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

[mauried@tpg.com.au (Maurie Daly)]

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.


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.

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