An agenda for change

02/10/2013 - 05:07

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It will be fascinating to see where Economic Regulation Authority chairman Lyndon Rowe takes his inquiry into micro-economic reform.

Mr Rowe has been given almost carte blanche by Treasurer Troy Buswell, who has asked the ERA to go beyond its narrow regulatory role and investigate broad reform opportunities.

His former employer, peak business group CCI, has signalled the wide opportunities in its submission to the ERA.

It calls for action on many fronts, including taxation, regulation, procurement, privatisation, project approvals, the energy market, waste management and land development.

The challenge for Mr Rowe will be deciding where he can make a difference.

He will no doubt be conscious of the experience of the Productivity Commission in Canberra.

It has produced numerous reports over the years, advocating sensible market-driven reforms.

In most cases, its reports spark interesting debate but fail to shift the policy dial, because the recommendations usually run up against vested interest groups.

Mr Rowe has previously outlined some of his personal ideas for policy reform.

Speaking at a Business News boardroom forum in2011, he mapped out an ambitious plan for energy sector reform.

"If I had my druthers I would split Verve and split Synergy and make two 'gentailers' and privatise them," Mr Rowe said.

"I would move towards full retail contestability, I would remove Verve and Synergy's current restrictions in 2016 and at the same time bring on full retail contestability."

However, he suspected this was an unlikely scenario.

"It is unlikely to happen. First, because privatisation appears to be off the agenda and, secondly, because there is a risk that any government that was interested in privatisation would want to get the highest price by selling a monopoly," Mr Rowe told the boardroom forum.

His reform hopes might have been lifted by new Energy Minister Mike Nahan, who has floated the possibility of creating two 'gentailers' – after the government works out how to re-merge specialist generator Verve and specialist retailer Synergy.

Mr Nahan also floated the idea of partial privatisation, down the track.

If that ever does happen, it will be after the next state election, when premier Colin Barnett has retired to his hobby farm.

"There is no plan to merge and then de-merge and privatise utilities," Mr Barnett told parliament last week.

"I do not know what the minister's comments were ... but I would imagine he was perhaps looking into the very long-term future of what the energy structure might be in Western Australia."

If anything, Mr Barnett sees a re-merged energy utility as almost another policy lever for government.

If Mr Rowe decides energy reform will not be a fruitful field, there is no shortage of other areas he can tackle.

CCI's submission contained 35 recommendations for reform – all designed to help reduce business costs and promote more efficient and competitive markets.

The loss of the state's AAA credit rating adds yet another reason for pursuing reforms like a functional review of government.

This would seek to ensure the right government agencies are pursuing appropriate policy objectives.

Another option is evaluating more private sector and not-for-profit service delivery – not because these options are necessarily cheaper or more efficient but because they provide a benchmark against which traditional service delivery can be evaluated.

Another area that should be under constant scrutiny is the efficacy of government regulation.

Think retail trading, the taxi industry, liquor licensing, and intrastate aviation services as prime examples.

The opportunities are boundless, for any government brave enough to take it on.

The again, what's the point of holding the reins of power if they aren't used?

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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