regulatory control period. At the time, we forecast increases in opex of $206 million ($2015) from 2011 to 2015 due to these new regulations. Vegetation management expenditure across the industry was also likely affected by heavy rainfall during the period. The year 2010 was the fifth wettest year on record in Victoria following one of the wettest springs on record, and 2011 was the twelfth wettest year on record. While we have not collected evidence on the effects of this pattern on vegetation growth in Victoria, we did observe that above average rainfall in South Australia in 2010 and 2011 led to significant increases in vegetation growth and vegetation management expenditure. The moderate increase in maintenance expenditure across the industry in part also reflects other increases in regulatory obligations following the Black Saturday bushfires. For instance, one of the Victorian Bushfire Royal Commission's (VBRC) recommendations was to mandate maximum thirty seven-month inspection cycles of single wire earth return lines (SWER) and 22KV feeders in high bushfire risk areas. This came into force in the Electrical Safety Amendment (Bushfire Mitigation) Regulations 2011 and is now mandated by the Electrical Safety (Bushfire Mitigation) Regulations 2013. This has contributed to the increase in pole inspection expenditure in Figure A.4. Figure . Pole inspection and pole inspection expenditure ($ million, 2015) Source: AER analysis. Another factor contributing to the increase in maintenance opex and opex more generally is the strength in wage growth across the industry. Labour costs are the most significant component of opex for utility businesses. Since 2009, wage growth in the ABS' Electricity Gas Water and Wastewater (EGWWS) classification has been on average 3.7 per cent per annum in nominal terms. In real terms EGWWS wage growth has been on average 1.3 per cent. As indicated in Figure A.5, this has largely matched the rate of wage growth in the mining industry and has exceeded wage growth across the Australian economy. This, in part, is likely to reflect the impact of the mining boom on the EGWWS sector. The impact of the demand for mining labour has previously been recognised as a driver of utilities wages by Deloitte and BIS Shrapnel. Figure . Wage growth - ABS classifications Source: ABS, 6345.0 Wage Price Index, December 2015. In our view, the above drivers do not suggest that the Victorian service providers' operating efficiency has materially declined over the previous regulatory period. In our
regulatory control period. At the time, we forecast increases in opex of $206 million ($2015) from 2011 to 2015 due to these new regulations. Vegetation management expenditure across the industry was also likely affected by heavy rainfall during the period. The year 2010 was the fifth wettest year on record in Victoria following one of the wettest springs on record, and 2011 was the twelfth wettest year on record. While we have not collected evidence on the effects of this pattern on vegetation growth in Victoria, we did observe that above average rainfall in South Australia in 2010 and 2011 led to significant increases in vegetation growth and vegetation management expenditure. The moderate increase in maintenance expenditure across the industry in part also reflects other increases in regulatory obligations following the Black Saturday bushfires. For instance, one of the Victorian Bushfire Royal Commission's (VBRC) recommendations was to mandate maximum thirty seven-month inspection cycles of single wire earth return lines (SWER) and 22KV feeders in high bushfire risk areas. This came into force in the Electrical Safety Amendment (Bushfire Mitigation) Regulations 2011 and is now mandated by the Electrical Safety (Bushfire Mitigation) Regulations 2013. This has contributed to the increase in pole inspection expenditure in Figure A.4. Figure . Pole inspection and pole inspection expenditure ($ million, 2015) Source: AER analysis. Another factor contributing to the increase in maintenance opex and opex more generally is the strength in wage growth across the industry. Labour costs are the most significant component of opex for utility businesses. Since 2009, wage growth in the ABS' Electricity Gas Water and Wastewater (EGWWS) classification has been on average 3.7 per cent per annum in nominal terms. In real terms EGWWS wage growth has been on average 1.3 per cent. As indicated in Figure A.5, this has largely matched the rate of wage growth in the mining industry and has exceeded wage growth across the Australian economy. This, in part, is likely to reflect the impact of the mining boom on the EGWWS sector. The impact of the demand for mining labour has previously been recognised as a driver of utilities wages by Deloitte and BIS Shrapnel. Figure . Wage growth - ABS classifications Source: ABS, 6345.0 Wage Price Index, December 2015. In our view, the above drivers do not suggest that the Victorian service providers' operating efficiency has materially declined over the previous regulatory period. In our
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