Gold Coast-based developer <a href="https://www.apartments.com.au/developers/ignite-projects">Ignite Projects</a> has lodged a Development Application for a landmark $120 million precinct set to transform the southern gateway of the much-loved Spit.

Positioned at the most prominent entry point to the iconic peninsula, the project has been designed with a strong focus on architecture, public space, heritage and connectivity, delivering a revitalised parkland setting that invites locals and visitors to engage with the Broadwater.

Central to The Isles proposal is a significantly upgraded public realm, including landscaped open space, a new waterfront café, and a family-friendly park featuring a naval-themed playground, open lawns and improved pedestrian connections.

<img alt="Ignite Projects unveils exciting details of landmark gateway precinct for the Spit" data-entity-type="file" data-entity-uuid="de83a270-6091-4b26-bed0-86f9248e7f9e" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/The%20Isles%201.jpg?VersionId=vt79HlCOwV9F7eLQe9.Z3bv9JGLMaSP2" />

The design retains and celebrates key elements of the site’s history. The training mast from the vacant and degraded naval cadet building, which forms part of a former Navy minesweeper, will be preserved. The existing Navy Memorial will be relocated and upgraded in collaboration with the RSL, allowing it to be publicly accessible for the first time in years. 
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Heritage-listed Humphreys Boat Shed remnants will remain and be incorporated into the landscape, while the site’s established Norfolk Pines will be retained, reinforcing the area’s character and sense of place. The enhanced parkland will ultimately create a long-term community asset at the entry to The Spit. 
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The Development Application (DA) lodged with Gold Coast City Council includes 28 waterfront apartments across three levels, ranging in size from 145sqm to 383sqm, designed as a feature landmark within the precinct and complement the public domain.

<img alt="Ignite Projects unveils exciting details of landmark gateway precinct for the Spit" data-entity-type="file" data-entity-uuid="bbf94e00-b56a-47fb-a15d-3d17b0b1ec76" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/The%20Isles%203.jpg?VersionId=A0vmBNE_KohYJo1EoZcmF5IVW4tT5aDo" /> 
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Ignite Projects Director Josh Foote said the project as a whole had been carefully shaped to deliver a meaningful outcome for the wider community, not just future residents. 
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“This is about more than delivering opulent apartments – it’s about creating a welcoming and memorable gateway to The Spit that people can enjoy every day,” Mr Foote said. 
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“We’ve worked hard to ensure the public realm is a central part of the project, from the landscaped parklands and family-friendly spaces through to the preservation and celebration of important local heritage.”

<img alt="Ignite Projects unveils exciting details of landmark gateway precinct for the Spit" data-entity-type="file" data-entity-uuid="443bbde5-8221-45f8-a549-dad2623df20c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/The%20Isles%204.jpg?VersionId=iUl6nc.sHkjMdo_1RigwbwUz_celHJ3H" /> 
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Designed by <a href="https://www.apartments.com.au/architects/contreras-earl-architecture">Contreras Earl Architecture</a>, The Isles adopts a considered subtropical approach, with the building form shaped to maximise natural light, cross ventilation and views to the Broadwater and surrounding parklands. 
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Architect Rafael Contreras said the design responded directly to its unique coastal setting. 
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“Rather than a typical built form, the architecture has been shaped by performance and experience – from optimising outlook and privacy to creating a strong connection to landscape and climate,” Mr Contreras said. 
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“A central landscaped courtyard allows light, air and greenery to permeate the building, while the articulated façade introduces movement and rhythm inspired by the Broadwater.

“The Isles will create a place where people can gather, relax and connect with the water, while also delivering a refined residential product that responds to its unique setting.”

<img alt="Ignite Projects unveils exciting details of landmark gateway precinct for the Spit" data-entity-type="file" data-entity-uuid="1089570d-1120-4302-9900-fb9f75c75c26" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/The%20Isles%205.jpg?VersionId=pl9qmKZNbaL3A7XjmD7sjhLwmXaqzzLZ" /> 
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The DA relates to the residential and public realm components, with a proposed boutique marina to be progressed as part of a future stage, subject to separate approvals. 
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The Isles is being delivered under The Spit Master Plan, a collaborative vision to create a new residential, tourism, leisure, natural environment and cultural heritage hub on the iconic and much-loved peninsula.&nbsp; 
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Ignite Projects has an established track record delivering premium residential projects across the Gold Coast, including The Monaco at Main Beach and Cabana at Palm Beach. 
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Sales for The Isles are expected to commence in coming months from an on-site display suite, with construction targeted to begin later this year, subject to approvals.

Joel Robinson

Ignite Projects unveils exciting details of landmark gateway precinct for the Spit

The Federal Government’s sweeping changes to negative gearing and capital gains tax could trigger an unintended consequence: a surge of investor demand into the new and off the plan apartment sector.

While Treasurer Jim Chalmers has framed the reforms as a way to improve housing affordability and rebalance the tax system, the carve-outs for newly built housing are already positioning off the plan apartments as one of the few remaining tax-effective property investment plays.

Under the changes handed down in the Federal Budget, investors purchasing established properties after budget night will no longer be able to access negative gearing benefits. The Government will also replace the long-standing 50 per cent capital gains tax discount with a new inflation-indexation model and introduce a minimum 30 per cent tax on gains from July 2027.

However, there is a major exemption.

Investors buying new builds, including off the plan apartments, will still be eligible for negative gearing and will be able to choose between retaining the current 50 per cent CGT discount or adopting the new indexed model.

That distinction is expected to reshape investor behaviour almost immediately.

For years, established housing has dominated investor purchases because of its perceived lower risk, immediate rental returns and stronger historical capital growth. But with the tax advantages now heavily skewed toward new housing supply, the economics are changing rapidly.

The Federal Government has been explicit about its intent.

“The housing market and tax system are broken,” Chalmers said ahead of the Budget, arguing that existing concessions were disproportionately rewarding speculation rather than supporting housing supply.

The Government says the reforms are designed to encourage investment into new housing rather than established stock, a move aimed at increasing supply during a prolonged housing shortage.

According to the official Budget papers, limiting negative gearing to newly built homes is intended to “better align tax incentives with housing supply objectives.”

For the apartment development sector, particularly the off the plan market, the changes could become one of the strongest investor tailwinds in years.

Developers across Sydney, Melbourne and Brisbane have spent the past two years battling elevated construction costs, higher interest rates and subdued investor confidence. Many projects have struggled to secure sufficient pre-sales to commence construction, particularly in markets heavily reliant on investor demand.

The Budget changes may now alter that equation.

Investors seeking tax-effective property exposure will increasingly find themselves funnelled toward newly built apartments simply because established dwellings no longer offer the same benefits.

Commonwealth Bank described the reforms as one of the most significant shifts to residential property investment settings in decades, noting that the package is centred around “limiting negative gearing for residential property to new builds” while replacing the existing CGT framework.

That could have profound implications for the apartment sector.

Off the plan apartments already hold several advantages for investors. Purchasers typically secure a property at today’s price while settlement occurs years later, allowing time for capital growth and reducing the upfront capital burden. Brand-new apartments also generally attract depreciation benefits, lower maintenance costs, and stronger appeal to renters seeking modern amenity.

Now, they may also become one of the only residential property types still offering the full suite of historical tax advantages.

Industry analysts expect investor demand to increasingly migrate toward projects that can clearly demonstrate strong rental demand, transport connectivity and long-term supply constraints.

The shift is likely to be particularly pronounced in apartment markets already underpinned by structural undersupply, including inner Brisbane, the Gold Coast, parts of Sydney’s Lower North Shore and select Melbourne precincts where new apartment commencements have collapsed over recent years.

The reforms also arrive at a time when apartment supply nationally remains critically constrained.

Australia is already struggling to meet the Federal Government’s target of delivering 1.2 million new homes over five years. Construction feasibility pressures have delayed or shelved thousands of apartments across the country, particularly as building costs remain elevated and financing conditions remain tight.

Critics of the Budget changes argue the reforms could reduce overall investor participation in the housing market and place upward pressure on rents by discouraging investment in established housing.

Some economists estimate the measures could reduce housing supply over the longer term if overall investor appetite weakens.

However, the Government is betting that redirecting investor capital into new housing supply will offset those concerns.

“To continue to incentivise construction of new housing, investors building new residential properties will be able to choose either the 50 per cent CGT discount or the new arrangements,” the Budget papers stated.

That wording has been closely watched by the development industry because it effectively positions new apartments as the preferred investment class within residential property.

For off the plan developers, the reforms could become a powerful sales tool.

Projects that have increasingly relied on owner-occupier demand may once again attract investors seeking to preserve the tax advantages still attached to newly built housing before the July 2027 changes take effect.

The reforms are also expected to sharpen the divide between established and new housing markets.

Rather than a broad investor retreat from property altogether, many analysts expect a redistribution of capital toward sectors still supported by Government incentives.

That could create stronger demand for apartment projects in key urban growth corridors and transit-oriented precincts where population growth, migration and rental shortages remain elevated.

The policy direction also aligns with the Government’s broader push toward increasing housing density in established urban areas.

Across Sydney, Brisbane and Melbourne, planning reforms are increasingly encouraging higher-density apartment development around transport infrastructure and activity centres. By maintaining tax incentives for new housing, the Federal Government is effectively reinforcing that agenda from a taxation perspective.

For apartment developers who have spent years navigating subdued investor confidence, the changes may ultimately become the catalyst that reactivates parts of the off the plan market.

While the broader property sector is still digesting the long-term implications of the Budget, one thing is already becoming clear.

The era of investors buying established apartments and houses primarily for tax advantages may be ending.

But for off the plan apartments, the investment story may just be beginning.

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Investors to flood off the plan apartment market?

Adding to Chatswood’s growing skyline, <a href="https://www.apartments.com.au/new-apartments/the-anderson-chatswood-54-56-anderson-street-chatswood-nsw-2067">The Anderson</a> is grounded in a simple principle: apartment living in a major centre does not have to come at the expense of space and outlook.

Set on Anderson Street in the heart of <a href="https://www.apartments.com.au/developments/chatswood-nsw-2067">Chatswood</a>, the new residential tower, a collaboration between developers <a href="https://www.apartments.com.au/developers/changfa-group">Changfa Group</a> and <a href="https://www.apartments.com.au/developers/huirong-group">Huirong Group</a> with architecture and interiors by <a href="https://www.apartments.com.au/architects/ajc-architects">AJC Architects</a>, will introduce 122 apartments that prioritise generous proportions, considered orientation, and a strong connection to the surrounding heritage precinct.

The design originated from a Design Excellence Competition, where AJC proposed a building that combines suburban-style apartment scale with the density expected in a transport-rich centre. The development will include more than 1,800 square metres of retail and commercial space at street level, landscaped communal roof terraces, and a ground-floor pocket park framed by canopy trees. Together these elements aim to create a building that integrates with Chatswood’s evolving streetscape while maintaining a strong residential focus.

[smartcode_project:default project_id=151353 project_image_fid=353250]

A key driver behind the architecture was the desire to deliver family-sized apartments rarely seen in the Chatswood market. The Anderson includes a mix of one to four-bedroom apartments, with around 35 per cent of the residences configured as three or four-bedroom homes. At the top of the building, two double-storey penthouses span approximately 200 square metres each, reinforcing the project’s emphasis on scale and long-term liveability for both downsizers and intergenerational households.

Orientation and outlook were central to the planning of the building. The apartments are positioned to maximise views to the north and east across Chatswood’s heritage precinct, with upper levels capturing glimpses of the Pacific Ocean. South-facing apartments gain distant views toward the Sydney CBD and Harbour Bridge, while the building’s configuration intentionally reduces western exposure at lower levels to minimise overlooking toward the nearby railway corridor.

The external design references the character of the surrounding conservation area without replicating it directly. A brick podium anchors the building to the street and introduces a series of architectural portals that draw inspiration from the nearby Chatswood Presbyterian Church. Above this base, the tower shifts to a lighter, more open expression defined by horizontal lines and carefully detailed balconies that balance privacy with outward views.

[smartcode_project:default project_id=151353 project_image_fid=353254]

Toward the top of the tower, AJC introduces a distinctive lantern-like element formed by sliding screens. These screens provide both solar shading and privacy while also creating a visual marker for the building within the Chatswood skyline. The feature reinforces the architectural intent of the project, a structure that is visually refined while still responding to the practical requirements of apartment living.

Inside the residences, interior architecture focuses on clear spatial flow and practical everyday use. Open-plan living areas connect directly to large balconies, extending the internal living spaces outward and allowing natural light to move deeper into the apartments. Kitchens are designed as central working spaces with premium appliances and carefully selected materials, positioned to serve both daily living and entertaining.

[smartcode_project:default project_id=151353 project_image_fid=353256]

Bathrooms follow a similarly restrained design language, using refined fixtures and materials to create calm, functional spaces, while wardrobe areas adopt a gallery-style layout with integrated lighting and generous storage. These elements reflect a broader design approach that prioritises clarity, functionality, and durability over decorative gestures.

Positioned just a short walk from Chatswood Interchange, residents will have direct access to rail, metro, retail, and dining. The Metro extension allows travel from Chatswood to Martin Place in approximately 11 minutes, placing the CBD within easy reach for residents while maintaining the convenience of a walkable North Shore neighbourhood.

One-bedroom apartments at The Anderson start from $1,022,000.

[smartcode_project_cta:default project_id=151353]

How AJC designed The Anderson to bring oversized apartment living to Chatswood

<a href="https://www.apartments.com.au/developers/bridgewell-development">Bridgewell Capital</a> has lodged plans for a major mixed-use apartment development in the heart of Maroubra, seeking a significant uplift in height and density controls to deliver 120 apartments and a 120-place childcare centre near Maroubra Junction.

The State Significant Development application, filed through the NSW Government’s Housing Delivery Authority pathway, covers a 3,270 sqm amalgamated site at 251-257 Maroubra Road and 133-135 Garden Street. The proposal includes a concurrent rezoning that would increase the maximum building height from 12 metres to 35.6 metres and lift the floor space ratio to 4.02:1.

Designed by <a href="https://www.apartments.com.au/architects/bka-architecture">BKA Architecture</a>, the project would replace a mechanic’s workshop and several detached homes with a 10-storey residential building above four basement levels.

The scheme comprises 120 apartments, including 27 affordable housing units to be managed by a community housing provider for 15 years, alongside 203 basement car spaces and 92 bicycle spaces. A childcare centre occupying nearly 900 sqm of floor area would sit at ground level and be capable of accommodating 120 children and 22 staff.

<img alt="First look: Bridgewell plots 120 apartments and childcare centre in Maroubra town centre" data-entity-type="file" data-entity-uuid="038a0639-f9e4-4303-8fcc-d43e73fa480f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Bridgewell%20pers.png?VersionId=eGBElxmNqJW.YF3JFYgHTnPgAstdyXR3" />

According to the Design Report, the project has been conceived as a “gateway proposal” that responds to Maroubra’s evolving urban character and its proximity to the town centre.

“Designed to complement the character of Maroubra’s town centre, this gateway proposal features a building scale that matches its surroundings,” the report stated.

“It integrates residential units above a ground-level childcare centre, fulfilling the strategic objectives of the Randwick City Council Masterplan.”

The apartment mix is weighted toward larger residences aimed at families and downsizers, reflecting changing demographics in the Randwick LGA and increasing demand for medium-density housing close to transport and amenity.

BKA Architecture said the proposal seeks to reinforce Maroubra Road as a civic spine while improving the pedestrian experience around the site through landscaping and upgraded public interfaces.

“The design capitalises on the following site opportunities: reinforcement of Maroubra Road as a civic spine, enhancement of pedestrian pathways and the public interface via new landscaping, and strong market demand for two and three-bedroom apartments to support families and down-sizers,” the Design Report noted.

<img alt="First look: Bridgewell plots 120 apartments and childcare centre in Maroubra town centre" data-entity-type="file" data-entity-uuid="ee509779-3c7e-4918-b03d-761c785459d0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Bridgewell%20site.png?VersionId=eZC4Ruyn.C7O.Qwfr1SVeP5.ds1c5.66" />

The building has been designed with setbacks and articulation intended to transition between the commercial intensity of Maroubra Junction and the surrounding lower-scale residential neighbourhoods. Communal open space is proposed on level one, while upper-level apartments would secure views towards Port Botany, Maroubra Beach and Sydney’s eastern suburbs.

The development sits around 200 metres east of the Maroubra Junction intersection of Anzac Parade and Maroubra Road, within one of Randwick’s identified strategic centres. The site is close to Pacific Square Shopping Centre, major bus routes, schools, parks and future cycling infrastructure proposed under the Maroubra Junction Masterplan.

The Maroubra proposal aligns with broader NSW Government initiatives encouraging higher-density housing near established centres and transport corridors, particularly where affordable housing is incorporated.

Bridgewell is also working on a <a href="https://www.apartments.com.au/news/qld/goldfields-sets-the-stage-as-quartet-milton-launches">new 55-unit project in Killara</a>.

First look: Bridgewell plots 120 apartments and childcare centre in Maroubra town centre

National diversified developer <a href="https://www.apartments.com.au/developers/goldfields-group">Goldfields</a> has launched its latest Brisbane apartment project, <a href="https://www.apartments.com.au/new-apartments/quartet-milton-33-manning-street-milton-qld-4064">Quartet Milton</a>, marking its entry into the sought-after inner-city suburb just two kilometres from the CBD.

The circa $100 million development will rise 18 storeys and deliver 131 apartments, offering a mix of one, two-, and three-bedroom residences.

Ideally located on Manning Street, Quartet residents will be within 300 metres of Milton Station, 500 metres from the Milton Ferry Wharf, and a short walk to Milton Markets, the iconic Park Road, as well as a range of breweries and cafés.

[smartcode_project:default project_id=108736 project_image_fid=367993]

Designed by architecture firm <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a> and brought to life by <a href="https://www.apartments.com.au/architects/cera-stribley-architects">Cera Stribley</a>, the building features a simple, gridded façade paired with generous glazing to enhance views, maximise aspect, and capture both sunrises and sunsets from within the apartments and their generously sized balconies.

Residents will have access to a 1,000 sqm rooftop, curated to balance wellness and entertaining, in response to increasing demand for wellness-focused shared spaces.

"We've approached Quartet Milton as a complete lifestyle offering, not just apartments, but a place where the design, amenities, and location all work together in a meaningful way," says Goldfields Managing Director Lachlan Thompson.

"Buyers are looking for that sense of confidence, knowing the vision has been carefully thought through not just by us as developers, but by all our consultants appointed to bring this together, and that it will be delivered to the standard they expect."

[smartcode_project:default project_id=108736 project_image_fid=368000]

Cera Stribley Co-Founder and Managing Principal Domenic Cerantonio said the rooftop is designed to feel like a place "you'd genuinely use every day."

"A 25-metre pool framed by city and mountain views, wellness areas, and private dining spaces for evenings with friends create a setting designed for year-round comfort and effortless Brisbane living."

[smartcode_project:default project_id=108736 project_image_fid=367999]

In addition to the 25-metre pool, the rooftop will include a sauna, cold plunge, fully equipped gym, and zen gardens, all complemented by panoramic views of the city and river.

While the building is expected to appeal predominantly to owner-occupiers, Goldfields anticipates interest from investors seeking strong rental returns, driven by the project's design, location, and the city's projected capital growth in the lead-up to the 2032 Brisbane Olympics.

[smartcode_project:default project_id=108736 project_image_fid=367991]

<a href="https://www.apartments.com.au/developments/milton-qld-4064">Milton</a>, widely regarded as one of Brisbane's most desirable inner-ring suburbs due to its lifestyle offering and proximity to the CBD, has experienced a shortage of new apartment supply in recent years.

Goldfields is already active in the Brisbane residential market through its Ripley Valley masterplanned community, Hayfield. The 109-hectare neighbourhood is already home to more than 300 families and features a large community park.

Plans for the precinct include a 4 km running track, future schools, and retail and commercial amenities, all within a 35-minute drive of the Brisbane CBD.

Goldfields also plans to deliver a new mixed-use tower at 88 Robertson Street in Fortitude Valley, within the James Street precinct. The project will include 16,000 sqm of boutique commercial space, a level of wellness facilities, and a rooftop restaurant and event space, akin to Goldfields House in South Yarra, its flagship mixed-use development on Chapel Street, which is crowned by the Beverly Rooftop bar, one of Melbourne’s best-known venues.

[smartcode_project_cta:default project_id=108736]

Goldfields sets the stage as Quartet Milton launches

Energy Cost

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GUEST OBSERVER
The <a href="https://theconversation.com/power-bills-can-fall-but-the-main-attention-must-be-on-affordability-accc-85734" target="_blank">preliminary report on energy prices</a> released last week by the Australian Competition and Consumer Commission (ACCC) suggests that the consumer watchdog is concerned about almost every aspect of Australia’s electricity industry. It quotes customer groups who say electricity is the biggest issue in their surveys, and cites several case studies of outrageous price increases experienced by various customers.
The report is long on sympathy about the plight of Australia’s electricity users. But the true picture is even worse – in reality, the ACCC’s assessment of Australia’s energy prices compared to the rest of the world is absurdly rosy.
Australia has internationally high energy prices
The ACCC quotes studies from the Electricity Supply Association and the <a href="https://studylib.net/doc/6673393/category-analysis-rin---australian-energy-regulator" target="_blank">Australian Energy Markets Commission</a> (AEMC) to compare electricity prices in Australia with those in other OECD countries. But the ACCC’s comparison is based on two-year-old data, and badly underestimates the actual prices consumers are paying.
The AEMC’s analysis assumes all customers are on their retailer’s cheapest available offer. This is an obviously implausible assumption, and gives a favourable impression of the price that customers are paying.
As <a href="https://theconversation.com/australian-household-electricity-prices-may-be-25-higher-than-official-reports-84681" target="_blank">previously pointed out on The Conversation</a>, the Thwaites review – which looked at customers’ actual bills – found that in February 2017 Victorians were typically paying A35c per kilowatt hour (kWh) – 42% more than the AEMC’s estimate. What’s more, we know that Victoria’s electricity prices are lower on average than those in South Australia, Queensland and New South Wales, and hence below the Australian average.
A part of this 42% gap – around 15% – is explained by the latest price increases that are not included in the ACCC’s comparison. But this still leaves a 27% gap between what the AEMC assumes and the evidence of actual prices.
This begs the question: why did the ACCC not recognise the widely known flaw in the AEMC’s analysis?
<h2>The real problem is overbuilt network infrastructure</h2>
The report estimates that rising network charges account for more of the price increase than all other factors put together. There is no doubt that network charges are a real problem at least in parts of Australia, although their significance relative to retailers’ costs is contested territory.
But why would distributors build far more network infrastructure than they need? And why have government-owned distributors built far more infrastructure than private ones, despite having no more demand?
The answer to this perplexing question is to be found in part in Australia’s “competitive neutrality” policy. This is Orwellian doublespeak for an approach that is neither neutral nor competitive.
Under this policy, government-owned distributors are regulated as if they are privately financed. This means that when setting regulated prices, the Australian Energy Regulator (AER) allows government distributors to charge their captive consumers for a return on their regulated assets, at the same level as if they were privately financed. That is despite the fact that private financing is much more expensive than government funding.
It’s no surprise that when offered a rate of return that far exceeds the actual cost of finance, government distributors have a powerful incentive to expand their infrastructure for a profit. This “gold-plating” incentive is a well-known in regulatory economics.
Regulators, the industry and their associations have explained higher spending on networks in a variety of ways: higher reliability standards; flawed rules; flawed forecasting of demand growth; and the need to make up for historic underinvestment.
But was there ever historic underinvestment? A 1995 article co-authored by the current AEMC chair concluded that distribution networks had been significantly overbuilt. That was more than two decades ago, government distributor regulated assets are at least three times bigger per customer now.
The chart below – based on data from the AER’s website – examines how the 12 large distributors that cover New South Wales, Victoria, Queensland and South Australia spent their money on infrastructure between 2006 and 2013. This period covers the last five-year price controls established by the state regulators, and the first control established by the AER. It was during this time that expenditure ballooned. The monetary amounts in this chart are normalised by the number of customers per distributor.
<img src="https://images.theconversation.com/files/191134/original/file-20171019-1072-1b07x7v.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="">
 Distributor spending on infrastructure between 2006 and 2013. Author provided
The first five distributors from left to right (and Aurora) were owned by state governments and the others are privately owned. A clear pattern emerges: the government distributors typically built much more infrastructure than the private distributors. And the government distributors focused their spending on substations, which are much easier to build (or expand or replace) than new distribution lines or cables.
We also know that the distributors’ spending on substations far outstripped the increases in the peak demand on their networks. The figure below compares the change in the government and private distributors’ substation capacity (the blue bars) with demand (the red bars) over the period that most of the expenditure occurred. Again, the amounts have been normalised by number of customers.
<img src="https://images.theconversation.com/files/191133/original/file-20171019-1075-d1dvow.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="">
Substation capacity versus peak demand between 2006 and 2013. Author provided
The gap in spending between government and private distributors is stark. It is also obvious that in all cases, but particularly for the government distributors, the expansion of substation capacity greatly exceeded demand growth - which hardly changed over this period (and is even lower now, per connection).
To put it in more tangible terms, as an average across the industry, peak demand between 2006 to 2013 increased by the equivalent of the power used by one old-fashioned incandescent light bulb, per customer. But government distributors expanded their substation capacity by more than one 100 light bulbs, per customer. The private distributors did relatively better, but still increased the capacity of their substations by the equivalent of about 30 light bulbs per customer.
My PhD thesis included econometric analysis that shows government ownership in Australia is associated with regulated asset values that are 56% higher than private distributors, and regulated revenues that are 24% higher, leaving all other factors the same.
To some, this evidence supports a “government bad, private good” conclusion. Indeed it was this line of argument that the Baird government in New South Wales used to justify its partial privatisation of two network service providers.
But in international comparisons of government and private distributors in the United States, Europe and New Zealand, no such stark differences are to be found. The huge disparity between government and private distributors is a peculiarly Australian phenomenon.
<h2>How we got here</h2>
This Australian exception originates in chronic policy and regulatory failure. As far back as 2011, the Australian Energy Market Commission (AEMC) heard a proposal that government distributors should earn a return closer to their actual cost of financing – a suggestion that would have reduced prices significantly and removed the incentive to gold plate.
In response, the AEMC said the regulations were consistent with the “competitive neutrality” policy. But this is not true: in the policy’s own words, it was designed to stop government businesses from crowding out competitors. Distributors are protected monopolies; they do not have competitors.
The AEMC also argued, somewhat bizarrely, that it was good economics for a regulator to assume that government distributors are privately financed.
This represents the triumph of an idealistic “normative” regulatory model in which regulators act on the basis of how the regulated entity should behave rather than how they actually behave.
But it would wrong to blame the AEMC alone for this failure. All of Australia’s key institutions and governments have agreed that government distributors should be regulated as if they are privately financed. For governments that own their distributors, this has been a wonderfully profitable fiction.
Therein lies much of the explanation for what is effectively, if I may call a spade a spade, a racket.
It is an indictment of Australia’s polity and so many of its economists that the 2011 Garnaut Climate Change Review stands alone, in a library of reviews, as stating this problem clearly. In fact, if you review last week’s report from the ACCC, you will not find a single distinction between the impact of government and private distributors.
And if you thought this was yesterday’s war, you would be wrong. Despite the mass of evidence, our regulators persist in the fiction that ownership and regulation should be independent of one another.
It is difficult not to lapse into despair about Australia’s energy policy morass. Despite the valiant attempts by many, a deeply entrenched culture of half-truths, vested interests, ideology and wishful thinking still characterises all too much of what emanates from the political and administrative leadership of this industry.
Some energy consumers – Prime Minister Malcolm Turnbull among them – will buy their way out of this problem through solar panels and batteries. But the poorest households and many business customers will increasingly be left carrying the can.
<img src="https://counter.theconversation.com/content/86045/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">Australians are angry about electricity. Not unreasonably.
Bruce Mountain is director of carbon and energy markets at Victoria University.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/energy-prices-are-high-because-consumers-are-paying-for-useless-profit-boosting-infrastructure-86045" target="_blank">original article</a>.
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Energy prices are high because consumers are paying for useless, profit-boosting infrastructure: Bruce Mountain

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<img src="https://counter.theconversation.edu.au/content/63597/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
The energy sector is dealing with a complex mix of relationships between consumer trends, global commodity markets, and state, federal and industry regulation.
Because large established companies in electricity generation and distribution and coal and natural gas export have a lot of influence in this process, Australian energy regulations reflect more traditional energy provision rather than global trends where renewable energy is becoming more prevalent.
State governments are currently coming to terms with the regulatory changes needed to accommodate public support for disruptive technology. One example is the ongoing adoption of ride-sharing company Uber. However this same pragmatism needs to be reflected in preparations for the provision and consumption of energy in Australia. The energy companies that are prepared for this disruption will survive and flourish, while those that cling to traditional structures will struggle.
<div id="responsive-iframe-0">Evidence of disruption</div>
Globally energy companies are already showing signs of being affected by the looming disruption. Coal miners have been subjected to multiple forces over the last decade, but the changing landscape associated with new forms of energy, is a strong influencer of their performance. Coal companies in the US are facing dwindling share prices or bankruptcy like Peabody Energy and Arch Coal.
Tesla’s share price, which increased from US$28.52 in August 2012 to US$220 in August 2016, is more than double that of more traditional vehicle company Toyota. Toyota has experienced moderate growth from US$79.62 in August 2012. With electric vehicles forcing themselves into the motor vehicle market, technological disruptors like Tesla are seen as more likely to succeed than traditional motor vehicle companies like Ford.
West Texas Intermediate, a benchmark international oil price, declined from US$133 a barrel in July 2008 to US$45 a barrel in July 2016. This followed a slowdown in global growth after the global financial crisis and increased production of oil in Saudi Arabia, which some claim is to gain market share. Coal prices for export from Australia have fallen from A$180 a tonne in July 2008 to A$63 a tonne in July 2016 as China’s voracious appetite for coal has declined.
International natural gas prices have also declined because in Europe the natural gas price has been referenced to the oil price. Separate to this, the US price of natural gas declined as a result of new drilling technologies which released huge quantities of natural gas onto the US market, dragging down the price.
Many of these global trends are apparent in Australia too. Coal export prices have caused concerns for existing companies to the extent that new mine development has been shelved since 2008. Coal mine profits have dwindled and job losses abound.
Ambitious plans for coal seam and natural gas extraction for export to Asian markets have been curtailed with some experts predicting still further price declines in response to oversupply.
While there have been recent small upticks in prices, the trend for Australian primary energy company share prices since early 2014 has been downwards.
<h2>Challenges facing the Australian electricity generation sector</h2>
The electricity sector in Australia is facing multiple challenges. Electricity consumption has declined since 2009 and is forecast to increase only slightly by 2035/6. The closing of large energy users like the Kurri Kurri aluminium smelter and the Clyde Oil refinery, and a shift by residential consumers to the consumption of electricity from solar panels have contributed to this trend.
This is coupled with increasing supply of energy from low marginal cost wind power which, if the Australian National Energy Market is working as designed, reduces the spot price for electricity.
Many electricity generators have launched or acquired retail businesses to market directly to customers. AGL and Origin are the two largest of these “gentailers”, with a combined 56% of the small customer market in the eastern states. However, there is potential for disruption to this existing industry model. 1.57 million households now have solar panels on their roofs, and residential batteries are expected to increase consumer control of residential electricity.
Startups like Sunverge, Reposit and Powerledger are looking to connect households with spare energy to households buying spare energy. Mojo Power is offering customers fixed price packages that are more reminiscent of mobile phone offers than electricity. At this stage it is unclear whether the National Electricity Market will play a part in, or hinder, these new business models.
A few retail companies, like Red, Lumo, Powershop and Infinite spruik their renewable energy credentials. Renewable energy is viewed very favourably by the public.
Recent polling suggests that 71% of respondents would favour a government that facilitated greater support for solar panels and batteries. Energy giant AGL has a larger renewable energy portfolio than Origin making it slightly more attractive to consumers with environmental concerns, but it is exposed to the risk of owning a large coal generation fleet.
Infigen is the only renewable, publicly listed company. Infigen faced torrid times during the multiple back-to-back reviews of the Renewable Energy Target, but since the target has been set at 33GWh, Infigen’s share price has been recovering.
Of note, is the share prices of domestic energy companies AGL and Origin who are both in the business of generating and retailing electricity and previously were both engaged in the development of coal seam gas. Origin has continued its coal seam gas investment while AGL exited the market. AGL has instead focused more on diversifying its electricity generation portfolio. Part of this strategy has involved formulating innovative plans for virtual power stations of consolidated rooftop solar panels and residential batteries.
Origin’s foray into the export of Liquid Natural Gas (LNG) has not been good for its share price. Concern over debt related to the investment in LNG and exposure to declining LNG prices has worried investors.
<h2>Electricity distribution also faces multiple challenges</h2>
Electricity distribution companies in Australia are regulated monopolies. Distribution companies in NSW and QLD have been government owned and as a result of hefty investment plans, large electricity price rises were passed through to customers after 2009. This was at the same time as environmental charges were being included in electricity tariffs.
Customers were angered by the rise in electricity prices, but the NSW and QLD governments have enjoyed the profits that have flowed back into state coffers.
The NSW government is now seeking to sell a large share of its distribution businesses, although the most promising buyers have been knocked back by the federal government due to security concerns. With the popularity of solar panels and the expectation about the benefits of battery storage to meet demand after sundown, investors buying into the electricity distribution sector will be facing disruption.
Origin and AGL have gambled on different strategies to face a future with carbon constraints and technological disruption. Origin has bet on natural gas being a transition fuel to a cleaner energy future, while AGL is betting on electricity from renewable sources with batteries as the preferred path.
Energy distribution companies need to wrestle with the technological disruption that is looming from decentralised, distributed generation from solar panels, batteries and peer-to-peer energy transactions. Coal miners should seriously consider diversification to face a carbon-constrained future. The energy sector is in a state of transition; profits and share prices may be volatile for a few years to come. It would be advantageous if regulation did not get in the way of the shifts already evident.
Lynette Molyneaux is researcher, Energy Economics and Management Group, Global Change Institute, The University of Queensland and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/lynette-molyneaux-9433" target="_blank">here</a>.
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