House of Representatives Speech-Trade Practices Amendment (Infrastructure Access) Bill 2009

I support the Trade Practices Amendment (Infrastructure Access) Bill 2009. This bill is in the great tradition of Labor governments’ concern for infrastructure in this country. It continues on from a substantial number of reforms that have already been made by the Rudd Labor government to infrastructure and to the system of regulation of infrastructure in Australia. This bill demonstrates perhaps better than most how the Rudd Labor government, in its focus on infrastructure reforms, is continuing reforms from the Hawke and Keating Labor governments.

I support the Trade Practices Amendment (Infrastructure Access) Bill 2009. This bill is in the great tradition of Labor governments’ concern for infrastructure in this country. It continues on from a substantial number of reforms that have already been made by the Rudd Labor government to infrastructure and to the system of regulation of infrastructure in Australia. This bill demonstrates perhaps better than most how the Rudd Labor government, in its focus on infrastructure reforms, is continuing reforms from the Hawke and Keating Labor governments.

Well-planned infrastructure is very important for a country as large as ours. I am talking about transport infrastructure, water infrastructure and communications infrastructure. We need transport infrastructure, we need energy and water infrastructure, to meet the challenges presented by climate change, to meet the challenges that are presented by the size of the continent that we occupy and to meet the reality of the mostly dry and mostly brown land that we inhabit. We need of course social infrastructure, in the form of schools and hospitals, and we need to ensure that the infrastructure we have is properly utilised. This is what underlies the scheme of regulation that the amendments contained in this bill are concerned with. The particular form of regulation here is the national infrastructure access regime which was introduced following the August 1993 report of the Hilmer inquiry—an independent committee of inquiry established by the Keating government—often referred to as the Hilmer report.

The Hilmer report recommended, as part of a scheme of national competition policy, that there ought to be an access regime so as to properly share, in an economic and efficient way, infrastructure that already existed on a national scale. To bring this to life a little: the national infrastructure access regime is concerned with infrastructure such as national-scale railways and gas pipelines. Another example of how this national infrastructure access regime has been used since it was introduced by amendments made to the Trade Practices Act which came into effect in 1995 is the freight handling regime at our large airports. All of these types of infrastructure are very expensive to duplicate and it is appropriate that there be an access regime which makes possible—but certainly does not compel—the sharing of that infrastructure by other enterprises or businesses which may wish to use the existing infrastructure in their own businesses.

The other emblematic aspect of this legislation is that any examination of the history of the national infrastructure access regime demonstrates that, while the Hawke and Keating governments had a great concern for both the building of infrastructure in our country and the efficient utilisation of existing infrastructure, the former government had nothing of the same concern; indeed, the dilatory way in which the former government attended to the Productivity Commission’s very detailed recommendations for reform in 2001 is emblematic of the lax and lazy attitude of the former government on matters concerning infrastructure. You could extend that to saying that the former government had very little care for microeconomic reform and matters of economic regulation. Throughout the former government’s 11½ years in office it appeared that their primary concern with economic regulation was to lessen the rights of Australian workers. The major piece of economic legislation by the former government was the Work Choices legislation that they introduced and rushed through as soon as they got control of the Senate. We have heard an echo of that today from the new Leader of the Opposition who it seems is still devoted to Work Choices. In his very first media conference as leader he referred to the Work Choices regime. He said—and we should all be very concerned about this—that the phrase ‘Work Choices’ is dead. That would suggest that we are about to see a return to a promotion of the industrial relations policies of the former government.

To return to the subject matter of this bill: the national infrastructure access regime, introduced in 1995, was the subject of very detailed recommendations by the Productivity Commission in a review published in September 2001. In that report the Productivity Commission analysed at considerable length—as the Productivity Commission are wont to do; the report runs to over 500 pages—the purpose of a scheme of access regulation. They considered whether or not the national infrastructure access regime had been successful and the ways in which it might be possible to improve it.

The Productivity Commission made the point in their report that, although determinations under part IIIA of the Trade Practices Act had been few in number up to that point, 2001, the existence of the regime influences investment decisions and decisions that are made about essential infrastructure throughout Australia. It has an influence on the value of infrastructure assets. The report notes that the value of infrastructure assets affected by the regime—this is at 2001; there would be an even larger sum now—was over $50 billion. Infrastructure services affected by this regime affect very many important aspects of the Australian economy and the report gave examples of gas regimes, rail regimes, Victorian shipping channels and other matters that are potentially affected.

The Productivity Commission went on to note the potential costs that are bound up in having an infrastructure access regime, noting, obviously, that access regulation can intrude very significantly on property rights. It can give rise to a range of costs that have to be set against the benefits. Those costs would include administrative costs for government, compliance costs for business and constraints on the scope for access providers to deliver and price their services. And, probably the most important one, they drew attention to the reduced incentives to invest in facilities to provide new essential services or to maintain existing facilities. They noted other costs as being an inefficient investment in downstream markets and also wasteful strategic behaviour by both service providers and access seekers. They were talking there about a gaming phenomenon in business.

They explained in their report how there can be a deterrence for investment for two reasons, saying:

Potential exposure to access regulation is likely to increase the general level of risk attaching to investment in essential facilities.

The second reason offered was:

Investments in essential infrastructure will also be deterred if regulated terms and conditions are not expected to provide a sufficient return.

Notwithstanding those potential costs and the difficulties of administering a national infrastructure access regime, the Productivity Commission concluded in no uncertain terms that retention of what they described as a ‘modified’ national access regime was warranted. They went on in their very lengthy report to make some very detailed recommendations about how the provisions found in part IIIA of the Trade Practices Act, inserted by the Keating government in 1995, might usefully be amended so as to ensure that the national infrastructure access regime would work better, have less risk of cost, have less risk of deterrence to investment and in all respects provide a more timely and efficient system of access.

The recommendations that the Productivity Commission made included inserting provisions that changed the objects clauses for this part of the Trade Practices Act, some changes to the declaration criteria, provisions for dealing with negotiation and arbitration, provisions that removed immunity to Commonwealth access regimes and amendments which looked quite closely at improving the efficiency of the access regime and access pricing principles, and otherwise made suggestions as to procedural and administrative matters—in particular, introducing time limits for decisions by the Commonwealth minister, time limits for assessments by the National Competition Council and reporting arrangements and requirements for the Australian Competition and Consumer Commission.

I mention all that because I am very critical—and we should all be critical—of the slowness that was shown by the former government in taking some five years to act on a detailed set of suggestions made after considerable consideration by the Productivity Commission which were designed to ensure that this important form of economic regulation, the national infrastructure access regime, could work. It was not until 2006 that the Trade Practices Act provisions which set up this national infrastructure access regime were amended. In large part, the former government did act on the suggestions that had been made some five years earlier by the Productivity Commission, but it really was all too slow, which is representative of the attitude that the former government took to infrastructure matters.

In February of the same year, 2006, the Council of Australian Governments agreed to the Competition and Infrastructure Reform Agreement, which in turn made some further suggestions, among others to:

… introduce requirements that regulators will be bound to make regulatory decisions under an access regime within six months, provided that the regulator has been given sufficient information.

Again, no action was taken by the former government to ensure greater timeliness of the decision making that is bound up in this infrastructure access regime. Winding through the courts as far as the High Court, regrettably we have had a very dramatic example of just how slow the making of decisions in relation to infrastructure can be in the form of a very long running dispute between the Fortescue Metals Group and BHP Billiton Iron Ore Pty Ltd, a subsidiary of BHP Billiton, concerned with the access that is sought by the Fortescue Metals Group to two distinct rail lines in the Pilbara region, the Mount Newman and Goldsworthy rail lines. These rail lines are excellent examples of the kind of infrastructure that is intended to be the subject of the national infrastructure access regime.

I am not going to pre-empt what ought to be the eventual outcome of that particular dispute on the use of those rail lines between Fortescue and BHP Billiton. They are rail lines to which the Fortescue group wishes to have access. I mentioned this dispute as an example of why it is necessary for the amendments that are contained in this bill to be made, because these amendments are directed at increasing the speed with which the access regime is to be operated. It is a regime that depends on the making of declarations and a recommendations process involving the National Competition Council.

What has been demonstrated by the Fortescue-BHP dispute over access to those two rail lines in the Pilbara is that, starting in 2004 when the request for access was first made, the matter has been before two judges in separate decisions of the Federal Court, before another decision of the full Federal Court and finally before a decision of the High Court. All of those decisions and hearings before single judges of the Federal Court, before the full Federal Court and before the High Court were, regrettably, only bound up with preliminary aspects of the process by which decisions are to be made under the national infrastructure access regime.

It is to be hoped that, if the amendments contained in this bill are passed, in terms of some of those preliminary stages and the speed with which it is possible to, firstly, get recommendations from the National Competition Council and, secondly, have them reviewed under the review processes that are provided in the legislation, it is then going to be possible for the national access regime to be operated a great deal more quickly. The key provisions of the legislation are directed to timing, but there are also provisions in this legislation which will streamline the process for amending access undertakings.

The disincentive to investment that the Productivity Commission looked at when it did its report back in 2001 is of course, in part, a disincentive that is created by uncertainty in the way in which a regime like the national infrastructure access regime is going to work. The more that the legislative scheme, which introduces the obligations that will apply to infrastructure, is given clarity, the better in terms of removing the disincentive to investment, which we would all wish to avoid, that is going to be bound up with having an access regime of this nature.

This legislation deals with a key component of Australia’s regulatory frameworks. It is legislation which is going to promote the development of competitive and efficient markets. It is entirely consistent with a concentration that the Rudd government has had on infrastructure matters, I might say, not just in relation to the regulation of national infrastructure but in relation to the provision of national infrastructure. It is worth reminding the House of what the OECD Economic Outlook interim report released in March this year had to say about the Australian government’s response to the global economic crisis, because it noted in no uncertain terms that the composition of Australia’s fiscal response to the economic crisis had been tilted very heavily in favour of investment spending, that is, spending on infrastructure to a much greater degree than in any other OECD economy.

What we have seen from the Rudd government is very large spending that is to be made on more efficient metropolitan rail networks, which will deliver significant economic and social benefits through less road congestion and will lead to lower greenhouse gas emissions and faster travel times for commuters. It is also worth mentioning the $3.4 billion that is going to be spent on the Network 1 road freight corridor linking Melbourne and Cairns and the $389 million for port infrastructure, which will improve access to global markets for our export industries. The Rudd government is very concerned to not just create actual building of infrastructure where government can do that but also create the conditions in which private investment can take place in an atmosphere of certainty and in an atmosphere which promotes investment.