Wednesday, 4 March 2015
Regulations and Determinations
Competition and Consumer (Industry Code — Port Terminal Access (Bulk Wheat)) Regulation 2014; Disallowance
The reform process that this disallowance seeks to amend is one which has been corrupted by the Abbott government. The former Labor government had a plan for the ports used to export the nation's wheat post the wheat-for-weapons scandal and the dismantling of the single desk. Our 2008 legislation recognised the monopoly power of companies which market wheat and own the ports, and the risk that they would use their ownership of the ports to deny the entry of competitors in grains marketing. That would be a bad thing for the sector, for growers and for our economy.
The legislation also recognised that over time new port facilities would emerge, reducing the monopoly power of the older players, so it gave birth to a three-stage approach to promoting competition. The first stage—that is, 2008 to 2014—involved curtailing the power of the monopolists by forcing them to provide legally enforceable undertakings on port access and other matters to the ACCC. The second stage—2014 to 2019—was to be a period in which the market was subject to a prescribed code of conduct established under the Competition and Consumer Act. The code was to set rules for behaviour, disclosure, mediation and dispute resolution. The third stage was to be the dawn of a totally deregulated environment, one in which many more players, in a much more mature and competitive market, would be subject only to the general pro-competition provisions of the Competition and Consumer Act, as is the case in most markets. A decade seemed to be more than enough time to allow the market to grow and mature.
Under these arrangements, port operators would have had a capacity to apply to the ACCC for an exemption from the code on the basis that a port zone already had sufficient competition to guarantee fair dealings absent of a code. This makes sense. Why burden the market and its players with regulation when the market works fine without it? We have faith in the ACCC's ability to make such decisions, in the same way that we trust it to accept undertakings under the current regime.
Now the Abbott government wants to change our legislated plans. Firstly, the government wants to remove the certainty we provided on deregulation by removing the five-year sunset clause on the code. It seems the sector will remain subject to the whims of the minister of the day. Secondly, the government wants to leave it to Minister Joyce to decide who will be covered by the code and who will not. Indeed, Minister Joyce thinks that the largest vertically integrated player in the market and the market where there are least players should be exempt from the code because it is a cooperative. This is an extraordinary proposition. It raises the spectre of a code covering all the players on the east coast, where there are more players and more competition, but potentially covering no players on the west coast, where there are less players and less competition.
The wheat industry is critical to the Australian economy, annually earning around $6 billion in foreign exchange and meeting our own domestic consumption needs. Developing the most efficient market and supply chain is critical for our international competitiveness and grower returns. Senator Leyonhjelm's disallowance seeks to knock out Minister Joyce's power to exempt co-ops.
On balance, Labor will not support the disallowance; rather, it will give the government's proposal an opportunity to work—but we do issue an appeal. The government has removed the five-year sunset clause for the code. It has been replaced by a review in three years time. We urge the minister to provide certainty by reinstating the sunset clause. Labor believes that within five years sufficient competition will exist in all port zones to allow the removal of all regulation beyond the general provisions of the Competition and Consumer Act.
In summary, Labor believes the government has erred in providing the minister with the power to exempt certain market participants, but will not stand in the way of its right to be proven wrong to have done so.