Creating jobs and investment requires new competition law approach

Telstra’s General Counsel, Will Irving, today said the global financial crisis had significantly increased the need for an overhaul of competition law, saying Australia needed genuine and swift change to encourage investment in innovation and major infrastructure projects.

Presenting at the Corporate Counsel World Summit in Vancouver, Canada, Mr Irving said governments needed to work with industry to remove investment roadblocks to protect and create jobs and be at the forefront of technological innovation.

Using the Australian telecommunications industry as an example, Mr Irving said competition models built around low regulated input costs and readily available credit were no longer sustainable.

“With investors and lenders now requiring bullet-proof business plans, new infrastructure projects require regulatory certainty up front for the life of the investment,” Mr Irving said.

"Regulated access at below cost rates, such as we have in the Australian telecommunications industry, hinders new investment - as other telcos such as Unwired have also noted recently.

“In addition, the current three-year time limit on access Undertakings, which applies where a company like Telstra proposes new investment and seeks to lock-in regulated pricing for that investment, simply does not allow long-term investments in what are risky infrastructure assets from the perspective of both lenders and investors.”

Mr Irving said the time of ever-increasing asset prices offsetting low regulated operating returns was over.

"Governments and regulators need to realise this and focus on doing what they can to encourage private sector investment or face the potential consequences of years of under-investment.

"Around the world governments are trying to stimulate their economies through public infrastructure funding, and there is an opportunity to work with industry to generate much needed and supportive private sector investment through targeted regulatory reform.

“Every opportunity to use regulatory certainty to underpin private sector investment should be embraced.”