Chapter 1 - Introduction
Background
1.1
The Trade Practices Amendment (National Access Regime)
Bill 2005 was introduced into the House of Representatives on 2 June 2005 by
the Parliamentary Secretary to the Treasurer, the Hon. Chris Pearce, MP.
1.2
On 15 June 2005, on the recommendation of the Senate
Standing Committee for the Selection of Bills, the Senate referred the
provisions of the Bill to the Economics Legislation Committee for inquiry and
report by 5 September 2005.[1]
Conduct of the inquiry
1.3
The Committee advertised the inquiry nationally and
posted details on its internet site. In addition, it wrote to a number of
organisations advising them of the inquiry and inviting them to make
submissions.
1.4
The Committee received 16 submissions and three
supplementary submissions to its inquiry. These are listed at Appendix 1.
1.5
The Committee held a public hearing at Parliament House
in Canberra on Thursday, 11 August 2005. Witnesses who presented evidence at
this hearing are listed in Appendix 2.
1.6
The Hansard of the Committee's hearing and copies of
all submissions are tabled with this report. These documents, plus the
Committee's report, are also available on the Committee's web site at https://www.aph.gov.au/Senate/committee/economics_ctte/access/index.htm.
1.7
The Committee thanks those who participated in this
inquiry.
Report
1.8
The Trade Practices Amendment (National Access Regime)
Bill 2005 implements the Government's legislative response to the Productivity
Commission's review of the national access regime. Almost all submissions to
the Committee's inquiry supported the Bill.
1.9
The Committee does not intend to detail all the
measures in the Bill that are generally procedural in nature. These constitute
the majority of amendments in the Bill and go to increasing the transparency of
decision making, providing time lines for decision makers and increasing
accountability through the publication of reasons and reporting on specific
decisions and the operation of the regime in general. The unanimity of support
for these measures suggests that the changes are welcome and they will improve
the operational aspects of the Part IIIA national access regime.
1.10
Rather, the report focuses on those aspects of the Bill
that provoked specific comment by submitters. The major area of concern was the
method for introducing pricing principles into the regime, and the Committee
makes a recommendation in this regard. Other areas of focus in the report
include the objects clause and declaration criteria.
Productivity Commission Review of the National Access Regime
1.11
As the Trade Practices
Amendment (National Access Regime) Bill 2005 is the legislative outcome of the
Productivity Commission's review of the national access regime, a brief overview
of that review follows in order to contextualise the Bill's amendments.
1.12
On 11 October 2000, the Assistant Treasurer referred
Clause 6 of the Competition Principles Agreement and Part IIIA of the Trade Practices Act 1974 to the
Productivity Commission for inquiry and report.[2]
The Commission was to report on current arrangements established by Clause 6
and Part IIIA for regulation of access to significant infrastructure
facilities, and ways of improving them. It was to focus on those parts of the
legislation that restrict competition, or that impose costs or confer benefits on
business.
1.13
The Productivity Commission found that access
regulation provides a means for businesses to use the services of ‘essential’
infrastructure, such as gas pipelines, the electricity grid and rail track,
that is uneconomic to duplicate.[3]
Without such regulation, service providers might deny access to their
facilities or charge monopoly prices for their services which could be costly
to the community. Given these potential costs, the limited experience in
Australia with access regimes and ongoing structural change in a number of
infrastructure sectors, the Commission concluded that it would be inappropriate
to abandon access regulation at this stage.
1.14
However, while the national access regime, operating in
tandem with industry access regimes, has important advantages, the Commission
found that it also has significant deficiencies. The most concerning of these
is the potential for access regulation to deter investment in essential
infrastructure. To lessen this risk, the Commission proposed new measures to be
incorporated into the national access regime to facilitate efficient
investment.
1.15
Additionally, the
Commission proposed a range of modifications to the framework of Part IIIA to
ensure that access regulation is better targeted and more workable. These include
the following:
-
inserting an objects clause and pricing
principles to guide regulators and industry and to discourage unwarranted
divergence across industry-specific regimes;
- strengthening the coverage criteria to ensure
that mandated access would only occur where it would promote a substantial
increase in competition. This would guard against the inappropriate declaration
of essential facilities;
- streamlining the coverage criteria applying
across the regime’s different access routes to reduce the scope for
inconsistent determinations;
- enhancing the prospects for negotiated outcomes
and ultimately effective arbitrations, through modifications to the
negotiate-arbitrate framework; and
- improving administrative efficiency and
transparency to address the currently cumbersome and protracted arrangements.
1.16
The Government endorsed the bulk of the recommendations
of the Productivity Commission.[4] The
Trade Practices Amendment (National Access Regime) Bill 2005 makes amendments
to the Trade Practices Act 1974 to give
effect to those recommendations. The Government will implement a small number
of other Productivity Commission recommendations through the development of
industry-specific access regimes.[5]
Additionally, where amendments of Clause 6 of the Competition Principles
Agreement are required, these will be the subject of intergovernmental
discussions to be held following passage of the Bill.
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