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Published byShanon Preston Modified over 9 years ago
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Microeconomic Reform Deregulation
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Deregulation of Markets comes under Deregulation Privatisation Corporatisation
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Deregulation This is the process of removing barriers to entry in a market sector where Monopolies and Oligopolies exist. Industries are deregulated to encourage participation, increase competition, provide differentiated goods and services and improve efficiency and productivity.
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Deregulation In October 1990 the domestic airline industry was deregulated (previously only 2 competitors, Qantas and Ansett) We now have 4 domestic carriers, Qantas, Jetstar, Virgin and Tiger air. Domestic airline prices are less than 1990 where a return flight from Melbourne to Perth was $600
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Deregulation - 2 In 1993 the long distance telephone market was deregulated in Australia. Telecom (Telstra was a monopoly) The market has more competition and more variation in services and prices now Optus, Vodaphone and a number of retailers (DoDo, phone cards etc) now compete in the market.
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Deregulation - 3 In mid 1989 the NSW government deregulated the market for eggs. Previously quotas were placed on egg production meaning there was no market for new entrants unless they purchased an existing business
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Privatisation This is the sale of Government business assets (Federal, state and local) which compete in a market into the hands of private investors. The goal is to improve the efficiency of the firms by forcing them to be answerable to shareholders.
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Privatisation - 2 The Commonwealth Bank was a government owned bank that was sold off in two stages, in 1991 and 1996.
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Corporatisation The act of reorganizing the structure of government owned entity into a legal entity with the corporate structure found in publicly trade companies. These companies tend to have a board of directors (B of D), management and shareholders. However, unlike publicly traded companies, the government is typically the company's only shareholder and that the shares in the company are not traded publicly.
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Corporatisation Under Corporatisation the government business has to achieve financial performance factors that are used in the private market. Government Corporations must aim to make a profit just as if they were owned by shareholders. They do not receive special loans or other government benefits from the taxpayer.
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Corporatisation - 1 The best example of this process is Australia Post. In 1993 Australia post was Corporatised. Its operation is a stand alone business and produces yearly income statements and a balance sheet.
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