Auditing regulatory frameworks for economic assets post-privatisation

Bob Holbert, DirectorPerformance Audit Services Group

Overview

• Presentation in three parts– Sydney Airport– Development, regulation and privatisation– Key accountability issues

• Audit Focus– Five related audits in last ten years

Sydney Airport

• Australia’s busiest airport – a significant economic infrastructure asset located in urban environment

• Privatised in June 2002 – leasehold sale

• Residual risk of liability as landlord and owner

• Significant ongoing economic and environmental public policy interests

Revenue Passengers at Major Australian Airports 2004-05

Perth, 6 524 787 (8%) Melbourne,

20 274 457 (26%)Hobart,

1 522 838 (2%)

Darwin, 1 211 718 (2%)

Brisbane, 15 358 030 (20%)

Adelaide, 5 361 359 (7%)

Sydney, 27 936 217 (35%)

Regulatory Framework

• Economic– Trade Practices Act 1974, Airports Act 1996

• Safety– Navigation, Air Traffic Control

• Operations– Infrastructure requirements, specific

requirements at designated airports

Operational Regulation at Sydney Airport

• Curfew Act

• Long Term Operating Plan

• Sydney Airport Demand Management Act

Issues for Accountability

• Framework legislation – possible issues– Have procedural requirements for the making of the delegated

legislation have been observed? – Is the subject matter of the legislation authorised by the Act and

does it only deal with matters so authorised?– Does the legislation only makes provisions that are consistent with

the terms of the Act?– Is the legislation is certain, in the sense that a certain meaning is

able to be given to the functions to be performed, or the obligations to be complied with, under the legislation?

– Are the necessary elements, envisaged by the framework legislation for the proposed regulatory environment, present?

Issues in outsourcing regulatory functions

• Records and Accountability– Ownership of records– Access to records

• Performance and Accountability– Specifying, monitoring and reporting on

performance– Technical compliance

Conclusion

• Privatisation often accompanied by increased complexity in regulatory frameworks

• Challenges for accountability and transparency continue to evolve

• Effective regulatory action best served by a robust legislative framework and the active identification and management of risks by policy agencies