Kelvin Thomson (Wills, Australian Labor Party, Shadow Minister for Public Accountability and Human Services) Share this | Hansard source

I want to support Labor’s amendment to the Trade Practices Amendment (National Access Regime) Bill 2005. I think we need to make sure that we have as strong a competition regime as we can, and I think there are risks inherent in the bill presented to the House that that regime will be diminished. Frankly, this is a government that does not support the competition policy and the various small business protections that were put in place by Labor governments during the 1980s and 1990s. It is a government which has, in a variety of ways, sought to damage small business, effectively preventing them from collective bargaining. Labor remains the sober advocate of fairness and protection for small business from monopolistic behaviour, and indeed the protection of all workers to collectively negotiate.

This bill changes the regime under which a service provider can obtain access to an infrastructure facility. The purpose of the regulation is to seek to ensure access to infrastructure where elements of natural monopoly exist and to enhance competition and restrain monopolistic behaviour while encouraging investment in infrastructure. The Productivity Commission reviewed the regime back in 2001, and this bill is the government’s response to the Productivity Commission’s recommendations. The bill changes the existing regime by including a new objects clause that decision makers will need to have regard to when setting access pricing arrangements. Secondly, it introduces for the first time pricing principles which the Productivity Commission has recommended be embodied in part IIIA of the Trade Practices Act.

I am concerned that a consequence of some of the measures in the legislation is that, under cover of the current infrastructure debate, the Howard government will unravel important competition principles in favour of private monopolies at the cost of competition and, therefore, at the cost of the Australian economy and the consumer. Indeed it is instructive to look at how the government uses its friends to solicit advice and third-party reinforcements. Take, for example, the case of the Prime Minister’s former head of the Public Service, former key adviser, tactician and confidant of the Prime Minister, Max Moore-Wilton, who was also a former head of the Wheat Board which has become a matter of some controversy in recent times. In his role as CEO of Sydney Airport Corporation he is the chief executive of the monopoly provider of Australia’s largest air gateway. This makes Mr Moore-Wilton one of the most powerful figures in transport infrastructure in this country, leading a major private sector operator with the ear of the government.

Last year he was appointed by the Prime Minister to serve on the taskforce to advise on export infrastructure. Apart from the head of the Australian Bureau of Agricultural and Resource Economics, Brian Fischer, the other member of the taskforce was Henry Ergas, an economist well known for advising private infrastructure monopolies. Mr Moore-Wilton presides over a deregulated industry in which he is able to set the access fees, and indeed Sydney airport fees have gone through the roof. Not surprisingly, there have been some claims that Mr Moore-Wilton is abusing his monopoly power and that Sydney airport should be re-regulated. To fend off the criticism, Sydney Airport Corporation produced work by Network Economics, which turns out to be none other than the company of Mr Henry Ergas, that other member of the Prime Minister’s infrastructure taskforce.

So it is little wonder that some in the industry were bemused by the appointment of Mr Moore-Wilton to a taskforce to look at whether other private monopolies, such as ports, should be exempt from price controls. The executive director of the Board of Airline Representatives of Australia, BARA, Warren Bennett, had this to say in a report in the Financial Review of 22 April last year:

The airlines see that as being rather strange—that an operator of a private monopoly should be involved in determining government policy about whether private monopolies should be regulated. You can bet your bottom dollar that if a favourable outcome is determined in the case of marine ports–that they are allowed to be privately developed with no regulation—then all of the airport operators will be clamouring for the same sort of treatment.

Cathay Pacific’s Australian general manager said:

It certainly sits oddly. He’s not going to be impartial, is he? The chaps who are paying him—

that is, Macquarie Bank—

are going to be paying him to toe one particular line.

A spokesman for the former Deputy Prime Minister, Mr Anderson, was reported in the same article. He said:

I can’t see Max has any conflict of interest. The infrastructure taskforce is looking at blockages and I don’t think anyone sees Sydney Airport as a major infrastructure blockage.

But when the report came out it had precious little to say about physical infrastructure blockages. Guess what? It was all about regulation! But before we come to the report, it is instructive to look at what else the former Deputy Prime Minister’s spokesperson had to say about the question of Sydney airport’s predatory pricing practices. He was reported, again in the Financial Review, as saying:

... before privatisation, prices had been artificially held down and were now simply moving towards more real levels.

Of course, what is a real level is in the eye of the beholder. BARA’s Warren Bennet points out that deals with other airports have been completed smoothly but that negotiations were stuck with Sydney airport because they were trying to push through much bigger increases. He said:

You get the feeling you’re dealing with a monopoly. They have the market power and we’re fighting an uphill battle.

An uphill battle indeed. In a letter to Max Moore-Wilton dated 31 May 2005, Mr Bennett laments:

At the meeting on 20 May, the airline representatives were very disappointed when the Sydney Airport Corporation Limited resorted to threat-based negotiations to progress outstanding issues. Specifically, the airlines were informed that ‘superior economists’ are available to SACL who would discredit the airlines’ arguments in any arbitrated process. On this basis, the airlines should be prepared to accept an outcome close to the SACL offer.

The process of negotiation is supposed to involve the tabling of proposals or offers for consideration. Not surprisingly, SACL’s tactic of threats and demands generated little progress on the outstanding issues between SACL and the airlines.

There is no doubt that Max Moore-Wilton was playing hard ball and would not want any pesky ACCCs or National Competition Councils to get in his way. And the ACCC has had things to say about airport monopolists. Commissioner John Martin was quoted in the Australian Financial Review as saying:

... airports are a monopoly and there should be some control ... lt’s fair to say that the commission took the view when the government was looking at this that price capping was justified.

But of course the decision about these matters was not one for the ACCC. It also proved to be a vexed issue for the National Competition Council when Virgin Blue applied in late 2002 to have Sydney airport reregulated. The National Competition Council issued a draft determination in favour of the airline but generated an avalanche of media attacks and lobbying from Mr Moore-Wilton. Then, in an about-turn, the National Competition Council, under new leadership a year later, issued a final recommendation that Sydney airport should not be reregulated. In January 2004, the then Parliamentary Secretary to the Treasurer, Ross Cameron, signed the final decision to leave the airport unregulated. When he lost his seat at the federal election a few months later, he was almost immediately employed by—you guessed it—Macquarie Bank, owners of Sydney airport. This is all too characteristic of the Howard government: decisions which favour particular private business interests followed by a return of the favour further down the track.

The matter was still appealed to the Australian Competition Tribunal, but the Prime Minister went ahead anyway and appointed his old friend to the taskforce on export infrastructure. Given the live issues before the Australian Competition Tribunal, this was not an appropriate appointment. Mr Moore-Wilton had more than a minor conflict of interest. It raises real questions about this government’s intentions in relation to the appropriate regulation of monopolies, particularly with the prospect we now have of the full privatisation of Telstra.

So what did Mr Moore-Wilton and Mr Ergas find in their taskforce report? There was just a fleeting reference to physical infrastructure blockages or looming blockages—in particular to land based congestion at the Port of Melbourne, Port Botany, the Port of Brisbane, Fremantle, Adelaide and Portland—and a finding that detailed analysis was required to determine port access constraints over the next 10 years. But virtually all of the rest of the report was devoted to a discussion of regulation—no mention of how the government’s pork barrelling and political game playing was diverting vital dollars from important export infrastructure such as roads and rail. The report did note that:

During the course of the taskforce’s inquiries there was a strong, clear and consistent call from industry for the Australian Government to take a leadership role in facilitating efficient investment in infrastructure, especially key transport infrastructure ...

Despite noting that, the report proceeded to ignore the whole question of investment in infrastructure, especially key transport infrastructure. Its recommendations dealt solely with process issues—regulation, planning and coordination—so we had a single national regulator; simplifying and streamlining the regulatory process and ‘light-handed’ regulatory approaches, in particular ‘a presumption that issues to do with export oriented infrastructure will be resolved by commercial negotiation between the infrastructure provider and users’; improved time lines for decisions by regulatory agencies; joint planning processes for ports; industry coordination of logistics chains; regulatory agencies to consider the whole of the logistics chain; and an infrastructure audit, this last one being the ultimate cop-out by a lazy government in office for 10 years that responds to an infrastructure crisis with report after report after report. What a surprise that the government conjectured on the findings of this particular taskforce report even before it was released, given its composition. No doubt its findings were music to the ears of private monopolies. The report said:

If our problem in earlier years was at times profligate investment by government owned monopolies, the risk today is that efficient, commercial investment will be delayed or even deterred by inappropriate policy settings. Simpler, more transparent, predictable and accountable regulation is of key importance in this respect.

Macquarie Bank could not have said it better themselves. Indeed, I suppose the report was them talking.

There were a number of useful suggestions in the taskforce report, but I do highlight Mr Moore-Wilton’s conflict of interest to make a point about monopolies. We must take great care when utilising ‘light-handed’ regulation to ensure that we do not hand to monopolies a cash cow and hold other businesses which must deal with them to ransom. If this government is seeking to change the playing field and amend the competition policy reforms put in place by the previous Labor government, we must examine its motives and the fine print and keep it accountable.

This bill changes the regime under which a service provider can obtain access to an infrastructure facility. The purpose of the regulation is to seek to ensure access to infrastructure, where elements of natural monopoly exist, to enhance competition and restrain monopoly behaviour while encouraging investment in infrastructure. The bill, as I indicated earlier, amends part IIIA of the Trade Practices Act, which deals with access to monopoly infrastructure, allowing pricing principles to be determined by the Commonwealth minister. It includes a new objects clause that decision makers will need to have regard to. Labor’s view is that the objects clause should have mentioned restraint on monopoly behaviour and included much stronger procompetitive language.

The threshold for the application of the regime is raised to include only projects of national significance. New arbitration arrangements and appeal procedures are provided for, but rejected by the government was the Productivity Commission recommendation that the arbitration provisions of part IIIA be amended to provide for two-sided information disclosure requirements involving both the access provider and the access seeker. The access seeker should be required to provide sufficient information, including technical and commercial requirements, to enable the access provider to respond to the request for access. The provider of the declared service should be required to provide sufficient information to an access seeker to facilitate effective negotiation on the terms and conditions of access. Access to the federal regime is restricted to cases in which no effective state access regime exists, immunity from the regime is provided where a government service is provided by competitive tendering, and the bill introduces new target time limits, procedures for consultation and reporting of decisions.

One thing that the government party room had a bit of an argument about I understand was the provision in this bill to substantially reduce the powers of the ACCC to stop anticompetitive conduct that involves providing a good or service on the condition that goods or services are purchased from a third party, which is known as third-line forcing. I believe that the amendment which has been moved by my colleague the member for Hunter goes in the right direction and will ensure that this legislation does not have a detrimental impact on competition and does not tilt the balance overly in favour of monopolies. Therefore, I would urge the House to support the amendment.

Debate interrupted.

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