I wish to begin by acknowledging the Traditional Custodians of the land we are meeting on today, the Turrbal and Jagera people, who have never ceded this land.
I pay my respects to them and their cultures, and to their Elders past, present and emerging. I acknowledge their continuing connection to land, sea and community.
I would also to like to acknowledge and pay my respects to Aboriginal and Torres Strait Islander people who have attended this event.
Good afternoon. My name is Jim Cox and it’s my privilege today to provide the closing remarks for the 2024 ACCC/AER Regulatory Conference.
I have attended and spoken at many of these regulatory conferences during my time at the Australian Energy Regulator as I’ve been on the Board since 2013 and served the last four years as Deputy Chair. Indeed, I attended many of these conferences during my time at IPART prior to joining the AER.
But today will be my last address at this conference as, after more than 30 years working in economic regulation, retirement is now beckoning and I am finishing up work at the AER at the end of September.
So, I come here today not only to give a summary of what’s been discussed at this conference, but to also leave you with some of my own personal reflections on what regulation in times of disruption and uncertainty can look like.
Before I go any further, I would like to thank all those involved in ensuring that this year’s conference was once again, a resounding success.
Firstly, I would like to thank Songwoman Maroochy for the wonderful Welcome to Country she provided yesterday which presented her own genealogy and life experience.
Also, our sincere thanks to our international and domestic speakers, and panel chairs, especially those who travelled from overseas to attend, for your contribution to the ACCC/AER regulatory conference. Your considered and informed viewpoints, as well as your critical analysis have challenged us to think deeply and differently about what we need to do as regulators during this time of market disruption.
For those brave people who put up their hand to participate in the session many of us most look forward to every year – the ‘Great Debate’ – thank you. This conference tradition always entertains, and this year’s, on the topic of “Are regulators the ultimate disrupters?”, was no exception. Thank you to our debaters who brought their razor sharp wit, extensive knowledge and humour to the discussion.
I would also like to thank Gina Cass-Gottlieb, ACCC Chair, for her opening remarks which set the tone for our joint conference. Gina encouraged us to be flexible, agile and adaptable in the face of the significant, long-term disruption to markets that we’re experiencing and to consider the impact on consumers. I wholeheartedly agree with these sentiments and will touch on this further in my reflections.
To the ACCC/AER organising committee and all our staff who dedicated hours of work behind the scenes to deliver and promote this conference, our deepest gratitude. We know this conference is a huge undertaking and we could not run this event every year without your support – thank you.
Lastly, I want to thank all of you that have attended, both in-person and online. This conference is a unique opportunity to bring together industry, advisers, academics, and regulators from a range of sectors to discuss the shared challenges and opportunities facing us in regulation but also to think deeply about the impact of these disruptions on consumers. I hope everyone takes away at least one new perspective or idea from this conference.
Now, I would like to talk about the 2024 ACCC/AER Regulatory Conference and what we’ve learnt about disruption and regulation.
Over the past two days we’ve heard from our speakers about the impacts of some of the forces for change in the digital, energy and telecommunications industries. Our speakers shared their thoughts with us on how we might respond and what we must consider in these times of change.
We have covered a wide range of topics, including:
- the impacts of climate change, cyber-attacks and global supply chain disruptions on critical infrastructure regulation
- developments in digital markets and the use of AI in regulatory settings
- how existing approaches are being adapted to account for new, disruptive telecommunications technologies
- the energy transition, including the role of competition, whether we’re expecting too much from consumers, and its effect on gas market sustainability
- water infrastructure and the risks and opportunities presented by the National Water Reform agenda
- whether regulators are fit for purpose, regulatory activism and what a sustainable economy could look like, and
- the challenges and opportunities presented by new and emerging legislative frameworks.
These sessions have highlighted the duality of the role of the regulator in times of change. On one hand, we need to continue to be consistent in our practices to provide regulatory certainty. Indeed, one of the strengths of Australian regulation is that we have been level-headed in our approach and not necessarily attracted to the latest idea from overseas. This has helped consumers and investors to trust our regulation. On the other hand, we have to be able to adapt, and be flexible and agile to respond to changes in technology, and changes in community needs and expectations. And we need to do all this, while still protecting the interests of consumers.
In listening to these thought-provoking discussions, I couldn’t help but reflect on what I have seen in the past 30 years, as well as what might be needed now, and in the future, to address the challenges disruption will bring.
I think it is important not to lose sight of the fundamentals that we have learnt over decades of developing the regulatory craft. There are a number of lessons I would like to talk about.
The first of these lessons, is to regulate in the long-term interests of consumers.
Indeed, at the AER, that is our purpose – we exist to make sure that energy consumers are better off, now and in the future.
So we need to ask ourselves what is it that consumers expect from us, and how do we protect their long-term interests in an increasingly uncertain future?
Looking back on a speech I gave in 2012 for IPART, I think the statement I made then still rings true – “the community’s expectations of price regulators can be expressed in simpler, but more demanding terms: fair and balanced decisions”. But what does this mean?
Determining what is in the long-term interests of consumers involves a difficult balancing act. It is not just prices that are relevant (although low prices are a good thing in themselves) but also service quality, reliability, security, resilience and now emissions reduction. Future consumers as well as present consumers are relevant, and getting the balance right is the essence of the regulatory art.
Nowhere has this balancing been applied more consistently than in the AER’s work in energy network regulation. Compared to ten years ago prices are lower, capital and operating expenditure has been reduced and service quality has been maintained or even enhanced. The growth in regulatory asset bases has slowed or even paused. Although there are pressures for increased expenditure that must be recognised, it is equally important to maintain a disciplined approach to expenditure in the future.
The second lesson is that we should undertake meaningful consultation and be transparent in our decision-making.
Both of these aspects are, and will continue to be, critical if we are to retain the trust of our community and stakeholders.
When it comes to transparency, we as regulators have an obligation to the community and our stakeholders to close the loop on our consultations, give reasons for our decisions and explain them clearly. While the community and stakeholders may not always like our decisions it is important that they understand why the decisions were taken and how their views were taken into account.
Consultation and transparency will be especially important in the energy sector over the next 25 years as network businesses seek community and stakeholder support and social licence to build the renewable energy infrastructure we need to achieve our net zero goals.
Lastly, my final piece of advice is not to forget the importance of economic efficiency, even in times when other issues become prominent and are emphasised.
Improving economic efficiency makes it more likely that consumers can be provided with fair and reasonable prices. So regulators should be looking for further opportunities to make the industries they regulate more efficient.
In our work at the AER we examine economic efficiency in all its forms. For example, at the AER in assessing expenditure proposals we are considering how companies can efficiently integrate consumer energy resources into the operation of their networks.
We are also considering how social license-related activities for the delivery of transmission infrastructure can be funded to the extent that they are necessary, and no more than they are necessary, under the regulatory framework.
The ACCC has achieved significant advances in how the NBN is regulated. In addition to supporting downstream competition, the reforms place a sharper focus on aligning NBN Co’s investment decisions and product offers with the needs and preferences of the end consumer and oblige NBN Co to consult end user groups in developing their regulatory proposals.
The importance of economic efficiency to good consumer outcomes cannot be overstated, and while it is not always easy to argue for, it may not be the thing first on people’s minds, it is worth the effort.
In conclusion, I once again thank you for attending this conference and for your continued support of the AER and ACCC.
It has been a privilege to see this conference go from strength to strength over the years, always supported by the strong partnership between our two agencies.
It has also been my pleasure to know and work with many of you throughout my career. I thank you for the insights, thinking and challenge, you bring to our discussions, and the commitment you share with us in keeping consumers at the heart of all our work. I’ll certainly be following what happens in the future with great interest.
Thank you.