A report into the economic cost of child undernutrition in Papua New Guinea was released today by Save the Children and Frontier Economics (Asia-Pacific).

Child undernutrition results in substantial increases in childhood mortality, physical disability, cognitive impairment and disease burden, with the potential to also affect future generations. It is particularly prevalent in low and middle income countries. For example, Papua New Guinea (PNG) records extremely high child stunting rates in the world (the primary indicator of undernutrition) with 49.5 percent of children under the age of 5 suffering from stunting.

The intergenerational effect of undernutrition can include:

• Losses in productivity from increased mortality: undernutrition in childhood leads to increased risk of death from disease, which leads to a direct reduction in the economy’s labour force.
• Losses in productivity from poor physical status and reduced cognitive function: childhood undernutrition (in particular stunting) leads to direct losses to a country’s economy through poor cognitive function and reduced human capital for the economy.
• Losses owing to increased health care costs: undernutrition in children contributes to impaired immunity, resulting in increased infection rates, which translates into increased utilisation of health centres and at-home treatments.

Yet, despite this, aid investment in nutrition in PNG is limited. For example, only 0.1% of Australian Official Development Assistance (ODA) to PNG in the years 2010 to 2012 was allocated to support nutrition interventions. Estimates of the economic cost of undernutrition could inform a reallocation of aid investment in PNG and domestic resources to improve child nutrition as a foundation for human and economic development. Accordingly, Save the Children engaged Frontier Economics to estimate the cost of undernutrition amongst children under five in PNG.

This ground-breaking report reveals that child undernutrition is estimated to have cost the PNG economy up to $USD 1.5 billion in FY 2015-16, representing 8.45% of its gross domestic product. This figure significantly exceeds PNG’s budget for health and education services and highlights the need for targeted investment in nutrition to ensure inclusive and sustainable economic development.

Frontier Economics partnered with Save the Children to undertake this project, providing a solid framework for examining this significant policy issue - drawing on economic principles and official literature, and considering country-specific and global data to estimate the economic impact of undernutrition amongst children under five.

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In 2009 and 2010, the Australian Competition and Consumer Commission (ACCC) took action against a number of international airlines – claiming that they had colluded on the fuel surcharges they had imposed on international air freight. Most of these airlines settled with the ACCC and agreed penalties that were put to the courts.

Air NZ and Garuda did not settle. They claimed that Australian courts had no jurisdiction on freight that came into Australia because the market in which the freight activity took place was not a market in Australia. These airlines succeeded with this argument at the trial but lost at the Full Federal Court. Today the High Court unanimously dismissed the appeals by the airlines and made some useful observations about the law concerning markets in Australia. The court held that all aspects of the market, including the presence of customers in Australia, need to be considered in deciding whether a market is ‘in Australia’.

Frontier Economics (Asia-Pacific) advised lawyers for the ACCC and the ACCC called Philip Williams to give evidence at the trial.

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In their role as the independent regulator responsible for determining the maximum prices that can be charged for certain water services in New South Wales, the Independent Pricing and Regulatory Tribunal (IPART) today released their Final Report and Determination regarding WaterNSW’s prices for NSW Rural Bulk Water Services, to be applied from 1 July 2017.

WaterNSW provides a range of services to different users (some of whom are customers), and a key step in determining the prices charged for WaterNSW’s services is to determine the sharing of the costs of WaterNSW’s rural bulk water supply between customers and the NSW Government.  While prices and charges for water should, in general, recover the full efficient cost of providing the service to water users, in some industries there are economic arguments for some government contribution to the cost of providing WaterNSW services. These arguments include the existence of public goods and unavoidable legacy costs, or where it is impracticable to recover costs from specific users of these services.

IPART engaged Frontier (Asia-Pacific) to prepare a report providing expert economic advice on the regulatory framework for sharing the costs of WaterNSW’s rural bulk water supply between customers and the NSW Government. The report recommended a new long-term sustainable approach to cost sharing based on sound and well-accepted economic principles, which were ultimately adopted by IPART and detailed in the final report. As a result of Frontier’s advice, IPART has made a decision to implement an extensive review of the cost share framework (with involvement of stakeholders and drawing on Frontier’s proposed framework) before the 2021 determination.

Frontier regularly advises clients in the water sector, including government, regulators and businesses.

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