Industry labels new legislation a “sovereign risk”

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Members of Australia’s business community and the energy sector have endorsed a statement to the Australian Government to abandon proposed legislation that will impede the broader investment environment in Australia and specifically discourage badly needed investment in the energy sector.

The signatories to this statement are opposed to the creation of unilateral divestment powers for the Treasurer, saying that such discretionary and quasi-judicial powers represent deep and genuine sovereign risk.

The statement says the legislation is inconsistent with best practice for a modern economy, such as Australia’s, and were specifically considered and rejected by the ACCC and the Harper Competition Policy Review.

If enacted, these powers would cast a pall over investment in all sectors of the Australian economy and threaten the economic attractiveness of a country highly reliant on foreign investment.

The statement also said the recent ACCC Retail Electricity Pricing Inquiry Final Report made 56 recommendations to improve outcomes for energy customers, divestiture powers was not one of them.

The Treasury Laws Amendment (Electricity Price Monitoring) Bill 2018 (the Bill) sets the ACCC recommendations aside and instead creates an unpredictable enforcement regime. This only undermines the long-term interests of consumers. This is a dangerous precedent, according to the statement signed.

Driving down prices for any market requires investment. Investors require clear, stable and predictable rules so that they have the necessary confidence to make those investment decisions.

The statement urges the Government to abandon the Bill and work with the business community on reform options which enhance Australia’s economic stability, encourage investment and deliver better outcomes for consumers.

The statement has been endorsed by:

Australian Energy Council

Australian Industry Group

Australian Petroleum Production & Exploration Association

Business Council of Australia

Energy Networks Australia

Energy Users Association of Australia

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