Andrew Murray (WA, Australian Democrats) Share this | Hansard source

The incorporated speech read as follows—

Although the Australian Democrats support the Trade Practices Amendment (National Access Regime) Bill 2006, there are still aspects concerning the national infrastructure access regime we have serious concerns about, and which still need to be addressed by the Government, particularly in light of recent actions by the Treasurer.

The Trade Practices Act is increasingly being seen as the enemy of small companies or new entrants to markets, and that is not the effect it was supposed to have when it was first passed.

These amendments address issues of timeliness in decision making and set out the criteria to be taken into account in those decisions. However, it is increasingly clear that there are further matters to be addressed by this Government and the State governments, in relation to competition regulation in particular in relation to large infrastructure.

In a perfect world all strategic infrastructure would be provided by the Government at either a State or Federal level, but this has not been the case for a long time. I accept that there are times when a public/private arrangement has merit. I also accept privately funded infrastructure which is well-regulated can provide a good outcome for the public and users.

The regulation of competition in Australia is through a system of certification and declaration and it has, in some respects, worked well. The companies themselves can apply for certification of infrastructure, two companies can negotiate a contract for use of certain infrastructure at a commercial rate, and if these two avenues fail then the Australian Competition and Consumer Commission and the National Competition Council can ‘declare’ the infrastructure.

And if one party does not like the declaration they can apply to the Minister for a decision. But more on that later. And if all these avenues are exhausted then they can resort to the Federal Court.

In a recent battle over rail lines in the northwest of Western Australia, the smaller mining company Fortescue Metals Group Ltd or FMG applied for access to the larger BHP Billiton’s rail line to transport ore from a proposed mine site in the area. FMG has not yet exploited the site because it took the sensible approach that a guarantee to transport access was essential prior to exploiting the area. The National Competition Council found that FMG should have access to the rail line.

The NCC’s decision was appealed to the Treasurer and it sat on his desk for 90 days, and lapsed because he did not make a decision. Nobody knows his reasons for not making a decision (he doesn’t have to provide any if he doesn’t actually decide anything) and now FMG must pursue its rights through the courts, at great expense and delay.

During the recent Estimates session, Mr Feil, Executive Director of the NCC pointed out the complexity of competition regulation in Australia, and highlighted for the Committee the fact that there are different avenues at Federal and State level that companies can utilise in relation to access to infrastructure. These different avenues mean that forum shopping between the state and federal systems, and forum shopping between different competition regulators is available, all of which slows down and confuses the decision making process.

In light of these complexities the Australian Democrats are pleased that the Treasurer is considering the creation of a national regulatory regime for infrastructure.

We note that in the OECD Economic Survey of Australia released recently, that it said

The time taken for regulatory decisions should be closely monitored especially where it is likely to impinge on export performance.

This advice needs to be taken seriously, especially in light of the Treasurer’s failure to make a decision for 90 days in relation to the FMG matter—that is 3 months, which is half the time recommended by the recent COAG agreement that an appropriate timeframe for such decisions should be 6 months.

However, this bill does not address such a streamlining, but I was heartened by Senator Minchin’s comments at Estimates that there could be a COAG consideration of the problem to try and bring about streamlining competition regulation nationally.

At the same Estimates hearing, Mr Feil pointed out that Part IIIA of the TPA applies to both interstate and intrastate state-owned and privately owned assets. He said that there are 3 routes open to companies in relation to competition questions. One is the State specific route, the other two are national and it is the choice of the asset owners, applicants and governments which they choose.

This also leads to forum shopping which I do not agree with, and which I see as an impediment to the speedy and cost-effective resolution of competition questions. It ensures that those with the deepest pockets will win the competition battle; that new players can effectively be excluded and in the long run, they can be bought up by the big players, when their patience and their pockets are exhausted.

I was disappointed to hear at Estimates that the fact that even though the Western Australian government facilitated the building of the BHP rail line which is now ‘privately owned’ by BHP, the taxpayers contribution to this private asset was not a matter which the NCC took into account when making its decision.

In his own words Mr Feil said

The contribution the state made some time ago in facilitating the construction and planning of the railway line was reflected to a degree in the state access regime, so the quid pro quo was some conditions for third party access and a number of other things including royalties. As it turns out, the state access regime does not appear to have provided the degree of access that perhaps at the time parties thought might have occurred but it is very hard to read exactly what the trade-offs were. So we treat this as a fresh application for an asset that is essentially privately owned.....

He went on to say

I do not think it is necessary or appropriate to consider how much the state government or the people of WA might have contributed some time in the past.

From that one can gather that if you are large enough, even if you gained concessions from the Government at either a state or federal level at public cost a long time ago, those are not matters which are considered relevant to the decision making of a competition regulator.

That simply seems wrongheaded to me.

Let me again put my views on the record. I do not agree with infrastructure monopolies in private hands. I do agree with private owners getting a full commercial return. I do agree that the new entrant must fund or help fund additions to the infrastructure if that is required.

If a rail line was built because the public let it be built, through taxpayer provided easements, facilitation, and concessions, it was built in the public interest not the private interest, and should be shared.

If taxpayers have helped facilitate or fund a piece of infrastructure which is now in private hands, then shouldn’t the company have to repay in dollars the actual competitive advantage it now enjoys? And at the very least, provide access, at a commercial rate, to competitors?

It is clear from the evidence of the NCC at Estimates and in light of FMG’s ongoing application for access to rail lines, that a workable national competition policy which inhibits forum shopping and promotes real competition must be hammered out between the States and Federal government sooner rather than later.

The proposed amendments to the Objects clause provide guidance to the ACCC/NCC in making determinations in relation to infrastructure ensuring ‘economically efficient operation of, use of and investment in the infrastructure’ and to provide for a ‘consistent approach to access regulation’.

The Democrats note that the Objects clause proposed in this bill takes into account economic efficiency but does not address one of the Democrats key concerns in National Competition Policy, that is, the need for an objects clause which addresses market conditions or behaviours that may impede the emergence of ecologically sustainable industries, business and business processes.

The Democrats support the aspect of the Objects clause which provides a framework to encourage a consistent approach to access regulation in each industry.

This amendment addresses a key concern of the Democrats with regard to the methodology and ideology that is applied to the decision making by the regulator. It is also obvious, that given the limited amount of jurisprudence in the area, such matters need to be spelt out in the Act.

The objects clause is intended to promote consistency and provide guidance in the decision making process, which the Democrats hope will enhance regulatory accountability.

Some of the submissions to the Economics Legislation Committee were concerned that these objects were adding a further layer for consideration, and in fact would not provide clarity. The argument was that it would mean juggling a number of considerations without any firm idea of which consideration should take precedence.

That is a pessimistic view of the matter and the inclusion of considerations of economically efficient operation and investment in infrastructure are important guides for the competition regulator.

In relation to the ‘declaration’ of certain infrastructure there is a further criteria of determining whether the service would ‘promote a material increase in competition in at least one market whether or not in Australia’. This amendment enshrines in legislation the way in which the regulator currently interprets the requirement.

My difficulty with this amendment is not that it changes the way in which the regulator works, but it brings me to my ongoing difficulty with declarations. The Australian Democrats do not believe there is a role for the Treasurer, who is the Minister in competition regulation matters. This has been borne out by his recent behaviour in relation to FMG and BHP Billiton.

If the regulator is making the decision against certain criteria, which are the same criteria that the Minister will apply in making his decision (if he bothers to make a decision), then how can the outcome be different?

It can be different if the Minister is lobbied so extensively that he changes the outcome of the declaration. It makes a mockery of the role of the regulator and it is a waste of taxpayers’ money. It also creates further delays, which impede the effectiveness of other provisions of this bill which provide for time lines within which the regulators must make decisions.

And what about the Ministerial decision-making process being private not public? That is contrary to good due process.

If large transnational companies do not like a declaration from the regulator, then they know that they can go to the Minister and with the various carrots and sticks available to them, possibly get him to change an outcome.

Given the number of politicians (of all political persuasions) who have jumped from various Parliaments into the arms of large infrastructure providers, investment banks and other corporations I do not think that I am being unduly cynical when I am wary of the role of Ministers in these matters.

Either you have faith in your regulator and the frameworks you are setting in place by legislation, or you need to work harder on your legislative drafting.

Just as the Health Minister no longer has a final say in determining which drugs are available in Australia, then I think the Minister should not have a role in this. If the companies do not like the decision of the regulator then, as in other matters, appeals to the Federal Court should sort out the matter.

Many of the amendments proposed in this bill increase the transparency of decision making, provide time lines for decision makers and increase accountability through publication of reasons.

These are all matters on which the Australian Democrats have campaigned long and hard in the past, so the Senate will not be surprised that we support these amendments.

It ensures that those applying for access to infrastructure are able to identify, with some certainty we hope, the amount of time it will take for the decision to be made. This increases certainty for investments and forward planning for businesses.

The bill also proposes that the regulator can seek public comment on a recommendation regarding a declaration. The Democrats have always advocated a public interest test—one that takes into account the social and environmental impacts along with the economic impact of certain behaviours.

Previously the public interest test has been construed very narrowly and has been under-utilised. This amendment appears to mean that public interest is of some concern to the Coalition. Public interest is an all encompassing term. The Democrats are cautiously optimistic that this provision will go some way to providing the possibility for a better assessment of all the relevant facts.

This bill also provides for the publishing of reasons by the NCC, the ACCC and the Minister. However this amendment has serious limitations which have become clear since the Treasurer failed to make a decision in relation to FMG and BHP. In that case he made no decision, he let the application lapse, so in that circumstance there was no requirement to provide reasons because there was no decision. That was technically within the letter of the law, but few would suggest that it was the way in which people envisaged the Trade Practices Act working.

The Australian Democrats support these amendments to the TPA but looks forward to the Coalition addressing obvious shortcomings in the national competition policy as soon as possible.