In its draft report, the Competition Policy Review (CPR) panel recommended that the regulatory functions of the ACCC be spun off into a new national access and pricing regulator, noting the possibility that states and territories may also transfer their regulatory functions to this new body.

This was an issue discussed at last week's CPR International Conference in Canberra.

This recommendation by the CPR is worthy of further study, but needs to be approached with caution.

At its heart is the view that there are few synergies between the law enforcement responsibilities of ACCC (which chiefly relate to competition and consumer protection) and its functions relating to access and economic regulation of communications, energy, water and transport infrastructure.

While there is some truth to this, especially in relation to energy, water and transport infrastructure, there has historically been a much closer relationship between access regulation and competition law enforcement in communications markets. Communications markets have typically had a greater degree of vertical integration, as well as industry specific competition laws. The case for separating the ACCC's regulatory functions in communications is not as clear cut as the panel suggests.

In energy and transport, the real question is what is to be gained?

The AER, with its own board and dedicated staff, is already autonomous for practical purposes, while port, rail and water infrastructure is subject to a tangled web of Commonwealth, state and territory regulation, producing inconsistent outcomes across the country.

What then would be achieved by moving the ACCC's regulatory responsibilities to a separate body? The implications may be:

  • a potential loss of synergies in communications regulation;
  • the continuation of the web of Commonwealth, State and Territory regulators in transport and water; and
  • little practical change in energy regulation.

While it may be tempting for governments to embrace this recommendation as something that can be delivered with relative ease, it is important not to mistake activity for reform. There is reason to hope that a new national access and pricing regulator could drive new thinking and produce better outcomes in regulated markets, but only if it has critical mass, in terms of its size and breadth of responsibilities.

This could perhaps be achieved if the existing regulatory functions of the ACCC (other than in communications) were combined with the regulatory responsibilities of the states and territories in relation to port, rail and water regulation.

However, it is doubtful this will be delivered through an aspirational approach. Persuading the states and territories to transfer regulatory functions to the Commonwealth will not be easy, and will necessitate their involvement in the governance and accountability arrangements for the new body. These measures need to be developed, together with the functions of the new regulator, as a single package.

Nevertheless, the history of energy regulation in Australia shows that the reform of regulatory structures is possible. If governments are prepared to aim high, genuine and worthwhile change, while difficult, is achievable.