Chris Pearce (Aston, Liberal Party, Parliamentary Secretary to the Treasurer) Share this | Hansard source

by leave—I present a supplementary explanatory memorandum to the bill. I move government amendments (1) to (4) together:

(1)    Schedule 1, item 67, page 31 (line 6), omit “determined under”, substitute “specified in”.

(2)    Schedule 1, item 92, page 39 (line 21), omit “determined under”, substitute “specified in”.

(3)    Schedule 1, item 100, page 40 (line 23), omit “determined under”, substitute “specified in”.

(4)    Schedule 1, item 110, page 48 (lines 20 to 23), omit section 44ZZCA, substitute:

44ZZCA  Pricing principles for access disputes and access undertakings or codes

                 The pricing principles relating to the price of access to a service are:

             (a)    that regulated access prices should:

                   (i)    be set so as to generate expected revenue for a regulated service or services that is at least sufficient to meet the efficient costs of providing access to the regulated service or services; and

                  (ii)    include a return on investment commensurate with the regulatory and commercial risks involved; and

             (b)    that the access price structures should:

                   (i)    allow multi-part pricing and price discrimination when it aids efficiency; and

                  (ii)    not allow a vertically integrated access provider to set terms and conditions that discriminate in favour of its downstream operations, except to the extent that the cost of providing access to other operators is higher; and

             (c)    that access pricing regimes should provide incentives to reduce costs or otherwise improve productivity.

As I mentioned earlier, the government has decided to accept a recommendation contained in the report of the Senate Economics Legislation Committee into the provisions of the Trade Practices Amendment (National Access Regime) Bill 2005 and to amend the bill to give effect to the committee’s recommendation.

The bill implements the government’s final response to the 2001 Productivity Commission’s Review of the National Access Regime. The Productivity Commission recommended that statutory pricing principles should be established to guide access pricing decisions by the ACCC when arbitrating access disputes and considering whether to accept an access undertaking or access code under the national access regime.

The government’s response to the Productivity Commission’s review accepted the recommendation that pricing principles should be included in part IIIA. However, as I mentioned in my summing up speech, in the course of developing the draft bill it was decided that implementing the pricing principles by way of what was originally proposed as a legislative instrument would be preferable, as this would afford greater flexibility should experience highlight a need for changes to those pricing principles. Consequently, the bill currently provides that the Commonwealth minister must, by a legislative instrument, determine the principles relating to the price of access to a service to which the ACCC must have regard.

The Senate Economics Legislation Committee conducted an inquiry into the bill and released its report in September last year. The committee’s report notes that submissions to the inquiry were very supportive of the bill and that the proposed pricing principles were not controversial and were broadly supported by all witnesses to the inquiry. However, as I mentioned, a majority of submissions did express some concern at the government’s proposed method of introducing the pricing principles under part IIIA by the use of a legislative instrument rather than enactment in the bill itself. These concerns largely centred around the idea that there would be a lack of certainty for infrastructure investors because there could be greater potential for changes to be made to those pricing principles, possibly without consultation, and that the use of a legislative instrument may have entailed less transparency and less parliamentary scrutiny.

So, on balance, the government considers that it should address these concerns by accepting the committee’s recommendations that the pricing principles be included in the bill itself. The apparent depth of concern revealed by the committee’s inquiry outweighs the greater flexibility that the use of a legislative instrument would provide.

I mentioned in my second reading speech—and I will cover it again briefly—that the introduction of these principles will achieve a number of important objectives. They will provide guidance on how the broad objectives of access regimes should be applied in setting terms and conditions. They will provide additional certainty to regulated firms and access seekers, in turn improving the operation of the whole negotiation and arbitration framework. The pricing principles will also provide some guidance for approaches adopted in industry regimes and help to address concerns that a regulator’s own values will unduly influence decisions relating to the terms and conditions of any access. The fact is that decision makers will be required to have regard to the pricing principles rather than requiring each and every principle to be satisfied. The pricing principles will assist in ensuring what will be a very consistent and transparent regulatory outcome. They will also enhance certainty for investors and access seekers and they will facilitate commercial negotiations between the parties.

As I mentioned, the committee made a second recommendation in its report. That recommendation was that the Senate should pass the bill subject to the abovementioned change being made. Given this additional recommendation, and given that the government has responded in a positive way to the recommendation of the Senate Economics Legislation Committee and has presented the amendments to the bill—and that they are not substantial—we believe that this bill should receive the full support of this House.

Question agreed to.

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