the dilemma of the Goonyella coal supply chain. It will argue that while regulation rationalization and overhaul will expedite the complex regulatory process, the solution lies with an integrated approach to the entire supply chain rather than the port focus.