Infrastructure debate must move forward: ACCC

The debate about infrastructure must move from claims about 'crises' and on to ways to improve regulatory arrangements and promote investment in the long term interests of Australia, Australian Competition and Consumer Commission Chairman, Mr Graeme Samuel, said tonight*.

"Infrastructure regulation in Australia has led to significant gains for consumers, business and the economy as a whole", he said.

"We need to move on from this [crisis] debate and instead continue to look for ways to improve regulatory arrangements and practices to promote investment in essential national infrastructure in the long term interest of the nation.

"This includes streamlining the regulatory process on a nationally consistent basis that minimises the scope for regulatory gaming and attendant time delays and uncertainty.

"But it also involves the private sector taking a lead role in investing in and developing infrastructure facilities, leaving it to Government to provide the resources for dealing with genuinely uneconomic, but socially desirable community or universal service obligations".

Mr Samuel said more could be done to speed up the process of regulation in Australia by clearing away the multiple layers of regulation and multiple levels of appeal.

"In short we need to go back to the spirit of Hilmer and have a national approach to nationally significant infrastructure. While state regimes might have been useful for the transition phase, it is now time that we move to a national approach.

"As a first step, for facilities of 'national significance' access decisions should be made by the Commonwealth Minister replacing the concept of an 'effective State or Territory access regime', as currently provided under Part 111A of the Trade Practices Act. While there would still be scope for state regimes in some circumstances, these changes would ensure that facilities of 'national significance' were not exempted from coverage under the national regime.

"Secondly, we should remove the requirement for re-hearing of decisions. Currently, the Minister's decision to declare a service or certify an access regime, as well as the arbitrator's decision on terms and conditions, is subject to re-hearing in the Australian Competition Tribunal.

"This is not to suggest that regulators should not be accountable, or that errors or unreasonableness should not be subject to review, but rather than rely on review processes, we should ensure that the original decision-making body has the expertise to generate confidence in its decisions. There will always be arguments and challenges by vested interests, but the reality in a relatively small country such as Australia is that there is too little relevant infrastructure expertise available to divide it amongst a range of administrative bodies. The AER [Australian Energy Regulator] provides a good model in this respect".

Mr Samuel said the private sector had a critical role in delivering many of the services in the transport, energy or telecommunications sectors.

"This is applicable even in the regional areas where under provision may occur".

As a general principle governments should be encouraged to intervene in a way that minimises any distortions to competition.

"That is, subsidies should not favour one competitor over another, nor should CSOs [community service obligations] or USOs [universal service obligations] advantage or disadvantage one service provider relative to others.

"It is particularly problematic if government funding for legitimate social policy purposes has the undesirable side-effect of entrenching or extending the existing market power of a dominant incumbent firm.

"As a general principle, governments should be encouraged to intervene in a way that minimises any distortions to competition. That is, subsidies should not favour one competitor over another, nor should CSOs or USOs advantage or disadvantage one service provider relative to others.

"It is particularly problematic if government funding for legitimate social policy purposes has the undesirable side-effect of entrenching or extending the existing market power of a dominant incumbent firm".

*Mr Samuel was addressing the National Australia Bank Infrastructure Forum in Canberra.  His speech will be available on the ACCC website.