Standing Committee on Economics, Finance and Public
Administration
Submission No 9: Santos Ltd
Santos Ltd
ACN 007 550 923
Santos House Level 29
91 King William Street
Adelaide SA 5000
GPO Box 2455 Adelaide SA 5001
Telephone: 08 8218 5111
International: +61 8 8218 5111
Executive General Manager - Commercial
Facsimile: 08 8218 5623
Ref- EGMC177/96
2 December 1997
Mr David Hawker, MHR
Chairman
House of Representatives Standing Committee on
Financial Institutions and Public Administration
Parliament House
CANBERRA ACT 2600
Dear Mr Hawker
This is the second of two letters dealing with the ACCC's appearance
before, and written submissions to, the Committee on 20 November 1997.
Santos does not wish to get into a significant exchange concerning whether
or not Santos' or the ACCC's view of a certain past event is accurate
or not other than where contained in the first of the two letters dealing
with the Parker & Parsley matter. Santos has expressed its concerns to
the Committee and believes the information and views it provided are correct.
Santos is willing to appear before the Committee or provide any further
evidence the Committee requires to enable the Committee to accept Santos'
views.
We believe that the appearance before the Committee of the ACCC and
its response to the Committee actually highlight rather than counter Santos'
concerns. There are two areas where we wish to make further general submissions
to the Committee. These concern the ACCC's role (other than as a law enforcement
agency) and "access to essential facilities".
In his appearance before the Committee, Professor Fels went to great
pains to set out the role of the ACCC. For example, he stated "We are,
as I have said, a law enforcement body. We are not in general a policy
advisory or policy advocacy body". He also stated "Above all, the
fact is that the commission cannot affect people's rights against their
will without going to court,... ". Further, he stated "The fact
is that the Council of Australian Governments agreed some time ago that
all governments would review, by the year 2000, all laws - federal and
state - in every sector and every department that had an effect on competition
to see if they were justified and, if they were justified, if they could
be done in a less anti-competitive manner. That is a very major element
in our national competition policy. We are not involved in the process.
.... our role is a more limited one. We apply the law,....".
Part of the message Santos was trying to give to the Committee was that
the ACCC is an extremely powerful body and its public pronouncements on
issues are taken very seriously, almost to the point of being a statement
of law or policy rather than merely views. The Committee should contrast
Professor Fels' statements about the ACCC's role with the fact that it
has taken a very public stance in trying to shape the industry in which
Santos operates and, more specifically, the operations in which Santos
is involved in the Cooper Basin. In these areas, it is not enforcing the
law - it is actively and vigorously lobbying those that make the laws
to change the industry structure. For example, although Professor Fels
has stated that it is not involved in the legislative review process,
the Commission made two written submissions totalling 117 pages to the
South Australian Government in the review it undertook of the South Australian
Cooper Basin (Ratification) Act. If that is not "involvement in the process",
Santos does not know what is!
Santos' concerns and comments should not be taken as a suggestion that
the ACCC should not be involved in these matters. Indeed, despite Professor
Fels' comments, the ACCC has a limited statutory role in relation to dissemination
of information, law reform and research. What we are concerned about is
the extent to which it has become a lobbying organisation expressing subjective
views and attempting to formulate policy, often without a full grasp of
the facts and the extent to which it attempts to drive industries to a
model of its preferred outcome. In terms of the legislative review in
South Australia, not only did the ACCC make substantive submissions but
it also made a number of public statements. Within the submissions and
public statements, views are expressed which are extremely subjective
but which, because they emanate from the ACCC, are taken very seriously.
What makes it worse is that some of the statements made in public forum
by officers of the Commission were, in fact, erroneous or so grossly subjective
that they cannot be sustained and should not have been made. It is this
behaviour of the ACCC that we object to.
On the matter of "access to essential facilities", Professor
Fels correctly identifies that it is the new Part IIIA of the Trade Practices
Act (TPA) which deals with access to essential facilities. It is in this
regard we believe he suggested to the Committee "that the commission
cannot affect people's rights against their will without going to court,".
He also stated "With all the access decisions, in general there is
a right to appeal on them to the Australian Competition Tribunal. So the
main powers the commission has rely upon our going to court to get results
or, alternatively, there being an appeal to the tribunal." Professor
Fels further stated "With the access regime, the first element in an
access issue is whether or not someone's facilities are declared to be
'essential facilities' covered by the provisions of part 3 of the act.
If someone wants to use the facilities of someone else, for example, if
you have some rolling stock on railways and want to use someone's railway
line, then if there is a dispute the applicant goes to the National Competition
Council, which makes a decision on whether they should have access. Then
there are a number of appeal rights and so on, but we are not involved
in that matter."
Santos' complaints concerning the ACCC's role in that matter of access
are highlighted by contrasting Professor Fels' statements to the Committee
with the ACCC's actions. Santos accepts that if its facilities are "essential
facilities" then they can be caught by Part IIIA of the TPA but, importantly,
Santos will be afforded all the protections that Professor Fels outlined
to the Committee, both in the determination of whether they should be
subject to access and, if so, the relevant terms and conditions. In particular,
Santos would enjoy the benefits of Section 44G(2)(a) - (f) and Section
44F(4).
The ACCC, however, has actively sought to have part or all of Santos'
Moomba processing plant covered, by way of administrative decision, by
inclusion of facilities within Schedule A of the National Third Party
Access Code for Natural Gas Pipeline Systems. Such an inclusion would
have denied Santos the protections within Part IIIA of the TPA as to the
threshold question of whether "access" should apply.
It should be pointed out that in developing the Competition Policy Reform
Act which introduced Part IIIA into the TPA, that very deliberate consideration
was given to the extent to which access principles should apply. The application
of access principles to processing facilities was expressly and deliberately
excluded from coverage. If there is a demarcation issue, the protections
referred to in Part IIIA provide a process for determination.
It is clear that in the Gas Reform Task Force (GRTF) and Gas Reform
Implementation Group (GRIG) processes that the ACCC sought to have these
facilities included. It is also apparent from the ACCC's written submission
to the Committee (pages 12 and 13) that it has been, and is, active in
continuing the push for an access code and coverage outside of Part IIIA.
Currently, the ACCC is lobbying the South Australian Government to create
an access regime over Santos' Moomba processing plant partly on the basis
of a one-sided view of a commercial issue.
Again, this behaviour hardly seems consistent with Professor Fels' statement
that the ACCC is "...a law enforcement body..." and that "...
we are not in general a policy advisory or policy advocacy body."
By way of its written submissions and its behaviour on GRTF and GRIG,
the ACCC has clearly demonstrated that it has a view about the structure
of the industry and that it is prepared to seek to implement that structure.
Both matters referred to above are clear examples where the ACCC is
taking actions far beyond the role that the Committee would reasonably
assume is being followed based on the ACCC submissions. It is not the
expanded role per se that Santos objects to, it is the fact that the ACCC
has become a lobbyist or advocate rather than an even-handed assessor
of the facts and implementor of the laws.
Yours sincerely
J W McArdle
Executive General Manager - Commercial
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