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New South Wales

Sep 6, 2017

What Utopia can teach us about the Federal Court’s recent coal port decision

In this case, what happened in Utopia was actually less ridiculous than the real-life equivalent, writes former board member of Prime Minister and Premiers Road Reform Project Luke Fraser.

A recent episode of ABC television’s satire Utopia featured political spivs trying to convince the fictional Nation Building Authority to endorse anti-competitive conditions on a multibillion-dollar port asset sale. Head of that authority, Tony Woodford — played beautifully by Rob Sitch — resisted valiantly. Shortly thereafter, a newspaper review criticised Utopia thus:

“… the writers of Utopia make their point by reducing pivotal players in the policy formation process to idiots. (They) are straw men, delivering obviously untenable arguments, which guide the viewer to think no one in government knows what they are talking about. It’s a lazy critique, but the writers get away with it because the viewers are entirely sympathetic. Lampooning ‘those clowns in Canberra’ is hardly a controversial undertaking.”

If only that sniffy assessment were accurate. 

It would be better for the TV reviewer to see our “policy formation process” — in ports at least — as it is today: an altar at which we worship at our own peril.

Within a week of Utopia’s port episode airing, the full bench of the Federal Court ruled to introduce price regulation at the coal port of Newcastle, which had been privatised a few years earlier. The court ruled the port’s monopoly features — left unaddressed in the privatisation — created undue risks of anti-competitive outcomes in coal.

This decision is a bombshell for Australia’s ports, and potentially other monopoly infrastructure — especially privatised infrastructure. It confirms the ACCC’s stated intentions for greater port competitiveness:

“… what the ACCC is concerned about is governments seeking to boost one-off sale proceeds through privatisation processes at the expense of creating a competitive market structure or putting in place appropriate regulation to curb monopoly pricing. This effectively provides one-off proceeds but places a ‘tax’ on future generations of Australians”.

There might yet be an appeal to the High Court. No doubt privatisation zealots and the usual infrastructure cheerleaders will be apoplectic and cry “sovereign risk” from the rooftops. The people who bought Newcastle’s port, including organisations that look after superannuation funds, may suffer.

This is worse than the situation satirised in Utopia in several respects. In the Utopia episode, the head of the Nation Building Authority fought a good fight and saw off the worst anti-competitive elements in the privatisation agreement. In doing so, he was helping avoid the sort of decision the court has just imposed on Port of Newcastle.

It is the New South Wales government that is primarily to blame for Newcastle — not the “Canberra clowns” referred to by Utopia’s reviewer. But as culprits for port problems, Canberra is also at fault; it has been insufficiently involved in protecting constitutional objectives for ports. Far from a byword for the “policy formation process”, as far as ports and their privatisation are concerned, the federal infrastructure department has become a watchword for sloth.

Third, and by far the worst, there was no suggestion that the port satirised in Utopia would be hamstrung by trading restrictions made in secret by the government for the benefit of another private port owner. This arrangement is more easily imagined in some 1970s African dictatorship, yet it happened at Newcastle.

In real life, the private owners of Port of Newcastle — generally regarded as one of the most modern and professionally run coal ports in the world — will be hamstrung in dealing with price regulation, because the secret 50-year trade restriction on this port prevents Newcastle’s owners from diversifying revenue streams into profitable container trades for another 47 years. Such diversification would have been necessary in any event for Newcastle — a city with a population larger than all of Tasmania. It would also greatly assist in reducing congestion in Sydney.

Blocked from this solution, some might argue Newcastle’s new owners should just make savings elsewhere. Where? Over half the cost of moving a container through an Australian port lies in road freight (see successive Bureau of Infrastructure, Transport and Regional Economics Waterline reports). These costs remain the sole responsibility of road agencies to fix, yet they have been rising across Australia’s ports unchecked for years, even as stevedoring, tugs, customs fees and other costs inside the port gate have fallen. In 2012, the prime minister and premiers agreed to trials which were to occur in the hinterland of such ports to resolve these road problems. Subsequently, quietly, these trials were dropped by the road agencies.

Another win for the “policy formation process”, in which none of the pivotal players are idiots.

With help from Canberra, the New South Wales government also managed to agree to a roughly $20 billion WestConnex project, which was expected to improve freight efficiency, but which does not yet have a plan to link to Port Botany, despite passing almost past this port’s front door. Yet again, very professional port managers and truck operators as well as the community and the economy all suffer from bureaucratic sloth.

*Read the rest of this article at John Menadue Pearls and Irritations

 

*Luke Fraser is the founder and principal of a transport policy and investment advisory. In 2012 he was appointed to the board of the Prime Minister and Premiers Road Reform Project. Prior to this he was a national freight industry chief executive.

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10 thoughts on “What Utopia can teach us about the Federal Court’s recent coal port decision

  1. Charlie Chaplin

    Wow. Thanks Luke. My mum and I never miss Utopia. We laughed like drains at the port episode. I commented to mum that apparently Utopia isn’t considered so funny anymore – it cuts too close to the bone. And we live in Newcastle. Newcastle born and bred. And we had no effing idea.

  2. Dog's Breakfast

    Oh Charlie, my wife and I watch it. I love it because it is so scarily accurate, but also cringe a little. My wife cringes all the way through, knowing how close it really is.

  3. Michael Byrne

    Michael Byrne – President East Liverpool Progress Association says:
    6 September 2017 at 2:16 PM

    Luke Fraser may want to check out the Utopianesq “transformational project” ( Infrastructure Australia quote) known as the Moorebank Intermodal… I grant that it is transformational when applied to the perversity of modern day politics where private / party interests smother the public interest.

    The two (2) intermodal projects are far from planning approved to meet the ultimate goal of 1.55 million TEU, upon which count the revenue projections are based. The BCR’s omit over $1.9 billion of public costs covering military relocation, land value, rail infrastructure and new roads required to service it. Revenues down, or costs up – same effect on the much heralded but unpublished Business Case Analysis.

    The project began with Mr Chris Corrigan’s ( loved by the Libs – hated by the ALP) influence prior to 2007, and became messy when the new Labor Government initiated a blocking play to Corrigan’s interests with its own Intermodal project on lands that just happened to stand between Corrigan’s property and the raison d’etre – the Port Botany freight rail line. A 6 + year delay owing to the ALP playing the “man” and ignoring the “what”, “how” and “why”. So much for the promised objective evaluation of major infrastructure projects by Government entities such as the Moorebank Intermodal Company and Infrastructure Australia. If only there was a Tony Woodford as Head of MIC or IA.

    The perverse irony is that Corrigan erred in his site selection.

    Any objective evaluation would have rendered the site unsuitable on the basis that East Liverpool ( Moorebank ) is bound by the Georges River on three sides and as such it is bridge reliant. It stands at the northern end of the Liverpool Military Area that runs for over 20 km south to past Campbelltown on the eastern side of the river. As such East Liverpool is the sole narrow traffic corridor connection to Sydney’s east and south for the entire, existing and growing, south west region of Sydney. The two nearby bridges carry almost as much traffic as the Sydney Harbour Bridge and Tunnel combined; they carry more traffic than the Sutherland Shire’s three major bridges combined.

    It is a national infrastructure disgrace. It stands today as a partially approved hotchpotch non-integrated development with no published plans and costs to see it advance beyond the pocket container park it is destined to be. There is an approval condition that the onsite warehouses are to be used for railed containers only.

    I cannot imagine the Utopia plot developers ever coming up with the scenario of a major political party using a duplication of an existing private infrastructure initiative to block a person they did not like. Too absurd. If only.

  4. Lee Tinson

    And which paper would that have been, I wonder? I didn’t read that sniffy assessment, so I could make a good guess.

    I seem to recall that we in Newcastle were all excited about a container port around that time, but the newly-minted Baird government did that deal and either expanded Botany or sent some of it to Wollongong. In any case, we all knew that a corrupt-seeming deal had been struck, with Baird himself in the thick of it as was usual with such deals (and Berejiklian is arguably even worse). Great christians, both of them!

    For all of us who worked in a public service most of our lives, this is required viewing. About every character in that show we can say: “yep. I know you well”. This season of Utopia is Sitch’s best work ever, IMHO.

  5. Raaraa

    Utopia keeps giving us gems like this one. The first season went a bit easy and people would believe if these are exaggerated scenarios. However, recently they’ve been hitting way too close to home for the comfort of people involved in these processes. Too many times I have heard friends and colleagues who are able to relate to the scenarios presented in Utopia.

  6. PG

    Worked in the public sector for 40 years. After an early Utopia episode one of my old bosses rang me up and said “How did they know?” It’s scary just how accurate the show can be. It should be kept in mind that many public sector experts are extremely competent – it’s when they get gazumped by political imperatives that the idiocy starts.

    1. Pollietragic

      I’ve worked there recently too PG. How did the Utopia writers know?
      Agreed PG, except for “many public sector experts are extremely competent – it’s when they get gazumped by political imperatives that the idiocy starts.” The very top echelon senior public servants may well be good operators, but they preside, not manage, over a weighty bureaucracy that is absolutely soul destroying for their middle and lower managers, and staff.

      Utopia touches on this, with the idiotic time destroyers of occupational health and safety, security, human resources policies, inefficient meetings, absurd marketing and IT obstacles and interruptions.

      Don’t rock the boat – code for don’t initiate or recommend change, and cover your arse, are public service standards for those who seek to preserve their position and salary.

  7. AR

    At Port Botany both CTAL & NTAL have fully functional rail links to the entire network.
    Yet RTA (or wotever the current name) makes a fortune fining truckies lined along Foreshore Rd for hours because they can enter neither congested wharf area.

  8. Jack Robertson

    Surely the best thing about Utopia is the awesome way each dizzyingly bone-shaving episode mobilises yet more of the vast hibernating reserves of democratic firepower into fully engaged political action out there at the electoral coal face. Oh yes. Listen closely, comrades: that rumbling sound is the tectonic plates of apathy and ignorance shifting at last, shrieking, groaning, roaring in action…a glorious cacaphony of massed awakening. Ah, yes, yes, arise, o my brothers and sisters arise!…for when the leviathans of lethargy and the dog days of disengagement descend ‘pon us, ‘t’is to the noblest of political callings we must look. O, stand-up and bite, ye wizards of the wry reflection! Unite and inspire us, wily ironists all! Ignite our stirring souls with your tinder-sparks of acerbic comedic hyperbole…

    Verily when the darkest political hours are at hand, we, with fretted brow and hope in our hearts, will turn, must turn, can only turn…to…to…Teh Satirist! For as history and Cook reminds us satire alone can salve and save us all. O, more, please…more satire, we must have more satire….humanity’s one last hope lies in yet more vaguely unfunny unbearably smug freeloading middle-class satire…

    *gullets red pill*

    /petulant cybersterile raging flail

    Flicks on Shaun/Pie/Colbert/whoever. Yes! Nailed it! Again! Cop that, Don.

  9. drsmithy

    Satire ? I thought it was a documentary…

    Anyway, arguably, Utopia would be quite kind by representing those characters as idiots (though that has never been my interpretation of them.).

    At least based on the alternative.

    Utopia’s satire is hardly limited to Government, either. Only the very fortunate or very young would have not encountered the same shenanigans going on in private industry.

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