Stephen Smith (Perth, Australian Labor Party, Shadow Minister for Industry, Infrastructure and Industrial Relations) Share this | Link to this | Hansard source

The Trade Practices Amendment (National Access Regime) Bill 2005 follows on from the findings of the Productivity Commission’s review of the national access regime. The bill amends the Trade Practices Act 1974 to enable implementation of most of the recommendations made by the Productivity Commission in that review.

This bill is of great importance to the future of Australia’s national infrastructure needs and comes at a time of ongoing neglect of our national infrastructure by the Howard-Costello government. The bill follows call after call by industry, the states and federal Labor for the government to actively work to address our national infrastructure needs.

Since May 2001, on at least 11 separate occasions, the Reserve Bank has referred to infrastructure capacity constraints impacting negatively on our national economy. As recently as its May 2005 quarterly statement on monetary policy, the RBA warned the government that capacity constraints were stifling economic growth. Most galling in failing to address our national economic infrastructure needs was the Treasurer’s 10th budget, which ignored the fact that, when interest rates increased by 25 basis points in March 2005, capacity constraints were cited as half the reason by the Reserve Bank.

In addition to the Reserve Bank’s warnings, over the last 12 months the Australian Competition and Consumer Commission, the OECD and CEDA have all voiced their dissatisfaction with the government’s complacency in this area. Since 1997, public sector investment, including in infrastructure, slumped to around 2.2 per cent of GDP, the sixth lowest of all OECD countries. An analysis by the Business Council of Australia shows a $90 billion shortfall in Australia’s infrastructure. The BCA estimates substantive infrastructure reform could lift the level of our GDP by two per cent or $16 billion annually.

Most recently, Hugh Morgan, the past president of the BCA, summed up the collective frustration of the business community when he said:

There’s really no strategy, there’s no plan for Australia’s infrastructure needs.

The Howard-Costello government’s response over the past year or so has been to commission no fewer than eight separate ad hoc infrastructure inquiries, including the Prime Minister’s own so-called Exports and Infrastructure Taskforce. One overriding factor relating to all of these inquiries is a complex regulatory regime and a lack of coordination of national interest priorities so far as infrastructure is concerned. On 1 June 2005 the Prime Minister’s taskforce issued its formal report. Even the Prime Minister’s own handpicked Exports and Infrastructure Taskforce, led by his old mate Max Moore-Wilton—and labelled by Hugh Morgan as ‘a committee to protect Sir Humphrey’—found there were ‘underlying weaknesses’ in Australia’s export infrastructure which must be addressed to prevent further capacity constraints and bottlenecks developing in export industries.

Labor’s view is that all levels of government, particularly the Commonwealth government, need an ongoing source of independent expert advice on the extent of infrastructure problems, how to fix them and how we plan for the roads, railways, ports and communications networks of the future. Consistent with Labor’s view, and despite its shortfalls as a political fix to a policy problem, the Prime Minister’s taskforce report noted that the greatest impediment to the development of necessary infrastructure is the way in which the current economic regulatory framework is structured and administered. The taskforce called for a simplified regulatory test, suggesting that regulators base decisions on whether proposals by the infrastructure owner are reasonable in the commercial circumstances and in light of statutory objectives. This recommendation reflects the fact that the crux of the complaints made by asset owners is that regulators are overly concerned with keeping down the prices that monopoly infrastructure operators charge over the short term, leaving providers with insufficient incentives to make much-needed investment in necessary infrastructure expansion.

That background brings us to the bill. Labor’s attitude to the bill is reflected by the second reading amendment, circulated and moved in the name of Mr Fitzgibbon, the shadow assistant Treasurer, shadow minister for revenue and member for Hunter. That second reading amendment reads:

“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 report of the infrastructure Taskforce;

(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”.

The second reading amendment refers to the absence of pricing principles in the bill, to be addressed by an amendment to be moved in the committee stage by the member for Hunter, which has been circulated in his name.

The bill remains timely—if not overdue, given the fact that it was introduced last year and sat on the Notice Paper for a considerable time. It is timely that a bill addressing infrastructure access issues is being considered at the present time. The government might pretend that it is timely, but it is also massively overdue. Our current national infrastructure difficulties could well have been averted had the government not been complacent and acted much earlier to provide certainty to investors and to access seekers.

The bill before us is the government’s formal response to the Productivity Commission’s review, which had its genesis 10 years ago when Labor was in government. Many will recall the Hilmer committee’s report on national competition policy which made a number of recommendations on a national approach to competition policy, the outcome of which in 1995 was agreement by the states and territories to implement national competition policy. The fundamental premise of national competition policy was increasing competition throughout the economy in order to build economic capacity and more effective national economic performance.

The national access regime was included as part of the 1995 national competition policy. There are two aspects to the national access regime, one of which is dealt with in the bill today. The first is clause 6 of the 1995 competition principles agreement which was negotiated between the federal, state and territory governments. That agreement set out the principles for assessing third party access to nationally significant infrastructure. The second is the legislative framework found in part IIIA of the Trade Practices Act 1974, which seeks to ensure that infrastructure with natural monopoly characteristics does not become a barrier to competition. Under part IIIA of the act, access to nationally significant infrastructure can be made available to businesses in situations where duplicating it would not be economically feasible or, in other words, where it would be an inefficient use of capital and where commercial negotiation has failed to see agreement on access arrangements.

There are three ways in which an access seeker can currently gain access to such natural monopoly infrastructure. Firstly, they can do so by applying to the National Competition Council to have the service declared—a mechanism that establishes a right to negotiate terms and conditions of access with the service provider. In the event that negotiations fail, declaration also gives an access seeker the right to seek binding arbitration by the ACCC. Secondly, they can do so by seeking access through an ‘effective’ access regime, meaning that it satisfies certain agreed criteria. Thirdly, they can do so by seeking access under the provisions of an access undertaking from the service provider which has been approved by the ACCC.

In October 2000, the government commissioned the Productivity Commission to undertake a review of that regime. That report was delivered on 28 September 2001 but not released until 17 September 2002, together with the government’s interim response. But it was not until February 2004—over 2½ years from the delivery of the review—that the government finally responded to the Productivity Commission’s findings. The delay from September 2001 to February 2004 on a matter of such fundamental importance to our national economic efficiency, productivity and international competitiveness is obviously unacceptable.

To compound that delay, it has taken nearly two years following the government’s formal response for the legislation to finally be dealt with by the House. It is five years since the commissioning of the original Productivity Commission review into national access and four years after the Productivity Commission delivered its report to the federal government, and only now do we see the legislation formally being debated in the House. That is five long years of uncertainty for third party access seekers to nationally significant infrastructure—five long years that have seen hurt done to the Australian economy.

The government’s overdue response contains a number of changes to the national access regime that Labor supports. Two recommendations are worth mentioning today because they go to the heart of building a competitive environment that also guarantees certainty for consumers and investors alike. The first is the introduction of a new public policy objects clause. The objects clause is intended to promote the economically efficient operation of, use of and investment in infrastructure so as to effect competition in both upstream and downstream markets and, importantly, to ‘provide a framework and guiding principles to encourage a consistent approach to access regulation in each industry’. Labor supports this approach. It is a sensible measure because it provides guidance on the intent and purpose of part IIIA of the act.

The second relates to pricing principles contained within the legislation. In its 2002 report, the Productivity Commission recommended that pricing principles ‘with specific application to arbitration for declared services, assessments of undertakings and evaluations of whether existing access regimes are effective should be included in part IIIA of the Trade Practices Act’. In its formal response to the Productivity Commission’s report, the government in 2004 agreed that statutory pricing principles should be established in relation to part IIIA to provide guidance for pricing decisions. I support the government’s logic that such an approach would contribute to consistent and transparent regulatory outcomes over time as well as provide commercial certainty for both investors and access seekers. Accordingly, the government’s formal response stated that it would include specific pricing principles in part IIIA, including that regulated access prices should:

(i)

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

(ii)

include a return on investment commensurate with the regulatory and commercial risks involved.

As well, the government agreed that any access price structures should:

(i)

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

(ii)

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

Given that this was the government’s formal response to the Productivity Commission’s recommendations, it would not have been unreasonable to see these principles somewhere in the legislation. The government had, after all, gone so far as to draft the appropriate principles with the specific reference that:

The Government agrees to include the following pricing principles in Part IIIA.

However, an initial review of the legislation revealed that any such pricing principles were to be excluded from the body of the legislation and included only in the regulations, to be specified by the Treasurer. This would have been a significant watering down of the previous position taken by the government. The government’s decision to move pricing principles into regulations was done without any adequate explanation, even with the benefit of a Senate inquiry.

This was a point neatly put in the public hearings of the Senate Economics Legislation Committee on 11 August, when the Energy Network Association said:

We think it could potentially have a chilling effect on new infrastructure development because … you—

an investor—

may make a different sort of risk-reward assessment investment decision on the basis of whether or not these pricing principles are within ministerial determination or the statute.

It is extraordinary that at the first opportunity the government had to demonstrate that it was actually capable of doing something to rectify our national infrastructure problems—after eight infrastructure inquiries as well as numerous bodies calling for urgent work by government to alleviate our national infrastructure difficulties—it stumbled on the detail with a flawed policy implementation.

Not including the pricing principles in part IIIA could have had two adverse consequences. Firstly, it would have diminished the certainty that investors and access seekers have been seeking for both existing infrastructure and future infrastructure investment. Secondly, part IIIA acts as a model access regime for industry specific access regimes. Removing pricing principles from part IIIA would have promoted greater divergence across industry specific access regimes rather than a consistent, certain national approach. This runs directly counter to the intent of the objects clause itself.

Regardless of the contents of any pricing principles, leaving them as a matter for the discretion of the Treasurer of the day is poor policy. It will not foster the certainty and transparency that pricing principles enshrined in legislation would do. It will not achieve the certainty needed to ensure that commercial operators invest in our nationally significant infrastructure into the future. It would have meant that investors and potential investors in infrastructure subject to part IIIA of the Trade Practices Act would have had no idea what pricing rules might apply, other than the fact that they would be beholden to whatever pricing principles the Treasurer decides to promulgate following their investment. As such, the pricing principle regulations may have turned out to be somewhat different from investor expectations and may well have undermined the basis of that investment decision.

Labor is glad to see that the government has finally seen the sense of enshrining the pricing principles into the body of the legislation rather than allowing it to be determined through ministerial determination. Labor believes that the guiding principles for the pricing of access charges for nationally significant infrastructure must underpin the certainty investors and users both need. It is only by enshrining these principles in the legislation that the level of certainty investors and users both need can be guaranteed over time. It is certainty for investors and users alike that will underpin future investment and growth in our nationally significant infrastructure, one of the fundamental underpinnings of our future economic productive capacity.

That is why Labor believes that regulated access prices should (1) be set so as to generate expected revenue for a regulated service or services that is sufficient to meet the efficient costs of providing access to the regulated service or services, and (2) include a return on investment commensurate with the commercial risks involved. That is also why Labor believes that the access price structures should, firstly, allow multi-part pricing and price discrimination when it aids efficiency; secondly, not allow a vertically integrated access provider to set terms and conditions that discriminate in favour of its downstream operations, except to the extent that the cost of providing access to other operators is higher; and, thirdly, provide incentives to reduce costs or otherwise improve productivity. Labor does not believe that the government has gone far enough to ensure a competitive environment for infrastructure development in our nation, and that is why Labor will move its own amendment to the pricing principles to further ensure a robust, competitive environment for infrastructure development. That is reflected by the committee stage amendment circulated in the name of my colleague the member for Hunter.

Australia needs to simplify the provision of nationally significant infrastructure if we are to take Australia to the next level of productivity improvement. This government has failed dismally to take Australia to that next level. The government has failed to invest in our future national prosperity, instead complacently taking five long years to get us to this point and have the content and detail worked out correctly. Current and future investors require both timely and certain outcomes to make the right investment decisions and they require an environment that encourages further investment. Australia’s economic and productivity performance depends on certainty—both regulatory certainty and legislative certainty. While Labor supports this bill for the greater economic good of our nation, we take exception to the flawed implementation of this legislation. We call on the government to support Labor’s amendment to ensure an appropriately competitive environment of certainty for infrastructure investment and development. I commend the second reading amendment and the detailed committee stage amendment circulated in the name of the member for Hunter to the House.

Alex Somlyay (Fairfax, Liberal Party) Share this | Link to this | Hansard source

Before I call the member for Moncrieff, I would like to acknowledge the new Minister for Workforce Participation, who is at the table. I congratulate her on her well-deserved elevation to higher office.

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I join with you and associate myself with your remarks. I am pleased to speak today to the Trade Practices Amendment (National Access Regime) Bill 2005, and I will comment about the remarks that the member for Perth made in his contribution to this debate. It is important to recognise that the national access regime plays a crucial role in our national economy. Many years ago, the roll-out of cable and broadband which took place, most notably across the suburbs of Sydney and Melbourne, saw a duplication of the type of infrastructure that, potentially, we could be talking about with respect to this bill.

Whilst a competitive environment in an open economy such as Australia is something to be cherished and fostered because it typically leads to the most optimal economic outcomes, it can also be said that an overly competitive environment, especially where economic efficiencies can be gained from natural or near natural monopolies, would result in suboptimal economic outcomes. Recognising this, the principle of a national access regime was introduced as part of the Hilmer recommendations in the early to mid-1990s.

Various speakers in this debate have highlighted those principles contained in the competition principles agreement that was reached between the federal and state governments at COAG. At that point, it was generally regarded that a national access regime would provide the kind of framework that would lead to good economic outcomes that were in consumers’ interests where natural monopolies existed or natural monopoly characteristics existed in a particular market. The key, of course, is to differentiate between those markets in which it is important to protect a natural monopoly because it provides optimal economic outcomes and those markets in which monopolies ought not be protected because they lead to, for example, price gouging or other economic inefficiencies leading to suboptimal economic outcomes.

In that regard, I am pleased that the government is taking steps to address some of the features that have emerged as a consequence of a number of reviews of the operation of the national access regime. We know that the Trade Practices Act is designed to promote competition in markets—that is a positive thing. Part IIIA of the Trade Practices Act puts in place a legal regime to facilitate user access to services provided by essential facilities that operate as natural monopolies—for example, railway lines, gas pipelines and electricity and water infrastructure.

My constituents may wonder what is the benefit and purpose of a national access regime. How does it apply to their daily lives? For all Australians the efficient utilisation of not only capital but, importantly, the goods or services produced in natural monopoly markets does have an impact, for example, on the prices that we pay for some of these services. Electricity, water and gas are all common services and it is important that we regulate them correctly.

In recent years, we have also seen the great economic stock that Australia has as a result of being the world’s best producer in primary industry and energy markets. In particular, in Australia’s west, in Queensland and in parts of Central Australia we see very large amounts of our natural resources being successfully exploited and sold to foreign markets, all of which has helped to contribute to the long period of economic growth and sunshine that Australia has enjoyed. When one considers that there are many billions of dollars worth of capital tied up in sunk costs to exploit this type of energy and these natural resources, it is absolutely crucial that the respective governments of the day, Commonwealth and state, have the correct policy settings if they are to continue to provide the incentive necessary to create a commercial return for those companies that sink those billions of dollars of capital.

I heard the member for Perth making various comments about his concern over what he alleges are delays by the government in the introduction of this bill. I also heard him speak of a lack of a uniform approach with respect to access, as well as a number of other aspersions that he cast on the operation of this bill. In fact, I think the line that the member for Perth used was that, after five long years of hurt being felt by the national economy, he was pleased to see this bill before the House. I am fascinated that apparently five long years of harm has been done to the national economy, because the last time I looked at the figures the Australian economy was in better shape than it has been for decades. Under the stewardship of the Treasurer, Peter Costello, we have seen the Australian economy continue to move forward with the investment of record amounts of capital in new infrastructure projects. We have seen record prices achieved overseas for Australia’s natural resources. This has been done under the existing access regime—an access regime, I might add, which was introduced by the Australian Labor Party.

In stark contrast, I turn the parliament’s attention to the operation in Queensland of a separate, state based access regime, which operates under the Queensland Competition Authority Act. In particular, the Queensland Competition Authority, for a period of slightly less than two years, was looking at the issue of how to deal with a coal port in Queensland at which we were getting an exceptionally poor level of service. This is the kind of infrastructure that is crucial to our national economy, crucial to maintaining export growth and crucial to generating wealth for this country. Yet, under a state Labor government, we saw that infrastructure bogged down because the Queensland Competition Authority was unable expeditiously to make an informed decision which would lead to the kind of certainty that was required by the companies involved.

It is important that governments act, but it is also important that governments get the policy settings right, and this bill does get those settings right. In September 2005, the Senate Economics Legislation Committee recommended that the bill be amended so that the pricing principles would be included in the bill itself rather than implemented through a subordinate legislative instrument. The government has accepted this recommendation, and I too am pleased that this took place. Effectively, the amendments as a result of the acceptance of this recommendation are that a minister must, by legislative instrument, determine principles relating to the price of access to a service and that the bill should set out the pricing principles relating to the price of access to a service. The ACCC will be required to have regard to the pricing principles when making an arbitration determination and when deciding whether to accept an access undertaking or access code. The fact that the pricing principles are contained in the statute rather than in subordinate legislation is, as I said, a step in the right direction, and I am pleased that the Australian Labor Party acknowledges that.

Access regimes, by their very nature, are complex. An access regime typically involves the utilisation of infrastructure worth hundreds of millions of dollars, if not billions of dollars, and the companies involved are playing a high-stakes game. In that regard, it is little wonder that many of the existing infrastructure projects that the Australian economy is enjoying the use of are subject to often protracted negotiations between the various parties when it comes to an access regime. It almost goes without saying that it is in the interests of the parties to achieve as expeditious a resolution on an access regime as possible. It goes without saying that, where there is clearly a benefit to be gained through the utilisation of existing or forward-looking infrastructure that is to be introduced into Australia, and where there is capacity that allows for one or more companies to utilise that infrastructure, there is something to be gained by companies working together.

It has been my observation that this has occurred on many occasions. In fact, there have been a number of instances in which the national access regime has worked very well. There are, of course, those instances in which, when it comes to the national access regime, a stakeholder does not wish to see access granted to its infrastructure. And it is typically in these instances that we see the protracted kinds of negotiations and indeed the protracted arbitration that often takes place. Where an effective access regime can be put in place, or access undertakings provided, we have seen that utilised. But we are now dealing with, for example, infrastructure under a declared service. That declared service, as others have mentioned in this debate, provides for negotiation and subsequently arbitration by the ACCC where resolution cannot be achieved. It is these most difficult aspects of negotiations on access regimes for the piece of infrastructure concerned that often capture the media headlines and the interest of the business community, because any big business with a piece of infrastructure that is potentially subject to being a declared service places a lot of stock in the judgments made and decisions taken by the ACCC as part of the arbitration process.

The fact that we see the incorporation of pricing principles into legislation that is not necessarily industry specific makes an important contribution and provides indicators to the various stakeholders and potential new market entrants as to the kinds of considerations that the ACCC will take into account with respect to that piece of infrastructure or indeed to a piece of infrastructure that may potentially be subject to being a declared service. In this regard, pricing principles must be transparent. I am pleased that, through the amendments the government has agreed to, we will see that transparency contained in the bill.

Pricing principles are important also because it is very clear that, for those who are engaged in industry, the economic powerhouse that drives this country and creates wealth—the infrastructure that we see particularly in Western Australia, Central Australia and along the eastern seaboard—is the kind of infrastructure for which owners want to know that a commercial return will be supplied. Owners are of course seeking optimal economic result for the kind of capital that is sunk into major infrastructure projects. In this regard, the incorporation of the pricing principles helps to provide the certainty that is required.

In many respects, despite the protests of the member for Perth and other members opposite, many aspects of access undertakings have proved to be very successful. Access undertakings and effective access regimes do work effectively, and we have seen that on many occasions. So it is a bit false for members opposite to claim that where you have protracted negotiations under a declared service it is somehow an indication of the inappropriateness of the national access regime—principally because, by virtue of the fact that if an effective access regime were not put in place or if access undertakings were not provided, it almost goes without saying that that particular piece of infrastructure was always going to be the subject of negotiation and indeed arbitration. So in that respect, this bill is a positive step forward. The pricing principles are included in the legislation, and that is a positive step forward. I am very pleased to commend the bill to the House today.

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