The boss of the Australia’s competition watchdog has warned Qantas and Virgin that they will be watched “very carefully” to make sure they don’t block two new airlines entering the market.
Outgoing chairman of the Australian Competition and Consumer Commission Rodd Sims on Tuesday gave a speech to the National Press Club where he also slammed the practice of privatising assets and public monopolies for the highest price, which was then passed on to the customer.
“We keep privatising assets and claiming success when we swap them off for an extremely high price,” he said.
“These high prices are very often virtually always the result of restricting competition to the entity that you’re selling or selling a monopoly which people have no choice but to use with no regulation at all on the price.
“So people who pay the most are the ones who will take most advantage of that situation.”
He said it represented a continuing tax on the community.
Mr Sims singled out Telstra as an “unfortunate” example but said Victoria’s privatisation of its electricity assets was a success.
“The right thing to do (with Telstra) would have been at that time to have split the retail from the network,” he said.xjmtzyw
“We wouldn’t have needed to invent the NBN, it would just come about naturally. They would have had incentive to build that.
“We’ve spent $50bn on the NBN and the objective must not be to get a commercial return on $50bn – it must instead be to make the best use of the NBN.”
The outspoken regulator – who is the longest serving chair and is due to finish up in his role next month – said the privatisation of airports without regulation was also an issue.
It comes as Regional Express expands its capital city flights and new budget airline Bonza looks to start flying by the middle of the year.
“Obviously, aviation has had a shocking time and Australia desperately needs a competitive aviation sector, given our landmass and the fact that we’re basically a whole lot of city states,” Mr Sims said.
“Despite this reality, however, the government, many years ago I hasten to add removed regulation from airports just as they privatised them, so again, they could boost the proceeds from sale.”
Mr Sims said there continued to be no price regulation on landing or other charges levied by the monopoly airports.
He said the main airlines didn’t need as many airport slots – authorisation to either takeoff or land – as they had.
“We’ve got the prospect of more competition from Rex on city routes and Bonza who will target unserved routes,” he said.
“Whatever the chances those companies have at success, they must not fail simply because they can’t get slots at our airports.”
He said the ACCC would be watching Virgin and Qantas “very carefully”.
“To make sure … (they) aren’t flying new routes that they previously didn’t at a loss to try and block the new entrants,” he said.
