Reconsider Infrastructure Monopolies

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Industries with little or no competition in Australia should be government operated to varying degrees.

The concept of a ‘natural monopoly’ is well known to economists and the subject of ongoing debate.  There are multiple versions of how these might come about, but the most relevant to Australia is the lack of competition in many areas combined with a small population spread across a large geographical space.  This affects all utility service providers in much the same way; for most connections between producer and consumer, it would be incredibly expensive to duplicate the infrastructure.  The issue is not competition between actual producers or service providers, but between large scale, expensive pipes and cables that connect them to the consumer.  The important aspect is that producers and retailers should not be fighting for access to the connecting network, they should be fighting to produce more efficiently or construct attractive retail services for consumers.  In order to achieve this, the organization running the connecting network cannot be allowed to also compete in the generation or retail markets. That component of the system would be far better managed by the government directly and regulated tightly to ensure all generators and retailers have equal access and charges to make use of the network.  Those charges should cover the maintenance and improvement of the network over time.

The danger with establishing any kind of monopoly service provider is the lack of competition leading to little or no innovation or evolution in the quality or efficiency of service.  The avenue for change here should be through the network of small to medium businesses providing specific materials, equipment and sub-contracted services to the government operation.  The final step is establishing service level requirements on the overall services provided by the network organization that are adhered to and enforced stringently. These service levels must include continuous service improvement components that are subject to regular review.  The time period of review depends on the industry involved; an annual review should be the default, but for some aspects a five year or longer review may be appropriate.

The second requirement on all utility organisations is a strong move to decentralization of production or processing.  This should come from revisions to the building code to require a percentage of every building’s water, electricity and sewerage services be handled within the building.  All new residential buildings should be required to produce or process 100% of their average needs within ten years, all old buildings should be retrofitted within forty years.  None of the technologies required are new and this would create a strong demand across Australia for new companies providing this equipment and services.  These should be encouraged as multiple startups to ensure competition in the industry of making buildings self-sufficient.

Telecommunications & Internet

Competition between a small number of telco service providers has not resulted in any significant benefits for consumers.  The fundamental problem is the division between running the core infrastructure of cables, exchanges and mobile towers as opposed to the equipment at either end of the cable and within the mobile towers.  The NBN project already recognizes this problem and seeks to establish a separate company as the owner and service provider for the underlying physical network.  That responsibility needs to be extended later to cover wireless data transmission for mobile phones and other devices.

Traditional telecommunications solutions are now being retired in favour of standard high speed internet connections being used as the foundational protocol for a vast array of communications.  This evolution has already turned Telco providers into internet service providers and this will continue naturally.  Increased competition in the retail market can only be achieved by removing Telstra’s infrastructure monopoly – something the NBN company would achieve if it is allowed to complete as originally intended.

Electricity

Privatisation of electricity supply has not resulted in either an improvement to service or a reduction in costs to consumers.  In fact corporate profit drive has ensured lower service at a higher price. [1]

The AEMO already recognizes that need to centralize network infrastructure and diversify production and retail organisations.  This is a good start, but should be carried further with more government investment in long distance HVDC cables required to manage more distributed power plants required by renewable energy solutions.  The network organisations must also deploy multiple, distributed energy storage solutions to the grid to support the uptake of solar photovoltaic panels on all buildings.  This will help alleviate peak supply demands by storing solar power for use around the clock.  Nickel-iron batteries would be an extremely appropriate technology considering Australia produces both minerals in abundance and these batteries are the best suited to intermittent charging as occurs with solar and wind generators.

The industry must be pushed to adapt to a more decentralized approach to generation.  Building standards need to be introduced to ensure every residential, commercial and industrial building produces a percentage of its own electricity.  This should begin at 50% and be increased annually; residential buildings should be required to produce at least 90% of their own power within ten years.  If a building can produce all of its own electricity, it should be required do so.  If it can produce more to feed back into the grid, it should be required to do so.  This constant addition of generating capacity with all growth will act to severely limit the need for the large, central generating plants that are currently required.

Water

No organization really produces water, they simply catch it, store it and supply it instead.  This utility is the most in need of nationalization to protect the interests of all the people.  Water must be seen as a basic human right and be made available to everybody easily.  The cost of storage and transport of water is already captured and controlled by the government and this system must remain in place.

There must be changes to building standards to ensure every residential and commercial dwelling collects rainwater for local use.  This includes systems on houses, apartment and office buildings with regulations enforcing a percentage of total use to be collected on the property.  This should be not less than 50% for any residential or commercial building as a starting point.  Commercial buildings will also need to actively deploy water saving systems in order to meet this requirement. Industrial buildings may consume excessive amounts of water that make internal capture and storage unfeasible, but must also be required to contribute appropriately.

The continued sale of plastic water bottles must be strongly discouraged as it:

  1. Is an extreme waste of energy producing plastic we don’t need
  2. Is polluting the environment with a huge mass of plastic that will not degrade
  3. Is offering exactly the same product in different packaging with an enormous margin.
    1. The price of water must be set and regulated explicitly such that the cost of bottled water properly represents only costs of water supply, packaging and transport.

Single use plastic containers of all kinds must be significantly reduced and replaced with sustainable systems of reuse and recycling.

Sewerage

This is another service that needs to have the network component nationalized, but with competition existing between processing plants over time.

In line with the general necessity of decentralizing utility resources, all buildings must be required to process a percentage of sewerage onsite.  Whether this is for immediate use onsite or for later collection, this would contribute directly to local and vertical farming industries in the most productive way.

 

[1] http://www.etu.org.au/system/files/ETU%20Electricity%20Privatisation%20Report.pdf


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