Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

The Trade Practices Amendment (Infrastructure Access) Bill 2009 amends the National Access Regime in part IIIA of the Trade Practices Act 1974. The bill is designed to improve regulatory certainty and streamline administrative processes associated with the National Access Regime.

This bill does not aim to strengthen or weaken the criteria for application of the National Access Regime. It delivers on commitments made by the Council of Australian Governments under the Competition and Infrastructure Reform Agreement, and includes other reforms, to streamline the National Access Regime.

The National Access Regime seeks to promote competition in markets that depend on the use of infrastructure that cannot be economically duplicated. Without such regulation, owners of this infrastructure might deny access to their facilities by prospective users or charge monopoly prices for their services.

The regime is not designed to replace commercial negotiations between facility owners and access seekers. Rather, it seeks to enhance the incentives for negotiation and provide a means of access on reasonable terms and conditions if negotiations fail.

Under the regime, there are three ways for a business to gain access to a service.

The first approach is when a service has been declaredunder the National Access Regime.

When a service is declared, the ACCC can make a binding arbitration determination if commercial negotiations between the access seeker and service provider are unsuccessful.

The second is through an industry-specific state or territory regime that has been certified as effectiveaccording to the agreed criteria.

The third is when access is provided under the terms and conditions specified in an approved undertaking given by the service provider.

Responsibility for administering the arrangements is divided among the National Competition Council, the Australian Competition and Consumer Commission and the Australian Competition Tribunal. Various state and territory regulators are responsible for administering certified state access regimes.

Since its introduction in 1995, the National Access Regime has proven to be an innovative and important piece of economic regulation.

Although determinations under part IIIA have been relatively few in number, the regime influences the framework for the provision of access in most of Australia’s key infrastructure sectors.

However, infrastructure owners and access seekers have argued that processes under the regime are too lengthy and costly.

Indeed, some owners of nationally significant infrastructure have expressed concerns that the regime is generating regulatory risks that may hinder investment in essential infrastructure.

The government acknowledges that delays and costs in decision making under the regime may be having an adverse effect on important infrastructure investment that is needed to underpin economic growth and national productivity.

In 2001, the Productivity Commission reviewed the National Access Regime.

The Productivity Commission supported the retention of the regime but made recommendations to improve the regime’s operation and improve the certainty and transparency of regulatory processes.

The majority of these recommendations were endorsed by the former government and effected through amendments to the Trade Practices Act in 2006. 

That year the Council of Australian Governments agreed to the Competition and Infrastructure Reform Agreement.

Under this agreement, all jurisdictions agreed to streamline regulatory processes in their access regimes.

This included incorporating binding time limits and a limited form of merits review for regulatory decisions. 

In November 2008, the Council of Australian Governments agreed to the National Partnership Agreement to Deliver a Seamless National Economy which reaffirmed COAG’s commitment to complete outstanding reforms under the Competition and Infrastructure Reform Agreement.

This bill implements the Australian government’s commitments under the agreement.

I will now deal in turn with each of these reforms starting with binding time limits.

The 2006 reforms to the National Access Regime introduced target time limits for the decisions of regulators.

However, there remains a widespread view that more needs to be done to improve the timeliness and effectiveness of regulatory decision making under the regime.

COAG has also committed to implementing binding time limits in access regimes.

This bill provides that regulators must make decisions under the National Access Regime within a statutory time period. 

For the National Competition Council, ACCC and Australian Competition Tribunal, this is generally a period of six months.

For ministers, a decision must be made within 60 days of receiving a recommendation from the National Competition Council. This is in line with the existing statutory time frames for declaration decisions.

In calculating the time for making decisions, certain periods of time will be disregarded through ‘clock stoppers’.

The main clock stoppers would occur when the regulator and the parties to the decision agree to stop the clock, or when the regulator requests information or invites public submissions.

Where ministers or the ACCC do not make a decision in the expected period they will be deemed to have made a decision according to the provisions of the bill.

The ACCC will be deemed to have made a decision that access is not to be regulated under the National Access Regime.

Consistent with a 2001 Productivity Commission recommendation, ministers who do not make a decision will be deemed to have made a decision that accords with the National Competition Council’s recommendation. 

It is not practical to deem a decision by the National Competition Council, since its role is to make recommendations, or the tribunal since its role is to review decisions.

Accordingly, these bodies may extend the time limit for making decisions. However, I anticipate that extensions would rarely be used.

I now turn to the merits review process.

There are concerns that current review processes under the regime are too lengthy.

Concerns have been raised about the ability of parties in a review to provide additional information to the Australian Competition Tribunal that had not been provided to the original decision maker in their deliberations.

In light of this, COAG agreed that where merits review is available, the review should be limited to considering the information provided to the original decision maker.

The bill provides that where merits review of decisions under the regime is available, the Australian Competition Tribunal may only have regard to the information taken into account by the original decision maker. 

The tribunal may only seek additional information to clarify information provided to the original decision maker or from the National Competition Council or the ACCC in their role of assisting the tribunal.

Uncertainty about whether the regime will apply to new infrastructure may hinder investment decisions.

The regime does not currently allow a person who is considering building an infrastructure facility to determine with certainty whether or not the proposed facility would be declarable. 

The bill provides for an upfront decision that a service to be provided by a proposed infrastructure facility is ineligible to be a declared service.

To be considered ineligible, it must not meet the test for declaration under the regime.

Once the minister decides that a service is ineligible, it cannot be declared for at least 20 years, or longer as provided for in the minister’s decision.

A similar mechanism is also available under the National Gas Law for ‘greenfields’ pipeline projects.

This reform will enhance regulatory certainty for potential investors in major new infrastructure.

To improve regulatory certainty, the bill will also enable a service provider to submit an access undertaking to the ACCC which includes one or more terms that will apply for a certain period beyond the expiry date of the undertaking.

These terms, referred to in the bill as ‘fixed principles’, will help to ensure that investors and access seekers have greater certainty regarding the terms and conditions of access to the service under future access arrangements.

Once accepted by the ACCC, the fixed principle must be included in any subsequent undertaking covering that particular service for as long as the fixed principle is in operation. The fixed principle may only be varied or withdrawn with the consent of the ACCC.

Regulatory risk for infrastructure investors could also be reduced if access undertakings were allowed to contain fixed principles which apply to any subsequent access undertakings for that infrastructure service.

When important variables are fixed, service providers and access seekers can more easily extrapolate the terms and conditions for access under future arrangements.

For example, a fixed principle could apply to the method of calculating the value of an asset base in current and subsequent undertakings. This would allow access providers and seekers to extrapolate access prices in future access arrangements, thus delivering greater certainty in investment planning.

A similar mechanism is available under the access regulation of gas pipelines under the National Gas Law.

The Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 currently before the parliament also includes provision for the ACCC to determine fixed principles in relation to access determinations for telecommunications services under part XIC of the Trade Practices Act.

The bill includes a number of other mechanisms to improve the efficiency of decision making under the regime.

Currently, the ACCC does not have the power to accept access undertakings which have been revised following the service provider agreeing to amendments. Instead, for a revised undertaking to be accepted it must be withdrawn and resubmitted.

Not only does this cause delays and increase costs but it may give rise to a perception that an infrastructure provider, which has voluntarily agreed to provide third-party access, has acted improperly.

This may reduce incentives for infrastructure providers to submit access undertakings.

The bill streamlines consideration of undertakings by allowing the ACCC to accept such undertakings when certain amendments have been made.

The Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 currently before the parliament also includes provision for the ACCC to accept special access undertakings subject to amendments under part XIC of the Trade Practices Act.

The bill will introduce measures to streamline the declaration test under the regime.

The declaration test under the regime requires ministers and the National Competition Council to be satisfied of certain matters.

Firstly, the health and safety matter will be removed.

This required the National Competition Council or minister to be satisfied that if the service is declared access can be provided without undue risk to human health or safety.

This matter is misplaced as a consideration for declaration because health and safety issues are properly managed by other relevant regulation, irrespective of whether access is available for third parties.

If in exceptional circumstances it is a relevant consideration, the ACCC can consider these issues in an arbitration of an access dispute.

Secondly, the effective access regime matter will be amended so that designated ministers must only consider state or territory access regimes that have been certified as effective under the National Access Regime by the Commonwealth minister.

Currently, any access regime that may cover the service must be considered and assessed against the certification principles in clause 6 of the COAG Competition Principles Agreement. This can be an expensive exercise.

This reform will streamline the National Competition Council and the minister’s assessment of declaration applications by only requiring an assessment of whether certified state or territory regimes apply to the service.

This reform is consistent with the commitment by States and Territories under the Competition and Infrastructure Reform Agreement to seek certification of their access regimes for nationally significant infrastructure by the end of 2010.

Once a regime has been certified, access seekers must use the certified state or territory regime. The service cannot be declared, nor can any access undertaking be approved under the National Access Regime.

I now turn to amendments to declaration applications.

The bill clarifies the National Competition Council’s existing ability to accept variations to applications where appropriate.

The National Competition Council will be able to accept variations to declaration applications where the variation would not cause undue delay or unduly prejudice the interests of others.

The bill also allows the National Competition Council to make decisions by circulation of a document for signature.

A decision without a meeting must be a unanimous decision of all councillors, (except those who are unable to vote on the resolution due to a pecuniary conflict of interest).

This will improve the National Competition Council’s decision-making processes.

Decision-making processes of the Australian Competition Tribunal will also be improved by the bill.

Currently, any decision to declare a service is automatically stayed by an appeal to the tribunal.

This creates a strong incentive for service providers to commence appeals and then delay their completion.

To address this concern, the tribunal will be empowered to determine whether a stay is appropriate.

If a stay is not granted, access seekers may begin to negotiate with the service provider, and may lodge an access dispute with the ACCC if negotiations are unsuccessful.

The ACCC will be able to commence arbitration but will not be able to make a final decision until the tribunal makes a decision on the review. If the tribunal overturns the decision, the arbitration is terminated.

This will speed up the resolution of access disputes as preliminary matters may be settled in advance of the tribunal’s final decision.

Another improvement to the operation of the tribunal relates to the ability to award costs in review of declaration decisions.

Unlike most court proceedings, and unlike matters arising in the tribunal in relation to the regulation of gas pipelines, there is currently no provision for ordering costs in reviews of declaration decisions.

Allowing the tribunal to order costs will reduce incentives for delaying tactics, frivolous review applications and other inappropriate behaviour.

In conclusion, this bill contains a number of modest but important measures to increase regulatory certainty and improve decision-making processes under the National Access Regime.

With the release of the latest population projections, suggesting a population of 35 million by 2049, Australia is facing a huge infrastructure investment challenge. That challenge is compounded by the imperative of ensuring there is sufficient national export infrastructure to enable Australia to respond to the opportunities presented by the phenomenal growth of China and other countries in our region. As a parliament, we need to ensure there are strong private sector incentives to make the infrastructure investments Australia needs and to promote the efficient use of that infrastructure.

I would like to thank my predecessor, the Hon. Chris Bowen MP, for his efforts in developing this reform package.

I would also like to thank premiers and chief ministers for providing their views on the reform package.

I appreciate the efforts of the National Access Regime regulators in assisting with the development of the bill.

Debate (on motion by Mr Haase) adjourned.