Frontier Economics chairman Lord Gus O'Donnell and former Australian Minister for Trade and Investment Andrew Robb AO presented to a full house at the 'Brexit & Australia" event in Singapore held on 25 September. The audience was treated to the unique perspectives in government and international trade offered by both presenters, with the occasional controversial statement thrown in!

The Frontier Economics chairman spoke about how Brexit came to pass and the decisions made by the British Government along the way, stretching over three years and three Prime Ministers . He also spoke about the challenges faced by the current government in trying to negotiate a deal that would result in the UK leaving the EU in a more orderly fashion than crashing out with no deal Such a deal would mark the end of the beginning of the negotiations required between the UK and the EU. The next stage is to sort out the details of the UK’s trading relationship with the EU, to replace the deals the EU has with other countries and to negotiate trade deals with countries like Australia, Canada, New Zealand and the USA. Andrew Robb drew parallels between Australia’s program of microeconomic reforms in the 70s and 80s to show that while that transition was difficult, it was followed by substantial economic growth as the country became more liberalised and trade opened up. The parallel drawn with Brexit is that it may have long term beneficial effects on trade, particularly with countries outside of the EU (e.g., Australia).

The event was co-presented by the Australian Chamber of Commerce, Singapore, and the British Chamber of Commerce, Singapore, with the discussion moderated by Juliette Saly from Bloomberg Radio & Television.

Frontier Economics was delighted to sponsor this event as part of our 20^th anniversary celebrations.

We are aware of some recent social media posts referencing our work on the Productivity Commission’s inquiry into Airport Regulation.

These posts reference the Commission’s critique in its draft report of our analysis which assessed the costs and benefits of reforming the regulatory regime applying to monitored airports.  The Commission alleged that our work contained fundamental errors and was not credible. We disagree, and have provided a response to the Commission setting out why.

In short, our analysis was directed as estimating the potential impact of excessive airport charges on air travel and Australia's connectivity with the rest of the world. We found that these effects were potentially quite significant, as airports had earned excess returns over a long period and returning some of that to airlines and airline passengers could substantially improve route connectivity.

This​ analysis should have encouraged further analysis and assessment. ​ However, unfortunately it did not.​ Instead the Commission dismissed Frontier’s analysis based on disagreements with our finding of excess profits, and the impact of reducing this on airport charges.

Rather than identifying “fundamental errors”, the Commission has simply taken a different view without any consideration of the underlying framework we put forward. Our analysis of excess profits is based on an economically-sound methodology that draws data from ACCC monitoring reports and takes into account returns earned on both the aeronautical and non-aeronautical side of the business – the most common regulatory method used in other jurisdictions. The Commission in turn made a number of errors in characterising our approach to turning excess profits into a reduction in the aeronautical charges paid by airlines. Most notably, it confused a return passenger with a one way passenger which resulted in assumptions which in no way reflect those underpinning our work. We have sent the Commission further details to correct its misunderstandings.

More generally, Frontier Economics indicated its disappointment with the way the Commission contextualised our evidence and engaged with it.​  We were the only party to present a more detailed assessment of the impacts of changing the regulatory regime applying to monitored airports. Every other party including the airports and the Commission itself skirted this issue. Why? Probably because it is hard and requires certain assumptions to be made. Assumptions necessarily introduce uncertainty, but this does not of itself discredit our analysis. We were transparent about our assumptions and considered carefully how best to used this connectivity analysis in our wider assessment. ​

For those that are interested to understand these issues, we suggest you read our March 2019 submission to the Commission’s draft report.

For more information, please contact us.

The Water Services Association of Australia (WSAA) has released the paper “Blue + Green = Liveability: the value of water to liveable communities”.

This paper advocates for the consideration of water-related infrastructure in creating liveable cities. Last year, in a project for WSAA which looked at Health Benefits from Water-Centric Liveable Communities, Frontier Economics created a ready reckoner modelling tool which identifies and quantifies (where possible) the relationships between the water industry investment and improved health-related economic outcomes. This has the significant benefit of enabling a consistent and rigorous means of assessing infrastructure projects, which in turn leads to the right projects being approved. This work is featured as a case study in the paper.

Blue + Green = Liveability also features a case study of our work with Infrastructure NSW on the Western Parkland City (Sydney’s Third City), much of which lies within the South Creek Catchment. We undertook a strategic business case which found that adopting integrated land use and water cycle management strategies in the WPC would deliver significant economic, social and environmental benefits to the community in the form of reduced water infrastructure, more open space, greater urban cooling and more healthy waterways and riparian environments.

Blue + Green = Liveability sets out a series of recommendations for government, the urban water industry and other collaborating partners, with a key recommendation being the establishment of a new National Water Initiative focused on liveability of cities and regions across the urban water cycle.

Frontier Economics assisted WSAA with research and consultation in the development of this paper. The Urban Economics team at Frontier Economics has been advising clients on a range of projects at policy and implementation level addressing challenges particular to our urban environment.

For more information, please contact us.

The Australian Chamber of Commerce and British Chamber of Commerce in Singapore are presenting a joint event, "Brexit & Australia" on Wednesday 25 September 2019.  Frontier Economics is co-organising this event as part of our 20th anniversary celebrations. Brexit & Australia will discuss what is happening in the lead up to and following October 31st when Brexit is due to take place. Prime Minister Boris Johnson promised that the UK will leave the EU regardless, however, there is still considerable uncertainty about the process and what it form it will take. Further ahead, what does Brexit look like for Asia and Australia?

For more information, please contact us.