Senator TROETH (5:20 PM) —I table a revised explanatory memorandum relating to the Gas Pipelines Access (Commonwealth) Bill 1998 and move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard .

Leave granted.

The speeches read as follows—

CHEMICAL WEAPONS (PROHIBITION) AMENDMENT BILL 1997

This bill amends the Chemical Weapons (Prohibition) Act 1994 in order to implement refinements to the administration of that act to rectify certain problems identified during its initial implementation.

The Chemical Weapons (Prohibition) Act gives effect to Australia's obligations as a party to the Convention on the Prohibition of the Development, Production and Stockpiling and Use of Chemical Weapons and on their Destruction, usually referred to as the Chemical Weapons Convention. The Convention bans the development, production, acquisition, stockpiling, retention, transfer and use of chemical weapons and provides for the destruction of all existing stocks of chemical weapons.

Australia has long supported the Chemical Weapons Convention as a key international instrument in the fight against the spread of weapons of mass destruction, and was the sixth country to ratify it on 6 May 1994, following the passage of the Chemical Weapons (Prohibition) Act three months earlier. Three years later, on 29 April of this year, the Convention entered into force, and less than 27 days later Australia's initial declarations were submitted to the Organization for the Prohibition of Chemical Weapons.

The Chemical Weapons Convention requires Australia to make regular declarations concerning activities with chemicals listed in its Schedules, and activities producing discrete organic chemicals. The Chemical Weapons (Prohibition) Act allows the Chemical Weapons Convention Office in the Department of Foreign Affairs and Trade to collect from chemical facility operators the information required to compile these declarations, through a system of permits and notifications. National inspectors appointed under the Chemical Weapons (Prohibition) Act have the power to inspect chemical facilities to ensure compliance with obligations imposed by the act. Certain facilities are also subject to inspection by the Technical Secretariat of the Organization for the Prohibition of Chemical Weapons.

The task of preparing Australia's initial declarations has highlighted some aspects of the Chemical Weapons (Prohibition) Act which need to be refined, to simplify its overall administration, to promote compliance with it, and to ensure more effective fulfilment of Australia's commitments under the Chemical Weapons Convention.

A key element of this amending bill is the provision it makes to automate the annual permit renewal process in the Chemical Weapons (Prohibition) Act. This will simplify the compliance obligations for each company or organisation requiring a permit, but maintain the annual reporting cycle that is needed to fulfil our Convention obligations. Simplification of compliance obligations should reduce the possibility of inadvertent breach of the act. It will also provide for continuity in the relationship of each permit holder with the Chemical Weapons Convention Office.

This bill also provides for clarifications of some outstanding technical issues to be implemented through regulations under the Chemical Weapons (Prohibition) Act. The Chemical Weapons Convention is a complex instrument, and a number of technical issues related to its implementation remain unresolved internationally. Some of these issues bear directly on which industrial facilities should be subject to declaration and inspection requirements. Understandings clarifying these issues are expected to be reached by the organs of the Organization for the Prohibition of Chemical Weapons.

The bill also includes amendments which refine its secrecy provisions, streamline certain administrative procedures, and provide for applications, notices or reports to be made by way of electronic lodgment.

To reinforce the effectiveness of Australia's compliance with the Chemical Weapons Convention, this bill also includes amendments dealing with minor drafting errors identified in the Chemical Weapons (Prohibition) Act 1994.

Before concluding, I wish to thank all those from Australia's chemicals industry for their input with respect to this amending bill. In particular, I acknowledge the very important and useful contribution made by the Plastics and Chemicals Industries Association.

Australia has been at the forefront of efforts promoting the effective implementation of the Chemical Weapons Convention, and the refinements to national implementing arrangements in this bill demonstrate an ongoing commitment by the Howard Government to that goal.

GAS PIPELINES ACCESS (COMMONWEALTH) BILL 1998

This bill represents a key component in the delivery of increased competition in the natural gas sector; competition which will provide significant benefits to all Australians in the form of lower prices and increased economic activity.

The bill fulfils the Commonwealth's obligations in respect of the Natural Gas Pipelines Access signed by the Prime Minister and all other Heads of Government at the CoAG meeting of 7 November 1997.

The agreement by all governments to the natural gas industry reform package is a significant achievement in competition reform. The agreed arrangements will enhance competition in the natural gas sector, and establish the basis for the best possible use of Australia's gas resources and the lowest possible prices for all gas consumers.

The economic benefits from increased competition in the gas sector are considerable: competition will increase efficiency in production, haulage and delivery, leading to lower energy costs for industry and other users, with consequential increased economic activity.

There are also substantial greenhouse benefits from the increased use of natural gas over other fossil fuels for electricity generation and energy.

In the new competitive gas market, gas consumers will be able to contract directly with a gas supplier of their choice for the supply of gas, and contract separately with the pipeline owner for the transportation of the gas. This will encourage `gas on gas' competition between producers within a basin and between basins for the supply of gas to consumers, as well as increasing competition between gas and other fuels.

In the downstream sector of the gas market, where competition is constrained by natural monopolies, the reforms, of which this bill is a part, have been designed to replicate the outcomes of a competitive market. It seeks to do this by providing a transparent, industry specific, third party access framework.

Clearly, third party access arrangements are only one part of the process of implementing "free and fair trade in natural gas", albeit a major part.

Further reform will be necessary to establish competition at all levels in the gas chain, as well as across the energy market. The Minerals and Petroleum Resources Policy Statement I announced on 2 February 1998 sets out the Government's vision and strategic framework for sustainable development of the resource industries to enhance their international competitiveness and contribute to rising national prosperity, increasing employment opportunities and regional development.

The statement identifies further policy initiatives which the Commonwealth Government will implement on energy market reform. Specifically, the Government will build on reforms in the gas and electricity industry and work to facilitate the development of a national energy market. The Government will maintain, and where possible accelerate the momentum for ongoing competition reform, and review the operation of the evolving markets with the States and industry to identify and remove any emerging impediments to efficient market operation.

Natural gas is already a major energy source in Australia providing an economic and environmentally efficient fuel source for industry, electricity generation, transport, commerce, and households. For the sector to continue to grow at the forecast 3% per annum in order to provide 28% of Australia's primary energy demand by 2030, it is recognised that competition reforms in the gas sector need to be delivered.

Heads of Government have indicated their continued commitment to the national competition reform process, and specifically to the implementation of the proposed regulatory framework for the gas sector.

The national third party gas pipeline access regulatory scheme was developed through a process which included the Commonwealth, States and Territories and gas industry members: gas producers, pipeliners, and major users, represented by their associations. The agreed reform arrangements reflect a sound and balanced outcome, acceptable to all nine jurisdictions and the four peak industry associations.

The national gas pipeline access scheme will provide a legally enforceable right for third parties, such as suppliers, retailers and users, to negotiate access to pipelines for haulage services on terms and conditions which are fair and reasonable to both access seekers and pipeline owners. At the same time the access regime provides incentives for pipeline owners to grow the market and provide innovative and competitive pipeline haulage services, with the discretion for pipeline-specific circumstances to be taken into account.

Access to markets through pipeline networks will provide incentives for petroleum exploration and development, and for pipeline infrastructure construction and interconnections between markets. This will further enhance competitive outcomes through intra- and inter- gas basin competition, which will provide lower energy costs to industry, commercial and domestic users.

The outcomes of third party access are expected to be the development of an integrated national gas market and an interconnected pipeline grid, which will allow gas to be freely traded across jurisdictions and a national market.

There are two components of the reform arrangements to be noted.

One is the national element. The other is the regulatory approach adopted by the scheme.

National Consistency

National coverage and consistency in regulatory approaches and outcomes is very important to achieving the benefits from competition reform.

Inconsistencies in regulatory arrangements between the States or between ownership of pipelines within an integrated network could frustrate and constrain the opportunity for trades across the grid, by raising the regulatory transaction costs of industry and causing delays and uncertainty.

Establishing and maintaining a consistent and uniform national regulatory framework is central to delivering the reform benefits to gas users and to the economy. This uniformity has been established in a number of ways. Firstly, a common third party access Code is to be adopted by all jurisdictions. Secondly, to ensure consistency, an "application of laws" approach to give legislative effect to the national gas pipeline access law and the code has been chosen. This will best maintain the uniformity and integrity of the regulatory arrangements across all jurisdictions, and eliminate the danger of variations over time as a result of uncoordinated changes being made to jurisdiction-based legislation.

South Australia is the `lead' legislature, and has enacted a bill with the Gas Pipelines Access Law and the Gas Pipeline Access Code as schedules. Each jurisdiction will enact legislation to apply the South Australian law, other than Western Australia which will enact legislation to apply the gas pipeline access law and code directly, with essentially identical effect.

The Commonwealth legislation will complete the national coverage of the scheme. A seamless, consistent approach will be further enhanced by using national competition bodies to undertake key roles in the scheme.

Approach in Access Regime

The code details matters which need to be included by the pipeline owner in an Access Arrangement and specifies the pricing principles for determining the tariff for specific haulage services. The Access Arrangement for a pipeline, to be approved by the regulator, subsequently governs third party access terms and conditions to that facility for a specified period.

The monopoly component of a pipeline business is to be separated from related but contestable components of the business (for example, the transportation of gas will be separated from retailing of the gas commodity) to reduce the likelihood that related businesses will receive preferential treatment.

The arrangements provide a balance between the right of parties to procedural fairness through an appeals process, and the timeliness of regulatory outcomes. In this regard, there is provision for judicial review of decisions, and administrative appeals for certain decisions of the regulator.

The scheme also contains arrangements for resolving disputes between access seekers and the pipeline owner over the terms and conditions of access.

I now turn to examine the main provisions of the bill.

Commonwealth Role

The Commonwealth legislation is critical to establishing the national character of the access scheme.

The bill extends the scheme to areas where legislation of the States and Territories could not operate without Commonwealth assistance. In this respect, the scheme will be applied to offshore waters, relevant external territories, and to the Moomba-Sydney pipeline system.

To establish a regulatory and legal environment conducive to producing nationally consistent economic outcomes, Commonwealth competition policy institutions will have key roles in the scheme as regulatory, appeal and enforcement bodies. The States and Territories will also apply Commonwealth legislation governing judicial review.

Specific amendments are to be introduced by the Commonwealth bill to give effect to the national scheme.

Trade Practices Act 1974

The bill includes amendments to the Trade Practices Act 1974 to enable Commonwealth bodies to perform regulatory functions under the national access arrangements. The Australian Competition and Consumer Commission will be the regulator for all transmission pipelines (other than in Western Australia), and for distribution pipelines if a jurisdiction so chooses. The National Competition Council will advise on whether a pipeline meets the criteria for coverage. The Australian Competition Tribunal will hear administrative appeals on specified matters.

Amendments to the Trade Practices Act will remove any uncertainty surrounding the application of the Competition Principles principles. The changes are to make it plain that there is flexibility in the application of the Competition Principles principles in determining whether a State or Territory access regime is effective.

In addition, the bill will extend the application of Part_IIIA of the Trade Practices Act 1974 to Commonwealth waters, and apply certain sections of Part_IIIA to services to be provided by infrastructure facilities to be built in the future. The bill will also provide the Australian Competition and Consumer Commission with greater flexibility to authorise conduct which might otherwise constitute anti-competitive behaviour. The later amendments are particularly relevant to network industries, where industry codes are in effect, such as electricity, or being introduced.

Courts and Legal Interpretation

The uniformity in the rights of parties created by the adoption of a national scheme of access to pipelines must flow through to greater predictability in interpretation and, when appropriate to the case, to decisions.

Accordingly, it has been agreed that the Commonwealth's Administrative Decisions (Judicial Review) Act 1977 will apply to decisions taken under the Code and the national access Law and for concurrent jurisdiction to be conferred on the Federal Court and a Supreme Court. The latter also entails an amendment to the Australian Capital Territory (Self-Government) Act 1988 to allow the Australian Capital Territory to confer concurrent jurisdiction on the Federal Court.

Extending the Operation of the Scheme

The Moomba-Sydney pipeline is a major gas pipeline system, and will be integral to the development of an integrated eastern State pipeline net work. The bill will repeal the Commonwealth's specific access legislation contained in Part 6 of the Moomba-Sydney Pipeline System Sale Act 1994 to enable the national scheme to apply to this pipeline when it is enacted by New South Wales and South Australia.

The Commonwealth bill provides for the application of the national scheme to Commonwealth waters and to certain external territories. When the scheme is applied by the States or Northern Territory, the State or Territory legislation will be applied by the Commonwealth's legislation to pipelines in their offshore waters and in any relevant external territories. If a State or Northern Territory does not apply the scheme, the scheme is called-up directly by the Commonwealth legislation and applied in that jurisdiction's offshore waters and any relevant external territory.

The common carriage provisions in the Petroleum (Submerged Lands) Act will be displaced for gas transmission pipelines covered by the scheme.

The gas pipeline access scheme is to apply to gas transmission and distribution pipelines in Australian territory, but it is not intended that the scheme apply to that part of a pipeline which is located in another country, even if the pipeline is partly in Australian territory.

Conclusion

This bill ushers in a new phase of development in the domestic natural gas industry. This scheme is to be implemented by all jurisdictions, and is the culmination of extensive development and discussion with the gas industry and users.

I commend the bill to the honourable senators.

PRIMARY INDUSTRIES AND ENERGY LEGISLATION AMENDMENT BILL (No. 3) 1997

There are a number of statutory marketing authorities, research and development corporations and other authorities within the primary industries and energy portfolio. This bill will amend relevant acts to remove the legislative requirement for the portfolio Minister to approve the terms and conditions of employment, including remuneration, of the principal employee, placing the responsibility for this process entirely with the individual organisations.

Amendments to the Agricultural and Veterinary Chemicals (Administration) Act 1992 will provide a wider scope from which applicants with experience in occupational health and safety can be considered for appointment as a Director of the National Registration Authority for Agricultural and Veterinary Chemicals (NRA). It is also proposed to add an additional Director of the NRA with experi ence in the development or administration of Commonwealth Government policy.

The Australian Horticultural Corporation Act 1987 specifies that the Australian Horticultural Corporation Selection Committee consists of a Chairperson and seven other members. The proposed amendments will reduce the number of "other members" on the corporation from seven to three, four or five. The number of members required for a quorum will be reduced from five to a majority of the member of the Selection Committee.

Other amendments to the Australian Horticultural Corporation Act 1987 will repeal the Corporation's export trading powers.

The amendments to the Australian Wine and Brandy Corporation Act 1980 will correct a drafting error, by inserting regulation-making powers into the sections detailing the meaning of false or misleading description and presentation of wine. Currently, the regulations refer to an inappropriate section of the act and could be subject to challenge. The amendments will permit the regulations to be soundly based in the act, after which the regulations will be amended to refer to the correct head of power.

The bill will repeal clauses in the Dairy Produce Act 1986 which exclude people aged sixty five and over from holding membership on the board of the Australian Dairy Corporation.

As a part of the Agriculture—Advancing Australia package the Government announced that it would not seek repayment of loans incurred under the Farm Household Support (FHS) scheme.

The decision to terminate the FHS scheme was announced in the 1996-97 Budget. The FHS scheme provided income support to farmers to meet day-to-day living expenses who were unable to borrow commercial finance.

It was paid as a loan that could be converted to a grant under certain circumstances specified in the FHS Act. Over the life of the FHS scheme (which commenced in March 1993), there were approximately 700 FHS recipients. Of these, approximately 115 recipients had all their FHS payments converted to a grant as a result of meeting the legislative requirements.

Approximately 5 million dollars in FHS debt is owed to the Commonwealth. Two former FHS recipients have repaid their FHS loans and these people will be reimbursed.

The annulment of FHS debts is by legislative amendment, rather than by write-off or waiver, to ensure this change applies in all cases without exception.

Because FHS was initially paid as a loan, it was not considered to be income for taxation purposes. When other income support payments are made, for instance the Drought Relief Payment, the Australian Taxation Office applies a rebate so there is zero income tax payable on their income support.

Consequential amendments to the Income Tax Assessment Acts 1936 and 1997 will ensure that FHS payments, whenever converted to grants, will not be considered as taxable income, and the beneficiary rebate will be applied to the small numbers of people continuing on FHS payments (no longer as loans) consistent with the treatment of other income support payments.

The bill will amend the descriptions of the Adjacent Areas defined in the Petroleum (Submerged Lands) Act 1967 in respect of Western Australia and the Territory of Ashmore and Cartier Islands respectively to make the northern boundaries consistent with the seabed boundaries agreed in the Treaty Between the Government of Australia and the Government of the Republic of Indonesia Establishing an Exclusive Economic Zone Boundary and Certain Seabed Boundaries which was signed on 14 March 1997. The amendments are necessary to enable ratification of the Treaty.

With regard to the amendments to the Primary Industries and Energy Research and Development Act 1989, the Government proposes to reduce Commonwealth funding to the Fisheries Research and Development Corporation in the 1997-98 financial year by $3.612 million. Of the money saved, $1.5 million is to go to the adjustment program for the South East Fishery and the balance towards helping to pull back the Budget deficit.

The purpose of the amendment under the Primary Industry Councils Act 1991 is to formally abolish the Australian Pig Industry Council.

I commend the bill to honourable senators and present the explanatory memorandum.

Debate (on motion by Senator Conroy) adjourned.

Ordered that these bills be listed on the Notice Paper as separate orders of the day.