The planning, provision and operation of economic infrastructure

Document Sample
The planning, provision and operation of economic infrastructure Powered By Docstoc
					The planning, provision and operation of
economic infrastructure
                                                                                        Working together for a shared future

The Queensland Resources Council (QRC)
QRC is a non-government organisation representing the interests of companies involved in exploration,
mining, minerals processing, gas and energy production in Queensland. QRC will focus on policies to secure
the economic infrastructure requirements of industry by:
     advocating to infrastructure providers the imperative of timely access to competitively priced
      infrastructure services.
     promoting to Government the economy-wide benefits of infrastructure planning and delivery.
     working to achieve practical policy frameworks for industry that facilitates a competitive market for
      infrastructure services and identify market failures which impact on the economy.

Infrastructure underpins the Queensland economy
Queensland, with its significant energy and mineral reserves and industries, and rapidly growing exports, is
reliant on competitively priced economic infrastructure to deliver product to market. The main economic
infrastructure requirements for Queensland’s resources sector include:
     water infrastructure – supply and transmission.
     energy – generation and transmission of electricity and gas.
     transportation – rail infrastructure, pipelines and roads.
     export and import facilities – including port terminals and related activities.

In the absence of these essential economic building blocks, industry is unable to meet customer demand and
continue to drive Queensland’s economic growth.

Infrastructure’s importance to the resource industry
Industry’s relentless focus on the efficient operation, and timely provision, of infrastructure arises from the
fundamental industry-drivers:
1.    Resource industries are price-takers in global and domestic markets. As such, industry must focus on
      the minimisation of input costs, as it has no direct control over prices and therefore profitability. This
      includes international commodity markets for energy and mineral products, as well as dispatching
      electricity generated to the National Electricity Market.
2.    Industry supports market mechanisms – however, markets can only work efficiently when
      Governments have addressed market failures and distortions that are related to economic infrastructure
      such as curbing monopolistic excesses and addressing investment horizon mismatches.
3.    Infrastructure operates as part of a chain – the total capacity of an infrastructure system will tend to
      be less that the sum of its parts, whether as direct inputs (eg, water infrastructure) or the distribution
      system to market (eg, transmission or rail infrastructure). Careful coordination is needed across
      different infrastructure markets to ensure that the particular supply chain functions under a common set
      of aligned incentives. Where Government is the shareholder of major infrastructure service providers,
      then there is an even greater imperative to ensure coordination of future capacity delivery is achieved –
      in the context of planning, coordination and alignment of contractual arrangements.
4.    Queensland’s international competitiveness is shaped by our infrastructure – Queensland has a
      reputation as a reliable supplier in international and domestic markets, and this reputation is damaged
      when infrastructure systems perform below expectations. Access to cost effective, reliable
      infrastructure with a known expansion path is an essential part of Queensland’s enduring competitive
                                                                         QRC – infrastructure position

QRC infrastructure principles
In order to ensure the timely and cost efficient delivery of infrastructure services, the following principles need
to be implemented in planning, delivering, operating and expanding Queensland’s infrastructure.

Principle 1.     Ownership and operational arrangements should promote efficiency
QRC supports infrastructure ownership structures which best promote efficient service delivery. Industry’s
preference is for export infrastructure to be controlled by entities aligned to the interests of mining and mineral
processing industries. The intention is to have the whole supply chain focussed on maximising reliability and
throughput rather than having infrastructure controlled by third parties who are focussed on maximising their

Principle 2.   The role of Government should be proactive and reflect industry’s needs
QRC considers that the role of Government is to:
     Encourage the deployment of capacity enhancements in a timely and efficient manner – through
      adequate planning and co-ordination efforts as well as efficient regulatory approval processes.
     Address market failures and distortions related to the provision of essential economic infrastructure –
      including industry development activities.
     Facilitate competition and foster certainty in capacity – through practical regulatory frameworks.

Principle 3.     Commercial negotiations should provide the initial framework for infrastructure
Industry to have the ability to negotiate infrastructure contracts (pricing as well as terms and conditions) which
are aligned with the interests of industry. QRC supports the current diversity of:
     regulatory options for open access to multi-user monopoly infrastructure assets (eg, rail infrastructure
      and energy distribution networks), including economic regulation if required;
     ownership structures (private and public); and
     single- and multi-user facilities.

Principle 4.     Competition and regulatory outcomes need to be efficient
QRC considers that a unilateral national regulatory approach is not the appropriate answer to the challenges
currently facing Queensland’s export industries. Infrastructure projects must deliver in the interests of users’
commercial interests including incentives to deliver under budget and ahead of schedule.

Principle 5.     Consider impacts on integrated supply chains
QRC encourages regulators to consider the consequential impacts on actual commercial operations of
integrated supply chains when making decisions and establishing regulatory frameworks. QRC does not
support extending regulation solely on this basis – regulatory intervention should not impose distortions onto
industry – rather promoting greater user co-ordination within complex supply chains. All supply chain
participants need to be able to execute contracts with an understanding of the system capacity and in the
knowledge of known system constraints.

Principle 6.     Commercial frameworks require transparency that reflect established, agreed
QRC supports commercially negotiated agreements determined using:
     Prices based on efficient and transparent costs, including rates of return being commensurate with the
      commercial risks undertaken.
     Contracts to be offered on fair and comparable terms with no cross subsidisation between different
      commodities. Price differentiation should be based on differences in cost or risk in relation to access to
      monopoly infrastructure.
     Decision making processes should be transparent and include industry as an active participant – this is
      essential as industry is typically the major underwriter of the infrastructure investment.
     Service providers are responsible for their performance and share incentives with users for reliable
      performance, quality service and delivering innovation to benefit customers.

Adopted by the QRC Board on 16 April 2009                                                                  page 2

Shared By:
Description: The planning, provision and operation of economic infrastructure