Chris Hayes (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

Speaking on the Trade Practices Amendment (National Access Regime) Bill 2005 prior to the adjournment last night, I indicated that the development of a sound framework that gives certainty to all businesses—both owners and access seekers—involved in using infrastructure for the purpose of moving goods and services is essential to our economy. In most instances the negotiation of access arrangements involves significant information asymmetry, and this information gap can only be reduced through effective and well-structured oversight.

Businesses in south-west Sydney realise the importance of infrastructure that operates efficiently. That is why the Hume Highway’s on-ramps and off-ramps at Ingleburn were a critical issue in my election campaign. The ramps are needed to allow effective and efficient access to Ingleburn’s industrial park so that businesses there are able to move their products to domestic and international markets. The construction of these ramps continues to be one of the biggest concerns for local businesses—both those who are seeking to expand their markets and those who just want to make sure their business has the best opportunity it possibly can in our region. These businesses know it is essential that our road and rail transport networks are operating efficiently and effectively so that they can move their product to other parts of the country and overseas. They know how important it is to move their products through efficiently operating ports so that they can compete on a world scale—and they do.

Given that the Hume Highway is a federally funded highway and the Ingleburn on-ramps and off-ramps cost $13 million, it is regrettable that local businesses and residents were forced to raise $4.5 million to secure this essential piece of infrastructure in our region. Businesses that operate in the Ingleburn industrial estate will be levied about $2 million of that $4.5 million and residents of Campbelltown will be footing the rest of the bill for this critical piece of infrastructure.

I agree that timely, transparent and accountable decisions need to be made on important issues relating to access. Timely decision making adds to the certainty surrounding access arrangements. This bill applies ‘target’ time limits to various decisions under part IIIA. This is an important first step but, quite frankly, after all this time, I think the government has missed an important opportunity to produce a single, clear and pro-competitive legislative framework for infrastructure regulation. The micro-economic reform agenda that led to the development of the national competition policy, the relevant sections of the Trade Practices Act and the competition principles agreement are being left to wither on the vine.

The micro-economic reforms of the Hawke and Keating governments that led to the strong period of growth that this government has inherited are now being squandered as the government fails to introduce the legislative framework that is needed. The efficient operation of our roads, rail, ports, airports, water, electricity and gas assets is essential to lower the input costs of Australian businesses, which ultimately results in Australian businesses being more competitive in global markets and reduces the price for domestic consumers. Efficient infrastructure is a critical part of removing impediments to exports. (Time expired)

Bernie Ripoll (Oxley, Australian Labor Party, Shadow Parliamentary Secretary for Industry, Infrastructure and Industrial Relations) Share this | Link to this | Hansard source

I rise to speak on the Trade Practices Amendment (National Access Regime) Bill 2005. This bill proposes to amend the Trade Practices Act 1974 and its contents are the result of a Productivity Commission review of the national access regime as it relates to the nation’s critical infrastructure. The Productivity Commission’s review of the access regime produced a report with 33 recommendations. This bill is the government’s response to that review and the commission’s recommendations. This bill will amend the Trade Practices Act to clarify the national access regime’s objectives and scope with respect to infrastructure, in particular as it relates to investment, regulation, transparency and accountability.

With that in mind, I would like to express Labor’s support of such an overriding objective and for the changes this bill will bring about. But at the same time I would like to state very strongly that we on this side of the House believe the government has incompetently managed many aspects of the nation’s infrastructure needs. Therefore I urge the House to adopt Labor’s amendment. It states:

“whilst not declining to give the bill a second reading, the House condemns the Government for:

(1)

delaying the introduction of this bill for almost 3 years since the Productivity Commission report was released;

(2)

failing to amend Part IIIA of the Trade Practices Act to include the pricing principles in the bill;

(3)

failing to properly indicate the relationship of this bill to the report of the infrastructure Task Force;

(4)

failing to produce a single, clear and pro-competitive legislative framework for infrastructure regulation; and

(5)

adding to the complexities of the regime and posing further time delays by providing for a merit-based appeal against declaration arbitration outcomes”.

I would say that they are some of the most important issues that this national economy of our faces into the future.

The bill before the House has incorporated the majority of the commission’s recommendations, with a few other recommendations to be dealt with through industry specific legislation. The aspect of the bill which has caused so many problems is the government’s ham-fisted handling of the pricing principles. First the government accepted that the pricing principles should be in the bill, which was a key recommendation of the Productivity Commission. The government had agreed, and so had Labor, that statutory pricing principles should be established in relation to part IIIA, principally to ‘provide guidance for pricing decisions and to contribute to consistent and transparent regulatory outcomes over time as well as certainty for investors and access seekers’. This is an extremely important principle and part of what this bill does and how it should operate.

Then the government said that this was to be done by the minister. Instead of including these pricing principles in the bill, the government said it wanted to have these pricing principles set by the minister alone. These pricing principles were proposed to be determined by the Treasurer and specified in regulation. The Australian Competition and Consumer Commission would then be required to take into account those principles when making a final determination on an access dispute when assessing a proposed new or varied access undertaking or access code. Regulating the pricing principles to a regulation was a significant watering down of the previous position taken by the government.

According to industry sources, Treasury appears to be seeking greater flexibility on the setting of the principles. The decision to not include the pricing principles in part IIIA of the act would have had two consequences: (1) it would have greatly diminished the principle of certainty in the industry, which the industry had been seeking for both existing and future infrastructure investments, and (2) because part IIIA effectively acts as a model access regime for industry specific access regimes, removing principles from part IIIA permits greater divergence across industry specific access regimes rather than a consistent approach, which is clearly needed and wanted by the industry.

Making the pricing principles a matter for ministerial discretion is plain poor policy. We have seen many examples of what the government has done in this regard. I only have to refer to ministerial discretion over funds in AusLink. The government wants to have it both ways, in a sense. While with the Australian Wheat Board it says it has no authority, no knowledge, nothing at all and that it is all up to the bureaucrats, on other issues it says: ‘No, why should we let bureaucrats have any control? It should really all be up to ministerial discretion.’ I say to the government: if you have a principle then you cannot have it both ways. It is one or the other. I think this bill is just another example of how the government treats these types of issues.

Then the Senate Economics Committee called on the government to include the pricing principles in the bill, which it did. Now we have a situation where the government has done a backflip on a backflip. It would make Barnaby very proud. The government has completed a full circle of incompetence and mismanagement on the reform of the Trade Practices Act. The government has backflipped, it has pirouetted, it has done the hokey-pokey. But it did finally use some commonsense and follow Labor’s approach to public policy and it will now enshrine the pricing principles in the bill. While some members on the government side might find this funny and might think this is all a bit of a joke—and some parts of it are certainly funny—I would say that the government really did not know where it was heading on this. It just kept backflipping. That the government is coming full circle on this is just unbelievable. The real tragedy is that industry and the economy really do look to government for certainty that regulation does work. When a government mucks around for four years on very important infrastructure issues, there is undoubtedly an impact on the economy.

Members should be aware that it has taken four very long years for this government to respond to the Productivity Commission’s report on the national access regime through Commonwealth legislation that provides nonowners with access to essential monopoly infrastructure. This is simply incompetence of the highest order. This would come as no surprise to people who follow the debates in the House or people who follow the record of this government. As the Prime Minister keeps proudly saying, he will be judged by his record. On this issue, he will be judged very poorly.

The release of the Prime Minister’s export and infrastructure task force report confirmed what federal Labor has known for a very long time: Australia must have a nationally coordinated approach to the nation’s infrastructure needs. The Prime Minister’s report highlighted underlying weaknesses in Australia’s export infrastructure, which must be addressed to prevent further capacity constraints and bottlenecks developing in export industries. It recommended the need for streamlining and simplifying regulatory processes and for greater cooperation between all levels of government, both of which are federal Labor policy.

More importantly, the report highlighted the Howard government’s complacency and neglect in this critical area of public policy, as there has been no clear vision or political leadership from the Commonwealth. In fact, the Howard government is all at sea over its approach to investment in the critical economic drivers of the nation’s economy and infrastructure needs. I have been saying this for a while, but we cannot rely just on the hard work and reforms carried out in the past by Labor governments. We also need the government of today to put in place for the next generation the much needed regulatory and taxation reforms and future drivers of the economy. It seems that this government is just not up to the task.

The Prime Minister says that Australia’s creaking infrastructure is not a problem and it is not constraining our economic growth. We are told that our infrastructure problems are exaggerated. I do not think they are exaggerated at all. That is certainly not what the facts bear out. If we do not have infrastructure problems, why do we have blackouts, power surges, traffic jams, bottlenecks and water shortages? Why do our ports not deliver to the capacity at which they should be delivering? If we do not have infrastructure problems, why have our export volumes been stagnant for almost the last four years, particularly given the resources boom in this country? Australia is just not performing as it should be. It is not performing at its peak, because it is being held back by a government that refuses to act in a policy sense. If we do not have infrastructure problems, why did the Reserve Bank cite infrastructure bottlenecks as a reason for the 2005 interest rate hike?

I invite all members of this House to look at the facts concerning the state of our infrastructure. I make a couple of important points. When rating our infrastructure, independent report cards—specifically by GHD—do not give As to our assets; in fact, they give a few Bs, mostly Cs and many Ds. This is a bad outcome for Australia’s infrastructure. Under John Howard’s watch, government investment has fallen by one quarter or 25 per cent. It has fallen from 4.8 per cent to 3.6 per cent of our economy. This has caused an estimated $25 billion backlog in infrastructure investment for water, energy and transport infrastructure alone. This is a massive shortfall.

If we do not plug the gap now and do something today through public and private investment, it will cost us an estimated $6.4 billion a year in lost productivity, which year after year will compound—get worse. Australia’s place in the global economy, its ability to perform and maintain the lifestyles we enjoy today will not continue into the future unless governments make hard decisions about regulatory changes, reform and investment in infrastructure. This is not some rant from a Labor politician; it concurs with what every other industry body and many commercial organisations in the country think about this government’s ham-fisted approach to infrastructure. Quite simply, this government has had its eye off the ball. It has been more concerned about its own political hide than the state of economic affairs or infrastructure in this country. It has been looking to the past rather than to the future in terms of where this country is heading. My concern is that, at some point in the not too distant future, we will all feel the impact of opportunities that have been lost and wasted by this government while it revels in these golden economic times.

Respected organisations and people throughout the country have recognised the need for greater attention to be paid to developing the productivity capacity of Australia’s economy with investment in its infrastructure. Here are just a few comments that condemn the Howard government for its appalling record of investment in our nation’s critical infrastructure: regional Australia’s ‘needs in relation to infrastructure are simply not being met’ and Australia needs a national infrastructure advisory group to ‘offer a coordinated approach to identifying infrastructure projects of national significance’—not of National Party significance, not of Liberal Party significance and not of significance based on the size of your electorate, as we heard yesterday from one of the Liberal ministers, but based on national priorities, on what is in the national interest—‘[to] ensure that relevant projects are prioritised according to their ability to provide connectivity between regions and national and global markets’. This quote is from the Howard government’s Regional Business Development Analysis Panel report July 2003. If only the government would listen to some of its own reports and advice, I think we would be in much better shape today.

The Howard government should undertake ‘better infrastructure planning, development and coordination’. This would ‘lay the foundations for sustained improvements in prosperity and opportunity for this and future generations of Australia’. Who said that? That was said not by a Labor politician but by the Australian Industry Group in a May 2005 media release. Another quote reads that Australia needs:

... an advisory and consultative institution for national infrastructure with expert investor and consumer representation to point the way for long-term planning and delivery free from political interference.

Who said that? That was said not by a Labor politician but by the Australian Council for Infrastructure Development in an April 2005 media release. Another quote states that Australia needs:

... a National Infrastructure Advisory Council that would greatly dilute the opportunity for parochial and short-term outcomes that drain resources and distract attention from the national interest.

Also:

A National Infrastructure Advisory Council could achieve positive outcomes at the national level by improving the efficiency of existing infrastructure; increasing the role of the private sector in delivering infrastructure; and fostering cooperation between the nation’s infrastructure shareholders.

Who said that? That was said not by a Labor politician but by Engineers Australia in an April 2005 media release. Why are all these organisations, which are well respected across this country, saying these things? They are being said because they are true and plain for everybody to see—but this government turns a blind eye. Another quote reads:

Capacity constraints in rail and port infrastructure have begun to hamper export growth.

Who said that? It was said not by a Labor politician but by the Reserve Bank of Australia in a February 2005 statement on monetary policy. If people look at the financial papers today, they will begin to see the impact of what can happen when markets turn, particularly with what is being called a ‘glut’ in iron and steel across the world mainly from China. Suddenly the share prices fall and then the revenues coming into this country will fall. And what do we do about our own efficiencies? We do nothing—nothing to make an actual difference. Also:

Supply constraints and transport bottlenecks seem to have held back commodity exports.

Again you only have to look at the financial pages of this week and particularly of today to see some of the evidence of this. Who made that statement? That was said by the Organisation for Economic Development, the OECD no less, in its 77th Economic Outlook dated May 2005. Here is another in the litany of quotes. The 2005 federal budget has failed to invest in ‘key areas of infrastructure which, in many cases, are accidents waiting to happen following years of neglect’. Who said that? Was it said by a Labor politician? No. It was said by former leader of the Liberal Party Dr John Hewson. He said that in May 2005. Clearly, he is just being honest about the state of this economy and the infrastructure in Australia. Another quote:

The most telling evidence that Australia has a disjointed approach to infrastructure development is the simple fact that no-one can readily refer you to a point of reference that accurately defines who is doing what, what levels of expenditure are being committed at a government level and what comprises the national infrastructure agenda.

Simply, the government has no infrastructure agenda. It has an agenda on getting itself re-elected—that is plain to see—but no infrastructure agenda. Who said that? Was it a Labor politician who said that? No, it was the Hon. Shane Stone QC, former Liberal Chief Minister of the Northern Territory, in June 2004. I will continue because I think these are important to have on the record:

Capacity constraints in terms of infrastructure must be dealt with.

Who said they must be dealt with? It was the Hon. Mark Vaile, Deputy Prime Minister and Minister for Trade, in February 2005. Another quote:

We need a comprehensive national infrastructure reform agenda, supported by processes and structures that ensure greater accountability between governments on infrastructure planning.

We clearly need a new approach. Australia as a whole has no plan, no coordinated policy, to make sure the country’s infrastructure keeps pace with the economy and meets our higher standards of living. Another quote:

The result is a system in widespread disrepair. No-one else can resolve these strategic and policy issues but government. It is government’s job to get resolution and direction without delay.

Who said that? It was no less than the Business Council of Australia in a media release in March 2005. I will continue:

The minerals sector looks forward to a good faith commitment by all levels of government to a nationally consistent and integrated approach to export infrastructure.

That was from the Minerals Council of Australia, in a media release in June 2005. I could go on. I could find hundreds of examples of organisations across this country—believe it or not, even a few Liberal ministers and members of parliament—who would put on the record the need for a nationally coordinated strategic approach, a plan for this country. But the government does not act. That is the great disappointment.

In short, Labor believes that under John Howard’s tenure as Prime Minister the nation’s infrastructure needs have reached crisis point. The Howard government has overseen a period of national government that is characterised not only by deceit but also by neglect. In contrast to the government, Labor understands that Australia needs to develop an investment strategy to deal with the growing crisis in the nation’s critical economic infrastructure. The Howard government lacks the leadership, vision and political will to create a policy that will generate growth, efficiency and productivity in the Australian economy. Australia is at the crossroads. Unless the federal government is committed to creating a long-term nationally coordinated approach, we are heading for troubled waters.

If the Beattie government can deliver a 20-year $55 billion infrastructure plan for south-east Queensland alone, why can’t the federal government create a similar vision and plan for our nation? The short answer is that there is just no political will to do so. The Howard government is indifferent to Australia’s infrastructure needs, whereas federal Labor is ready to meet the challenge ahead. No single government authority or industry lobby group knows the true cost of building the infrastructure that would drive our economy forward and upward, either over the short or long term. This is a problem.

This would not be the case under Labor. Our Infrastructure Australia policy provides the perfect vehicle to create a coordinated vision for our nationally significant infrastructure projects. It will enable analysis of our long-term infrastructure needs, the best funding models and the measurement of the returns to the Australian economy. Infrastructure Australia will be charged with the responsibility for developing a strategic blueprint for our nation’s infrastructure needs and facilitating its implementation in partnership—and this is key—with the states, territories, local government and the private sector. It is now time for the Commonwealth government to back Labor’s Infrastructure Australia policy. This is good sensible policy. If nothing else, the amendment bill that we are debating today highlights that need. We cannot afford to wait another four years for this government to act. I do not believe the government will be here in four years time, because Labor will win in two years. We will certainly do so on infrastructure. (Time expired)

Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Primary Industries, Resources, Forestry and Tourism) Share this | Link to this | Hansard source

I rise this morning to address changes to the Trade Practices Amendment (National Access Regime) Bill 2005, which I believe are exceptionally important. The national access regime has considerable implications for Australia’s export performance. I am dismayed, because of the importance of this bill, by the short list of government speakers. Clearly, by their failure to address this bill, they have made a clear statement about their personal views about the importance of infrastructure in Australia.

I also suggest to the House that this bill is exceptionally important to my shadow ministry portfolios given the recent events involving BHP Billiton’s Mount Newman railway line and Fortescue Metals Group. However, I will firstly address more generally the purpose and impact of this national regime, commonly referred to as part IIIA of the Trade Practices Act. Obviously this is a complex, controversial and sensitive area of economic regulation. It covers infrastructure assets worth more than $50 billion and it is exceptionally important to Australia’s export performance, especially given the huge economic growth that is currently occurring in China. I would also suggest that it is exceptionally important because of the potential for huge economic growth in India, which Australia also wants to latch onto for the purposes of its own economic prosperity.

The national access regulation is still in its infancy in Australia. Access regulation attempts to address concerns about barriers to competition through essential infrastructure services with natural monopoly characteristics, and this requires government attention—that is, where it is not economically viable to duplicate the service, we have to work out a way of guaranteeing access for the purpose of maximising our export potential as a nation. Without such regulation, service providers might deny access to their services or charge monopoly prices to access them, which would be costly for the community and a disadvantage to Australia as a nation.

The introduction of an access regime arose out of an agreement by the Commonwealth and states in 1995 following the Hilmer report into national competition policy in 1993. The Productivity Commission concluded that the retention of an access regime to provide businesses with an avenue to negotiate access to such services on reasonable terms and conditions is warranted. It is in Australia’s national interest. Given the scale and importance of infrastructure investment, there are clear benefits from improving the effectiveness of this regime. The commission has described the focus of the regime as that of infrastructure services which are considered essential input to services provided in other upstream or downstream markets and which involve a natural monopoly technology. This means that it would be unlikely to be profitable or efficient for more than one firm to provide the service.

Outside the generic national access regime there are a host of industry regimes, many of which are governed by state and territory legislation. Business may access infrastructure through an undertaking by the service provider or a service can be declared by the National Competition Council. Undertakings by the service provider are registered through the Australian Competition and Consumer Commission. The NCC also assesses whether existing regimes are effective or not, and that assessment is exceptionally important. A service may be declared according to several criteria. These include: firstly, that access would promote competition in another market; secondly, that it would be uneconomic to develop a duplicate service; thirdly, the service is nationally significant; and, fourthly, the service is not already covered by an effective access regime—all very important criteria.

Under the national regime, the National Competition Council is responsible for assessing which services should be declared—that is exceptionally important. The final responsibility for the declaration of a service lies with the state premiers or the Commonwealth Treasurer. We, therefore, require cooperation between the Commonwealth, state and territory governments to make this system work in Australia’s best interests.

The Australian Competition and Consumer Commission then arbitrates on disputes over declared services. The regime—and I stress this—is not and cannot be a substitute for proper commercial negotiations in good faith. Its role is to facilitate and provide incentives for negotiation between service providers and those seeking access to the service. One of the important issues in access regulation is the potential it has to impact on private sector investment in infrastructure. It is therefore critical—and this is a challenge to the government with respect to some matters currently before the Treasurer—that such regulation does not act as a disincentive to investment. This concern is heightened at a time of national debate on deficiencies in Australia’s infrastructure. A number of members of the House have made contributions on that very issue during this debate.

I also stress that, in assessing infrastructure, the requirement of governments—be they state, territory or the Commonwealth of any political persuasion—is to make the right infrastructure decisions to determine what we need at a given point in time, rather than to willy-nilly select projects on the basis of how they might suit our own political agendas. That fault has lain with both sides of the House from time to time. We have to learn from our past mistakes, because some of our current infrastructure backlogs are related to our making political mistakes rather than our using appropriate criteria to select the right infrastructure that has to be prioritised.

That in turn takes me to the role of the Productivity Commission. I note that the Productivity Commission has come up with several proposals intended to ensure that regulation in this area does not deter private sector investment in essential services. Many of those proposals have been taken up by the government under these new amendments. These include but are not limited to: firstly, inserting an objects clause and pricing principles to guide regulators and industry—which is pretty fundamental; secondly, ensuring that access is only mandated where it promotes a substantial increase in competition—obviously, that has to be a driving force in determining these matters; and, thirdly, improving the administrative efficiency and transparency of the regulatory regime.

The opposition supports the Productivity Commission’s recommendations for the inclusion of a threshold to ensure that the regime is only applied in cases involving projects of national significance. Let us concentrate on the big issues that really have a major impact on our export performance. The commission has accordingly recommended that access declarations be granted only where the expected increase in competition in an upstream or downstream market is not trivial under criteria to promote competition.

The opposition would also support new arbitration and appeal procedures, including information disclosure requirements for both the access provider and those seeking access. Under current legislation, there is no guidance on prices for those negotiating infrastructure access with service providers. This has concerned the opposition because we have a belief that it may lead to significant uncertainty for investors. We all acknowledge the importance of certainty in attracting and facilitating private sector investment in Australia. Therefore, declaring pricing principles to regulation would have given the Treasurer the capacity to amend or withdraw them. Opening up discretion over prices in sensitive negotiations over valuable infrastructure is unlikely to foster transparency in a fraught area of economic regulation. Enshrining the principles in this bill provides the appropriate certainty for long-term investment in projects which carry significant commercial risk.

I underline the importance of this. We live in a global market and, given the importance of the resource sector at the moment, we have enough difficulties with the shortage of skilled labour in Australia being a barrier to investment to require us to go out of our way to get this system of regulation right. We have to guarantee that we have a framework in Australia that attracts investment. Once you lose investment, it is very hard to get it back over time. The resource sector is a very competitive sector, with a range of new opportunities opening up throughout the world in important areas such as iron ore.

I take the House to the Senate Economics Legislation Committee. The issues I have raised today were in evidence presented to the Senate committee of inquiry on the Trade Practices Amendment (National Access Regime) Bill 2005, which the opposition called for. In response to these concerns, the government has now caved in and agreed to more amendments to its own bill so that these pricing principles will now be included in the legislation. The opposition welcomes the introduction of pricing principles because they are about giving greater certainty to companies investing in infrastructure services.

The opposition has circulated an amendment to the pricing principles, in the name of the member for Hunter, which is different from that of the government. While the government considers regulatory risk as part of the pricing principles, the opposition believes this concept is not sufficiently precise to warrant inclusion in the formal pricing principles per se. That is important, because the question of investor certainty raised by the issue of pricing goes to the heart of the dilemma posed by this type of economic regulation.

In that context there is currently a very good example in the mining industry which illustrates the complexities of this regime and our requirement to not only get the legislation right on this occasion but also start making some important decisions about increased investment export opportunities in Australia in the foreseeable future.

I turn to the Fortescue Metals Group, which has sought and finally obtained a draft declaration from the National Competition Council to access BHP Billiton’s Mount Newman railway in north-west Australia, which is a highly efficient integrated operation. Interestingly, this is only the second application of its kind. I recall a similar application which was challenged in the Federal Court. It involved a request by Robe River to gain access to Hamersley’s iron ore rail operation. The court on that occasion found in favour of Hamersley on the basis that the rail line was part of the company’s production process; therefore, third parties should not have a right of access.

History will show that Robe River filed an appeal. But the matter was settled in 2000 before the appeal commenced because of other commercial outcomes, which effectively meant that Robe River became part of a larger mining operation and the question of access and the difficulties surrounding access disappeared. So the issue of a third party getting access to a railway line, which the Federal Court has so far determined to be a production process, remains very much open to debate to this day.

Having said that, access to infrastructure is a critical part of encouraging competition. We require competition in Australia. It is a highly competitive world in the resource sector. We have to make sure that we have a variety of operators out there doing the best they can for the purposes of selling our resource at the best possible price. We also have to balance the need to ensure that both competition and private sector infrastructure are made as easy as possible because it is a very difficult question.

BHP Billiton argues that it is already facing uncertainty, given the current case involving Fortescue. I think it is stating the obvious to say that at the moment Australia is living off a major resources boom. You have only to look at the trade figures and consider the performance of, for example, Queensland and Western Australia and the size of the state coffers with respect to the impact of the resource sector at this point.

Interestingly, BHP has foreshadowed a tripling of its iron ore exports in response to the massive demand for raw materials from China. That requires significant planning, because we are about meeting a large increase in production, and the capacity required to service it must be in place. Also, as I have indicated, it is important not just for our states and territories but for the national economy that we get this right. The extracted minerals are not the only item in demand because of this growth in export potential. What is critical to our competitive edge in this area is technology and infrastructure because it is about getting the ore to port for the purposes of shipping it overseas. The technological demands of minerals prospecting and processing are rising. One of the untold stories with respect to that is that mining services are now worth $2.3 billion a year in exports to Australia. It is not just about exporting raw products and in some instances downstream processing with respect to the aluminium industry. We as a nation are actually improving our performance, and appropriately so, on the export of mining services, and I encourage the industry to do more on this front.

We also have high hopes for streamlining mining processes and cutting costs, as evidenced, for example, by Rio Tinto’s HIsmelt technology—an example of where Australia’s future competitive strengths lie and on which we as a nation depend. Therefore, technologically efficient processes are vital to our export success. Currently, we have highly efficient export activities benefiting the private sector, investors, government and the general community. Access to infrastructure therefore must be available, but it is a question of how you handle that access. More than $2 billion was spent by BHP Billiton on its Mount Newman railway. About $100 million is spent annually maintaining what is the most advanced heavy haulage railway in the world. It is a state-of-the-art system, with sensors detecting the track’s integrity and monitoring the heat of ball bearings and the general efficiency of its operation. There is a careful sequencing of the automatic carriages so that they arrive in time for processing ahead of their loading onto the ship. If it goes wrong, it is expensive. Every breakdown costs $2 million. A derailment lasting 48 hours costs $50 million. We are not talking about small bickies.

Currently, 110 million tonnes a year of iron ore are being hauled. This will be expanded to 129 million tonnes during 2007. Given the technological investment and maintenance costs, BHP do not want third party trains being operated on their railway. But they are appropriately open to negotiating the carriage of Fortescue’s iron ore in BHP carriages—for example, an agreement on haulage that protects their seamless operations. BHP also argue that the relevant part of the Trade Practices Act, under which third parties gain access—part IIIA—was designed to promote the domestic market, not exports. This is apparently underlined by the Prime Minister’s infrastructure task force.

I am not in favour of the National Competition Council’s ruling. I think it endangers a massive investment by BHP. Having said that, I believe it is in BHP’s commercial interest to resolve this matter. Therefore, I have called for an arbitration mechanism outside the ACCC to get the parties to the table.

Haulage should be determined at an appropriate commercial price. This means it is the responsibility of the Treasurer to get it right and work out how he puts in place a process requiring BHP to negotiate in good faith to guarantee Fortescue haulage opportunities. If those negotiations fail, there have to be opportunities under part IIIA of the Trade Practices Act to try and work out how it is resolved with a third party. Alternatively, there may be an option under the state regime. But firstly the Treasurer should be saying in very blunt terms, ‘We recognise and respect your right, Fortescue, to seek haulage access.’ Then there should be a requirement for commercial negotiations between BHP Billiton and interested parties. If those do not succeed, we put in place arbitration proceedings with defined time lines.

This is not dissimilar to what has occurred on other rail tracks in Australia, such as with the Australian Rail Track Corporation. In this case, the government still owns the track, but everything above the track is up for negotiation in terms of access. It is a process to determine haulage rates based on competition and fair commercial outcomes. It is also important to keep in mind that resource developments often involve a large gap between a stated proposal to mine and eventual exports. Certainty is required. Sometimes we have seen so-called potential miners play a game for the purpose of putting pressure on a competitor to buy them out at an inflated price. The opposition does not support those games.

Fortescue has clearly said publicly that it is committed to export. It is therefore entitled to haulage access. Ultimately, there is a requirement for Fortescue and BHP Billiton to negotiate expeditiously and in good faith a commercial outcome. This means there has to be a commitment to bring the mine on sooner rather than later. Pressure needs to be applied to all parties to resolve this issue in Australia’s best interests. But however this matter is resolved—because it must be resolved—it is critical that highly efficient export operations are not jeopardised. The bottom line is that Australia must emerge from this resource boom with a proper process of competition in terms of the infrastructure in place. We cannot make the mistakes of the 1970s yet again, when we last came out of a resource boom. Therefore, the last thing we should be doing is endangering world renowned, seamless export operations. I raise these issues and commend the bill to the House. (Time expired)

John Murphy (Lowe, Australian Labor Party, Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

The Trade Practices Amendment (National Access Regime) Bill 2005 is one of a range of bills introduced by the government which make fundamental amendments to the Trade Practices Act 1974. As members of this House well know, other bills before the House that would seek to amend the principal act include the Trade Practices Legislation Amendment Bill (No. 1) 2005 and the Trade Practices Amendment (Personal Injuries and Death) Bill 2004. I specifically refer to the Trade Practices Legislation Amendment Bill (No. 1) 2005, which I will refer to as the TPA1 bill. This bill was introduced into the House on 17 February last year and was passed on 10 March last year. Also on 10 March 2005 the TPA1 bill was introduced into the Senate, where the bill remained until returning to this House late last year.

The reason I bring this legislative history to the House’s attention this morning is that, for reasons which I hope will become clear in a moment, there is a direct and fundamental policy connection between the national access regime bill and the TPA1 Bill. What is the purpose of the national access regime bill? The Parliamentary Library’s Bills Digest No. 186 of 2004-05 notes that the purpose of the national access regime bill is to amend:

Part IIIA of the (TPA) to implement many of the recommendations that were made by the Productivity Commission in its 2001 Review of the National Access Regime.

As members of the House are aware, the recommendations in the Productivity Commission’s 2001 review concern part IIIA of the Trade Practices Act, which was a new part of the act inserted as a result of the Hilmer report. The Hilmer report, in turn, deals with the access by consumers to what are described as essential services in those markets which operate under what is called ‘conditions of natural monopoly’.

The bill before the House this morning deals with the Commonwealth government’s commitment to participate in honouring the recommendations of the Hilmer report. In particular, the reforms deal, culminating in the competition principles agreement, and the CPA in turn prescribe the principles of the national access regime. It is an open question as to what industries operate as a ‘natural monopoly’. Examples that readily spring to mind and that are cited in the Bills Digest No. 186 include essential facilities such as:

electricity transmission grids, telecommunication networks, rail tracks, major pipelines, ports and airports ...

I note in passing the sale of telecommunications and other airport facilities and the disastrous manner in which the Howard government has administered these sales to the eternal detriment of the Australian consumer, the taxpayer, and, more importantly, the people I represent in my electorate of Lowe.

Highly profitable cash flow entities such as Telstra and the designated international airports of Australia have been flogged, with no attempt to solve the environmental and/or service problems, such as regional telephony services in the case of Telstra or, dare I mention it, aircraft noise, expansion and environmental problems in the case of Sydney airport. You have heard me speak on this issue ad nauseam since I was elected to this House more than seven years ago. It is scandalous that, at this very moment, Sydney airport is being developed as a great shopping centre and a car park. I do not know how often I have said it but, as an airport, it operates very well as a shopping centre and a car park. It is outrageous that this comes at the expense of the people that I represent in that every day they are bombarded with aircraft noise and that the government has not honoured its commitments in relation to the long-term operating plan to get fair noise distribution over the inner west of Sydney and to do something to make sure that the second airport for Sydney is built in the foreseeable future to take the pressure off Kingsford Smith airport.

Sydney airport, Sydney’s Ml motorway, M4 motorway, M5 motorway and a host of other infrastructure entities are all owned either directly by Macquarie Bank or by one of its subsidiaries or consortium partners. I question how a national access regime may operate at all in such a profit only and dividend driven psychosis that pervades every decision of the big end of town, which Macquarie Bank represents. I question how the Australian Competition and Consumer Commission may ever administer the national access regime where the god of profit dictates with an iron fist against each and every other responsibility—duty to environmental protection, duty to provide equitable services for all Australians, metropolitan or country, the hearing impaired or people with financial or distance limited access issues. These are the forgotten and marginalised people in the tyranny of utilitarianism.

The issue of marginalisation brings me to the connection I referred to at the beginning of this speech between this national access bill and the Trade Practices Legislation Amendment Bill (No. 1) 2005. The connection is most readily seen in an industry which gets no mention in the context of the national access regime, nor any mention at all. The real politic of this silence is due not to its irrelevance but to the fear that is struck into the hearts of others in this House who dare to mention this forbidden topic. What is the forbidden topic that I refer to? I have mentioned it on more than one occasion, and I notice the Chief Opposition Whip, the member for Chifley, is here to hear this contribution and he has heard me on this topic before. It is the industry domination of two media companies who have a stranglehold on commercial media ownership in Australia. I am obviously referring to PBL and News Ltd. I have spoken many times about this and my concerns in relation to the government’s agenda to concentrate media ownership in Australia.

Let me be under no illusion. Media ownership in Australia is already heavily concentrated. The influence of Australia’s two biggest media companies is such that no government or opposition would win an election with both companies campaigning against it. That is a fact. Some might ask what this has to do with the bill before the House today. I will tell you: the answer is everything. The national access regime is designed to supplement commercial negotiation where an individual or body corporate is effectively denied access to a declared service. What happens when the media is so monopolised by one or two companies that competition is for all intents and purposes effectively denied?

Much has been written in recent times about the increased influence of the internet as the sole or primary source of news and information available to the Australian public. Last year I read comments which were published in the Australian Financial Review attributed to the ACCC Chairman, Mr Graeme Samuel. I will read you inter alia what Mr Samuel said in a speech:

... “increasing competition in news outlets—including web log sites—could allay fears that diversity of news and information could be harmed in media deregulation.” He cited Rupert Murdoch’s comment that “young Americans now looked first to the Internet for news, second to cable TV, third to free-to-air television, and only fourth to newspapers.”

“As this occurs and you have a multiplicity of news and information, the prospect of domination by a duopoly in Australia may diminish”.

Mr Deputy Speaker, you know that is rubbish. I would like to restate the words of a letter that I wrote—one of a number of letters—to the Australian Financial Review. This one is dated 4 October, and I said:

Isn’t Mr Samuel aware that Internet penetration in Australia is low and that most Australians, overwhelmingly, still get their news and information from traditional media, that is, newspapers, television and radio stations?

I asked a further question in that letter:

Isn’t Mr Samuel aware that Mr Murdoch has a very great interest in any changes to Australia’s cross-media ownership laws?

Unlike other natural monopolies, regulating and protecting the public interest in the media duopoly is not simply governed by one law, nor even by one government agency. I fear that that split is deliberate. Media ownership laws that protect public interest items are prescribed in sections 38A, 51 and 53 to 56 of the Broadcasting Services Act 1992. These functions are performed not by the ACCC but by the newly formed Australian Communications and Media Authority, or ACMA, as I will refer to them. Foreign ownership regulations are prescribed in sections 60, 61 and 109. However, the ACCC does have a role in the regulation of the media industry in the field of merger provisions under section 50(1) of the TPA. Section 50 deals with the effect of a merger of any corporation, including media interests, which would have the effect of substantially lessening competition in a market. A non-exclusive list of factors for consideration in what may result in lessening competition is prescribed in section 50(3).

What is in issue here is the duopoly of commercial media ownership that exists in Australia. Current high-profile and very expensive litigation between Kerry Stokes’s Channel 7 and Telstra, News Ltd and PBL highlight at the moment what lengths of collusion and corporate warfare that duopoly is prepared to go through in order to control media in Australia. We saw this played out in public in the late 1990s, when News almost destroyed elite rugby league in Australia in its pursuit of owning a majority stake in the game in order to sell pay television subscriptions. To destroy Kerry Stokes and C7 you had to make sure the channel would not broadcast rugby league or AFL.

All this leads to the conclusion that there are at least two government agencies who have statutory responsibilities over the media duopoly that effectively operates within a monopolistic regime. Both the ACMA and the ACCC collectively have different but closely related responsibilities to ensure that any merger or other conduct by an Australian or foreign corporation will not lessen or substantially lessen competition and choice in media in Australia. That is the legislators intent with the original 1974 legislation, the Trade Practices Act—an act I am happy to say is one of the lasting legacies of the Whitlam Labor government. The wisdom of that legislation is only made more profound by the deliberate tampering we see here today by the government seeking to reduce the efficacy of this legislation.

It is disturbing to me, and I am sure to many Australians, to hear the words of the ACCC Chairman, Mr Samuel, who now acts in his new found role of salesperson for the big media moguls. Does the chairman think the public is stupid when he seriously suggests that internet media in Australia is more influential as a preferred choice of media than newspapers, radio and television? If that is the case, then I invite Mr James Packer and Mr Murdoch to sell some of their interests in traditional media—namely, newspapers, magazines and both free-to-air and monopoly pay television. What sophistry to purport that the game is up for these ‘old-iron’ media formats as the internet is sweeping us all away! That is nonsense.

I believe the ACCC needs to do its homework. It should be clear to the ACCC that, in Australia, PBL and News Ltd have a stranglehold on ownership and control of newspapers, magazines and free-to-air and pay television and will have for many decades to come. Indeed, independent media players providing news services on the internet will never match the mainstream influence of newspapers, radio and television. It is a fact that every day most Australians turn on a radio station, open a newspaper and watch a free-to-air television broadcast. That gives them the news and information that they need every day and, ultimately, will affect and influence the way they vote.

Whether old or new media prevails, media diversity relies on diversity of ownership. He who pays the piper calls the tune. So why is the government so hell-bent on concentrating media ownership in Australia as it proposes? The iron-fisted control over print and television exercised by our two biggest media companies is apparently still not enough. The companies will obviously try to extend their influence to dominate the new media sources such as news sites on the internet. I refer to a news article published in one of News Ltd’s newspapers, the Daily Telegraph, as late as 6 October 2005, entitled ‘News spreads its net wide’:

Rupert Murdoch’s global media giant News Corp has gathered up a group of websites attractive to young men worldwide as it pursues its goal to become a major force in cyberspace. Mr Murdoch, News Corps Chairman and Chief Executive Officer, is steaming ahead with plans to dominate the internet, with his full strategy for conquering cyberspace expected to be announced soon.

I say to Mr Samuel, the guardian of anticompetitive practices in Australia, that not even the internet will be spared total domination by our two biggest media companies. Mr Samuel, Australians will not go rushing to the internet to find an alternative view that has a real capacity to provide real competition to our two biggest media companies.

Outside the two biggest media companies, where do you turn for alternative views in our society? Thankfully, we have the public broadcaster, the ABC, but they continually get flogged by the government for allegedly being biased and are being starved of additional funds. It will be very interesting to see how the outgoing managing director of our public broadcaster, Mr Balding, goes in his latest triennial funding submission to the government. He will attempt to secure something like another $38 million for the ABC’s budget over the next three years—I would hate to be hanging by the eyebrows for that amount of money.

What confidence can we have in the watchdog of the public interest, the ACCC, that we will not have mergers or other corporate conduct that results in Australia’s media simply being further and further dominated by only two owners? Politically, this government is hell-bent on surrendering to the two biggest players. Worryingly, the ACCC would have us believe that the internet will save the day in terms of offering people real choice and real competition to those media giants. Real competition within Australia’s media industry is already nonexistent, as Mr Kerry Stokes of Channel 7 is discovering in the Federal Court at the moment.

If the government is serious about honouring the laws which exist only on paper regarding merger acquisition laws and the preservation of competition in all industries including media, then it will amend the Trade Practices Act and the Broadcasting Services Act to ensure that these laws do not become purpose-built for two media magnates who so dominate our democracy.

I urge the House to put an end to this worship once and for all. I exhort the government to do the honourable thing, fulfil its duty as trustee of Australia’s democracy and put the interests of Australia first. I await with great interest the media reform paper which the Minister for Communications, Information Technology and the Arts, Senator Helen Coonan, is expected to release in the near future to find out the real intentions of the government in relation to the media landscape that will exist when the government amends the Broadcasting Services Amendment (Media Ownership) Act.

People are very concerned about this because the negotiations have been and are being conducted by stealth. All the reports that one gets outside the two biggest media companies that have some objectivity of what is really happening are that the government—in particular, the Prime Minister and the minister for communications—seem to think that the two biggest media companies have to sort out their differences and ultimately report back to the government, who will provide them with a bill that will achieve what they want. That is a very serious threat to the public interest. That is a very serious threat to the future of our democracy and I want to see something happen with this new bill to make sure that we get new players, whether they are from overseas or Australia. For example, I have spoken before about how John Singleton wanted to have a free-to-air, 100 per cent Australian content television licence—he is denied that. The government are not even going to allow a fourth free-to-air television licence. They are not doing anything about multichannelling; they are not promoting datacasting. Why? Because it is a threat to the two biggest media companies, and that has to stop.

Julie Owens (Parramatta, Australian Labor Party) Share this | Link to this | Hansard source

The Trade Practices Amendment (National Access Regime) Bill 2005 finally follows on from the findings of the Productivity Commission Review of the national access regime. Its purpose is quite simple. It is to improve conditions that underpin investment in significant national infrastructure—that is, rail lines, gas pipelines, electricity, water infrastructure, ports and airports. It is about making sure that companies, organisations and owners of national infrastructure that have natural monopoly positions are not able to use those monopoly characteristics to deny access to others but also to ensure that they operate in a regulatory environment that is sufficiently known in advance and understood to make realistic investment decisions for the future.

Today is a good day to talk about infrastructure. In fact, so overdue is this debate that any day would be a good day to talk about it. Out there in the world, where people in business and families deal daily with the consequences of inaction in this place, there have been daily calls for the government to address our crumbling infrastructure. In the streets and lounge rooms of my electorate in Parramatta, people know that we have a problem in this country, that we as a nation are failing to invest in the foundations that underpin our growth in business and in our families. For most of them, they are not talking about gas pipelines or ports in the first instance, but the principles are the same. It is astonishing how accurately the general population reads the problem—that this country is failing to invest in the fundamentals that underpin good lives and good business. It is not only failing to repair and renew but also failing to respond to new opportunities and needs as they arise.

People tend to talk about the infrastructure problem in terms of their own lives, principally in terms of our ailing education infrastructure and our health infrastructure. They talk about water, roads and public transport. They talk about soft infrastructure, community networks, child care and aged care infrastructure and skills, and they talk about the processes—for example, the industrial relations infrastructure that delivers certainty and security. They certainly know about the word ‘infrastructure’ and there is very real concern out there at all levels of our community that we are failing to invest appropriately. There is a clear, undeniable need for this country to invest in the foundations on which businesses, individuals and families build their lives.

In this bill today we are talking about one type of infrastructure, and a subset of that. We are talking about the large national physical infrastructure—rail lines, gas pipelines, electricity et cetera. But it is interesting to me that, even when we talk about that kind of infrastructure at the moment, the word ‘crumbling’ quite often comes to mind and comes out of the mouths of people talking about it. It seems that in Australia at the moment the words ‘crumbling’ and ‘infrastructure’ go together. This morning, just to test my theory, I ‘Googled’ the words ‘crumbling infrastructure’ and found 11,700 Australian references. I even found a website where a competition was being run for the best slogan for a bumper sticker that spread the message that our decaying and crumbling infrastructure is in desperate need of investment, otherwise future generations will inherit infrastructure far worse than we had—

Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

That’s a very long slogan.

Julie Owens (Parramatta, Australian Labor Party) Share this | Link to this | Hansard source

No, that was the point that had to be made in the slogan. The best slogan—my personal favourite—was ‘Infrastructure—big word, big issue’.

Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

Not bad.

Julie Owens (Parramatta, Australian Labor Party) Share this | Link to this | Hansard source

Not bad. ‘Australian infrastructure—invest to inherit or delay to decay’. These are very wise words, but I think it is a problem in this parliament when we have people calling for suggestions for bumper stickers well ahead of the government acting on what is a very well known problem in this nation.

While the large scale infrastructure such as gas pipelines is not generally discussed in detail in lounge rooms, it certainly has been discussed at great length in the board room and among industry advocates in this country. On 11 separate occasions in the last four years we have seen the Reserve Bank refer to infrastructure capacity constraints as having a serious negative impact on our national economy. In the last 12 months we have seen the Reserve Bank, the Australian Competition and Consumer Commission, the OECD and the CEDA all voice their dissatisfaction on the state of our infrastructure and on the government’s inaction.

Recent analysis by the Business Council of Australia shows that there is a $90 billion shortfall in Australia’s infrastructure, which needs to be addressed immediately to prevent further capacity constraints and bottlenecks such as those we have been experiencing in critical industries. Our national freight industry, which moves around $2.2 billion tonnes of freight around the country every year by road, rail and sea, has been bottlenecked for years due to prolonged periods of underinvestment.

The national access regime bill is part of ensuring conditions that are conducive to investment in this crumbling infrastructure. All the screaming for the last four of five years has only been going on because this government has failed to act. The government’s job in the long run is to make sure these problems do not appear in the first place. It is evident in a country the size of Australia that infrastructure will always be a major issue, particularly the large physical infrastructure, and it is the government’s job to look ahead and ease the country along, not follow along after five years of constant arguing by our business community.

The national access regime was introduced back in 1995 as part of the national competition policy. The regime addressed natural monopolies in our national infrastructure, where the owner of nationally significant infrastructure had a natural monopoly. It covered access to national infrastructure by a third party where it is not really feasible to duplicate that large infrastructure. It was all about ensuring that owners of infrastructure where a natural monopoly exists could not put up barriers for third parties. For most of us, telecommunications is the most obvious example, although it is not covered by this bill. Again, people in the lounge rooms around Australia are familiar with the effects on both price and service where large-scale infrastructure is not openly available to competitors. The issue equally applies to the rail lines, gas pipelines, electricity and water infrastructure covered in this bill.

There are two parts to the national access regime. The first, agreed between state and federal levels of government, sets out principles underpinning access by third parties to nationally significant infrastructure. The second is in part IIIA of the Trade Practices Act 1974 and the reforms of relevance today are concerned with it.

Back in 1995, part IIIA put in place a legal regime to facilitate user access to services provided by essential facilities that operate as natural monopolies. It sought to ensure that, where infrastructure had a natural monopoly, it could not become a barrier to competition. Part IIIA of the act sets out three paths to gaining access to an eligible infrastructure service: (1) having a service ‘declared’ by the National Competition Council where an individual or business has been denied access to a facility, (2) using an existing state or territory access regime which has been certified as effective, and (3) seeking access under the terms and conditions specified in an undertaking given by the service provider and accepted by the ACCC.

The government commissioned a review of the national access regime in October 2000, some five years later. It was undertaken by the Productivity Commission and delivered in September 2001 but not released until a year later, in September 2002. That was in spite of its importance. The government then sat on the review for another 2½ years, until February 2004. It was finally put on the Notice Paper in the middle of last year, where it languished for months. Again it was a delay of nearly five years, in spite of constant calls by some of the most respected organisations in Australia for urgent action on our crumbling infrastructure.

All too often with this government we see a complete failure to act until the problem has manifested sufficiently for there to be loud calls for action. This government does not lead from the front—far from it. I am undecided whether it is incompetence or politics. If you solve the problem before anyone notices it, you do not get many votes for doing it. I have come to suspect that this government is very much about waiting for the problem to be noticeable so that it can get the biggest brownie points for acting. Unfortunately, every year delayed is a year in which we do not invest in our national infrastructure, and Australians and the country as a whole suffer because of government inaction. So today is a good day for us in this parliament to talk about national infrastructure, because a bill for which we have waited five years is finally in front of us. It is not as good a day as yesterday or if it had been last year, the year before that, the year before that or the one before that—all the way back to September 2002—but it is a good day nevertheless.

This bill is a step in the right direction. From the perspective of this side of the House it falls far short of the mark and, in spite of infrastructure being important, comes several years late. These are long-awaited amendments, particularly on our side of the House, which has such a strong track record in competition policy and support for the development of infrastructure. But it does move us closer towards achieving investment in national monopoly infrastructure and promoting competition for the nation’s future prosperity.

The bill comprises a piece of critical and long overdue legislation to amend part IIIA of the Trade Practices Act to implement many of the recommendations made by the Productivity Commission in its 2001 Review of the national access regime. These amendments will finetune the regime to allow third parties improved access to infrastructure of national significance. Labor welcomes the new section 44A, which inserts an objects clause: ‘to promote the economically efficient operation of, use of and investment in the infrastructure by which services are provided, thereby promoting effective competition in upstream and downstream markets, and provide a framework and guiding principles to encourage a consistent approach to access regulation in each industry’.

The new objects clause must be taken into account by the NCC, the minister and the tribunal with regard to declaring a service, certifying that a regime is effective, approving access undertakings and accepting access codes. The Labor Party supports this clause, although it could hardly be described as bringing a hard edge to the legislation. We would have preferred that it include much stronger pro-competitive language or a mention of restraint on monopoly behaviour. Nevertheless, Labor supports the improvement in regulatory certainty that the objectives provide in determining disputes and declarations.

Labor remains committed to going further to prevent the owners of crucial bottleneck infrastructure facilities from setting high prices or creating other impediments to accessing the monopoly infrastructure. One of the big differences between the beliefs of Labor and those of the government with regard to the national access regime is around the need to enshrine pricing principles in the legislation. It was the original preference of the Liberals to leave it to the minister, and it is Labor’s belief that they need to be enshrined.

The pricing principles are the prices that the ACCC will be required to arbitrate on, which access seekers must pay for access to a service, and set out in an access undertaking. Currently the legislation contains only very broad principles that the ACCC must consider when determining conditions of access, and they do not relate specifically to the issues of price. Again we see that the Howard government has been incredibly slow off the mark, and it only just made it to achieving the requirements set out in the 2001 Productivity Commission report.

After agreeing to establish statutory pricing principles in part IIIA, the government then wavered on enshrining these principles in legislation, proposing that they be determined by the Treasurer and specified in regulation. This marked a significant watering down of its initial preference in favour of the position of the ACCC over the position of the Productivity Commission. The pricing principles were recommended by the Productivity Commission to provide guidance for pricing decisions and to contribute to consistent and transparent regulatory outcomes over time, as well as providing certainty for investors and access seekers. But after four years of dithering and delays the government itself still could not provide any guidance or leadership about pricing principles. It is incredible that this government again almost missed the point completely when for years pricing principles have been at the core of the raging debate about infrastructure.

I note here the comments made on 15 August 2005 in the Australian Financial Review. In an article appropriately entitled ‘Plea for certainty’, in which AGL stated that it was ‘puzzled and concerned’ that the pricing principles were not in the bill and warned that this would create uncertainty among investors about the government’s plans for infrastructure regulation. However, following substantial pressure from Labor and significant media coverage on this issue, the government has finally decided to do something to unlock new investment in our country’s starving infrastructure, worth tens of billions of dollars.

Labor has regarded the pricing provisions of the bill, from its onset, as improvements which go some way towards promoting consistency and certainty for both users and providers of national infrastructure. Labor also believes that the provisions move towards providing some guidance to decision makers in their approaches to enhance regulatory accountability. Labor supports the increased certainty created by the pricing provisions of this bill. At the same time Labor also recognises the need to safeguard the regime against the owners of crucial bottleneck facilities setting high prices for commercial access which limit competition.

Following on from my earlier point of this government being slow off the mark, it is noteworthy that this bill also imposes new time frames when making access decisions, which Labor welcomes, particularly considering the Export infrastructure report’s criticism of the lack of timeliness in access decision making. There is some irony here, given the government’s delay in bringing about at all these important and pressing amendments. Labor believes that imposing time limits on certain decisions can curtail opportunities for delaying access through regulatory game planning—for example, stalling techniques. This in turn increases confidence and consistency in regulatory processes with a flow-on effect for service seekers and consumers.

Labor has a proud tradition of supporting and promoting competition and of building our national infrastructure. Former Prime Minister Paul Keating stated in 1992 that ‘the engine which drives efficiency is free and open competition’. Labor was the architect of competition policy reform in Australia, introducing the Trade Practices Act in 1974. Labor commenced a landmark period of reform during the eighties that included decisions such as floating the currency, deregulating the financial markets and reducing trade barriers. It was Labor that launched the national competition policy, which, amongst other things, reformed a range of legislation restricting competition and holding back key infrastructure. Labor oversaw the Hilmer review, which provided a road map for competition reform, including in the area of access to nationally significant infrastructure facilities. Through overseeing the Hilmer review and launching the national competition policy, Labor created a regulatory framework which promoted competition and access and balanced the wider needs of the public in accessing key infrastructure. All these reforms have contributed greatly to our recent economic success. It is with some sadness that we on this side have watched the delay over the last five years significantly slow down and even halt the reform which we carried out over many years. As Kim Beazley stated in his address to the AusRAIL conference on 24 November:

Labor will use competition policy to make sure competitive forces set infrastructure pricing so that there is enough investment and fair access.

Australia’s energy and water utilities need a fresh blast of the competition blowtorch—that means national markets, fair access regimes and realistic user-pricing.

Labor is committed to steadily and responsibly rebuilding the crumbling infrastructure of Australia, to locking in Australia’s future prosperity and to creating a much stronger economy and nation. We know that this needed to be done a few years ago, and it is certainly of great urgency now. That is why Labor has recently delivered its blueprint for infrastructure, which includes:

... the creation of Infrastructure Australia (a Commonwealth statutory authority reporting directly to COAG and through COAG to state and Commonwealth infrastructure ministers) ... which will function to analyse, monitor and report upon the delivery and operation of major infrastructure projects ...

Labor:

... Will conduct a national infrastructure audit which will see the development of a national infrastructure priority list.

... Will develop a co-ordinated approach in working with the states to give priority to the long range strategic planning of the nation’s infrastructure needs ...

... Will establish the Building Australia Fund ... to aid infrastructure financing ...

The provision and maintenance of our national infrastructure is an investment in our nation’s future, not something to be viewed only as an expense or a budgetary item. In short, good infrastructure is a national asset, not a national cost. However, after nearly 10 years in government the Howard government has done virtually nothing. It has taken five years to put these current amendments in place, and even then the Howard government almost missed the mark. Still there is much more that needs to be done to ensure that Australia gets back on the right track to strengthen and rebuild our nation’s infrastructure for the benefit of all Australians. This bill goes part of the way.

Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

I wonder if I might put an entry into the bumper sticker competition that the member for Parramatta has mentioned. I think it was Bill Clinton who picked up on the phrase: ‘It’s the economy, stupid!’ Perhaps we could put on bumpers: ‘It’s the infrastructure, idiot!’ That is just a thought. It certainly would fit. The Trade Practices Amendment (National Access Regime) Bill 2005, I am afraid to say, is a disappointing piece of legislation. Australia has been waiting for this legislation for more than three years, and it is pretty much a damp squib. I say that by referring, for example, to the objects of the bill:

(a) promote the economically efficient operation of, use of and investment in the infrastructure by which services are provided, thereby promoting effective competition in upstream and downstream markets; and

(b) provide a framework and guiding principles to encourage a consistent approach to access regulation in each industry.

You could hardly describe those objects as bringing a tough edge to this legislation—very general and not providing much guidance at all. But more importantly, although the legislation does pick up a set of pricing principles and they include a return on investment commensurate with the regulatory and commercial risks involved, the bill does not enshrine those principles. Instead, the principles are to be determined by the Treasurer and specified in regulations. Time and time again this government parades itself as a deregulatory government, as a free enterprise government, yet it cannot seem to let go. Here is an important set of pricing principles that should be enshrined in legislation but the Treasurer just cannot let go. If you look at this government’s behaviour, whether it is in the area of university education, the area of aged care or the area of health care, it feels that it has to control everything from Canberra as if it is some sort of central planning agency. Eminent economist Max Corden has described it as ‘Moscow on the Molonglo’. You would think we would be talking about a socialist government, and in many respects this government does display those features.

It should be a government that lets go where it can and allows market forces to prevail. Indeed, that was the whole ethic behind national competition policy—a major reform initiated not by the Fraser government but by the Keating government. National competition policy was another great instalment of the economic reform program of the Hawke and Keating governments. That program has delivered unprecedented economic growth on the back of very strong productivity growth. That is what it was expected to do and that is what it has delivered. When the government talks about what jolly good fellows they are that household incomes have increased by 15 per cent in real terms, there is one valid explanation for that. That explanation is the economic reform program initiated by the Hawke and Keating governments, including national competition policy. Yet, after years of delay, we get this damp squib legislation, which is a grave disappointment in my view.

The economic reform program to which I referred has led to the OECD ranking Australia as having one of the least regulated product markets in the world for goods and services. That itself has helped build the productivity growth which has created so much prosperity in the last few years. The financial markets were deregulated early on with the floating of the dollar, then there was the entry of foreign banks and further deregulation of financial markets, product markets began to be deregulated and, a little further on, the Keating government introduced national competition policy. There has been a lot of criticism of that policy, including at times from our side of politics. No-one would argue that everything that has been done in the name of national competition policy had clear net national benefits, but overall it has been very successful in lifting productivity growth.

Here we are debating some amendments to the national access regime, and I think it is really important to make the point that, in setting access terms for infrastructure that possesses characteristics of national monopoly, it is very easy for regulators to insist that that access be at a very cheap price in the name of competition. But we must always remember that the owners of such assets need an incentive to invest or reinvest in those assets, to enhance the assets or to replace the assets with better assets. If the return that they get on that investment is insufficient to warrant that extra investment or reinvestment, then of course it will not happen.

There have been cases in Australia in the recent past where that situation has applied. Dalrymple Bay, which is subject to the Queensland Competition Authority, is a classic example. We have been confronted with a situation whereby very valuable and very high quality coal exports have been held up at a port because it did not have the capacity to handle them. A fundamental reason for that was that the regulator was considering a rate of return on investment in that port which was insufficient to warrant any further investment in it. Fortunately, that matter now appears to have been resolved, but it is a really good case study of how easy it is for regulators to argue that the access terms should be very favourable to the company that is seeking access and unfavourable to the company that owns the asset—all in the name of competition.

Competition can only truly apply and prevail if we have assets in which investment is taking place. That is why it is important—and I do support in particular this part of the pricing principles—that they should include a return on investment commensurate with the regulatory and commercial risk involved. That is a wise aspect of this legislation. It is just such a pity that the Treasurer cannot let go and enshrine that particular principle, and the other principles, in legislation.

Australia is confronted by very serious problems in respect of infrastructure. There is no national infrastructure plan. We now desperately need in this country a new wave of economic reform. It is very hard to identify any cohesive comprehensive reform program of the Howard government, which very soon will have been in power for 10 long years. You would think that within 10 years a government could develop a national reform program, a key component of which is a national infrastructure plan, but frankly it has been too lazy to do that. I do not think it has even tried. It has been too lazy to develop a comprehensive new reform program to sustain productivity growth as a basis for ongoing prosperity in this country.

I have had occasion in the past to refer to the Intergenerational report released by the Treasurer in 2002. That report contains projections that Australia’s productivity growth will slip back from 2.05 per cent per annum—which, up until 2003, had been the sort of productivity growth that Australia had been achieving for almost a decade—to 1.75 per cent per annum. If that were to happen in combination with the impact of the ageing of the population, Australia’s economic growth per person from the decade of 2010 onwards would be the slowest since the decade of the Great Depression. That has to be a cause for grave concern amongst policy makers but, amazingly, it does not seem to be a cause for concern in the Howard government. Mr Deputy Speaker, recall that I said that 1.75 per cent per annum is the assumed productivity growth in the Intergenerational report, but it is not 1.75 per cent per annum now. It is not even one or zero per cent. Australian productivity growth, from the beginning of 2004, slipped into reverse, went negative and has been stuck there ever since.

Surely the government is concerned about that, but the Treasurer says the solution to low productivity growth—to Australia’s negative productivity growth—is almost complete deregulation of the labour market. As economists have pointed out, if the Treasurer happened to be right in saying that this would increase employment levels, it would in fact reduce productivity growth. So the Treasurer does not even have that right. I do not believe that this Work Choices legislation will improve employment levels. All it will do is make job security a thing of the past. If you have people worried about their jobs day in and day out, then you do not get the best out of them. You do not get the best out of working people when their jobs are insecure and when the relationship with their employer is so badly unbalanced. We will not get productivity growth as a result of the Work Choices legislation, so we need to look around and see where else could Australia get the much needed second round of productivity growth.

It will not be from this government, because we know that fundamental to productivity growth in the 21st century is investment in education, skills, ideas and infrastructure. This government has failed on all fronts. It has failed to invest in skills, with the problem manifesting itself in acute skill shortages. Major resource projects are now being delayed for two reasons: firstly, they simply cannot get skilled workers; and, secondly, if they tried to get skilled workers, that would continue to bid up the wages of those workers not only in those projects but also in all the other resource projects and associated projects around Australia—and Australia’s major resource companies are very worried about that.

The consequence is that these skill shortages are holding back Australia. They are holding back our economic growth. They are holding back our productivity growth. Indeed, they are holding back our export growth. It is just astonishing that the Minister for Trade walks into the parliament every second day boasting about Australia’s great export performance. Let me tell you about Australia’s export performance: it is the worst export performance since the Second World War, despite the best commodity prices for at least 30 years and perhaps 50 years. How you could achieve that result is amazing when you are blessed with such endowments as record commodity prices; yet Australia has put in its worst export performance since the Second World War.

As I was pointing out, there is no economic reform program. There is not the required investment in skills. In fact, in the 1997 budget—the only budget in which there was genuine spending restraint—the government reduced its investment in skills because it thought that was dispensable, and here we are today paying the price. There has been nothing on the skills front.

In relation to university education, Australia now has a situation where all of the growth in the last 10 years—in the 10 long years of the Howard government—all of the growth of enrolments in Australian universities has been from full fee paying foreign students. There has been no increase in enrolments by Australian students. Why? Because they are being priced out of a university education by the government continually increasing HECS charges or allowing universities to increase HECS charges, and also by its move to full fee paying Australian students. Young people are doing the calculations and they are coming to the judgment that it is just not worth it. As a consequence, we then have a situation where last year, for only the second time in 50 years, enrolments of Australian students in our universities actually fell. Early indications for 2006 are that that is going to happen again. So there is no investment in skills and no investment in our universities.

I will now go to investment in ideas. The government’s record in relation to investment in ideas and innovation is appalling. While the rest of the Western world is surging ahead in terms of business spending on research and development as a share of gross domestic product, Australia’s has just finally lifted a little, but the gap continues to widen. It is that gap that is relevant to our performance as an economy compared with those countries.

Productivity growth could also be gained through investment in infrastructure. This brings me back to this particular piece of legislation. There has been very little investment in infrastructure by this government. It is now well known that before the 2004 election the government went on a $66 billion spending spree. Add that to the extra spending that has occurred after the election and it is well over $100 billion. I have calculated that no more than $7 billion of that could be considered investment in Australia’s future—investment in infrastructure and education. It is around seven per cent on a generous interpretation. The rest of it is essentially consumption spending.

Here we have the government coasting on the prosperity created out of the reform program of the Hawke and Keating governments and created out of national competition policy and then squandering the proceeds on a consumption spending spree. Labor knows and understands that infrastructure possesses the characteristics of public goods. A technical term for it is ‘nonexcludability’—that is, that the owner of particular types of infrastructure cannot exclude all users. As a result of infrastructure possessing those features of a public good, if infrastructure is left purely to the private sector it will be underprovided. The government does not acknowledge this reality. Instead, it believes that the private sector has sole responsibility for the provision of infrastructure in this country, and the response is as you would expect. In economic textbooks, the underprovision of infrastructure is otherwise known as an infrastructure crisis.

These features of public goods and infrastructure mean that there are positive spill overs to the wider community from infrastructure investment, and these should really be taken into account in decisions on whether infrastructure investment should be supported by a federal government. This government does not take account of those spill-over effects and as a result we get this underprovision of infrastructure, except of course if the infrastructure happens to be in a marginal seat at the mouth of a river—for example, Tumbi Creek in the seat of Dobell. This is obviously regarded as vital national infrastructure by the Howard government and so it dredges a creek, the mouth of which had been opened up by rain just a few days before. It said, ‘No, we need to retain that marginal seat, so we’ll keep it open by dredging it again,’ even though that was a complete waste of money. That is this government’s idea of investment in infrastructure. It is an investment in getting re-elected, it is an investment in marginal seats, but it is not an investment in Australia’s future.

Labor, instead, supports the establishment of Infrastructure Australia, effectively an infrastructure authority that would be given the responsibility of developing a national infrastructure plan and coordinating and arranging the necessary investment in infrastructure. Australia desperately needs a national infrastructure plan and an infrastructure advisory council to provide that advice. We had a debate in this parliament just yesterday on the Future Fund. It would make good economic sense for some of the proceeds going to the Future Fund instead being invested in the implementation of a national infrastructure plan on the basis of objective advice, not of pork-barrelling. These are some of the contrasts between the coalition government and Labor.

We do have a commitment to a national infrastructure plan. We do have a commitment to securing that much-needed next round of productivity growth through investment in infrastructure, through investment in the talents of our people and through investment in ideas. It is time that the government got on with that particular crusade and developed such a plan. Our hopes are forlorn that that will happen and, therefore, the Australian people will have to wait for 2007 for a change of government to get the infrastructure investment that Australia so desperately needs.

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

It is my pleasure to sum up this debate on this important legislation, the Trade Practices Amendment (National Access Regime) Bill 2005, this morning. The government has decided to accept the 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 Australian 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 Australian Competition and Consumer Commission, otherwise known as the ACCC, when arbitrating access disputes and when considering whether to accept an access undertaking or access code under the national access regime. The Australian government’s response to the Productivity Commission review accepted the recommendation that pricing principles be included in part IIIA.

However, in the course of developing the draft bill it was decided that implementing the pricing principles by way of a legislative instrument would be preferable, as this would afford greater flexibility should experience highlight a need for changes to them. Consequently, the bill currently provides that the Commonwealth minister must, by 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 subsequently conducted an inquiry into the bill and released its report on 8 September 2005. The committee’s report notes that submissions to the inquiry were supportive of the bill and that the proposed pricing principles were not controversial. The committee further noted that the pricing principles were broadly supported by all witnesses to the inquiry. However, the committee also reported that many submissions expressed concern at the government’s proposed method of introducing pricing principles under part IIIA by the use of a legislative instrument rather than by enactment in the bill itself. The main concerns expressed in submissions were that there would be a lack of certainty for infrastructure investors because of the greater potential for changes to be made to the pricing principles, possibly without consultation, and that the use of a legislative instrument entailed less transparency and parliamentary scrutiny. The government determined that it would accept the committee’s recommendation that the pricing principles be included in the bill. An announcement to this effect was made by the government on 14 September last year.

The introduction of pricing principles should achieve a number of important objectives. The pricing principles will provide guidance on how the broad objectives of access regimes should be applied in setting terms and conditions and provide additional certainty to regulated firms and access seekers, in turn improving the operation of the negotiation arbitration framework. Further, pricing principles will provide some guidance for the approaches adopted in particular industry access regimes and the pricing principles will help to address concerns that a regulator’s own values will unduly influence decisions relating to the terms and conditions of access. 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 consistent and transparent regulatory outcomes. They will also enhance certainty for investors and access seekers and facilitate commercial negotiations between parties.

I was pleased to hear that the opposition supports the majority of the measures contained in the bill. However, there are two significant differences between the opposition’s proposed amendments on pricing principles and those of the government. First, the government amendments provide that regulated access prices should 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 a regulated service or services. The opposition’s amendments mirror the government’s amendments but they omit the words ‘at least’. Omitting the words ‘at least’, as proposed by the opposition, would reduce the scope for regulatory decisions on access prices that provide appropriate encouragement for new investment in infrastructure and would thereby undermine one of the key aims of the bill. Retaining the words ‘at least’, as far as per the government’s amendments, ensures the pricing principles facilitate incentives for service providers to continue to invest in infrastructure.

Second, the opposition amendments seek to ensure that the regulator is not required to consider regulatory risk in any return on investment. On the other hand, the government amendments provide that access prices should include a return commensurate with the regulatory and commercial risks involved. To remove scope for the regulator to factor into investment returns an amount to compensate for regulatory risks would be to ignore concerns put forward by service providers in the Productivity Commission’s review that regulated investment returns do not accurately account for the uncertainty that may arise from regulatory decision-making processes. I note also that the Productivity Commission consulted extensively on these amendments, while the wording of the opposition’s amendments has not been subject to the same level of scrutiny.

In summary, the government does not accept the opposition’s amendments. We do not accept them because they would appear to contradict one of the key aims of the bill, supported strongly by industry, which is to facilitate efficient use of and investment in infrastructure.

The Senate Economics Legislation Committee made a second recommendation in its report on the bill, namely that the Senate pass the bill subject to the abovementioned change being made to the implementation of pricing principles. With the government having responded fully to the sole concern identified in the committee’s recommendations, and given strong industry support for these measures, the government considers that the bill deserves the full support of this House.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this the honourable member for Hunter has moved as an amendment that all words after ‘That’ be omitted with a view to substituting other words. The immediate question is that the words proposed to be omitted stand part of the question.

Question agreed to.

Original question agreed to.

Bill read a second time.