Dec 20, 2016 - road, rail, sea and air freight modes and operations, freight services users ... for the misuse of market
SRFC*
SOUTH RUSTRRLIRN FREIGHT COUNCIL
14 November 2016
escosa@escosa.sa.gov.au Attn: 2017 Ports Pricing and Access Review ESCOSA GPO Box 2605 Adelaide SA 5001
296 ST VIHCEHT STREET PORT ADELAIDE SOUTH AUSTRALIA 5015 P+61 8 8447 0688 F+61 8 8447 0606 WWW.SAFREIGHTCDUHCIL.CDM .RU
Dear Sir I Madam RE: 2017 Ports Pricing and Access Review On behalf of the South Australian Freight Council's (SAFC) Executive Committee and Membership I thank you for the opportunity to comment on the 2017 Ports Pricing and Access Review Issues Paper. As you may be aware, SAFC is the State's peak, multi-modal freight and logistics industry group that advises all levels of government on industry related issues. SAFC represents road, rail, sea and air freight modes and operations, freight services users and assists the industry on issues relating to freight logistics across all modes. SAFC concludes that, as with previous reviews in 2007 and 2012, whilst there is scope for the misuse of market power in terms of port pricing and access, there is no evidence that this potential power is being exercised. Therefore, SAFC contends that the current light-handed access regime and price monitoring are achieving their objectives (albeit untested to date) and should continue in their current form. In making this recommendation, we note that SAFC has previously recommended (during the Rail Access Regime Review) that ESCOSA investigate merging the two SAspecific rail regimes (including Tarcoola to Darwin) and the Ports Access Regime. Our submission of 23 March 2015 stated: SAFC believes there may be some merit in exploring a merger of these access regimes into a single regime, notionally referred to as the 'Strategic Supply Chain Infrastructure Access Regime'. Under this concept, in the event that a new mining venture (for example) may require both rail and port access to get its products to market, a single scheme would provide consistent regulatory treatment for what is essentially the same objective - access to significant infrastructure on a fair and equitable basis, whilst maintaining similar 'background deterrent' provisions that will discourage any perceived anti-competitive behaviour. In the design of such a scheme, SAFC would expect that any new regime would incorporate broad regulatory parameters to guide access negotiations, and should apply to all significant
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SOUTH RUSTRALIAH FREIGHT COUNCIL INC ABH 31 580 715 581
rail and port infrastructures in the State, including elements that are currently excluded from coverage by existing regimes. This position was supported by the Department of Planning, Transport and Infrastructure (DPTI) and was discussed at length within the Rail Access Regime Final Report. SAFC is however unaware of any subsequent investigation occurring. We request that the Draft report includes discussion of this concept; and indicates what progress ESCOSA has made to date on such an investigation.
With regards to the specific questions laid out in the Issues Paper, SAFC submits: 01: There is no evidence of misuse of market power by providers of regulated port infrastructure services, however the potential for misuse remains. 03: Measurement, in a quantitative sense, is not possible. Nil disputes under the regime could be taken to mean a number of things - that regulation is unnecessary, or that the system is working well in that the potential for misuse of market power has been deterred by the regime. As such there is no possible justification (at this time) for a more intensive regulation scheme; however there is a possible argument for removal of regulation. On the balance, given the potential for abuse but no evidence of it occurring, SAFC supports the retention of the current provisions. 05: the current regulatory system has resulted in no disputes - this is a benefit. The risk is that if regulation was removed entirely, that market player's behaviour could change. Q7: SAFC points to a possible 'Strategic Supply Chain Infrastructure Access Regime' as outlined above and in our submissions to the Rail Access Regime review as a possible alternative.
QB: With regards to Port Pricing, SAFC and the industry across Australia have noted with some amazement the recent prices paid for port assets interstate; including $9.7 billion for a 50 year lease of the Port of Melbourne. It is clear that port charges in Melbourne must increase substantially if the new owners are to break even; let alone make a profit over the period of their lease. This will alter the competitive position between the Port of Melbourne and the Port of Adelaide for contested cargoes in the Port of Adelaide's favour. It should be noted that there will be a form of price regulation in Melbourne for the first 15 years of the 50 year lease. Flinders Ports could respond to this change in competition in Port Adelaide in a number of ways: • By increasing EMS charges in step with the Port of Melbourne, maintaining the current flow of freight to each port, • Holding EMS charges down, thereby taking volume from the Port of Melbourne, or • A combination of the two. SAFC is not suggesting that Flinders Ports is likely to act anti-competitively, or that much will necessarily change over the next five years until the next Ports Pricing and Access Regime Review (given price regulation in Melbourne over this period and beyond). However, there is the potential for anti-competitive behaviour; and as such SAFC believes that a continuation of the price monitoring regime is appropriate.
Q9: SAFC points to a possible 'Strategic Supply Chain Infrastructure Access Regime' as outlined above and in our submissions to the Rail Access Regime review as a possible alternative. When global economic conditions improve there is likely to be a renewed interest in new mining ventures in SA - many of which will require both rail and port access. Q10: SAFC contends that there is value in regulatory consistency - a point highlighted by the harmonisation of regulations that has occurred under the Office of the National Rail Safety Regulator & Rail Safety National Law; and the National Heavy Vehicle Regulator & the National Heavy Vehicle Law. For this reason, SAFC supports further investigation of the possibility of combining the rail and port access regimes into a 'Strategic Supply Chain Infrastructure Access Regime'. Q11: Should the investigation suggested above go ahead it would be appropriate to consider other elements of the supply chain that it may apply to. While current low commodity prices have halted many potential mineral ventures in the short term; it is likely that over time these will become viable again. This will likely require new port infrastructure to be built - such as the currently halted Port Bonython proposal. The '50 year Port Strategy' under development by DPTI may provide further information on the locations of such ports, and potential users. SAFC believes that there would be value to the state in having any such new facility be 'multi-user', and access covered under the ports pricing and access regime.
Should you wish to discuss any element of this submission further, please feel free to contact me on (08) 8447 0664 or via email knapp.evan@safreightcouncil.com.au. Yours Sincerely,
van Knapp Executive Officer, SA Freight Council.
