Submission on the Productivity Commission's International Freight Transport Services Issues Paper

August 2011

While we appreciate that the Issues Paper is only a first step in the Commission’s inquiry, there does appear to be a lack of balance in the emphasis placed on particular topics, in the references listed in the bibliography (which appear to show a selective bias towards consultancy studies supportive of privatisation and offshoring), in a tendency to underplay the crucial strategic issues arising from the presence of dominant firms with the ability to exercise holdup (such as port concerns that a dominant shipping line will threaten to use another port, wasting their investment in specialised assets), and in the very limited discussion of the potential gains from centralised strategic planning as a means of coordinating the domestic components of the logistic chain.

It would be unfortunate if the Commission were to move towards recommending industry micro-reforms on the model adopted for industry reform in the 1980s and 1990s without taking full and careful account of the downsides of that approach, and of the reasons why it failed to result in a sustained improvement in productivity growth for the economy as a whole. In particular, we hope that in its inquiries, the Commission will take seriously its statutory purpose, “to provide advice to the Government on improving productivity in a way that is directed to supporting the overall well-being of New Zealanders, having regard to a wide range of communities of interest and population groups in New Zealand society” by implementing the full meaning of the word “well-being”, and genuinely taking into account the implications of any actions on the whole of New Zealand society.