In Defence of Competition: The Successful Application of Competition Policy in NSW Rail

Abstract

This paper argues that recent rail reform in NSW has been successful. NSW rail is now not only more cost effective, but also offers improved service and safety levels to its customers. As such the NSW rail reforms have been of benefit to the community as a whole, and have laid the groundwork for a resugence of the rail sector. Despite the criticism surrounding recent job losses, it is argued that the reforms have reinvigorated an industry that had been caught up in an ever decreasing vicious circle. The success of the 1996 reforms have been dependent upon a reform model that mixes factors such as vertical separation and independent regulation with government provision of targeted community service obligation payments. This paper argues that the most important ingredient for rail's future is the removal of the enormous bias in government tax and user charging policy against rail and towards road transport. In addition to keeping faith with the traditional National Competition Policy agenda, nothing is more important than that Australian governments address this continuing and debilitating bias against rail transport.