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c) the need to discourage cost increases arising from increases in wages and changes in conditions of
employment inconsistent with principles established by relevant industrial tribunals.
The Commission takes the view that, in relation to these two first criteria, an important consideration is that in an open
and competitive market economy efficient provision of services underpins investment and employment opportunity.
Investment and employment in the national economy will be promoted when firms produce goods or services
efficiently and charge prices which correspond as closely as possible to the competitive levels. Monopoly suppliers do
not necessarily produce goods or services at efficient cost levels or at competitive prices. If higher than efficient prices
for intermediate services and products are passed on to the rest of the economy, there is a resultant loss in technical and
allocative efficiency and potentially therefore in investment and employment opportunity. The Commission considers
that encouraging efficient pricing outcomes in line with more competitive conditions implies that price increases
should stem from a cost base which is efficient and involves only appropriate margins. Given this broad context, the
Commission in assessing price notifications will direct its attention to:
– the efficiency of the cost base that the declared company is working from to earn a return; and
– the reasonableness of the rate of return that the declared company is seeking.
The third criterion outlined in paragraph 17(3)(c) no longer appears to be directly relevant to a price notification
because of changes to industrial relations legislation and wage determination practice.”
SOURCE DATED: 10 JULY 2008.
Airports
“The 22 leased Federal airports (i.e., leased by the Federal Government to private operators for 50 years with an option
for a further 49 years) are able to commercially negotiate with their customers without government intervention. These
22 leased airports are subject to the Federal Government's Airports Act 1996 and Aeronautical Pricing Principles
which set out the Government's expectations on the airports' pricing behaviour. A persistent failure to produce
commercial outcomes consistent with these Principles could lead to a more formal price scrutiny of the relevant airport
and potentially may lead to imposition of a more heavy-handed regulation. The Government's Pricing Principles are
consistent with paragraphs 22 and 23 of ICAO Document 9082/7.
However, only five of these 22 leased airports (Adelaide, Brisbane, Melbourne, Perth and Sydney airports) are subject
to a formal price monitoring regulatory regime. The Australian Competition and Consumer Commission (ACCC)
publishes annually a financial, price and quality of service monitoring report in respect of the five major airports. The
ACCC report helps inform the Government whether there has been a misuse of market power by any of the monitored
airports.
In addition to the 22 leased Federal airports, there are also around 230 other aerodromes in Australia covered under the
Aerodrome Local Ownership Plan (ALOP). All 230 ALOP aerodromes had been transferred to local ownership --
mainly to local councils, but in a small number of cases, to business or State Government. The Federal Government
has no direct role in the operation, maintenance or development of these local aerodromes. However, prior consent of
the Secretary of the (Federal) Department of Infrastructure, Transport, Regional Development and Local Government
must be obtained if the aerodrome is to be closed or developed in a manner that renders it inoperable.
Furthermore, there are other airports in Australia that are not subject to regulation under the Federal Government's
Airports Act 1996 − for example: Cairns International Airport (operated by a State government business enterprise);
Avalon Airport (leased by the Federal Department of Defence to a private operator) and Newcastle (Williamtown)
Airport (leased by the Federal Department of Defence to local councils). These airports are not subject to the Federal
Government's airport pricing regulatory arrangements.
10 SUPPLEMENT TO DOC 9082
The pricing principles relating to prices for aeronautical services and facilities (as defined in Part 7 of the Airports
Regulations 1997) provided by airports are:
a) that prices should:
(i) be set so as to generate expected revenue for a service or services that is at least sufficient to meet the
efficient costs of providing the service or services; and
(ii) include a return on investment in tangible (non-current) aeronautical assets, commensurate with the
regulatory and commercial risks involved and in accordance with these Pricing Principles;
b) that pricing regimes should provide incentives to reduce costs or otherwise improve productivity;
　
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