Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here’s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.


 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate

Subscribe!
Subscribe





On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.
___________

Syndicate
RSS/XML


RSS 2.0

Chilling case of accessive regulation

By Alan Moran - posted Tuesday, 26 June 2007


Having been a touchstone in Australia’s economic resurgence the national access regime is now a ball and chain around the ankle of growth.

Following the Hilmer report in 1993, major facilities including ports, pipelines, telecommunications systems and railways were declared open. Their mainly government owners were required to allow private businesses to use the assets on fair terms and conditions. This raised the curtain on a new arena of competition and drove improved efficiencies bringing lower prices.

But the Hilmer report itself was uneasy about forcing firms to share their facilities. It recognised that such powers could stymie new infrastructure development by making firms unwilling to spend shareholders’ money on assets. After all, nobody would build a house on the basis that once completed, a regulatory body will determine its spare capacity, to whom it may be leased and the rental price of the lease.

Advertisement

Hilmer also recognised that easy access to others’ facilities might lead firms to focus unduly upon seeking that access rather than making their own investments.

These issues were exacerbated by a reinterpretation of Hilmer by the Keating Government in enacting it as Part IIIA of the Trade Practices Act (there is also a parallel Part XIB and C for telecommunications). Instead of it applying only to facilities that were “impractical to duplicate” the provisions became “uneconomical for another facility to provide the service”. This was much more accommodating to applicants and it prompted Stephen King (who is now an ACCC Commissioner) to write alarmingly that the provision could bring up to 50 different infrastructure facilities within its net.

The Keating Government clearly had similar concerns since it specifically excluded “production processes”, or manufacturing, from the provisions’ reach.

The institutions created to administer competition policy set out to extend its ambit. At the birth of the new policy, the recently created National Competition Council interpreted it as saying that now it was unnecessary for a competitor to build a second network if one already exists.

The newly empowered ACCC decided that it would not release facilities from its dominium unless there were several competing between separate supply and market locations. And the ACCC at the outset sought to reduce the extent of the inviolability of “production processes” by trying to bring gas feeder pipelines within the agency’s ambit.

The current high profile issues concern transport of coal and iron ore and telecommunications facilities.

Advertisement

With coal, the regulatory arrangements have contributed to inadequate rail investment and the downturn in exports in the face of a world boom. With iron ore, the regulators’ aggressive moves to require BHP and Rio to share their rail lines are causing serious reviews of investments for new facilities to feed the growing China demand.

With telecoms, it is resulting in the stand-off on broadband development since Telstra will not spend the required $4 billion plus unless it has assurances about the conditions under which it might be obliged to share the network with its competitors.

Concern about the “chilling” effects of the provisions on investment has mounted. Various Productivity Commission reports (with which the regulators have habitually dissented) have warned against the “regulatory risk” created by the Part IIIA seizure of private property. The May 2005 Exports and Infrastructure Task Force saw real risks to export potential being caused by the operations of the regime.

  1. Pages:
  2. Page 1
  3. 2
  4. All

First published in the Australian Financial Review on June 18, 2007.

Advertisement
 Institute of Public Affairs Advertisement

 

Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

5 posts so far.

Share this:
reddit this reddit thisbookmark with del.icio.us Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Alan Moran is the principle of Regulatory Economics.

Other articles by this Author

All articles by Alan Moran

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Photo of Alan Moran
Article Tools
Comment 5 comments
Print Printable version
Subscribe Subscribe
Email Email a friend
Latest from Institute of Public Affairs
 No reality holiday from this population challenge
 For budgets only smaller is tougher
 Government subsidies to green groups must end
 Boot-strapping on a carbon tax
 West's history not complete without reference to Christianity
 More...
Advertisement

About Us Search Discuss Feedback Legals Privacy