Efficient infrastructure key to economy beyond the COVID-19 crisis

15 October 2020

Efficient infrastructure is integral to rebuilding the economy beyond the pandemic but cannot come by excessively focussing on the needs of infrastructure owners at the expense of the users, ACCC Chair Rod Sims said today.

Mr Sims was speaking at the Australian Financial Review’s National Infrastructure Summit on competition issues in infrastructure and changes since COVID-19.

Infrastructure issues addressed in the speech included the competitiveness of the NBN, energy affordability and disruption to the airline industry.

”The final roll out of the NBN could not have been more timely as so many families and businesses moved from physical to virtual workplaces and became wholly dependent on their broadband connections,” Mr Sims said.

“Australia’s broadband infrastructure has been seriously tested during the pandemic and our most recent Measuring Broadband Australia data shows that average NBN speeds haven’t missed a beat. It has allowed so many of us to go to work and school, or just stay in touch with family, without leaving the house.”

“The arrival of 5G networks will bring a new and very welcome source of competition with both mobile and fixed-location broadband connections and should certainly be encouraged,” Mr Sims said.

“Rather than be guided by any sense of protecting the asset value of the NBN, we need to promote competition wherever possible and see Australians with the most efficient possible high speed broadband,” Mr Sims said.

“This is why the NBN was built.”

Mr Sims also said that electricity prices are high nationally and affordability continues to be a key concern for Australian households and businesses.

“It is imperative we don’t let the effects of the COVID-19 pandemic result in further market concentration, and we want to see the current substantial reductions in wholesale market prices being passed on to consumers,” Mr Sims said.

“Past over-investment in some state-owned networks was driven by an increase in network reliability standards and inadequate regulatory rules. The associated costs are estimated to be in the tens of billions of dollars and customers in those states continue to pay for it.”

“As our electricity transmission system is redesigned to address reliability and sustainability concerns, we cannot lose sight of affordability as increased costs will be passed onto consumers,” Mr Sims said.

“There are real concerns that again affordability is being given inadequate weight in our electricity market policy discussions.”

The economic contraction resulting from COVID-19 has seen a sudden fall in international gas prices that has not been reflected in the east coast domestic contract market.

“Increasing competition and affordability in domestic gas markets is more critical now than ever to ensure that Australian gas customers benefit from low international prices,” Mr Sims said.

“We see a sense of urgency in ensuring producers bring gas to market in a timely manner, and at prices that more closely reflect the drop in international prices.”

Mr Sims also spoke about the pandemic’s devastating impact on the airline industry.

“A competitive airline industry is vital to meet the needs of consumers and the economy more broadly, especially for a large country as geographically dispersed as Australia,” Mr Sims said.

“We are following the Government’s directive to monitor prices, costs and profits in the domestic airline industry and we want to see the industry up and running and competitive as quickly as possible.”

“It will also be interesting to see how unregulated monopoly airports price their services and otherwise react as the aviation sector recovers.”

“The ACCC’s focus will continue to be on ensuring the infrastructure sector is competitive and delivered in a way that is in the long term interests of consumers,” Mr Sims said.

“We must keep asking whether as a country we are too focussed on the needs of infrastructure owners at the expense of the users and so the economy.”

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