Additional comments by Coalition senators
Introduction
While the Coalition broadly supports the Trade Practices
Amendment (Infrastructure Access) Bill, it is particularly concerned about the
introduction of the limited merits review. It is felt that amendments in this
area could be made and encourages the Minister to consider changes in this
specific area in order to maintain Australia’s strong economic position when
dealing with resources.
Merits review
Getting decisions wrong in the area of infrastructure of
national importance will increase sovereign risk related to investment in
private economic infrastructure and severely compromise operational efficiency
with potential costs to the economy of billions of dollars in export income,
royalties, employment, company profits and income tax. The proposal to limit
the Australian Competition Tribunal’s merits review power is flawed because the
likelihood of a wrong decision will increase substantially if there is not an
independent review with the right to test, through cross-examination, all
assertions made or the right to call for and receive new evidence.
More generally, it is alarming that the scope of a judicial
body be fettered on claims of supposed unwarranted delays based, not on a
considered review of the law in action over time, but on conjectures about
cases which radically enter new legal territory and have not yet reached their
legal completion.
The Minerals Council of Australia argued in its submission
and in evidence before the Committee that the stakes are high and that the
changes dressed up as simply procedural are actually substantial:
It comes down to two simple but profoundly important
questions: under what circumstances should one business be required by law to
make its private facilities available to another business where it is still a
competitor; and what are the consequences—in terms of efficiency losses,
regulatory costs and deterred investment in economic infrastructure and
innovation—of getting the judgements wrong?[1]
For this reason, the evidence to the Senate Economics Legislation
Committee by Justice Ray Finkelstein is significant and a cause for caution. It
is unusual for a judge to make such an intervention.
To be declared, a facility has to be of national
significance. The stakes for the parties and the stakes for the nation are
high. It goes without saying that it is imperative that at each level the
correct decision is made insofar as that is humanly possible. I cannot but
acknowledge that it does take time to resolve declaration applications.
Sometimes the time seems inordinate. It no doubt seems inordinate to the
business world, as much as it does to the executive arm of government, but it
is necessary to understand precisely what is involved and the factors that
contribute to the delay, because some of them are unavoidable. That is to say,
like it or not it is a complex process.[2]
... When I say ‘big stakes’, I am not trying to overplay what
is going on. We are talking about major capital infrastructure. If things go
wrong, what we are talking about is millions, if not hundreds of millions, if
not worse than that in dollars being misspent or lost. It is serious stuff.[3]
Justice
Finkelstein suggests the proposed limits review is too restrictive, in that the
method being suggested may overcome the inherent delays with the risk of
incorrect decision making:
While limited merits review does save time, if the
limitations are too strict there is a real risk that it will end in erroneous
decision-making.[4]
Justice Finkelstein points towards several problems that may
arise from the introduction of the Amendment Bill in its current form. In his
submission, Justice Finkelstein discussed three major problems with the
proposed changes to the Trade Practices Act.
He first discussed how the definition of what material could
be clarified and provided was not properly defined and the method of obtaining
additional material was inefficient:
The first problem is that the nature of the additional
material which the Tribunal is too confined.[5]
The Tribunal may also request the ACCC or NCC to provide
additional information. This is inefficient – it forces the Tribunal to ‘go
through a middleman’ when it would be quicker to directly seek the information
from the relevant individual.[6]
Justice Finkelstein continued on to examine information
provided and how additional information from parties not involved in the
dispute would, on occasion, be needed and under the proposed amendments this
could not happen:
A second, related, problem is that under the proposal the
Tribunal can only request information from either the person who provided
information to the original decision-maker, the NCC or the ACCC.[7]
Finally, the discussion turned to the issue of the process
involved in seeking further information. Given the complexity of the issues and
the fact that the Tribunal may not know it needs specific information without a
specific line of questioning meant that this could lead to incorrect decision
making:
The third, and perhaps most significant, problem is that the
proposed process for the Tribunal to seek further information is impractical.[8]
Most importantly, Justice Finkelstein warns that the
proposal will hamper the Tribunal’s ability to make correct decisions:
No doubt it is essential for there to be efficient procedures
for the timely resolution of access disputes. What is proposed in the Bill,
however, will seriously detract from the Tribunal's ability to make correct
decisions.[9]
Justice Finkelstein gave weight to his submission at the
Committee hearings:
Putting it as simply as I can, the process chosen is a flawed
process and the risk of getting a wrong result is too great. If it was my
decision I would not take the risk.[10]
The Minerals Council of Australia questioned whether change
to the merits review powers is warranted at all, arguing that the changes stand
to diminish transparency, restrict accountability and undermine due and proper
regulatory process, increasing the sovereign risk related to private investment
in economic infrastructure:
The Tribunal is an essential forum for testing facts and the
regulatory process. The restriction will mean a genuine consideration of
whether granting access will materially reduce the efficiency of the
infrastructure owner will not take place. The National Competition Council does
not have the powers or processes to allow it to undertake this role effectively.[11]
The consequence is increased sovereign risk, reduced
investor confidence and compromised operational and economic efficiency. Given
the recent problems in global financial markets, Australia needs to be in a
position to provide investors with the confidence to continue to invest in
Australian firms and ensure high levels of operational and economic efficiency.
The Law Council of Australia was also concerned about limiting
the amount of material before the Tribunal to the material that was before the
original decision maker. While there was recognition of the extent of delays in
decision-making, the Law Council of Australia was concerned that the limits
could lead to an incorrect decision:
The importance of merits review is well established as an
essential aspect of good regulatory process and provides an appropriate check
and balance. It is also likely that in many instances, limitations on merits
review will in fact reduce procedural efficiency, as parties will choose to
place more detailed and probative information before the original decision
maker in an effort to ensure that this information will be available to the
Tribunal, should the original decision proceed to review.[12]
Additional areas of concern
An additional area of concern to the mining industry is what
happens if the Minister does not respond inside the 60 days set down in the
legislation. While this proposal could be regarded as an efficiency or time
saving measure, it is important that any procedural assumption applied in this
situation should fall in the favour of the asset owner, rather than the asset
seeker, and that a non-response to an NCC recommendation is to be deemed as
accepting of the NCC’s recommendation as a concern. More discussion with
relevant stakeholders should be undertaken by the Government about the
implications of this proposal.
Conclusion
Justice Finkelstein recommended some specific changes in his
submission:
It is suggested that the Bill should provide that:
a. In reviewing a decision, the Tribunal may have
regard to information before the original decision-maker with a power to obtain
any further information which the Tribunal considers is material to the review;
b. The Tribunal may exercise the power to obtain
further information at such times and in such manner as the Tribunal
determines; [13]
In exercising a power to seek additional information, the
Tribunal must have regard to section 103(1)(b) of the Act, which provides that:
103(1) In proceedings before the Tribunal
...
(b) the proceedings shall be conducted with as little
formality and technicality, and with as much expedition, as the requirements of
this Act and the proper consideration of the matters before the Tribunal permit. [14]
Given the weight of concerns by stakeholders, there is merit
in further addressing these concerns and the Coalition would welcome the
opportunity to discuss these issues further with the Minister.
Senator Alan Eggleston Senator
David Bushby
Deputy Chair
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