Port reform under review: new research

Privatised ports may not be in the best interest of the public according to a new economic analysis of Australian and New Zealand ports.

In light of recent port reforms in both countries, Associate Professor Malcolm Tull from Murdoch University and Dr James Reveley from the University of Woollongong conducted the first comprehensive analysis of the changes made to Australia and New Zealand’s ports.

“The 1980s was a time of radical economic change, with deregulation and privatisation of labour markets,” said Professor Tull.

“While Australia retained most ports in public ownership and concentrated on corporatisation, New Zealand favoured partial privatisation, with the majority of shares held by local authorities.

“We were interested in comparing the two systems as New Zealand was thought to be an example of best practice by port commentators, based on little analysis or evidence.”

The research team examined the performance of ports in both countries and found that shareholders, rather than port users, were benefiting from any efficiency gains in the privatised ports.

“Traditionally ports have not been run to make money, but shareholders like to make a profit,” said Professor Tull.

“Any private monopoly on a port needs close surveillance by authorities, which does not happen enough in New Zealand. However, in Australia there are bodies such as the Australian Competition and Consumer Commission, and Victoria has a special regulatory board for ports.

“Consumers pay in the long run if port users do not feel the benefits of reforms.”

South Australia has recently followed New Zealand’s example, privatising all seven major ports in the State.