Opening address: ACCC/AER Regulatory Conference

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Introduction

I am delighted to welcome you to the 2015 ACCC and AER Regulatory Conference.

During the next two days we will be privileged to hear the insights of experts with a diverse mix of professional experience, and equally diverse range of accents. I would like to thank all of our speakers for making themselves available for the conference, and especially those who have travelled across many time zones to be here.

The purpose of this conference, as always, is to facilitate a robust and productive discussion. Just like everybody else, I am here to learn.

How can we achieve better regulatory outcomes?

And how can we reduce the regulatory burden whilst still achieving our core responsibility to regulate in the long term interests of the end users of economic infrastructure?

Regulator performance

The second session today will challenge us on what we understand to be good regulatory outcomes.  Stakeholders can have very different perspectives. The main criticism of the ACCC, in everything we do, is that we don’t do enough and we should have greater powers and be more intrusive. We are constantly trying to explain why this is not the case.

And it is important that we consider what constitutes good regulator performance.

The new performance reporting requirements under the PGPA Act will increase transparency about the efficiency and effectiveness of regulators such as the ACCC and AER. It is based on a clear input-output-outcome framework. That is, what is our funding? What do we ‘produce’ with it? And what do we achieve? How effective are we in enhancing the welfare of all Australians?

The ACCC will also be reporting under the new regulator performance framework, which has just commenced on 1 July.

The framework establishes six outcomes-based key performance indicators that reflect sound principles of good regulatory practice. They are:

1. Regulators do not unnecessarily impede the efficient operation of regulated entities

2. Communication with regulated entities is clear, targeted and effective

3. Actions undertaken by regulators are proportionate to the regulatory risk being managed

4. Compliance and monitoring approaches are streamlined and coordinated

5. Regulators are open and transparent in their dealings with regulated entities

6. Regulators actively contribute to the continuous improvement of regulatory frameworks

It is clear that these KPIs focus on our engagement with the businesses we regulate, and not on those for whom we regulate.

But if we do these six things well, then we will both (a) reduce the regulatory burden, and (b) make decisions and take regulatory actions that are effective in achieving our statutory objectives.

As part of the new framework, the ACCC has established a Performance Consultative Committee consisting of 15 business, legal and consumer representatives. The committee is therefore well placed to provide feedback to the ACCC and to our Minister about the ACCC’s performance.

The Committee has met once, in May, and we are already implementing several of their very practical ideas about how we can improve how we engage.

Conference preview

This conference is an opportunity for us all to think about issues that are complex and challenging, but will offer ideas that may lead to change that could have substantial gains for all. I shall briefly mention five:

• The consumer engagement and negotiated outcomes in the UK water sector session looks at the possibilities and implications of changing the traditional role of regulators.

• The trade-off between regulatory flexibility and certainty session goes to the issue of the appropriate arrangements around regulator discretion.

• Tomorrow morning’s session will raise questions about whether current regulatory frameworks may be hindering electricity network businesses from offering services that consumers will increasingly value

• This afternoon’s net neutrality topic will look at the implications of very specific regulation being applied to possibly not well-defined social concerns.

• And the session on benchmarking will focus on how the various approaches used by regulators in several European counties have developed and evolved over many years. There must be some ideas for us as to how the sheer magnitude of the pages of submissions, decisions, and evidence can be substantially reduced.

A major aspect of our regulatory frameworks for ‘natural monopoly’ infrastructure is to facilitate the development of competition in upstream and downstream markets.  And technological change can relatively quickly recast the invisible boundary line around the natural monopoly aspects of the supply chain.

Increased competition at every level should ultimately lead to less regulation and reduced burden, and better outcomes for all.

But governments can put in place arrangements that hinder competition developing, especially in relation to infrastructure.

This can be:

• existing infrastructure that government plans to continue to own

•  infrastructure that is in line to be privatised

• infrastructure that it is in the process of building, and

• infrastructure that government is contracting with the private sector to have built.

I am therefore particularly looking forward to the session this afternoon about extending Australia’s competition law to government activity in trade or commerce.

But right now it is time for me to hand over to Cristina so that she can introduce a trio who have accepted the challenge of bringing us all up to speed on all of the big regulatory issues in the UK, Europe and North America.

Thank you Stephen, Anna and Tim for bravely accepting that challenge. I am looking forward to what you all have to say.

And thank you all for attending this years’ conference, and your contribution to the discussion.