Divestment Bill - High on Risk, Short on Details
The Australian Energy Council welcomes the Federal Government’s agreement that any divestment power must be consistent with the Constitution, but remains alarmed at the Government’s intention to legislate an onerous and unprecedented set of Government market interventions which will only increase risk to investors and costs for consumers.
The ACCC Report specifically recommended against the need for a divestiture power and did not find misconduct in the market, rather recommended welcome reforms to improve its transparency and operations. The ACCC correctly identified the primary drivers of high prices - cost pressures across the supply chain and the policy vacuum.
The industry recognises that customers need support in an environment of high prices, and is already working with the regulator to implement those recommendations which will assist consumers to get a better deal.
The Australian Energy Council’s Chief Executive, Sarah McNamara, said that the energy sector was yet to see the revised Bill and looks forward to sitting down with Government to work through the detail.
“To date there has been only a token consultation over a 3 day period on an earlier version of the Bill. It appears that many significant questions raised through the submissions process remain unanswered.
“Once we see the revised Bill, we will consider it and respond in good faith.
“Divestiture powers are an extreme measure in any market and deserve thorough economy-wide consultations and cost-benefit analysis. This Bill differs markedly from its equivalent in the US, which is economy wide and aimed at monopolistic behaviour, and in the UK divestment powers under its Enterprise Act are also economy wide and subject to very strong prescriptive measures and processes focussed on ensuring natural justice.
“The only thing that is certain is that this Bill increases the risk profile of investment in the energy market for would-be investors. This can only increase costs for market participants, and accordingly the price for Australian families and small businesses.
“We continue to urge the Government to work with the business community on reform and policy options which enhance Australia’s economic stability, encourage investment and deliver better outcomes for customers. If the Government insists on progressing this Bill, we support careful consideration of the detail and a proper consultation process to reflect the unprecedented nature of the interventions it proposes.”
About the Australian Energy Council
The Council represents 23 major electricity and downstream natural gas businesses operating in competitive wholesale and retail energy markets. These businesses collectively generate the overwhelming majority of electricity in Australia and sell gas and electricity to over 10 million homes and businesses.
Carl Kitchen 0401 691 342