Regulatory experts tackle tough questions on efficient infrastructure

7 August 2014

More efficient use of, and investment in, infrastructure is essential to improve national productivity, Australian Competition and Consumer Commission Chairman Rod Sims said today at the ACCC / AER Regulatory Conference in Brisbane.

“It is clear that recently in Australia some poor infrastructure investment decisions, by commission and omission, have harmed national productivity.”

Mr Sims said the annual conference is set to examine regulatory challenges and tackle questions about efficient infrastructure outcomes.

“First, how do we get the right price signals and encourage greater use of other demand-management techniques so that consumers make the best use of existing infrastructure, and businesses and governments invest in efficient new infrastructure?”

“Second, how should regulators and regulated businesses deal with declining demand for particular assets, such as energy network assets?”

“Third, how do we allow for competition between different technologies to be promoted in markets that had previously appeared to be natural monopolies?”

“During the next two days, we will hear the insights and views of academics, consultants, regulatory rule makers and representatives of regulated businesses on these important issues,” Mr Sims said.

The Chairman also proposed privatisation, roads, congestion pricing, shipping, and water as key areas of microeconomic reform.

“The reason to privatise assets is to promote economic efficiency,” Mr Sims said. “With sound regulation the private sector will operate businesses more efficiently as they will have better incentives for, and impose fewer constraints on, performance.”

Mr Sims said despite their key role, roads have not been subject to the level of microeconomic reform that has occurred in other industries.

“Australia now has an opportunity to engage in structural reform of road provision and charging, leading to considerable productivity benefits.”

Mr Sims said there are opportunities to enhance the productivity of certain key infrastructure assets such as roads, electricity, ports and airports by greater use of congestion pricing.

“All Australians understand why it costs more to rent a beach house in January than July. We just don’t call it congestion pricing.”

Mr Sims said that with approximately 99 per cent of Australian imports and exports transported by sea, reforms are required in both international and domestic shipping.

The Chairman also said water markets now exist in many areas throughout Australia helping many farmers mitigate drought.

“However, there is scope for further reforms to better define the types of rights available, and to extend the reach of water trading in a range of ways; for example, in more rural areas, between rural and urban regions, and between different water users.”

Read the Chairman’s opening address to the regulatory conference: Regulating for efficient infrastructure outcomes

Release number: 
MR 197/14
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