ALMOST 4.5 million residents now have an NBN broadband connection at home, and nearly half of them are on fast plans with speeds of 50Mbps or more, the latest ACCC quarterly Wholesale Market Indicators Report shows.

The ACCC’s report for the September quarter shows the number of NBN residential broadband connections rose from about 4.1 million last quarter (up almost 8.6 percent).

More than 2.2 million consumers are now on these high-speed plans, an increase of 20 percent on the previous quarter. Of these, there are now 1.8 million services on the 50Mbps speed tier, a more than a ten-fold increase compared to about 159,000 residential customers on 50Mbps plans in December 2017.

This reflects NBN Co’s pricing strategies to encourage Retail Service Providers (RSPs) and their customers to higher speed plans, as well as various other initiatives including the ACCC’s advertising speed guidance project.

“The NBN Co’s Focus on 50 promotion has demonstrated that RSPs and their customers are willing to move to higher speed plans if the incentives are right,” ACCC chair Rod Sims said.

“We expect these incentives will continue to operate as NBN Co transitions to longer term bundled pricing for the higher speed plans.”

However, at the same time, the number of customers choosing the most basic NBN services also continues to rise. Just over 1.2 million consumers are on the lowest 12Mbps speed plan (up by 4.3 percent).

“Consumers on 12/1 plans still represent more than a quarter of all NBN services. It is important that NBN Co recognises the needs of this significant cohort of consumers for an affordable and reliable service,” Mr Sims said.

Average CVC per user also continued to rise this quarter, up by 2.9 percent, from 1.66Mbps in June 2018 to 1.71Mbps in September 2018. In March 2017 it was 1.00Mbps.

“It is important RSPs maintain sufficient CVC capacity to ensure consumers get the service they have paid for, particularly in the busy period,” Mr Sims said.

“The ACCC will continue to monitor CVC utilisation under its record-keeping powers. The ACCC’s Monitoring Broadband Australia Program will also continue to rank RSPs by whether they are providing the speeds expected by consumers.”

This quarter’s report also includes, for the first time, the number of services provided over Fibre to the Curb (FTTC) technology, with 39,204 FTTC services in operation at the end of September.

Overall market shares remained relatively stable; smaller RSPs increased their market share slightly from 6.1 percent to 6.3 percent (adding about 27,000 more services).

All 121 POIs had at least six access seeker groups (including Telstra, Optus, TPG, Vocus and Aussie Broadband) acquiring NBN services directly from NBN Co. There were seven access seeker groups at 118 of the 121 POIs.

The ACCC will continue to monitor the evolution of the NBN broadband market to help consumers make an informed choices about broadband plans.

Key points from the September 2018 report:

  • The number of 50Mbps services continued to increase, reaching more than 1.8m services at the end of September, a 26 percent increase on the June quarter.
  • Plans with speeds of 50Mbps services or more now account for just under 50 percent of all NBN residential broadband services.
  • At the end of September 2018, NBN Co was supplying a total of 4,488,295 wholesale residential broadband access services (up from 4,133,791 in the June quarter).
  • FTTC services were reported by NBN for the first time. Over 39,000 services provided over this new technology were in operation at the end of the quarter.
  • There were at least six access seeker groups present at all 121 POIs.
  • The average CVC per customer increased an additional 2.9 per cent.

Further information, including time series data, is available at September quarter 2018 report.

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THE second public hearing on the Telecommunication and Other Legislation Amendment (Assistance and Access) Bill 2018 will be held on Friday, November 16, 2018 in Sydney.

The Committee will hear from academics, statutory oversight agencies, and industry peak bodies.

Public hearing details: 9am – 3.15pm, SMC Conference & Function Centre, 66 Goulburn St, Sydney (Carrington Room)

The hearing will be live streamed (audio only) at www.aph.gov.au/live.

The full program of the hearing is available at https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Intelligence_and_Security/TelcoAmendmentBill2018/Public_Hearings

Additional hearings will be held in Canberra on November 27 and 30.

Further information on the inquiry can be obtained from the Committee’s website.

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A PUBLIC HEARING hearing will be held in Melbourne next week by the House Economics Committee as it conducts an inquiry into the implications of removing refundable franking credits - an inquiry that has been welcomed by the Institute of Public Accountants (IPA).

“This inquiry will heighten community understanding of a well-established feature of our taxation system,” IPA chief executive officer, Andrew Conway said.

“The Labor Party is proposing to change the rules to remove the ability for individuals and superannuation funds to claim their full entitlement to franking credits.

“The inquiry will highlight the significant implications attached to any change in government policy on refunding imputation credits.

“If we were designing a new tax system today, you would most likely not have full imputation where the taxation is assessed in the hands of the recipient and any excess franking credits are refunded. 

“In today’s economic circumstances it would be difficult to justify from a fiscal sustainability perspective.

“However, the refunding of imputation credit policy has been in operation for close to two decades and removing it in a piecemeal way without dealing with the consequences is fraught with danger.

“The case for removing dividend imputation is not strong and any tinkering needs to be assessed against some alternative benchmark tax system such as removing dividend imputation entirely and replacing it with a discounted tax rate.

“More importantly we need to be looking at how we tax all forms of savings more consistently. A more holistic approach to taxing personal savings across all asset classes as recommended by the Henry Review would be more beneficial than changing one aspect in isolation.

“We do not support any changes in the removal of refundable franking credits unless it is associated with more holistic tax changes to the treatment of savings more broadly.  A survey of our members also shows that 95 percent of respondents do not support any change,” said Mr Conway.

The IPA will be appearing before the inquiry next week.

www.publicaccountants.org.au

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THE Defence Sub-Committee of the Parliament’s Joint Standing Committee on Foreign Affairs, Defence and Trade is holding a public hearing in Canberra on Friday November 16 for its inquiry into transition from the ADF.

Members of the Defence Sub-Committee will hear from individuals and representatives of Ex Service Organisations and Mental Health Researchers on the efficacy of support services available to members of the ADF transitioning out of active service, particularly focussing on mental health care, employment pathways and the role of Ex-Service Organisations (ESOs).

Representatives of the Department of Defence and Veteran’s Affairs will also give evidence.

Public Hearing details:  8.45am to 12.30pm, Friday 16 November 2018, Committee Room 1R3, Parliament House, Canberra

The full program for Friday’s hearing is available from the committee’s website.

This hearing will be streamed live at aph.gov.au/live.

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A SURVEY of large super funds by the Financial Services Council (FSC) has found it is likely that the largest group of people benefiting from franking credit refunds are ordinary Australians who are members of large super funds.

The number of Australian beneficiaries is significantly larger than the number of individuals and Self- Managed Super Funds (SMSFs) who also benefit from refunds. The FSC has expressed its support for refunds of franking credits in a submission released today.

The submission to the House of Representatives Economics Committee reveals that these franking credit refunds benefited up to 2.6 million members of large super funds in 2015–16 and up to 3.5 million members in 2014–15.

While refunds provide a smaller average benefit for individuals in large super funds than for SMSFs, the FSC survey shows the impact on some members could be significant; over a lifetime the benefit of refunds could add up to a considerable figure, up to $55,000 at retirement.

Refunds of franking credits mean an Australian investor in local shares pays the same overall tax as an investor into other Australian assets including bonds, term deposits, property and infrastructure. If refunds are restricted then some low-income earners, retirees and super funds will face a tax penalty if they invest in shares.

The FSC survey of 14 retail super funds found:

  • Many super fund members with low balances benefit from refunds. Four surveyed funds had an average balance below $100,000; there were 73,000 accounts in these funds and refunds increased returns to all fund members on average by 0.26% per year.
  • There were also 33,000 surveyed super accounts where the average benefit of refunds was more than 0.3 percent per year across all fund members. As an illustration, an increase in superannuation returns of 0.3 percent per year over a working life would increase retirement savings for a typical full-time worker by about $55,000, based on Productivity Commission methodology.
  • There were 66,000 retiree accounts in the surveyed funds; if the retirees received the benefit of the refunds then the average benefit per retiree was $850 per year.

Refunds also provide a significant benefit to small APRA regulated funds, of many thousands of dollars per year on average, increasing average returns by up to 4.2 percent per year. In addition, over $100 billion invested in managed funds outside of super receive significant benefits from refunds.

FSC CEO Sally Loane said, "The FSC considers that franking credit refunds should continue. They provide substantial support to the retirement savings of millions of Australians — including many with fairly modest savings.

"Constant tinkering with the rules on retirement savings and superannuation, and hitting retirees hardest, will only erode confidence in the system, leaving more Australians reliant on the age pension.

"The FSC supports a moratorium on adverse changes to the superannuation system, including changes to franking credit refunds. A more stable superannuation system will encourage engagement and confidence in the system and increase self-reliance in retirement. If policy makers keep moving the goal posts Australians will disengage with the super system and stop contributing more to their superannuation."

 

About the FSC survey

The survey covers 14 Australian retail superannuation funds, with 305,000 member accounts in total. The average franking credit refund was $4.7m per fund.

About the Financial Services Council

The FSC is a leading peak body which sets mandatory Standards and develops policy for more than 100 member companies in Australia’s largest industry sector, financial services. FSC's Full Members represent Australia’s retail and wholesale funds management businesses, superannuation funds, life insurers, financial advisory networks and licensed trustee companies. FSC Supporting Members represent the professional services firms such as ICT, consulting, accounting, legal, recruitment, actuarial and research houses. The financial services industry is responsible for investing almost $3 trillion on behalf of more than 14.8 million Australians. The pool of funds under management is larger than Australia’s GDP and the capitalisation of the Australian Securities Exchange, and is the fourth largest pool of managed funds in the world.

www.fsc.org.au

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DESPITE Labor Party claims their proposed changes to negative gearing and capital gains tax will not affect existing investors, as the changes will be grandfathered, research house RiskWise says this is simply not the case.

RiskWise CEO Doron Peleg said the proposed changes would create two types of property markets - primary and secondary markets - which would significantly impact dwelling prices. This is because when an existing property is sold, the buyer would not be able to enjoy the current taxation benefits, and thus, would be willing to pay less, i.e. the fair market value of the property would be lower.

The ALP has proposed limiting negative gearing to new housing and reducing the discount on capital gains tax from the current 50 percent to 25 percent.

However, they state all investments made before the changes would be grandfathered in full, meaning taxpayers would continue to be able to deduct net rental losses against their wage income, providing the losses came from newly constructed housing.

“This sounds good on paper, but the changes will effectively create a primary market, comprising new properties and existing investment properties that qualify for negative gearing tax concessions, and a secondary market, comprising all second-hand dwellings that are sold following the changes, that do not qualify for these benefits,” Mr Peleg said.

“This will have a significant impact on both buying and selling decisions by property investors with a flow-on effect to dwelling prices.”

He cited a simple example of an existing investor with a negatively geared unit, in a saturated rental market, worth $500,000. The unit is not suitable for families so could only be used as a rental, as there would be little demand from owner-occupiers.

“For simplicity, let's assume you are currently an investor with an income that is similar to the median salary in Australia, and in the current market you would expect the overall taxation benefits from the negative gearing and capital gains tax to be $60,000,” he said.

“Now let’s assume the proposed changes take place, which means you can still enjoy the benefits of negative gearing as you are the primary investor, however, if now you want to sell to another investor, that investor will need to assess how much he or she is willing to pay given they will not be able to claim negative gearing against their wages and only receive 25 percent capital gains tax discount.

“So, if the capital gains tax discount only amounts to say $10,000, it means that the potential buyer/ new investor, will not be able to enjoy $50,000 of the $60,000 that the primary investor did. This means the secondary investor will have significantly lower financial benefits and therefore he will want to pay much less for the property. It’s as simple as that.

“And the same principle will be applied on a property valuation for re-finance purposes. The valuer should assess the fair market value of a property, assuming it is sold, and obviously, in that example, the valuation will be significantly lower if the taxation changes are implemented.”

Mr Peleg said re-finance could also become a major issue. This is because many interest-only loans were maturing and many investors were looking to re-finance with another lender. However, this lender would require a new valuation, and a lower valuation might not enable the investor to do so.

“You can compare it to buying a new car where the dealership might give you five years’ free service, five years’ warranty and free roadside assistance services. But if you sell the car to another private owner, they will not be able to take advantage of any of those benefits - no warranty, no free service and no free roadside assistance,” he said.

Mr Peleg said investors did not want to buy depreciating assets and this would have a direct impact on buyers if the changes to negative gearing and capital gains tax were implemented.

He said by grandfathering the changes, the property investor could still enjoy the taxation benefits, and only lost them when they sold, “and he will obviously get a lower valuation, if he needs to refinance”.

“In other words, if they don’t want to lose the benefits, they have to hold on to the property until the market adjusts and a potential buyer will see it as a positively geared property, something that could take many years,” he said.  

“This is a key reason for investors, even now, to sit on their hands and to wait for the implementation of these taxation changes and only then to reassess the market and to buy for lower prices - and we are already seeing the effect of these potential taxation changes, with accelerating price reductions.

“This is because the probability of a Labor win at the next election, to be held by May 18, 2019, is around 80 percent.

“In addition, auction clearance rates are the lowest they have been for many years, with Sydney recently recording the worst preliminary results in a decade.”

www.riskwiseproperty.com.au

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THE Financial Planning Association of Australia’s (FPA) independent disciplinary body, the Conduct Review Commission (CRC), has imposed $50,000 in fines plus costs on Sam Henderson for the nine proven breaches of the FPA’s Code of Professional Practice.

No appeal was made by Mr Henderson and he is no longer a member of the FPA. The published case determination is published on the FPA website.

Dante De Gori CFP, CEO of the FPA said, “Professional financial advice is about helping people at all stages of life, work towards their individual goals. Each client’s circumstances, needs, goals and priorities are different. 

“The FPA Code requires members to put their client’s interests first. The CRC has ruled that Sam Henderson did not place his client’s interest first or provide professional service objectively, and imposed sanctions accordingly.

“Consumers actively search for FPA members when looking for financial advice because of the higher standards the FPA requires of them. The FPA is committed to standing with Australians for a better financial future and enforcement of the FPA Code is an important aspect of that commitment,” Mr De Gori said. 

The CRC is an independent body established to ensure FPA members are held accountable to the FPA Code. The CRC plays a vital role in regulating the conduct of FPA members and upholding the highest ethical standards within the financial planning profession. 

The CRC panel, which hears FPA disciplinary matters, is made up of experienced members of the financial planning profession. It is currently chaired by a former presidential member of the Australian Administrative Appeals Tribunal (AAT).

The FPA encouraged all members to read past CRC determinations, and map their advice process to the FPA Code of Professional Practice to ensure they are aligned with the standards expected of them by the profession, and public.

www.fpa.com.au

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THE ACCC has announced it will not oppose the proposed merger between Nine Entertainment (ASX: NEC) and Fairfax Media (ASX: FXJ/DHG).

The ACCC examined a number of markets affected by this proposed merger. Australian news, including online news, current affairs reporting and investigative journalism, was the key issue, and in particular whether the merger would substantially lessen competition in the creation and provision of Australian news content.

The merger investigation was extensive and involved contact with hundreds of stakeholders, consideration of the more than 1,000 submissions, and examination of internal documents the ACCC compelled from both Nine and Fairfax.

“While the merger between these two big name media players raised a number of extremely complex issues, and will likely reduce competition, we concluded that the proposed merger was not likely to substantially lessen competition in any market in breach of the Competition and Consumer Act,” ACCC chair Rod Sims said.

“This merger can be seen to reduce the number of companies intensely focusing on Australian news from five to four. Post the merger, only Nine-Fairfax, News/Sky, Seven West Media and the ABC/SBS will employ a large number of journalists focussed on news creation and dissemination.

“With the growth in online news, however, many other players, albeit smaller, now provide some degree of competitive constraint. These include, for example, The Guardian, The New Daily, Buzzfeed, Crikey and The Daily Mail,” Mr Sims said.

“While there are important barriers to building trust and scale, significant new entry into the Australian online news market has already occurred and made a noticeable difference. Due to the difficulties in monetising journalism online, however, it is hard to predict the future landscape with any certainty.

”The ACCC also found that Nine’s television operations and Fairfax’s main media assets generally do not compete closely with each other. Nine’s news and current affairs programs target a mass market audience while Fairfax’s print and online publications tend to provide more in-depth coverage, targeting the demographic of its subscription audience. However, one area of more direct overlap is online news, where both Fairfax and Nine have invested significantly.

“By most measures, a combined Nine-Fairfax will likely become one of the largest online providers of Australian news, alongside News Corp Australia and ahead of the ABC, so this was another area of great focus. We found that while Nine and Fairfax online sites currently did not constrain each other much, other news websites would likely competitively constrain the combined Nine-Fairfax,” Mr Sims said.

The ACCC also investigated potential competition issues in the provision of regional news. In particular, concerns were raised about combining the two key newsrooms in the Hunter/Newcastle region. It determined, however, that in the Hunter region, Fairfax and Nine do not compete sufficiently closely with each other.

When the ACCC considers mergers, it compares the future with the merger to the future without the merger. Many submissions argued that this proposed merger will change Fairfax’s culture and result in less investment in journalism. In particular, market participants raised concerns about losing a brand that is known for independent investigative journalism.

The ACCC understood these concerns.

“Media markets are highly dynamic. The shift to online and the huge reduction in hard-copy classified advertising revenue have changed the media landscape irrevocably,” Mr Sims said.

“The impact of some of these changes is demonstrated in the approximate halving of advertising revenue from Fairfax’s digital and print mastheads in the last five years,” Mr Sims said.

“The ACCC recognises there will likely be changes to the way Fairfax and Nine operate in future, either due to the changing media landscape more generally or due to the merger itself. However, we reached the conclusion that if such changes do occur, they would not be, to a significant extent, caused by the merger lowering the level of competition,” Mr Sims said.

The ACCC also considered the potential impact of the proposed merger on competition in advertising markets, content acquisition markets and markets for the provision of non-news content to the public, as well as the potential impact of cross-promotional activity and bundling.

In relation to advertising markets, content acquisition markets and non-news content markets, Nine and Fairfax do not currently compete strongly against each other, and would continue to face a range of competitive constraints after the merger.

Cross-promotions and bundling of advertising were considered likely to occur within a combined Nine-Fairfax, but the ACCC did not consider such behaviour would be likely to substantially lessen competition.The ACCC has noted the speculation about future media mergers.

“Each merger or acquisition is assessed by the ACCC individually taking into account its particular circumstances," Mr Sim said. "Today’s decision not to oppose the Nine-Fairfax merger is not indicative of what the ACCC may conclude in respect of any future proposed media merger or acquisition."

According to the ACCC, some submissions suggested that the ACCC should consider the proposed merger under the merger authorisation “net public benefit” test. Nine and Fairfax did not apply for merger authorisation and the ACCC cannot compel merger parties to do so. In any case, merger authorisation may be granted if either the acquisition is not likely to substantially lessen competition or the proposed acquisition would be likely to result in net public benefit. Accordingly, the final outcome would have been the same had the ACCC been applying the merger authorisation test.

Further information is available at Nine Entertainment Co Holdings Limited (Nine) - proposed merger with Fairfax Media Limited (Fairfax)

NINE

NineNine is an ASX-listed Australian media and entertainment company. Its main business activities involve its free-to-air television business, digital publishing assets, on-demand video services (including a 50% share in Stan) and television content production and distribution.Nine sells advertising opportunities across its free-to-air television, digital and video media assets, including premium offerings (which typically involve advertising across platforms and integration into content). It operates an advertising sales platform, 9Galaxy, which automates the buying and selling of non-premium television airtime, and will be expanded to also cover broadcast video on demand (BVOD) and streaming inventory.

FAIRFAX

Fairfax is an ASX-listed company with a portfolio of news, marketplace and entertainment assets. It publishes metropolitan, agricultural, regional and community newspapers, financial and consumer magazines. Its print mastheads include The Sydney Morning Herald, The Age, The Australian Financial Review and a range of other daily newspapers, as well as corresponding websites. The group also includes several classified (including a 59.4% shareholding in Domain), transaction and social websites. It sells subscriptions, as well as advertising opportunities to advertisers across its platforms.Fairfax also has a 54.5% interest in radio broadcaster Macquarie Media Limited, a shareholding of approximately 47% in Australian Associated Press Pty Limited, and is a 50% joint venture partner (with Nine) in subscription video on demand (SVOD) service Stan.

www.accc.gov.au

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THE National Measurement Institute (NMI), Australia’s authority on measurement, today announced a two week ‘blitz’ in the lead up to Christmas on compliance with trade measurement regulations in Australia’s major supermarkets.

As the national regulator of trade measurement, NMI has released its 2018-19 National Compliance Plan, outlining a program of compliance activities across the economy covering both wholesale and retail sales.

General manager for legal metrology at NMI, Bill Loizides, said, “Australia’s trade measurement laws ensure consumers can make informed purchasing decisions and that they get what they pay for when they buy products by weight, volume or number. Australia’s major supermarket chains have assured us that they have robust quality assurance programs in place to comply with these laws.

“We have put the major supermarkets on notice that the concentrated national audit program will be taking place and that they can expect a vigorous approach to enforcement action should serious or persistent non-compliance be found during our trade measurement inspections.

“While we recognise that most businesses want to do the right thing, there are penalties for businesses that breach the law. NMI can issue infringement notices with fines of $1,050 per offence. If the matter is serious enough for a prosecution, the maximum fines are $210,000 per offence as a company or $42,000 per offence as an individual.”

NMI’s major supermarket audit will run from November 12 to 23, 2018 and include:

  • auditing 1000 individual business premises
  • inspecting 2000 measuring instruments, usually scales, for compliance with regulations
  • checking 25,000 pre-packed article lines for correct weight/volume and measurement labelling
  • conducting 500 ‘secret shopper’ trial purchases to ensure proper business practices, such as accounting for the weight of packaging, are being followed in over-the-counter transactions.

“Consumers need to be confident that packaged goods contain the amount stated on the label. Any business that uses a measuring instrument such as a scale to determine a price must ensure that instrument is an approved type and accurate at all times,” Mr Loizides said.

Mr Loizides said that consumers or businesses that wanted more information or to report a suspected breach of the rules should contact the national trade measurement hotline on 1300 686 664 or This email address is being protected from spambots. You need JavaScript enabled to view it..

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THE Queensland Resources Council (QRC) has welcomed the decision by Brisbane-based Senex to start construction at the company’s Roma North natural gas development.

QRC chief executive Ian Macfarlane said the job creating project 30km north of Roma would provide a much needed boost to the local economy.

“By awarding the construction contract to Wasco, which has a place of business in Roma, there will be local employment opportunities in the 50 jobs to be created directly, and more roles indirectly,” Mr Macfarlane said.

“Roma North is part of Senex’s Western Surat Gas Project and is a flagship example of industry and government working together to produce more natural gas, with benefits for Queensland.

“Queensland’s resources industry has a proven track record of attracting new investment and creating new jobs because of the clear and stable regulatory environment in which it operates. It is essential that we have stable and reliable regulation for our resources sector to continue to attract the investment that builds our State and delivers for every Queenslander.”

According to the QRC, the Queensland resources sector now provides one in every six dollars in the Queensland economy, sustains one in eight Queensland jobs, and supports more than 16,400 businesses across the State all from 0.1 percent of Queensland’s land mass.

www.qrc.org.au

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ENERGY Networks Australia has welcomed the NSW Transmission Infrastructure Strategy released today by the NSW Government.  

The strategy sets out to boost NSW's interconnection with Victoria, South Australia and Queensland, increase energy capacity and streamline regulation for a modernised grid.

Energy Networks Australia CEO Andrew Dillon said the NSW plan was a vital step towards a more integrated energy system that would deliver greater benefit to customers through a more resilient grid and more competitive wholesale markets. 

“Around the world, modern energy systems are responding to more variable renewable generation by ensuring greater connection between generation sources and customers,” Mr Dillon said. 

“NSW sits at the centre of the National Electricity Market (NEM) and is critical to the development of a more connected energy future.

“Fast-tracking the four key projects outlined in the strategy will bolster the grid's capacity and put downwards pressure on prices – a priority for network businesses across Australia.”

Mr Dillon said the sequential nature of current regulatory arrangements was slow and unsuited to the transformation underway in electricity generation. 

“By providing a funding guarantee for preliminary planning work, the NSW Government can fast-track priority projects while ensuring projects will only proceed where the benefits for consumers clearly outweigh the costs,” he said.

“Networks want to keep costs as low as possible while ensuring new renewable generation can be reliably integrated into our grid. The NSW plan will help achieve this.”  

 

About Energy Networks Australia

Energy Networks Australia represents Australia’s electricity transmission and distribution networks and gas distribution networks. Members provide energy to virtually every household and business in Australia.

www.energynetworks.com.au

 

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