Lost at Sea

An Assessment of the Productivity Commission’s Report on Container Port Productivity
by Phillip Toner

New research from the Centre for Future Work challenges the methodology and conclusions of a recent Productivity Commission study of productivity in Australia’s container port system.

The report, by economist Dr Phil Toner, suggests that the Commission’s exercise was ideologically motivated, and failed to properly interpret its own data.

By several indicators, Australian container ports have demonstrated superior and globally competitive productivity performance, including:

  • 7.8% annual compound growth in number of containers handled.
  • 3.6% annual compound growth in containers handled per hour of work (more than twice average productivity growth in the broader economy).
  • 5.9% annual compound growth in equivalent container units handled per crane.

The Productivity Commission’s claims that Australian ports are not ‘technically efficient’ rests on a faulty methodology which assumes that ports should minimise use of productive inputs (including land, capital, and labour) to meet any given volume of traffic. But in the real maritime logistics industry, other criteria – including ship turnaround time, and ability to respond to fluctuations in demand – are more essential for shippers.

“Even the Commission’s own abstract modeling confirms that Australian ports can be as efficient, or more efficient, than global benchmarks,” said Dr Toner. “By more practical measures such as turnaround time, flexibility to accept fluctuations in volume, and safety, Australian ports are both efficient and productive.”

The report was especially critical of the Productivity Commission’s blanket assertion that unspecified industrial relations practices in Australian ports are the source of purported ‘technical inefficiency.’’

“The Productivity Commission report provides no hard evidence that workplace practices are reducing productivity in our ports,” Dr Toner added. “Its assertions are unbalanced, and reflect an ideological predisposition to blame unions rather than being based on careful empirical analysis.”

Dr Toner’s 50-page report highlights numerous methodological problems and inconsistencies in the Productivity Commission’s analysis of port productivity. It concludes by urging the current Commonwealth government to reject the Commission’s draft recommendation to revise the Fair Work Act in order to restrict collective bargaining and industrial activity in ports and related activities.

The Commission’s inquiry into port productivity was commissioned before the 2022 federal election by the former Coalition federal government. Its draft report was released in September.

Full report