Public sector deregulation: a paradigm in conflict

Abstract

Australia has undergone an intensive period of reform particularly in relation to its port infrastructure. This has led to the deregulation of much of the port and maritime sectors. Privatization and corporatization of government owned businesses, as a result, have been set in place.

A decade after reform was introduced, particular problems are emerging relating to regulation. Much of the reformed infrastructure was developed by state governments and deemed to be ‘natural monopolies’. These facilities, once privatized, were transformed into privately owned ‘natural monopolies’. This has demanded regulation to prevent the abuse of monopoly power and the imposition of monopoly rents. A myriad of regulatory regimes have been created at the federal and state government levels to regulate privatized and corporatized instrumentalities. Evidence is now emerging suggesting that outcomes are in conflict with the objectives of reform and of National Competition Policy, and are constraining the expansion of essential port and creating inefficiencies in export supply chains.

This paper discusses the objectives of reform and problems associated with the deregulation of public sector monopolies. It looks at the particular problem of regulating a former government monopoly, once privatized, and transformed into a private sector monopoly. It investigates the impact of regulation on the workings of commercially focused port businesses and on export supply chains.