Re: Freightcorp's interstate sell-off blamed on competition fears

[Greg Rudd <grudd@mail.usyd.edu.au>]

Marie Dally wrote:

> On Thu, 25 Jan 2001 12:37:14 +1100, Greg Rudd <grudd@mail.usyd.edu.au>
> wrote:
>
> >
> >
> >David Bromage wrote:
> >
> >> Greg Rudd (grudd@mail.usyd.edu.au) wrote:
> >> > David Bromage wrote:
> >> > > The proposed privatisation of Freightcorp has been blamed for the sale of
> >> > > 20 locomotives interstate rather than to a local company. Silverton Rail,
> >> > > based at Parkes, had sought to purchase the Freightcorp-owned locos.
> >> > >
> >> > > http://www.abc.net.au/news/regionals/orange/monthly/regor-24jan2001-5.htm
> >> > >
> >> > > (I presume this means the 442s, but only 16 were sold.)
> >>
> >> > My question is why was the locomotives sold privately instead of at public
> >> > auction, or tender where the highest possible price chould have been gained.
> >>
> >> For the single reason that Silverton would have bought them and operated
> >> them in competition with FreightCorp!
> >
> >It really is amazing.  Freightcorp will go and compete against another operator in
> >SA but is so frightened of competition themselfs
> >
> >>
> >> > Is this a breach of Freightcorp's own disposal procedures?
> >>
> >> FreightCorp is corporatised and is told to behave like a business. As
> >> such, my understanding that public tenders are no longer mandatory. Even
> >> then, FreightCorp is like Microsoft - it doesn't adhere to any standards,
> >> even its own.
> >>
> >
> >It is only a business because of expediency on the governments part.  When a
> >directive comes from the minister to do something that freightcorp doesn't want to
> >do, it is amazing how quickly it becomes just another government department.
> >
> >> Cheers
> >> David
> >
>
> Freightcorp is a Govt owned Corporation like RIC , but unlike NRC or
> ARTC,which are incorporated and are subject to the Companies Act.
>
> The differances are numerous but essentially in simple terms an
> incorporated Company has a board appointed by the shareholders and a
> CEO appointed by the board .
> The important bit is that an incorporated company operates
> independantly of its shareholders or their wishes, with shareholders
> only being able to exercise any control over the company via the
> annual general meeting where they may replace the board or wind up the
> company .
> A Govt company like Freightcorp is subject to the control of its
> shareholders whenever they wish , and as the shareholders of
> Freightcorp are nominated ministers ,(Carl Scully is 1 and I
> understand that the Premier is the other)  they may make any
> directions that they wish.
>
> Otherwise , the company can essentially do whatever it likes.
>

Really it is a win win situation for Freightcorp as the can do what they like without
being scrutinized by the parliament in its day to day operations, however if the
company does something that is not popular, the minister can intervene if it starts to
effect him in the opinion polls.

>
> The competition issue is really interesting.
> As a company Freightcorp is free to go anywhere and compete against
> anyone ,but the reverse is not true , ie anyone wanting to compete
> against Freightcorp in NSW has to in effect negotiate some sort of
> agreement with RIC to gain access to the tracks and since RIC operates
> its access agreements in total secrecy, what sort of deal a potential
> competitor to Freightcorp would get.

This is one thing that has not changed in the latest round of "reforms" which should
have changed.  Also I find it strange that the locomotives in question have been idle
for a number of years because there is no work for them.  Yet when another operator
starts going after work that Freightcorp is not interested in, they become rather
defensive.

>
> We have here the classic conflict of interest problem.
> The NSW Govt is a Railway operator (in Freightcorp), the NSW Govt via
> RIC controls all access to its tracks ,and the NSW Govt via DOT
> controls who can run trains in NSW anyway.
>  Thimgs may improve a bit when Freightcorp is privatised , but wont
> really get better unless RIC is privatised as well, with the NSW Govt
> simply providing regulation via DOT.
>
> Eventually we need to end up with a similar situation to the aviation
> industry,where the people who fly the planes ,dont own the airports or
> manage or operate the air traffic control.
>
> MD

Or alternatively where the RIC operates in the same fashion as what the RTA does in the
road industry  where operators pay a fixed registration fee for each piece of rolling
stock they own as well as a fixed access charge that each operator pays to access the
system.