NO.093

STATES URGED TO BACK NATIONAL REFORM FOR CONTINUED GROWTH

Australia could unleash a new wave of economic growth based on low cost energy

if antiquated State-based regulatory arrangements are reformed.

Addressing the BCA tonight, the Treasurer said Australia has huge proven energy

reserves of coal, LNG and uranium. Last week in Beijing, I raised the prospect

of an energy freeway supplying these resources to the emerging global economic

power in China.

But domestic reform of the energy market would see enormous benefits to business

and consumers in Australia as well. At present, the State-based regulatory regime

has a multiplicity of access regulators and a multiplicity of retail regulators

established by the States. Most of the States also own electricity generating

enterprises or retail enterprises regulated under these State systems. In some

market segments, private companies are prevented from competing against government

instrumentalities.

Inappropriate government intervention and regulation can damage the operation

of markets and impede appropriate investment signals. Our complex regulatory

arrangements have held back the development of a truly national market for the

provision of energy and full contestability for all energy users.

Progress towards a national unified market has been slow over the last 10years

and there are disturbing suggestions that the Ministerial Council on Energy

due to meet next week could try to delay handing over regulatory powers to a

new national regulator, the Australian Energy Regulator, scheduled to occur

from 1January 2007.

Australia needs to move to fully integrated national infrastructure markets

in gas, electricity and water. Benefits from simple nationally consistent regulation

could lead to better investment, lower prices and a lift in economic development

in Australia.

The reform of regulation covering infrastructure and utilities is critical

to future economic development in Australia.

27 October 2005

SYDNEY

Contact: Amanda Kennedy

03 9650 0244