APIA executive director, Dr Allen Beasley, told a Productivity Commission hearing in Sydney that errors in the design of the gas access regime have made the system unworkable for Australia's gas transmission sector.

"These mistakes have resulted in unacceptably protracted regulatory processes for the gas transmission sector, undue levels of intervention and escalating legal challenge against regulatory decision making," Dr Beasley said.

"However, instead of encouraging such urgently required development, the current Code acts as an impediment by not enabling efficient investment in new pipeline infrastructure."

The frustration expressed by Beasley follows comments from Jim McDonald, managing director of the Australian Pipeline Trust, who gave Australian regulators a serve in front of an international audience in Budapest last week.

Speaking at the International Pipeline & Offshore Contractors Association conference, McDonald said development of an Australian national gas grid was being frustrated by economic regulators who created uncertainty for investors and operators.

"The distraction provided by the economic regulators is particularly frustrating in view of the strong prospects for growth in natural gas demand," said McDonald.

Dr Beasley said several recent public inquiries have already highlighted the need for major expansions to meet projected gas demand growth and the fact that too much regulatory uncertainty surrounds pipeline development.

APIA also emphasised that new pipeline development was a highly contestable process in Australia, making regulation unnecessary.

"The apparent perception that monopoly power conferred by the natural monopoly characteristics of gas transmission necessarily equates to monopoly abuse is erroneous," Dr Beasley said.

"The revised regime must enhance the prospects for negotiated outcomes with our very small and informed customer base."

APIA's specific recommendations for an overhaul of the regime include a commitment of the transmission industry to develop a voluntary behavioural code of conduct for unregulated pipelines.

The need for a revised Code based on a negotiate/arbitrate model for the transmission sector, consistent with Part IIIA of the Trade Practices Act rather than the current intrusive, costly and time consuming regime.