Speaking today in Sydney at a Productivity Commission hearing, Australian Pipeline Industry Association (APIA) CEO Dr Allen Beasley, said the industry shared the Commission's observations regarding the adverse impact of regulation on investment and the long term community benefit.

"Over recent years the transmission sector has been distracted from the critical task of market development and creation of arrangements needed to establish a national gas market," Dr Beasley said.

"Recent events in South Australia have highlighted the major benefits that an interconnected pipeline system brings to the Australian economy.

"However, we are deeply disturbed about the consequences to customers and the community of recent events in Western Australia which highlight the importance of regulatory policy settings and guidance that encourage, rather than stifle, timely expansion of pipeline capacity."

Dr Beasley said that a number of recent decisions by the Australian Competition Tribunal overturning major ACCC decisions had highlighted the very serious nature of problems with the current regulatory environment.

"There are deeply embedded structural flaws in the application of the current regime and reluctance by regulators to look at the long term consequences of their actions," he said.

"The Productivity Commission's Draft Report correctly highlights the risks associated with increasing scope for regulatory error in the current regime.

"It is time to abandon intrusive cost of service regulation of Australia's gas transmission sector."

Dr Beasley emphasised that the Commission had made commendable progress in developing workable solutions to clarify the intent and scope of the Gas Access Regime.

This included much needed guidance to regulators, consistent with the deficiencies identified in the Commission's report.

"Our main outstanding concern is that implementing the Draft Report's recommendations could unintentionally exacerbate the shortcomings of the current regime," Dr Beasley said.

"APIA's submission therefore examines the key recommendations in detail, outlining the unintended consequences of the current drafting and proposing alternative drafting to meet our understanding of the Commission's underlying intent," he said.

Dr Beasley also emphasised the importance of clarity in legal drafting in order to achieve the objectives sought by the Commission in its draft report.

"The Commission's current work will be of enormous significance in the policy formulation process to be undertaken by the Ministerial Council for Energy (MCE) which will be considering the report once it has been finalised," he said.

"APIA remains concerned that the complexity of the issues can create scope for material shifts in positions as findings and recommendations are implemented by the MCE acting on the advice of bureaucrats."