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John Quiggin 
Alice, look at it from another angle if Rees had the numbers would privatisation be on the agenda.
Whaddya mean MOSH? People are stating to hate it (the very word privatisation brings a look of utter horror and rolling eyes). Why are continued privatisations even on the agenda? You tell me. What do you mean about numbers?
Im sick to death of the right MSOH, no matter what damn party they inhabit! Im sick to death of their ideologies and Im sick to death of their failed policies (and Ill bet so are a lot of people – exactly how big a crash to we need to sweep their ideas out). This country was mixed form of socilaism historically for a dman long time, it suits us, we did well with it historically (we dont have a huge market – just a pathetically small one – what part of that dont the right wingg zealots understand – there is NO private sector saviour shining knight – or not enought of them).
We need help (not idiots in power thinking they can sell major public employers).
We are all paying MORE for their blunders.
Ive had a gutful of privatisations (to put it very plainly).
Alice, don’t get your knickers in a knot for the majority of Australians agree with your sentiments. Thumbs up Alice & Rees.
In Australian I thought it was the fairfax papers that were suffering most. And love him or loath him Rupert seems to be doing okay for a guy that publishes a stack of unprofitable online content.
Perhaps because they are long overdue.
TerjeP (say tay-a), since you are one of the minority in Australia who truly believes in deregulation then name one public good which has been privatised and the price of that good and/or service has in real terms decreased.
The police also think it is a fake email:
Coupled with all of the other documents and quotes from authorities, I am satisfied that Godwin Grech’s fake email is exactly that, irrespective of the existence or non-existence of an email sent by Andrew Charlton to Godwin Grech – that is a distinct and separate issue.
BTW, it is not only Grech’s reputation being damaged here; Andrew Charlton’s reputation has been knocked about even after the police have interviewed him, and made the statement I’ve quoted above.
“Why are continued privatisations even on the agenda?”
terjeP (say tay-a): “Perhaps because they are long overdue.”
Or, Terje, perhaps, the beaurocracy now knows a process of how to do it and forgot the question why. (job advertisements I’ve seen stipulate prior experience in the privatisation business)
I try again,
Or, Terje @ #6, page 4, perhaps the public coporporate beaurocracy now knows a process of how to privatise and they forgot the question why. (Job advertisements I’ve seen stipulate prior experience in the privatisation business).
One could argue analogously, the private corporate bueaurocracy now knows the process of how to get bonus payments for themselves but they forgot the question why they should get any. (Try head-hunting companies to find out their stipulated prior experience for the job).
John, many would support Barnaby Joyce’s calling for a senate inquiry into the whole OzCar affair amid claims of not only witness coaching but of other irregularities.
MoSH,
Just one MoSH? Only one? OK – let’s start with phone calls. I can now call the UK untimed for $0.00 cost per call on my monthly phone plan of $15. If you can show me how I could have done that (in inflation adjusted terms of course) under Telecom Australia I will eat my hat.
Need another? Airline flights. There are more.
@Ernestine Gross
Could not agree more with Ernestine’s comment…”perhaps the bureaucracy now knows how to do it (privatise) but forgot to question why”…
Its the old ratchet effect isnt it. Once its in the govt system, in the wheels and cogs and paperwork.. it inevitably gets pushed too far and fails to be adequately evaluated for performance after…hence some projects fails period (and fail to be cost effective and carry negative externalities that outweigh short term budget injections). Privatisations can actually cost governments and consumers and tax payers more but someone needs to be there, evaluating the outcome after the event and reporting on that…who is that? The unquestioning agenda is in the advertisments, govt advertises it needs people with privatisation experience…not people who question the effectiveness of privatisation.
Ratchet effect…once its in, it stays in as policy until some monumental disasters make the bureacracy sit up and say…hang on a minute.
Its a bit like medium density housing on Sydneys main roads…it just keeps rolling on until when? Until it becomes a high density mess and the transport isnt there and then there are gridlock problems.
There is no such thing as “private does it better” or “public does it better”. Case by case on its merits, not blanket acceptance as JQ has suggested before.
Andrew, not so long ago before the GFC – there was nothing competitive about getting out of Australia on a plane and we had two airlines and we still have two.
As for phone calls being cheaper….new technology Andrew (mobile phones). There are no hard and fast rules over who does it better (public v private) but either a pure state owned economy or a totally private model is likely to fail us in different ways, and you can go too far in either direction on the continuum.
Andrew Reynolds:
There wasn’t competition introduced by any chance?
Chris,
One of the many benefits of deregulation. Lower prices, better service and more choice. Anything not to like?
Alice,
We still have two – but I well remember paying $1200 to get the cheapest flight I could from Perth to Sydney return in 1987. I am now paying less dollars (even without inflation adjustment) for a full economy or a discount business class. More deregulation, please.
As for the new technology bit – Telecom Australia was incredibly slow to introduce new technology like mobile phones and when they did they were very, very expensive. They were also more than happy to stick with the old charging system for international calls which kept their prices way too high. They are still charging over the odds for most international calls. On that record I have little confidence they would have done any better unless they lost their regulated monopoly status.
In other countries where the regulated monopoly status has been maintained there has not been anything like the changes and price drops as here.
In any case, MoSH asked for one example. I outperformed and gave two.
Excellent Andrew Reynolds, now weigh up the benefit of your telephone calls against the other privatised goods are you in front or behind?
@Andrew Reynolds
Andy – case in point for de-regulation equals more expensive – the insurance industry? Any cheaper than when NRMA used to be a members association? How about house insurance – just got a bill yesterday. They increased the coverage by 5% and the bill by 12 percent.
Andy, and this goes on every year…not just this one – I look forward to my annual argument with the now “not cheaper” insurance all round (yeah sure..)
Remember the GIO anyone?
ignore “the yeah sure”. Insurance is NOT cheaper since de-regulation. Its frightenling more amzingly more expensive and you need it to get out of bed in the mornings…
Crikey Alice, does that mean nearly all Australians except Andrew Reynolds and TerjeP (say tay-a) are better or worse off with deregulation?
Andrew Raynolds @#15, page 4. Good. You get cheaper flights to Sydney. May I send you the bill for loss of productivity due to aircraft noise?
Ernestine Gross, you seem to have caught on and don’t forget to include the GST.
Ernestine Gross, your example is excellent for with extra aircrafts ie taxiing on the tarmac deregulation has meant more pollution, more sickness, more costs to the community, and society as a whole is worse off due to competition. So who benefits?
M.of S.H. (…I thought my name was long), my Sunday afternoon casual answer to your #22, page 4 is: Apparently they have left the industry on time.
Ernestine Gross, I believe that where there’s a will there’s a way and tend to agree with the Southern Cross Climate Coalition campaign that by investing in a low-carbon economy and creating sustainable jobs Australia will head in the wright direction.
@Andrew Reynolds
Pardon me but in Australi…before de-regulation? Two airlines. After de-regulation? Two airlines. You are paying less for flights now Andrew, not because of de-regulation but because the planes are taking a hit with empty seats due to the GFC. They are trying to put more bums on seats…thats all. The only other reason you have paid less is when the market has been contested by a third airline…fares drop rapidly to fight off the competitor (Compass first and the next time the contestor won and Ansett died. As soon as we go back to two airlines – we pay some of the most expensive fares anywhere.
Another of my examples. Australia is too smalll market and once you totally de-regulate you are just replacing one ogre (in your book – the state) with another ogre (a concentrated oligopoly). That is not competition Andrew. That is swapping the witch for the bitch.
John, life is difficult without politicians sniping behind ones back and Rees will be doing NSW a big favour by removing the useless wright-winger ministers who are under performing in their portfolios. Thumbs up Rees.
Alice,
Sorry – nonsence. Even when the loadings were 90 to 100% 12 to 24 months ago the price was nowhere near the pre-deregulation price – even in inflation unadjusted terms. That is just plain poor analysis and shows a clear lack of thought.
.
As for insurance – I also remember the insurance bill for my old clunker when I was at university. I also know how much I am paying for a much better car now. It has gone up – but by not nearly as much as the price of the car. Do you have any actual numbers to show that insurance rates have increased substantially or is this more anecdote? Note tht the numbers would also have to be compared not to the value of the cars, but to the value of the payouts, as payouts now are much, much bigger than they were before deregulation – you need to add in the extra repair costs and vastly increased medical settlements that we were not getting before. A quick bit of searching on line saved me a lot of money over the published rates with the bigger insurers. Perhaps you should also try that.
.
EG / MoSH,
Who benefits from lower prices? The people who previously could not travel much, if at all, due to the prohibitive cost. That is to say – the poorer members of our society that can now realistically expect to travel to London or the US for work, holidays, catch up with family, understand the world a bit better, gain a foreign education or perhaps look to starting their own businesses. Of course, if you want to disadvantage the poor feel free to make that argument – but do not expect it to be popular.
Andrew Reynolds, you told us that you benefit from the lower monetary costs of air transport at present. Sorry, I didn’t know you are poor.
I don’t believe it is ‘the poor’ regarding Sydney airport. I recall it was ‘industry’ (aviation, tourism, business) who wanted an airport close to the CBC. There are many examples in ‘the global economy’ (a term coined by people who missed out on elementary geography?) where ‘the poor’ travel many km by car or public transport to get to a ‘second airport’ for budget airlines. If you really want to go into detail, I can tell you that I came across a mayor of a local council with interests in an air freight forwarding company at Mascost. No prize for guessing on whose side he was on.
CBC should read CBD.
EG,
I will ignore the first piece of your comment as it is clearly unworthy, apparently demonstrating a basic ignorance of the effects of lower prices that you clearly do not have.
.
As for the location of the main Sydney airport – I do not see this as strongly related to the cost of air travel in Australia. The potential for a new site for that airport has little to do with the cost of flying from Perth to Brisbane, for example. Perhaps you can demonstrate how moving the airport would have a serious effect on the cost of flying.
Moving the airport won’t affect the cost of flying, provided you ignore the cost of recovering the capital spent on the new airport, so anyway, forgetting those billions to be paid for through terminal shop rents and flight tickets, it should be fine.
Mind you, an additional airport would lead to reduced costs through competition.
Andrew Reynolds & Pedro, it is obvious from your answers that you simply do not understand what is going on and how smog is literally killing residents living within the Sydney Basin. I suggest you do some reading rather than rave on.
Killing people? Wow, that is bad, but what has that got to do with whether flying is more or less expensive in different circumstances? I’m all for improving air quality, but I wasn’t talking about that.
Also, I thought this was supposed to be a polite blog.
Pedro, do some reading.
Andrew,
Even the ACCC acknowledges that even where reulation has been removed in Australia the industry is one of natural monopoly or oligopoly. Since de-regulation from the 1990s on we had the entry of Impulse and Virgin Blue and the subsequent collapse of Impulse and Ansett. The market is now dominated by Quantas with Virgin trying to make inroads. Tell me how that has brought more competition than the two airline policy. Any thought of competition in the airline industry is noted by the ACCC as being unstable and fragile. In addition a number of regional airlines also collapsed.
The bureau of transport economics also found questionably large profits were being made on business and mining routes in 2002. The ACCC took action against Quantas in 2001 for capacity dumping on the Brisbane to Adelaide Route (extending capacity way beyond demand) as a form of anti competitive conduct against Virgin. There has also been a complete lack of transparency in dealings with consumers over price advertising (once taxes and charges are taken into account). Then there was the frequent flyer debacle.
Should I go on Andy? Then there is the Macbank monopoly of Sydney Airport. Since the removal of price caps in 2002 (more de-regulation) – landing charges rose between 30 and 140% in one year, along with car parking rates and check in counter rentals. At the timke of MacBanks successful bid the so called “productivity” (JH again) commission stupidly argued MacBank wouldnt raise prices too much because MacBank would be naturally “restrained by the threat of re-imposition of price rises”.. HA HA HA – what a joke – they obviously werent the least bit scared of any “re-imposition of price controls’ – which by the way were indexed to inflation when they were in place.
All this has added to flight costs Andy.
It is impossible to force competition in this industry with deregulation. What you are forcing on people is ultimately Monopoly market power in Australia’s Aviation industry and higher fares.
It is you who are talking completely and utterly through your hat Andrew, and usual, pushing the more and more and more deregulation line.
and Ill add with a flourish…take that Andy!! KAPOW. (Andy goes down…)
As I mooted before, the only reasons we ever got cheaper fares had more in common with predatory pricing to oust contestors (like Impulse) than genuine competition and the GFC emptying their seats…
Fools paradise Andy…come in spinner.. cheap fares huh? Just like shopper dockets at petrol stations..
AR @30. You wish to ignore the first piece of my comment @28 on the grounds that it is “unworthy”.
ok., as you wish. However, if the first piece of my comment @28 is ‘unworthy’ then all preceding comments are unworthy. Lets go backward
EG @28: “Andrew Reynolds, you told us that you benefit from the lower monetary costs of air transport at present. Sorry, I didn’t know you are poor.”
AR @27: “Who benefits from lower prices? The people who previously could not travel much, if at all, due to the prohibitive cost”
EG @20: “Andrew Raynolds @#15, page 4. Good. You get cheaper flights to Sydney. May I send you the bill for loss of productivity due to aircraft noise?”
AR @ 15: “We still have two – but I well remember paying $1200 to get the cheapest flight I could from Perth to Sydney return in 1987. I am now paying less dollars (even without inflation adjustment) for a full economy or a discount business class. More deregulation, please.”
——
My argument is that the monetary prices for air fares (with or without deregulation), which are of interest to commercial profit calculations (and GDP calculations), do not ‘fully reflect’ all costs. Aircraft noise (unwanted sound) is a negative externality – an unwanted by-product which doesn’t go away by making appeals to people’s emotions or to their sympathy for ‘the poor’.
The expansion of KSA in Sydney is an example of a planning disaster because only commercial values entered the analysis. As a consequence of this inappropriate focus on ‘business interests’ only, a natural advantage for the domestic aviation industry has been wasted. I am talking about the relative abundance of space (eg Wilton; see 1985 Site Selection Report for medium distance airports for Sydney) where an airport can be built and operated 24 hours. KSA can’t be operated for 24 hours because one would have to noise insulate from Cronulla to Hornsby on the North-South axis and from Coogee to (I am not quite sure where) in the West for people to get some sleep. The former PM, John Howard, mitigated the horrific aircraft noise problem created by Hawke-Grainer-Keating-Brereton by spreading the noise all over Sydney. As long as traffic levels are low (eg now) and wind-conditions change a lot such that no region of metropolitan Sydney is overflown for prolonged periods of time, most people find it bearable. But, as soon as traffic picks up (this is what the airport operators and the tourism industry want), the problem is back. The mitigation effort by Howard has not resulted in ‘no negative aircraft noise externalities’. The Howard mitigation effort has spread the cost. Since the cost of aircraft noise is like a tax on the affected residents, Howard can be said to have introduced a fairer tax then Keating-Brereton.
For places like Sydney, the low-budget airline second airport solution, which I mentioned, is not a good idea because of the high volume of heavy aircraft from overseas. However, keeping KSA as a relatively small domestic airport for hops to Melbourne, Canberra,…., and operating from say 7:00 am to say 10:00 pm with no heavy aircraft (nothing bigger than a B767) and having a 24 hr international airport (plus heavy domestic planes) outside the Sydney air basin could be a solution for both, improving the air quality and reducing aircraft noise and the risk of a ‘big’ aviation accident over densely built up area. There is already a railway line stump finishing short of Wilton. Furthermore, it is true that airports do provide some employment. Wollongong wouldn’t be far. So, spreading employment opportunities could happen as a positive externality. But all this is clearly too simple and straightforward to be of interest to anybody with decision making power.
I hope I have answered your questions and cleared up any misunderstanding about how I came to write the first part of my #28.
Efficiency arises when innovation flourishes and technology in its broadest sense finds better ways of doing things.
Innovation flourishes when innovators can obtain funds to innovate and are permitted to sell their services.
The current system of financing innovation in both private and public spheres is loaded towards preserving the status quo.
It is not whether ownership is public or private that matters. It is whether or not change is allowed and facilitated.
Public ownership prevents change when the incumbents in positions (e.g. featherbedding unions) do not allow change.
Private ownership when the existing systems deliver profits by preserving the status quo (e.g. banking regulations on deposit holding organisations, licenses of band width, four pillars of banking, access to the “last mile” in telecommunications, patent restrictions, copyright restrictions)
Large bureaucratic organisations of all types are change averse. It is nothing to do with who owns what and all to do with can we make things work more efficiently by trying out different approaches and discarding those that are less efficient.
My post at 35 should read ““restrained by the threat of re-imposition of price caps”
Kevin Cox, I’m not sure whether you are aware but the ACTU is part of the Southern Cross Climate Coalition and a new voice advocating ‘change for the better’ and a clean and green environment. Thumbs up Southern Cross Climate Coalition.
Alice,
My point was unrelated to the number of players. It is simple – fares have dropped. That is an observable fact. You are free to argue against it (like with numbers or something) but unless you can show that prices have actually risen you are on a hiding to nothing.
Prices have dropped is the only argument I was trying to make there.
Andrew – nonsense – and nonsense again. Air fares in Australia have dropped periodically for the reasons I outlined twice now. Due to anti competitive pricining OR the GFC which made airlines DESPERATE> They have NOT dropped prices consistently as you suggest as a result of de-reglation – thats rubbish.
No more nonsense Andy – the aviation industry in Austrlia is failure under your de-reg competition model.
A stand out failure in fact. We were better under a two airline policy and the airport was better off owned by the govt instead of Macbank. Its bleeding obvious Andy – take those ideological rose coloured “blinding” glasses off. Macbank and the airport has been a damn disaster. You think a govt monopoly was bad with REGULATION – not nearly as bad as the greedy Macbank under DEREGULATION.
You people (zealots to a lost cause of endless deregulation) are grinding Australians down. Im not putting up with it.
Foolish notions Andy – completely foolish. As Salient suggests, Im prowling the net for nonsense to censor and you are zapped, Andy! Zapped! And Gone.
Alice,
So you were seriously happier paying much more per flight, for flights with lower standards of service and flying less often. Hmmm. Okayyyyyy…
OH and Quantas, which as the dominant (by a long way) firm supplying the Autsralian airline industry Andy REGULARLY comes up as one of the most expensive airlines in the world. (THE WORLD). What part of that dont you get?? You just get in here and make stuff up Andy. No cred.
You talk Andy about cheaper fares since de-regulation of airlines in Australia. Dream on and utterly false! I dont know what you get from dissemination of nonsense but I hjave to ask – is Macbank paying your childrens private school fees Andy?
Lies, lies and damned lies Andy.
John, it seems like Frontier Economics report commissioned by the Coalition and Nick Xenophon is for more of the same with one exception buy our way out of jail. No thanks.
Qantas has been expensive for much of its life. When Virgin arrived Qantas tried all sorts of tricks to make it difficult for Virgin. Price per seat for domestic flights definitely dropped once Virgin was established in Australia. The real question concerning prices is what factors are the significant ones in causing a price drop of Qantas price per seat for domestic flights? The second question, but no less important, is what factors did Qantas manage to shift to externality because of the freed up deregulated environment?
For question 1, there are plenty of factors to choose from, and which may be supported by data. I doubt that any one factor can be demonstrated as the cause, for the simple reason that it is a set of factors that are the cause of the price drop. Factors are deregulation, the Maqification of Sydney Airport (which simply shifted some of the revenue to Maqcharges on taxi ranks, retail and food, parking, etc), relaxing of the flight time rules to allow flights to be virtually 24/7, offshoring and outsourcing of mechanical repairs and inspections of aircraft, etc. Marked increased supply of seats would clearly have been a factor too. Qanta deliberated increased supply at times; presumably to dent the upstart Virgin. The threat of a third domestic airline competitor is also a large factor in price drops and price variability. As Alice has pointed out, significant price drops are coincident with competition from third airlines. Qantas seems quite happy with the two airline oligopoly arrangement.
For question 2, the lack of charges for air pollution, and noise pollution, are two obvious cases. The slow burning one is the outsourcing of aircraft quality, by way of off-shored mechanical repairs and inspections. No-one knows whether there is a higher risk of catastrophic failure of aircraft, or what the benefit-cost trade-off on aircraft air-worthiness have been made by Qantas in its bid to keep profit growth. I doubt they are like the Aeroflot of old but it is a factor.
I fully concur with Donald Oats @ 48. The financial value of Sydney Airport depends on rents extracted from the monopol of the ground (shops, parking..) and not on air traffic. I’ve got data on that.
Alice,
Can you please show me how prices were less (in inflation adjusted terms) prior to deregulation.
I would be genuinely fascinated on the source – but I very much doubt you could find one. I know how much I used to pay. I know how much I now pay. Qantas is still expensive in world terms, but they are a lot less expensive than they were. If, like in the US, they ha never been nationalised I believe they would be cheaper still – but I would be the first to concede that I have no data on that.