servicing was partly responsible for the‘trade diversion’strategy in the 1930s,
of discrimination against imports from the USA and Japan.
The Second World War generated traffic for the railways, but maintenance
was deferred. For thefirst time since very early days, in the 1950s railway
revenue fell short of working expenses; by the mid-1970s, the gap was 20 per
cent. Thereafter, railways lost market shares of both passenger and freight, and
theirfinances deteriorated further (Butlin, Barnard, and Pincus 1982, p. 285).
By the early 1990s, railways losses were estimated at over $4 billion a year,
and cumulatively amounted to about two-thirds of state enterprise debt
(Industry Commission 1991). Under the National Competition Policy of the
1990s, most government rail enterprises have been divided into corporations
that provide the travel and freight services, and those providing the rail
infrastructure. The former were not expected to cover costs from revenues:
as an indication, in 2006–07 the five large government urban transport
enterprises—including trams and ferries—recovered 60.5 per cent of account-
ing cost. In the early 2000s, the rail infrastructure enterprises monitored by
the Productivity Commission (PC) produced low or negative returns on the
assets that they used (PC 2008).
9.2.2Competition Policy
Australian railways were granted monopolies over rail services in their colony
or state: apart from some relatively minor competition over Riverina trade,
there were no‘competitive’or‘duplicate’lines. (Canadian railway history, in
contrast, was mightily influenced by competition from its neighbour to the
south; and, in the Canadian Pacific and Canadian National Railways, created a
duopoly.) Consequently, in the later nineteenth and early twentieth century,
Australian railways could not give rise to the private‘trusts’that became a
potent political issue in the USA, sparking the creation of what has been called
‘the regulatory state’in that country, one focus of which was the preservation
of rivalrous competition. Arguably, the existence and experience of state
railway monopolies contributed to the widespread ignorance or scepticism
in Australia about the social value of competition—public monopolies were
considered a very desirable form of industrial organization, and private cartels
were not only permitted (until the 1970s) but also judicially lauded, as in the
judgement of the 1912–13 Coal Vend Case.^10 The Deakinite package in the
early years after Federation had an anti-competitive bias against low-priced
(^10) ‘Cut-throat competition is not now regarded by a large portion of mankind as necessarily
beneficial to the public...The intention of the parties was to put the Newcastle coal trade on a
satisfactory basis, which would enable them to pay adequate wages to their men and sell their coal
at a price remunerative to themselves’(cited in French 1994, p. 94).
Jonathan Pincus