The final report of the Victorian Taxi Industry Inquiry was tabled in Parliament today. The Inquiry, looking into all aspects of the Victorian taxi industry, ran for 16 months and included extensive consultation with all members of the industry. The Inquiry received more than 1300 public submissions. Following release of a draft report in May 2012 and subsequent further consultation, a final report was handed to the state government at the end of September.
The final report included 139 recommendations. The most contentious recommendations were those reforming the current restricted licensing system. The Inquiry recommended partial deregulation of licences, through the implementation of a $20,000 per annum license (current rental fees for a taxi license are approximately $30,000 per annum). There would be no cap on the number of licenses available.
Additional recommendations focused on providing fairer driver terms and conditions, including a greater share of the fare box. Hire cars would also be more lightly regulated to make it simpler for new entrants to provide a hire car service.
The government has said it would seek further public consultation on the final report before releasing its reform package in early 2013.
Frontier (Australia) provided economic advice to the Inquiry, through the secondment of Warwick Davis, who led the economic analysis.
For more information, please contact Marita O’Keeffe at m.okeeffe@frontier-economics.com.au or call on +61 (0)3 9620 4488.
The Independent Pricing and Regulatory Tribunal of New South Wales (IPART) has today commenced its review and determination of regulated retail electricity prices for 2013-14 to 2015-16. Frontier (Australia) has again been engaged by IPART to advise on wholesale electricity prices that retailers face in supplying regulated customers. For this current determination, Frontier is also advising IPART on key input assumptions, which include generation capital costs, gas costs and coal costs. The review is expected to be completed, and IPART’s determination released, in May 2013.
For more information, please contact Marita O’Keeffe at m.okeeffe@frontier-economics.com.au or call on +61 (0)3 9620 4488.
The implementation of smart metering in Australia is currently the focus of considerable attention. The Federal Government’s recent Energy White Paper promotes smart metering as a way to provide information about electricity usage and curb peak-time demand to reduce bills. Frontier (Australia) assesses the proposal in a client briefing and finds that the benefits of the required investment in Australia may not be justified by the costs.
For more information, or to request a copy of the client briefing, please contact Marita O’Keeffe at m.okeeffe@frontier-economics.com.au or call on +61 (0)3 9620 4488.
Frontier (Australia) Chairman, Philip Williams, has commented in The Australian today on whether there is a need for an additional regulator to police media acquisitions.
Earlier this year, the Federal Government's Convergence Review recommended the establishment of a new communications regulator. Such a regulator would have the power to examine changes in ownership of nationally significant businesses that produce content and would have the power to block a transaction if the proposal was not in the public interest. The Government is currently considering this proposal.
The article says that concerns about media ownership are concerns about product variety. A change in media ownership may mean a contraction in the variety of views that are available. But these issues are considered under the current merger test by the ACCC, the Competition Tribunal and the courts. To create a second regulator with a test that is only slightly different is likely to give rise to serious problems of overlap and serious disputes between regulators over jurisdiction.
For more information, or to request a copy of the article, please contact Marita O’Keeffe at m.okeeffe@frontier-economics.com.au or call on +61 (0)3 9620 4488.
Infrastructure Australia, the Government’s advisory body on infrastructure, today published a report “Australia's Public Infrastructure - Part of the Answer to Removing Infrastructure Deficit”. The report calls on governments to examine the viability of selling publicly owned assets to the private sector, in order to fund new infrastructure. According to the report, many assets in the energy, port, regional airport and rail freight sectors could be sold relatively quickly and with only minor changes to current regulatory arrangements.
The report highlights that many of the public's concerns about private sector ownership could be addressed through appropriate regulatory regimes that maintain service levels and protect against monopoly pricing.
Frontier (Australia) provided economic advice to assist Infrastructure Australia with its report.
For more information, please contact Marita O’Keeffe at m.okeeffe@frontier-economics.com.au or call on +61 (0)3 9620 4488.
The Australian Competition and Consumer Commission (ACCC) today announced that Sonic Healthcare Limited (Sonic) could buy one of the pathology businesses it wished to buy from the troubled Healthscope Limited (Healthscope). Sonic had sought clearance from the ACCC to acquire Healthscope’s pathology businesses in Western Australia and Queensland. The ACCC decided to clear the acquisition of Healthscope’s pathology business in Western Australia, but not in Queensland.
Frontier (Australia) advised the lawyers for Sonic, which included an empirical analysis of the likely effects of the proposed acquisitions on prices for pathology services.
For more information, please contact Marita O’Keeffe at m.okeeffe@frontier-economics.com.au or call on +61 (0)3 9620 4488.
The Essential Services Commission of South Australia today released for public consultation a draft determination to change the wholesale electricity cost allowance.
The Commission is currently investigating the wholesale electricity component of the retail costs that make up the standing contract price. The standing contract is a statutory arrangement under which any residential or small business customers who have not entered into a market‐based contract with a licensed electricity retailer are able to purchase electricity under terms, conditions and prices regulated by the Commission. The investigation was prompted by the Commission’s belief that recent developments in the wholesale electricity market suggested that the forward cost of wholesale electricity was materially lower than was assumed by the Commission in making its initial price determination.
Frontier (Australia) estimated wholesale energy purchase costs for the Commission, which fed into the draft determination.
For more information, please contact Marita O’Keeffe at m.okeeffe@frontier-economics.com.au or call on +61 (0)3 9620 4488.
The High Court of Australia (‘High Court’) today ruled that the Australian Competition Tribunal (‘the Tribunal’) had exceeded its powers in its decision regarding access to railway lines by mining companies in the Pilbara. The High Court has remitted the matter back to the Tribunal, under tighter constraints as to what evidence can be heard.
The matter started in 2004 when Fortescue Metals Group Ltd applied for declaration of railway lines owned and operated by BHP Billiton Ltd and Rio Tinto Ltd. Declaration is necessary for the Australian Competition and Consumer Commission to determine any terms of access. The decision to declare is made by the responsible minister, who must first be satisfied that certain criteria are satisfied. One of these criteria is that “it would be uneconomical for anyone to develop another facility to provide the service”.
The Minister declared three of the four railway lines, but this decision was appealed to the Tribunal by all the parties. At the Tribunal the parties presented substantial new evidence and the Minster’s decision was amended. Rio Tinto and BHP Billiton then applied to the High Court for judicial review of the Tribunal’s decision.
The High Court held that the Tribunal had exceeded its powers by conducting a re-hearing of the matter. It should only have considered those materials considered by the Minister supplemented, if necessary, by any extra information that it might request from the National Competition Council. The High Court remitted the matter to the Tribunal for determination within these constraints. The High Court also ruled that the word ‘uneconomical’ in the criteria for determination did not mean that the facility had to be a natural monopoly; rather, it meant ‘privately unprofitable’.
Frontier (Australia) advised Rio Tinto and gave expert evidence in the hearing before the Tribunal.
For more information, please contact Marita O’Keeffe at m.okeeffe@frontier-economics.com.au or call on +61 (0)3 9620 4488.
The Australian Energy Market Commission (AEMC) today called for comment on a draft report proposing new ways for consumers to control their use of electricity and manage their bills.
The draft report released by the Power of Choice review includes proposals for change to every part of the electricity supply chain – enabling greater demand-side participation in the National Electricity Market (NEM) to help minimise costs of supply. The draft report also identifies ways to give consumers the information, education, incentives and tools they need to manage their electricity use.
As part of the review, Frontier (Australia) developed a user friendly model to assess the impacts of alternate time varying tariff structures and consumption patterns on consumer bills. This model was used to conduct an initial analysis of the relative merit of different tariff structures and the opportunity each provides for demand-side participation. Frontier’s model and accompanying report is available on the AEMC website.
For more information, please contact Marita O’Keeffe at m.okeeffe@frontier-economics.com.au or call on +61 (0)3 9620 4488.
Sportsbet, the internet bookmaker based in Darwin, has claimed that various State governments have allowed racing regulators to levy discriminatory charges against it in order to prevent leakage of wagering revenue out of the State. Section 92 of the Australian constitution prohibits discrimination that is protectionist. The Federal Court of Australia today found in favour of Sportsbet in its allegation that Harness Racing Victoria had imposed a fee on Sportsbet’s turnover of 1.5% compared with a fee imposed on the turnover of on-course bookmakers of only 1%, and that this constituted discrimination that was protectionist.
Philip Williams of Frontier (Australia) acted as an expert witness on behalf of Sportsbet and gave evidence at the trial on whether the fees were discriminatory and on whether the discrimination was protectionist.
For more information, please contact Marita O’Keeffe at m.okeeffe@frontier-economics.com.au or call on +61 (0)3 9620 4488.
