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Wednesday, 19 March 1997
Page: 2536

Mr MILES (Parliamentary Secretary to the Prime Minister)(12.39 p.m.) —I move:

That the bill be now read a second time.

This bill is about removing legislative impediments to the implementation of reforms in the electricity industry. These reforms, together with the gas reforms agreed by the Council of Australian Governments in February 1994, have been estimated by the Industry Commission to lead to an increase in annual gross domestic product of $5.8 billion.

To do this, the bill will amend part IIIA of the Trade Practices Act 1974, the principal act. Part IIIA includes provisions whereby third parties can seek access to services provided by essential infrastructure facilities of national significance. These provisions are an important feature of Australia's national competition policy reforms. They promote competitive markets in order to improve efficiency and service delivery. The amendments to part IIIA will provide a legislative framework to support reforms in network industries where a co-regulatory approach, as an alternative to direct regulation, is being used to implement pro-competitive market structures.

This approach, which is being pursued in the electricity industry, involves the development of a code of conduct by industry participants and governments, setting out market rules, including rules about third party access to network infrastructure. In order to implement the access provisions of the code, it is envisaged that network service providers will offer access undertakings to the Australian Competition and Consumer Commission, later referred to as the commission, under part IIIA, setting out obligations in relation to network access. These undertakings are enforced by the Federal Court, upon application by the commission.

There are, however, a number of shortcomings with the principal act which would prevent the timely implementation of this approach to access regulation. Firstly, the principal act requires the commission to undertake multiple public consultation processes before such arrangements can be established: one in relation to the code, if the code requires authorisation under part VII of the principal act, and others in relation to the access undertakings of individual service providers. This unnecessary duplication of public consultation processes is an inefficient way of processing access undertakings in network industries, and runs the risk of unduly delaying progress towards more competitive infrastructure industries. Also, it may be difficult for the commission to assess whether separate access undertakings will achieve coherent industry-wide access arrangements.

Secondly, the principal act requires an undertaking to set out a high level of detail about the terms and conditions of access. Accordingly, an undertaking cannot include a maximum price or a formula with factors which are reset from time to time. Inclusion of highly detailed terms and conditions about access may be undesirable and impractical in certain network industries, such as the electricity industry, where an industry-wide approach to access is to be adopted.

Thirdly, the principal act does not enable an access provider to confer power on the commission to make decisions about access issues pursuant to an undertaking. For example, in the case of access to the national electricity grid, it is envisaged that undertakings will provide for the commission to make decisions which will affect the price for access, in accordance with criteria set out in the undertakings.

The bill will address these shortcomings by setting out a process whereby the commission can accept industry access codes, following public consultation. Each access code would set out rules about access for the industry. Once the commission has accepted an access code, the commission can accept access undertakings in accordance with the code, without the need for further public consultation. This process allows for the development of coherent access arrangements through a single consultation process. Furthermore, the bill will relax the level of detail required in an access undertaking. The appropriate level of detail will be determined by the commission and access providers, on a case-by-case basis.

The bill will also enable access providers to confer power on the commission to make decisions in connection with access. The undertaking would set out how the commission is to make its decisions, along with other relevant ancillary matters. In this regard, an undertaking could confer on the commission a role that is similar to its role under part IIIA of the principal act in relation to declared services, should an access provider choose to give the commission such a role.

In addition, the bill includes a provision to preserve the integrity of the competitive conduct rules and authorisation provisions of the principal act. The bill provides that the access provisions in the principal act will not affect the liability of the relevant parties for contraventions of the competitive conduct rules in the principal act. The cost to revenue of the proposed amendments is expected to be nil. I present the explanatory memorandum to this bill and I commend the bill to the House.