Michael Peters

There is perhaps no greater failure of competition policy than access to airports.

The Australian Competition and Consumer Commission’s (ACCC) submission to the Productivity Commission’s inquiry into the economic regulation of airport services states that airports should face tougher rules to discourage excessive parking and other fees.

I can’t help but feel we all pay for this anomaly.

The ACCC has stopped short of suggesting that there should be price caps, however the ACCC has revealed airport charges passed on to passengers make up as much as 20% of the cost of Qantas and Virgin’s cheapest airfares, and even more for budget carriers, and wants to curb the potential for privatised airports to reap excessive profits through market strength.  The ACCC is concerned that some airports may have used their market power to achieve monopoly profits in services provided to airlines and in car parking.

There is little doubt that airports have taken advantage of their market power to the detriment of key industries such as tourism and couriers, as well as everyone who flies for business. The extra costs the airports impose impacts on the entire economy.

The ACCC says the threat of arbitration would encourage fairer commercial negotiations between airports and airlines when determining charges, but it has not pushed for a return of price caps fearing tourism could be harmed.

That’s fair enough, however this form of profiteering is a burden to the economy.

It restricts productivity and distorts the market. In particular the cost to the community is significant. For many years successive governments and the regulator have attempted to do something about our airports – just as they tried to do with Telstra. The answer is the application of sound public policy and to vigorously pursue competition law enforcement to ensure access to key infrastructure.

I want to see a total reform of this area. Rod Sims – the new Chairman of the ACCC – and the ACCC as a whole is in a unique position to finally deal with the elephant in the room that is passengers using the nation’s airports.

Michael Peters is a Lecturer in Business Law and Taxation at the Australian School of Business.

Michael Peters

New legislation is intended to more closely regulate the duties and pay arrangement of financial planners.

However I would argue that more regulation is not the answer.

Financial Services Minister Bill Shorten’s new legislation has been largely supported by the financial services industry however the chant coming from government once again is ‘when in doubt regulate’.  It will only increase costs, make it less accessible and is unlikely to provide better advice.

Under the legislation, known as Future of Financial Advice (FOFA), financial planners will be obligated to renew contractual arrangements with clients every two years from the beginning of July next year.

It is proposed that what are called ‘fiduciary duties’ are to be codified, however most of what the law will require is good business practice, so why make it law? Why not put it in a code of behaviour endorsed by ASIC and enforced by the ACCC like other professions such as travel agents?

As proposed the legislation will also offer more powers for the financial regulator, ASIC, which will be given additional power to intervene earlier, as well as allowing the regulator to ban financial planners in certain circumstances.

Why are we using regulation to make people feel immune from the market place – which will sometimes lose them money?

People will still miss out on their bet on the stock market or interest rates, and that is quite simply how markets work. Protecting people from themselves through more regulation does not mean people will not lose money. Instead, it means those with money are likely to get access to better advice than those who cannot afford it.

Under the legislation, brokers would have to restructure remuneration arrangements on margin lending, cash management and banking products, and other product solutions sold to retail clients such as managed funds.

There is enough law to regulate planners and advisers; it’s just a matter of enforcing these rules, rather than making more law.

Michael Peters is a Lecturer in Business Law and Taxation at the Australian School of Business