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.