Net Public Benefits
9.183 In considering the net benefits to acquirers, the Commission has had regard to both the efficiency effects (only some of the allocative efficiency) and the distributional effects of the removal of excess returns. The Commission is required by section 52 to take this approach. However, the Minister, in exercising his discretion, may wish to consider only the efficiency effects contained in the net public benefits. This approach considers the interests of the public at large, including WIAL, and not just those of the acquirers. Such an approach involves focusing on the efficiency, and ignoring the distributional, effects of control. Excess returns would be ignored, as transfers between suppliers and acquirers are considered efficiency-neutral.
9.184 Table 53 presents the Commission's estimates of the potential benefits and costs of introducing control for airfield activities for the economy as a whole (not just acquirers). The figures shown in Table 53 are an average of the three years 2001-2003. Results for individual years are shown in Appendix 15.
Table 53: Estimates of the Potential Benefits and Costs of Control of Airfield Activities Supplied by WIAL, Average Per Annum ($000s)
| | Over WACC Range | At Point Estimate |
|---|
| Total Benefits | 46 to 102 | 80 |
| Total Costs | 646 to 1,426 | 1,022 |
| Net Public Benefits | -1,380 to -544 | -957 |
9.185 Table 53 shows there are no net public benefits likely to accrue from controlling the airfield activities supplied by WIAL through price cap regulation. The costs exceed the benefits irrespective of the point chosen in the WACC range. This assessment does not take into account WIAL's proposed price increase.
Back to Top