7.1  Development of a national code for third party access

In 2005 the New South Wales Independent Pricing and Regulatory Tribunal (IPART) released recommendations for a proposed state-based access regime. The key elements to this regime which the New South Wales Government (Water for Life website 2006) endorsed are summarised below:

•  Development of a state-based access regime for services provided by means of significant water and wastewater infrastructure.

•  Review of the legal framework to ensure appropriate obligations are placed on both incumbents and new entrants and barriers to competition and private sector involvement in the water industry are addressed.

•  Development of a streamlined regulatory framework for sewer mining, including establishing a formal dispute resolution process.

•  Continued IPART price regulation of services to small customers and that the prices of services for large customers continue to be regulated but be reviewed if an access framework is established.

•  Increased use of competitive sourcing by water authorities in the greater Sydney area to procure additional water supplies.

•  The implementation of reforms through an adaptive management approach. 

A national access code would need to expand on this approach by IPART to manage the potential increase in private sector involvement in the water sector across all jurisdictions. To be effective this national code would probably need to be specific to the water sector and offer guidance on issues such as:

•  access protocols

•  relationship between the new entrant and the incumbent

•  pricing guidelines

•  risk sharing guidelines

•  arbitration, and 

•  compliance with monitoring and reporting.

An access code could formalise the conditions under which the public and private sector operate and provide the confidence for both sectors to negotiate arrangements and cooperatively work together. If by chance these arrangements fail the access code could include a system to settle disputes through an independent umpire. An access code and transparent arbitration system would provide all parties with greater certainty over investment risks and operation of the water supply and/or sewerage system and minimise the potential for drawn out and costly legal action. 

An access code could also minimise complexities over regulations. At present there is a plethora of state and territory agencies with a range of responsibilities for the various elements of the water and wastewater supply system. There may be value in centralising the responsibilities for a national access code under the command of central agencies in each jurisdiction to minimise the complexity of regulatory controls, assessment processes and also speed up private sector approval processes. 

One of the central elements of successful energy reform was the establishment of a national access framework specific to the sector (Page 21 for a summary of the results on energy reform). Information on access regulations for the energy industry can be obtained form www.pc.gov.au or www.accc.gov.au.