Open and efficent transport markets

Efficient and well-functioning markets produce significant benefits for society. Well-functioning markets allocate resources to their most valued use. They promote the best use of scarce resources such as land, labour and capital in a manner that maximises output and the welfare of citizens.

Key components of well-functioning markets include:

  • ease of market entry and exit – free entry and exit enables markets to function efficiently, while barriers to entry reduce competition and efficiency
  • absence of significant monopoly power – the presence of a significant monopoly power in a market reduces competition and pressure for efficiency and innovation, resulting in reduced levels of choice and price protection
  • price signals – timely and accurate price information enables appropriate supply responses from businesses and demands responses from purchasers, leading to better- quality products and services at the lowest possible prices
  • absence of externalities – all of the costs and benefits of goods or services provided are fully captured within the market (or there are subsidies or taxes to match the externalities)
  • widespread availability of information – all parties in the market (businesses and consumers) need to be well informed if they are to make the most effective decisions.

The Ministry's role in creating more open and efficient transport markets

The Ministry has an important role in advising government on opportunities to improve the efficiency and competitiveness of our domestic and international transport markets, which supports the government’s Business Growth Agenda. To do that, we need a strong understanding of how different transport markets work and how firms operate within them. This is particularly important in instances where a firm may have a near monopoly providing transport infrastructure or services for an area.

Some transport markets are competitive (for example, road freight and taxis), in some there is a degree of domination by particular firms (for example road construction or aviation), and in urban transport there is a ‘market failure’ related to congestion. The Ministry, in consultation with stakeholders, is deepening its understanding of transport markets and of actions that could be taken on those that are not functioning well.

A market in which the Ministry is active is international aviation. Airlines can only operate to and from NewZealand by our agreement; and likewise, NewZealand can only operate to other sovereign territories by their agreement. The Ministry improves access to international markets through the international air services agreements it negotiates on behalf of the government. These agreements enhance NewZealand’s attractiveness as a tourist destination and provide new capacity for time-sensitive freight exports.   

Information is an important component of open and efficient markets. The information the Ministry can provide to transport operators and users can help them make more informed transport decisions. The Ministry has access to a range of information across the transport portfolio. It is bringing together the information in new ways and making it available to transport operators and the public to enable better decision-making.

To improve the openness and efficiency of transport markets the Ministry will:

  • reduce or remove barriers to entry to domestic or international markets
  • provide the transport sector with access to better information on the sector.

Open and efficient transport markets – What we intend to achieve

The Ministry’s intended impacts in this area over the next four years, and the projects and activities that will deliver them, include the following:

Impact 2: Reduced or removed barriers to entry to domestic or international transport markets

Stakeholder engagement

The Ministry is focusing on collaborating more closely with non-government stakeholders in the transport system. This will strengthen the Ministry’s understanding of how transport markets operate ‘on the ground’ and identify opportunities to further enhance the efficiency of those markets.

International air services agreements

The Ministry will advance negotiations in accordance with the International Air Transport Policy, issued in August 2012, for new or amended air services agreements. The expected result of these negotiations will be increased numbers of international flights to and from NewZealand. This will reduce the cost of air travel, lift tourist numbers, provide additional export capacity for time-sensitive exports and increase NewZealand’s connections to international markets.  

The Ministry considers the world has opportunities to achieve a better and more efficient air transport system. It is important that NewZealand participates in the collective discussions, which are emerging globally, that are focusing on modernising the current system of air services agreements. 

To maximise our effectiveness at international transport forums, we will develop a NewZealand strategy for engagement with the: 

  • International Transport Forum
  • International Civil Aviation Organization (ICAO)
  • International Maritime Organization
  • Asia Pacific Economic Cooperation (APEC) Transport Working Group.

This will provide a strong voice for NewZealand’s preferred positions and minimise any negative impacts from the decisions taken by these institutions. 

The Ministry will actively participate in the international fora where these discussions are occurring, including ICAO and APEC. It will also consult with individual countries and airlines that, like NewZealand, are pressing for liberalisation. 

NewZealand will host the APEC Transport Working Group meeting in 2014. This will focus on trade liberalisation and facilitation in the transport sector, economic and technical assistance, and capacity building. Important goals for the working group are to develop systems that ensure safe, secure and efficient movement of people and goods throughout the Asia-Pacific region. 

Public Transport Operating Model

Domestically, the legislative elements of the Public Transport Operating Model were enacted in mid-2013, and regions are now expected to progressively implement the new arrangements, including adopting a new public transport plan, and entering into new contracting arrangements with public transport operators. The Ministry, in conjunction with the NZ Transport Agency and in consultation with the Public Transport Leadership Forum, will report on the implementation and operation of the Public Transport Operating Model by the end of 2015.

Impact 3: The transport sector has increased information available to it

Research strategy and Domain Plan

The Ministry will continue to build its evidence base across the transport sector and collect important data currently not captured. Over time, the aim is to develop a research strategy for the sector.

Future freight services, scenarios and plans

We will facilitate discussions with major industry players to establish a shared view of future freight services, building on recently released Ministry information on port container handling rates, freight movements and our recent study on the future of NewZealand ports. This will provide the NZ Transport Agency, ports and industry with clear information on which to base their investment decisions. 

Through our Freight Information Gathering System, the Ministry will continue to provide quarterly information on freight container movements through NewZealand’s ports. 

The first National Freight Demand Study was undertaken in 2008. Given the changes that have occurred in the international economy since then, we have refreshed the study to provide a more current assessment of future demand.

Open and efficient transport markets – how performance will be assessed

Outcome measures

Increased number of international passenger movements to and from NewZealand. 

International passenger movements to and from NewZealand (millions): 

2013 - 10.0

2012 - 9.7

2011 - 9.6

2010 - 9.3

2009 - 8.9

Increased number of international flights that depart from NewZealand. 

International flights departing NewZealand: 

2013 - 32,332

2012 - 30,787

2011 - 31,434

2010 - 30,860

2009 - 30,322

Increased public transport passenger boardings.

Public transport passenger boardings (millions):

2012/13 - 133

2011/12 - 133

2010/11 - 133

2009/10 - 128

2008/09 - 126

 

Impact measures – reduced or removed barriers to entry to domestic and international transport markets

International air services agreements provide for greater access to other countries, and for an increased number of services.

NewZealand currently has air services agreements with 64 States or territories. 

In the first nine months of 2013/14, NewZealand negotiated new or enhanced air services arrangements with 18 countries: Ethiopia, Finland, Hong Kong, Indonesia, Jamaica, Luxembourg, Mongolia, Norway, Papua New Guinea, Saudi Arabia, South Africa, Sri Lanka, Sweden, Switzerland, Cambodia, Togo, Vietnam, Zambia. 

Cabinet mandates have been obtained for further negotiations with the Philippines, India, Thailand, Colombia, Peru, Panama, Mexico, South Korea, and Argentina. Further negotiations will be pursued where opportunities arise.

Decreased ratio of subsidy to public transport passenger boardings[1].

Subsidy per passenger boarding (growth relative to 2007/08, based on 2007/08 = 100):

2012/13 -115

2011/12 -115

2010/11- 104

2009/10 - 106

2008/09 - 123

1 Includes SuperGold Card, central and local government public transport contributions dollars. 2007/08 is base year.

Impact measures – transport sector has increased information available to it

Increased range of freight information is captured within the Freight Information Gathering System.

The Freight Information Gathering System currently captures containerised freight movements through sea ports. Freight movements not currently captured include non-containerised freight through sea ports, and road and rail movements that do not go through a sea port. Further information on the Freight Information Gathering System can be found on the Ministry’s website.

Port productivity data for NewZealand’s six largest ports is publicly available. 

The Ministry provides updated container handling statistics on its website, each quarter. These statistics include:

  • annual vessel rates (the number of containers moved on and off a container ship in an hour of labour)
  • annual crane rates (the number of containers a crane lifts on and off a container ship in an hour)
  • annual ship rates (the number of containers moved on and off a container).

 

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