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Gas Pipelines Access (Commonwealth) Bill 1998

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1997

 

 

 

 

 

 

The Parliament of the Commonwealth of Australia

 

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

Gas Pipelines Access (Commonwealth) Bill 1997

 

 

 

 

 

 

Explanatory Memorandum

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Resources and Energy,

 Senator the Hon Warwick Parer)

 

 

11171 Cat. No. 97 1690 4 ISBN 0644 366109



 

Gas Pipelines Access (Commonwealth) Bill 1997

 

 

General Outline

 

1.       This Bill gives effect to the Commonwealth’s role in implementing the national third party access regime for natural gas pipelines in fulfillment of the Council of Australian Governments’ (CoAG) commitment to "free and fair" trade in natural gas, and in accordance with the Commonwealth's obligations in the Natural Gas Pipelines Access Agreement, signed by Heads of Government at the CoAG meeting of 7 November 1997. 

2.       The Bill also includes amendments to Part VII of the Trade Practices Act 1974   (TPA) to improve the flexibility of the authorisation process by which the Australian Competition and Consumer Commission (the Commission) can grant immunity (on public benefit grounds) from certain actions under Part IV of the Act and the Competition Code, to organisations engaging in anti-competitive conduct. 

3.       The Gas Pipelines Access (South Australia) Bill 1997 is to be the ‘lead’ legislation for the national scheme for third party access to natural gas pipelines. To maintain uniformity and the integrity of the regulatory arrangements, each jurisdiction (other than Western Australia, which will enact substantially similar legislation) will enact legislation to apply the Gas Pipelines Access Law as initially established by the South Australian Act. 

4.       The Gas Pipelines Access Law comprises Schedule 1 to the South Australian Act, and the National Third Party Access Code for Natural Gas Pipeline Systems (the Code).  The Code as agreed by the Council of Australian Governments on 7 November 1997 is set out in Schedule 2 to the South Australian Act, and may be amended in accordance with Schedule 1 to that Act.

          Coverage by Commonwealth legislation

5.       The Commonwealth legislation will complete the national coverage of the scheme by ensuring it will apply to offshore waters, to relevant external territories and adjacent areas, the Jervis Bay Territory, and to the Moomba-Sydney pipeline.

6.       In the case of the Moomba-Sydney pipeline, the Bill will repeal the Commonwealth’s specific access legislation contained in Part 6 of the Moomba-Sydney Pipeline System Sale Act 1994 , thus clearing the way for the relevant State or Territory Gas Pipelines Access Law to apply.  The repeal of Part 6 of the Moomba-Sydney Pipeline System Sale Act 1994 will take effect once the national scheme is applied in New South Wales and South Australia.

7.       The owners and operator of the Moomba-Sydney Pipeline (MSP) will not be disadvantaged by this change:  a single access regime will continue to apply to the whole of the MSP;  the same regulatory and appeal bodies as apply under Part 6 will make decisions (respectively the Commission, and the Australian Competition Tribunal (the Tribunal));  rights to judicial and merits review are provided; and the national access scheme will apply to the MSP as it will apply to other natural gas pipelines.

8.       Amendments to the Petroleum (Submerged Lands) Act 1967 will apply the national scheme to areas of Commonwealth jurisdiction beyond States and Territories territorial waters and in external territories.

9.       The common carriage provisions in the Petroleum (Submerged Lands) Act will be displaced if a pipeline is covered by the scheme.  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 offshore areas adjacent to their territorial seas and in external territories in their jurisdiction.  If the relevant jurisdiction does not apply the scheme, the scheme is called-up directly by the Commonwealth legislation and applied in the adjacent Commonwealth area.

10.     The power to direct common carriage would also be removed in respect of a pipeline for which a declaration is in force under Division 2 of Part IIIA of the TPA, or for which an access undertaking has been accepted by the Commission under Division 6 of Part IIIA.

11.     It is not intended that the gas access scheme apply to a pipeline service, or that part of a pipeline service, provided in another country, even if the pipeline is partly in Australian territory.  Nor is it intended to apply the scheme to a pipeline service if the pipeline commenced in international waters, traversed the Australian continental shelf and/or exclusive economic zone on its way to another area of high seas or another country.

12.     The Bill includes a number of provisions, and amendments to existing Commonwealth legislation, to facilitate the national character of the scheme.  As a result the uniformity in the rights of parties created by the adoption of the Gas Pipelines Access Law, should flow through to greater predictability in interpretation and therefore, when appropriate to the case, to decisions.

          Judicial Review and Federal Court

13.     The Bill provides for the Administrative Decisions (Judicial Review) Act 1977 to apply to any decisions of a Code body under the Commonwealth Law or Regulations.  Jurisdiction is also conferred on the Federal Court in respect to matters arising under the Commonwealth Law.

14.    

To promote the national character of the scheme, the Gas Pipelines Access Law is to confer concurrent jurisdiction on the Federal Court. The Commonwealth Bill amends the Australian Capital Territory (Self-Government) Act 1988 to allow the Australian Capital Territory (ACT) to legislate to confer concurrent jurisdiction on the Federal Court. 

15.     The Commonwealth Bill will also permit other scheme participants to confer jurisdiction on the Federal Court in civil and criminal proceedings, and applications under the Administrative Decisions (Judicial Review) Act 1977 , to facilitate a nationally consistent judicial review mechanism applied by all participants.

          Trade Practices Act 1974   amendments

          National competition bodies

16.     The Bill will ensure the national competition bodies can exercise powers and carry out functions conferred on them by the other scheme participants.  The Gas Pipelines Access Law provides for the Commission to be the Regulator for transmission pipelines, and individual jurisdictions may confer on the Commission the Regulatory role for distribution pipelines.  U nder Part IIIA of the TPA, the National Competition Council (the Council) will have a role in assessing the effectiveness of State and Territory access legislation submitted to it.  It will be given the additional role by the Gas Pipelines Access Law of advisory body on coverage of pipelines.  The Tribunal will hear administrative appeals.  It is intended the Tribunal will hear appeals from decisions of the Minister (on whether a pipeline is to be covered), and the Commission on specified access matters.

17.     The amendments specify that the Council may only perform functions or powers so conferred if the conferral is in accordance with the Competition Principles Agreement, signed at the Council of Australian Government’s meeting in April 1995.  The Commission may not perform a function or exercise a power conferred under this provision, unless that conferral is in accordance with a relevant agreement between the Commonwealth and the State or Territory concerned, and Tribunal will only be able to perform a function or exercise a power conferred under this provision where such conferral is in accordance with a relevant agreement between the Commonwealth and the State or Territory concerned.

          Part IIIA coverage

18.     The territorial application of Part IIIA, and other provisions of the Act which relate to Part IIIA, will be extended to cover the external Territories and the adjacent area, as defined in the Petroleum (Submerged Lands) Act 1967 , in respect of the States, the Northern Territory, and the external Territories.  This is to ensure that Part IIIA will apply to gas pipelines which extend offshore, so far as they are within Australian territorial waters.

         

Application of Competition Principles Agreement principles

19.     Related amendments to the Trade Practices Act 1974   will ensure that any uncertainty surrounding the application of the Competition Principles Agreement (CPA) principles is eliminated.  The CPA underpins the National Competition Policy, and is relevant to the access arrangements in Part IIIA of the TPA.  The changes are to make it plain that there is flexibility in the application of the CPA principles, by the Council and the Minister, in determining whether a State or Territory access regime is effective.

          Access to services

20.     Other TPA amendments will apply certain sections of Part IIIA to services to be provided by means of infrastructure facilities that are yet to be completed (future services).

          Authorisations

21.     The Bill will amend Part VII of the TPA to enhance the procedural flexibility of the Commission’s power to authorise conduct which might otherwise constitute anti-competitive behaviour.  Where conduct would ordinarily contravene the competitive conduct rules (except for the misuse of market power rule) in Part IV of the TPA (or the Competition Code), Part VII enables the Commission to grant an authorisation to the conduct, where public benefits arising from it outweigh the detriment to the public from the lessening in competition.  An authorisation confers on the parties engaging in the conduct, immunity from action under the TPA for contravention of the competitive conduct rules in respect of which the authorisation was granted, so long as the authorisation remains in force.  There are, however, a number of shortcomings with Part VII which impede the Commission’s procedural flexibility to authorise certain conduct.  In particular, an authorisation for exclusive dealing conduct cannot be sought by an applicant on behalf of other parties to the conduct and cannot be granted so as to protect all other parties named in the application.  Nor can it be expressed so as to protect additional persons who engage in the conduct as a result of becoming a party to an agreement after the authorisation has been granted.

22.     Amendments are proposed to address these deficiencies, and are particularly relevant to network industries (such as electricity), where industry codes are in effect or being effected.  The amendments will enable the Commission to extend authorisation of an industry code to all new parties to the code without conducting a full re-examination of the code.  The amendments will also streamline the process for varying, revoking and substituting authorisations which will enable the Commission upon request to grant minor variations to an authorisation to encompass code variations or, at the request of the industry, revoke an authorisation and substitute a new one. 

23.     The amendments in the Bill will also extend the Commission’s current power to grant interim authorisations, to include interim authorisations in relation to applications for minor variations and applications for the revocation of an authorisation and the substitution of a replacement authorisation.  It will also clarify that the Commission will have discretion in deciding when interim authorisations come into force.  This will enable the Commission to deal with emergency situations where a change in conduct is necessary immediately, or prior to the finalisation of a minor variation to, or revocation and substitution of, an authorisation.

          Consequential amendments

24.     The Bill will make some consequential amendments to the TPA which are primarily aimed at expanding the provisions dealing with Tribunal review, disclosure of documents and the keeping of a register by the Commission, to encompass matters involving minor variations, revocations, and revocation and substitution of authorisations.

          Financial Impact Statement

25.     Nothing in this Bill will increase the financial commitment of the Commonwealth significantly.  Some minor additional funding will be required to meet the Commonwealth's one-third share of the cost of monitoring and administration of the scheme.

26.     The overall economic benefits from introducing competition into the gas market is substantial, making up a significant part of the $5.8 billion Gross Domestic Product per annum return to the economy from electricity and gas reform, as estimated by the Industry Commission.

          Regulation Impact Statement

27.     The Australian natural gas market has been characterised by a monopoly structure where a single utility or regional distributor is connected to a single supplier of natural gas by a single transmission pipeline.  It is generally agreed such structures have led to high prices for end users and retarded growth in industries making use of gas.  There is a need to establish a regulatory environment which encourages competition in the supply of gas to consumers, and guarantees access by new market participants to the services provided by monopoly infrastructure at efficient prices.

          Specification of Regulatory Objectives

28.     In February 1994 the CoAG agreed to facilitate developments aimed at stimulating competition in the natural gas sector, to promote the best possible use of Australia's gas resources and the lowest possible prices for all gas consumers.  They agreed that a national framework characterised by ‘free and fair trade in natural gas’ would include third party access to pipelines.

29.     The objective of third party access to natural gas pipelines is to provide scope for competition between suppliers of gas to customers by providing access to the services supplied by natural monopoly pipelines on reasonable commercial terms.  CoAG agreed to apply these arrangements in a uniform national legislative approach, as this would result in the most efficient outcomes and maximise the reform benefits.

30.     A uniform framework for access by third parties will:  facilitate the development of the market for natural gas and its operation on a national basis;  aim to prevent abuse of monopoly power in the market;  promote competition so that customers may choose suppliers;  provide incentives for investment in pipelines;  and provide for resolution of disputes.

          Alternative Approaches to Regulation

31.     One legislative mechanism for facilitating competition reform within the economy is Part IIIA of the TPA which provides a right for third party access to ‘essential’ facilities, including natural monopoly infrastructure such as pipelines.  However, Part IIIA can result in proliferation of different access arrangements, and uncertainty for pipeliners and users regarding their rights.  It is also likely to be more effective for large users to pursue third party access claims.

32.     The approach adopted by jurisdictions and industry is to implement a national gas pipelines access scheme specific to the gas sector.  Compared to relying on the Part IIIA regime, this approach will enhance certainty, uniformity and consistency  -  outcomes which will assist the expansion of the market for gas and encourage investment in pipelines.  The scheme to be applied involves a balance between flexibility, required to deal with the individual circumstances of pipelines and customers, and a level of prescription to ensure consistency of treatment.  The approach will be applied in each of the States and Territories, and to offshore waters and relevant external territories.

33.     In the absence of a national approach (the do nothing approach), the alternative is to leave it to each pipeline owner to develop an access arrangement as a specific undertaking to be approved by the Commission, or for each jurisdiction to pass specific gas pipeline access legislation.  Either course would result in a proliferation of differing regulatory arrangements with the potential to create 'rail gauge' problems, damaging development of a national market in gas, with adverse consequences for economic growth and Australia's international competitiveness.  A proliferation of individual regimes involving regulatory arrangements and institutions of varying quality was already occurring.

34.     In this do nothing scenario, potential investors in pipelines would be reluctant to rely on agreements with State regulators unless the jurisdiction's legislation was assessed as effective under the processes established as a result of the Competition Principles Agreement and included in Part IIIA of the TPA.  Without a positive assessment of its effectiveness, any pipeline in the jurisdiction would be at risk of a declaration request under Part IIIA, with the possibility that an agreement with the State regulator on terms of access to the pipeline would be overturned.

          Applying the Regime

35.     The jurisdictions assessed that in the interests of allocative efficiency and administrative simplicity, the legislative approach should maintain uniformity in the rules and consistency in their application across the nine jurisdictions.  The process agreed (except by Western Australia (WA)) for giving legal effect to the gas access Code is similar to the model used for the national electricity Code, i.e. an ‘application of laws’ approach.  WA will enact complementary legislation. 

36.     The enabling legislation will apply the Code to a list of existing natural gas transmission and distribution pipelines, to which pipelines will subsequently be added or removed according to objective assessment criteria.

37.     Once the scheme is adopted by legislation in each jurisdiction, each State and Territory government will ask the Council to assess the effectiveness of their access regime, so that access can be governed by that regime to the exclusion of Part IIIA.  The Council has however been involved in the development of the arrangements at the national level, and in public consultation on the proposals, and accordingly has given in-principle agreement to the general arrangements.  The national scheme will need to be formally assessed by the Council following its legislative enactment, and the Council will need to assess each jurisdiction’s legislation in adopting the national scheme.

38.     Consideration was given to applying the approach adopted in the electricity reforms (lodging undertakings with the Commission), but given the predominance of private ownership in the gas sector compared to electricity, the national scope proposed, and the proposed lower-level of price prescriptiveness in gas  pipelines access arrangements, an industry undertaking approach was not considered feasible for gas.

39.     The Council certification route combined with application of a single law offers the scope for a model applying to all jurisdictions.

          Access Arrangements

40.     The gas pipelines access regulatory arrangements facilitate commercial negotiations between parties for access to the services of designated natural gas pipelines by addressing the imbalances in information and negotiating power between the parties.

41.     To facilitate negotiations, and to redress the imbalance in negotiating power between pipeline operators and seekers of pipeline access, pipelines which are to be subject to the Code are to establish Access Arrangements that are to be approved by the regulator.  Access Arrangements are to include approved tariffs (Reference Tariffs) for a number of standard services from the pipeline operator.  These tariffs will be approved by a regulator according to detailed pricing principles.  These tariffs will be a reference point from which individual contracts can be negotiated, and tariffs for alternative services can be negotiated.  The pre-approval of tariffs should also reduce the scope for disputes, and provide a degree of regulatory certainty for investors in pipelines.

42.     The alternative to the Access Arrangement model, is the negotiate/arbitrate model.  Comparatively, the approval of an Access Arrangement will tend to create greater certainty for all parties and reduce the scope for, and the number of, disputes.

          Ring Fencing of Pipeline Service Providers

43.     To realise the benefits of competition in the natural gas retail market, a degree of separation between the monopoly pipeline transportation business and those potentially contestable businesses will be required.  The national access  Code 'ring fencing' arrangements will require the monopoly transportation business to be separated from the retail business of the company, including separate accounts, staff and customer information.  Governments have agreed not to collect any stamp-duty or other taxes on actions taken by pipeline owners in order to comply with the ring-fencing provisions of the new arrangements.

          Responsibility for Regulation and Maintenance of the Regime

44.     The regime will operate based upon a single set of rules applied by all jurisdictions.  These rules are contained in an industry Code and the legislation, and provide only as much prescription as is needed to ensure access to pipelines on fair terms, while at the same time incorporating enough flexibility for the parties to negotiate contracts within an appropriate commercial framework .

45.     With the exception of the separate WA market, the Commission will have a key role in ensuring consistency as it has been agreed by all other jurisdictions that it will be appointed as the Regulator for transmission pipelines that link regional markets and producing basins.

46.     Independent jurisdictional-based regulators will regulate third party access to distribution pipelines.   Distribution has more local considerations, and this was considered an appropriate demarcation.  All regulators will, however, be applying the same regulatory framework of legislation and the Code.

          Impact Group Identification

47.     The regulatory arrangements will effect significant gas pipeline operators, and gas producers, marketers and consumers.  The arrangements will place obligations on pipeline operators covered by the Code, and provide rights of access to pipelines which will benefit gas producers, gas marketers/retailers and consumers.  Many pipelines are already subject to some form of access legislation so that the impact will vary.

48.    

Following a short adjustment period (which differs depending on the circumstances in each State), all gas consumers will be potentially contestable customers.  Customers will progressively, beginning with larger customers, be able to negotiate directly for the supply and carriage of their gas.

          Assessment of Costs and Benefits

49.     T he Industry Commission evaluation of the impact of the Hilmer reforms estimated that reforms in the electricity and gas sectors could deliver around $5.8 billion real growth in Gross Domestic Product per year, a significant proportion of which would be attributable to gas.  This is a quarter of all economic benefits expected from the competition reforms across the economy.  Inter-state interconnection benefits in the gas and electricity sectors are expected to be of the order of $1.8 billion, with more than three quarters of these arising from gas developments.

50.     It has been forecast that natural gas will increase its market share from 18% to 28% by the year 2030.  This equates to an annual increase in the demand for gas of around 3%, making it the fastest growing energy source in Australia.  To meet these demands, the Australian Gas Association’s Gas Supply and Demand Study 1997 indicates direct capital investment in the total gas industry would be around $14 billion (including more than $3 billion in transmission) in the period 1995 to 2005.  To a large extent these expectations will be dependent on reforms in the gas sector, including the introduction of these arrangements.

51.     Some customers (particularly industrial consumers) are likely to gain significant reductions in the price of gas.  This will result from enhanced competition in the supply of gas to final consumers resulting in greater efficiency in supply and bidding down of monopoly profits, the development of a more comprehensive interlinked gas pipeline grid and a broader national market for gas, and removal of any cross-subsidies.  There will be incentives as a result of this emerging market for new producers to supply markets by engaging in exploration, including outside of the existing supply basins, and to establish new links between producing basins and markets.  Both producers and consumers will have a greater choice respectively regarding the parties to whom they sell or from which they purchase, so that needs should be more closely satisfied.

52.     As well, to the extent that competition in gas stimulates energy substitution, increased gas usage will promote key environmental objectives related to reducing CO2 emissions.  Gas reform will be of particular importance in contributing to the achievement of Australia's targets for greenhouse gas emissions abatement, endorsed by CoAG in the National Greenhouse Response Strategy.  The importance of gas reform was also recognised in the Greenhouse 21 C Statement.

53.    

There will be a cost to pipeline owners in complying with the obligations of the Code, including in establishing access arrangements and meeting ring-fencing provisions.  However industry support for a national Code is based on the perceived efficiencies and economic benefits to be gained from this approach, including lower transaction and arbitration costs.

54.     The costs of regulators are not anticipated to be substantially different under this arrangement than if the status quo of individual regimes developing, against the background of Part IIIA arrangements, was allowed to continue.  There will be an enhanced role for the Commission, the cost of which is to be recovered from industry.  The costs of the Council are met by the Commonwealth.

55.     The legislation protects certain pre-existing rights in relation to the Moomba-Sydney Pipeline (MSP).  Compensation must be paid if there is an acquisition of property in relation to the MSP that would otherwise breach s.51(xxxi) of the Constitution.

          Consultation

56.     The full range of alternatives in design of a gas pipeline specific access regime have been analysed.  Work to identify and explore all the issues and alternatives has been undertaken over a 3 year period, within government,  by the Gas Reform Task Force (GRTF) and subsequently by the Gas Reform Implementation Group (GRIG).

57.     The consultation process has involved:  Commonwealth, State and Territory governments (jurisdictions), and peak representative bodies of gas producers, pipeliners and gas users in the GRTF and the GRIG directly developing the regulatory regime.  A formal public consultation at two points in the development process to test the appropriateness of proposals has led to many refinements, as has discussions between the Project Team and individual companies to resolve specific concerns.  The Council and Commission were also involved in the development of the proposals, and a rigorous assessment by the Council against the competition principles criteria has been undertaken.

58.     As a result of representation by interest groups in the development process, the public consultation processes, and the involvement of the Council and Commission in these processes, it is understood that all groups accept the balance achieved with the policy content of the final package.

          Administrative Simplicity, Economy and Flexibility

59.     The scheme will simplify and clarify the current confusing access arrangements applying to the industry.  Consistency in arrangements throughout Australia, and the approval of Access Arrangements (including Reference Tariffs), will reduce the transaction costs associated with gaining access, enhance the likelihood of third parties seeking and gaining access, and reduce the scope for disputes.  However, there will be an increase in administration requirements for pipelines not previously covered by an access arrangement.

60.     The arrangements will be given legal effect by legislation in each jurisdiction.  However, within a framework of consistent principles and obligations, a regulator will have considerable discretion in applying the Code to deal with the individual circumstances of each pipeline.  In this regard, the balance of prescription and flexibility in the Code reflects the outcome of extensive negotiations between the various interests.

61.     There are also arrangements to allow the Code to be adjusted through a timely and efficient decision making process in light of experience with its operation.

          Explanatory Material

62.     The new arrangements have been subject to two public consultation processes to explain the operation of the arrangements.  Other explanatory documents will be available to the public, and the Code itself incorporates explanatory material.  In addition to normal sources for legislation, additional material will be available through an official Code Registrar.

          Review

63.     The regulatory arrangements will be subject to continuous monitoring and review by a purpose built body, the Natural Gas Pipelines Advisory Committee (NGPAC) which will be responsible for administration of the Code.

64.     The NGPAC will comprise a representative of each jurisdiction, two independent jurisdiction-nominated regulators, the national regulator (the Commission), and a representative of each of the Australian Gas Association, the Australian Petroleum Production and Exploration Association, the Australian Pipeline Industry Association, and the Business Council of Australia Energy Working Group.  A representative of the Council will attend in an advisory capacity. 

65.     The functions of the NGPAC will be to:  monitor, review and report on the operation of the Code;  prepare advice on interpretation and administration of the Code;  and recommend changes to the Code and law.

66.     The Council has an on-going responsibility for assessing proposed amendments to the Code to ensure that the scheme continues to be “effective” in the context of competition policy reform.

notes on clauses

          Part 1 - Preliminary

          Clause 1 - Short Title

67.     The Gas Pipelines Access (Commonwealth) Bill 1997 (the Bill), when enacted, will be known as the Gas Pipelines Access (Commonwealth) Act 1997 .  The application legislation of each of the other participating jurisdictions will also be entitled ‘the Gas Pipelines Access (Name of Jurisdiction) Act’.

          Clause 2 - Commencement

68.     The Bill is part of a national scheme of legislation for the regulation of third party access to natural gas pipeline systems.  The Gas Pipelines Access (South Australia) Act 1997 (the South Australian Act) will be the ‘lead legislation’ for the scheme.  If enacted, and subject to sub-clauses 2(2) and (2)(3) (see clause notes paragraphs 69 and 70 below), the Bill will commence at the commencement of sections 13 and 14 of the South Australian Act.  (Sections 13 and 14 of the South Australian Act confer functions and powers on the Commonwealth Minister and certain Commonwealth bodies).

69.     Items 2,3 and 4 of Schedule 1 of the Bill, which make certain amendments to the Moomba-Sydney Pipeline System Sale Act 1994 (‘Moomba Sale Act’), commence at the commencement of the later of sections 13 and 14 of the South Australian Act, or the corresponding provision of the Gas Pipelines Access (New South Wales) Act 1998 .  Items 2, 3 and 4 of Schedule 1 provide for the repeal of Part 6 of the Moomba Sale Act, which established a third party access regime for the Moomba-Sydney Pipeline.  The repeal of Part 6 will enable the National Gas Law, as applied by the States through which the Moomba-Sydney Pipeline passes, to apply to the Pipeline in their respective jurisdictions.  Part 6 of the Moomba Sale Act, being a Commonwealth law, would otherwise override the State legislation by operation of section 109 of the Constitution.  The result of tying the commencement of Items 2, 3 and 4 of Schedule 1 to the commencement of the later of the South Australian and New South Wales Acts is that Part 6 of the Sale Act will be repealed once the national scheme has been implemented in the two States in which most of the Moomba-Sydney Pipeline is situated.  While the Pipeline also passes through Queensland, it is not expected that any person will require access to the part of the Pipeline that is in Queensland at least until after the Queensland Law is enacted.

70.     Items 27 to 56 of Schedule 1, which make certain amendments to the Trade Practices Act 1974 in relation to authorisations, commence when the Bill receives Royal Assent.

         

Clause 3 - Schedule(s)

71.     As part of the implementation of the national scheme, the Bill propose s to amend the Australian Capital Territory (Self-Government) Act 1988 ; the Moomba-Sydney Pipeline System Sale Act 1994 ; the Petroleum (Submerged Lands) Act 1967 ; and the Trade Practices Act 1974 .  The proposed amendments are set out in Schedule 1 to the Bill, and are given force by clause 3 of the Bill.

          Clause 4 - Interpretation

72.     Clause 4 explains where various terms may be defined in the Bill, or the related Gas Pipelines Access (Commonwealth) Law and the Gas Pipelines Access (Commonwealth) Regulations.

          Clause 5 - Definitions

73.     Clause 5 defines certain terms for the purposes of the Bill only.

          adjacent area in respect of a State or Territory, is defined in terms of section 5A of the Petroleum (Submerged Lands) Act 1967 (the P(SL) Act).  Section 5A of the P(SL) Act generally defines the adjacent area in respect of a State or internal Territory as the area between the outer limits of the (former 3-mile) territorial sea and the outer limits of the continental shelf, excluding any part of that area that is within Area A of the Australian-Indonesian Zone of Co-operation.  Section 5A also provides individually for the meaning of the term ‘adjacent area’ in respect of each of the external Territories.

          Gas Pipelines Access (Commonwealth) Law :  Clause 8 of the Bill applies the Gas Pipelines Access Law in certain Territories, and subclause 8(2) provides that that Law as so applying may be referred to as the Gas Pipelines Access (Commonwealth) Law.  Clause 9 of the Bill applies the Gas Pipelines Access Law, in certain circumstances, in the adjacent areas of the States and the Northern Territory, and provides that the Law as so applying may be referred to as the Gas Pipelines Access (Commonwealth) Law.  The definition of Gas Pipelines Access (Commonwealth) Law in clause 5 reflects these provisions.

          Gas Pipelines Access (Commonwealth) Regulations .  Clause 8 of the Bill applies the Gas Pipelines Access Regulations in certain Territories, and subclause 8(3) provides that those Regulations as so applying may be referred to as the Gas Pipelines Access (Commonwealth) Regulations.  Clause 10 of the Bill applies the Gas Pipelines Access Regulations, in certain circumstances, in the adjacent areas of the States and the Northern Territory, and provides that the Regulations as so applying may be referred to as the Gas Pipelines Access (Commonwealth) Regulations.  The definition of Gas Pipelines Access (Commonwealth) Regulations in clause 5 reflects these provisions.

          Gas Pipelines Access Law : the Gas Pipelines Access Law (‘Law’) is the uniform law that will be applied by all participating jurisdictions in the national scheme.

74.     The Law comprises:

          (a)     Schedule 1 to the South Australian Act (‘Schedule 1’); and

          (b)     the National Third Party Access Code for Natural Gas Pipeline Systems      (the Code), which was agreed to by the Council of Australian      Governments on 7 November 1997 (see the Inter-Governmental       Agreement entered into on that date).  A copy of the Code as originally      agreed to is set out in Schedule 2 to the South Australian Act.

75.     Schedule 1 will be enacted as part of the South Australian Act.  The Code will not be enacted.

76.     Both Schedule 1 and the Code may be amended.  The Inter-Governmental Agreement provides that amendments to the South Australian Law must be approved by all Ministers before introduction into the South Australian Parliament.  Part 2 of Schedule 1 sets out how the Code may be amended.  Accordingly, the Gas Pipelines Access Law is defined in clause 5 of the Commonwealth Bill to mean Schedule 1 of the South Australian Act as enacted, or as amended and in force for the time being, together with the Code as initially agreed or as amended in accordance with Schedule 1.

          Gas Pipelines Access Regulations :  Part 3 of the South Australian Act provides for the making of regulations in relation to the Gas Pipelines Access Law.  Clause 5 defines any regulations in force under Part 3 as the Gas Pipelines Access Regulations.

          national scheme means the scheme facilitated by the collective operation of the gas pipelines access legislation of the participants in the scheme (including, for example, this Bill).

          P(SL) Act means the Petroleum (Submerged Lands) Act 1967 .

          South Australian Act means the Gas Pipelines Access (South Australia) Act 1997 of South Australia, which is the ‘lead legislation’ for the national scheme.

77.     Subclauses 5(2) and (3) provide that words and expressions used in both the Bill and Schedule 1 to the South Australian Act (applying as part of the Gas Pipelines Access (Commonwealth) Law) have the same meanings in the Bill as they have in that Schedule, except to the extent that the context or subject matter otherwise indicates or requires.  (The Gas Pipelines Access (Commonwealth) Law is the Gas Pipelines Access Law as applied by clauses 8 and 9 of the Bill.  The Gas Pipelines Access Law comprises both Schedule 1 to the South Australian Act, as well as the Code.  Subclause 5(2) only refers to Schedule 1 to the South Australian Act.).

         

Clause 6 - Crown to be bound

78.     Clause 6 provides that, when enacted, the Bill, the Gas Pipelines Access (Commonwealth) Law and the Gas Pipelines Access (Commonwealth) Regulations will bind the Crown in all its capacities other than the Crown in right of Norfolk Island.

          Clause 7 - Extra-territorial operation

79.     The national scheme is intended to regulate the provision of third party access to gas pipelines to the extent that those pipelines are situated within the jurisdictional area of scheme participants.  The operation of the scheme in relation to a pipeline situated within the jurisdiction may, however, be affected by things (eg contracts), acts, transactions and matters that are, or are entered into or occur, outside the jurisdiction.  Accordingly, clause 7 extends the operation of the Commonwealth Bill to regulate such things, acts, transactions or matters, whether they are (or occur etc) in or outside Australia, and whether or not they are otherwise affected by the law of another jurisdiction, including a foreign country.

80.     Subclause 7.2 makes it clear, however, that the scheme, including the Commonwealth Bill, does not purport to apply in respect of pipelines, or parts of pipelines, that are situated beyond the jurisdictional area of all the scheme participants (including, for example, pipelines or parts of pipelines that are outside Australia).

          Part 2 - Application of the Bill, and the Gas Pipelines Access (Commonwealth) Law and Regulations

          Clause 8 - Application of laws in certain Territories

81.     Clause 8 of the Bill applies the Bill (when enacted), the Gas Pipelines Access Law and the Gas Pipelines Access Regulations in certain Territories and their adjacent areas, on a ‘roll-back’ basis.  That is, subclause 8(1) applies the Bill, the Gas Pipelines Access Law and the Gas Pipelines Access Regulations in each of the external Territories (other than Norfolk Island or the Australian Antarctic Territory or other prescribed external Territory) and in the adjacent areas in respect of those Territories, as well as in the Jervis Bay Territory.  However that legislation will not apply if the gas pipelines access legislation of a State or of the Australian Capital Territory or the Northern Territory applies in that Territory (see subclause 8.4).  (‘Adjacent area’ is defined in clause 5 of the Bill).

82.     Subclause 8(2) provides that, if the (Commonwealth) Gas Pipelines Access Law applies in those areas because of 8(1), then:

          (a)     it applies in those areas as a law of the Commonwealth.  (This is         because it is applied by a Commonwealth Act, namely the Bill);

          (b)     as so applying it may be referred to as the Gas Pipelines Access         (Commonwealth) Law.  This ties in with the definition of Gas Pipelines   Access (Commonwealth) Law in clause 5.

83.     Subclause 8(3) provides that, if the Gas Pipelines Access Regulations apply in those areas because of 8(1) then:

          (a)     they apply as regulations under the Gas Pipelines Access          (Commonwealth) Law; and

          (b)     as so applying may be referred to as the Gas Pipelines Access (Commonwealth) Regulations.  This ties in with the definition of Gas        Pipelines Access (Commonwealth) Regulations in clause 5.

84.     The governing legislation of external Territories usually provides for the laws of a particular State, the Australian Capital Territory (the ACT) or the Northern Territory (the NT) to apply in that Territory.  Thus if the relevant State, the ACT or NT enacts gas pipelines access legislation (ie. legislation that applies the Gas Pipelines Access Law and Regulations) then that gas pipelines access legislation will apply in that Territory by force of that Territory’s governing legislation.  In such a case there would be no need for clause 8(1) to apply the Bill,  and the Gas Pipelines Access Law and Regulations in that Territory.  Accordingly subclause 8(4) ‘rolls-back’ the application of subclause 8(1) in such a situation.

85.     So, for example, s.5 of the Heard Island and McDonald Islands Act 1953 applies the laws in force from time to time in the ACT to the Territory of Heard Island and McDonald Islands as if that Territory formed part of the ACT.  If the ACT enacts gas pipelines access legislation, then that legislation will be picked up and applied in the Territory of Heard Island and McDonald Islands by s.5 of the Heard Island and McDonald Islands Act 1953 Until such time as the ACT enacts gas pipelines access legislation, subclause 8(1) of the Bill will apply the Gas Pipelines Access Law and Regulations in that Territory.  Either way, the Gas Pipelines Access Law and Regulations will apply in that Territory. However how they apply will determine whether that Territory (and its adjacent area) forms part of the ‘jurisdictional area’ (defined in item 2 of Schedule 1 to the South Australian Act, which is part of the Gas Pipelines Access Law) of the Commonwealth, or of the ACT.

86.     Furthermore, the laws in force in a Territory apply in the adjacent area in respect of that Territory by virtue of s.11 of the Petroleum (Submerged Lands) Act 1967 .  Accordingly, if for example the ACT enacts gas pipelines access legislation that is then applied in the Territory of Heard Island and McDonald Islands by s.5 of the Heard Island and McDonald Islands Act 1953 , that legislation will also be picked up and applied in the adjacent area in respect of that Territory by virtue of s.11 of the P(SL) Act.  Accordingly, subclause 8(4) of the Bill also provides for the ‘roll back’ of subclause 8(1) in relation to the adjacent area in respect of a Territory.

         

Clause 9 - Application of Gas Pipelines Access Law under the P(SL) Act

87.     The Bill proposes to introduce new subsections 9(1A) and 11(1A) into the P(SL) Act (see clause 3 and Schedule 1 to the Bill).  The effect of these new subsections will be to apply the Bill in the adjacent area in respect of a State or the Northern Territory, if that State or the NT does not enact gas pipelines access legislation which will apply in that area.  The gas pipelines access legislation of a State or the NT will apply in the adjacent area in respect of that State or the NT if:

          •        that State or NT enacts gas pipelines access legislation, and

          •        that legislation applies in the area on the landward side of the adjacent          area in respect of that State or the NT (ie. broadly , in the former 3-        nautical mile territorial sea) (s.9(1) of the P(SL) Act).  Whether or not           such legislation applies in the territorial sea will depend on the terms    of that legislation and, for example, the operation of the relevant Acts   Interpretation and Coastal Waters legislation.

88.     Clause 9 of the Bill provides that if the Bill applies in the adjacent area in respect of a State or the NT because of the operation of subsections 9(1A) or 11(1A) of the P(SL) Act, then the Gas Pipelines Access Law also applies in that area as a law of the Commonwealth, and as so applying may be referred to as the Gas Pipelines Access (Commonwealth) Law.  (This ties in with the definition of Gas Pipelines Access (Commonwealth) Law in clause 5).

89.     As a result, the Bill and the Gas Pipelines Access Law (the latter as the Gas Pipelines Access (Commonwealth) Law) will apply in the adjacent area in respect of a State or the NT pursuant to the combined operation of proposed new subsections 9(1A) and 11(1A) of the P(SL) Act, and clause 9 of the Bill, unless that State or the NT enacts its own gas pipelines access legislation ( applying the Gas Pipelines Access Law) that applies in the territorial sea of that State or the NT.  Either way, the Gas Pipelines Access Law will apply as Commonwealth law in the adjacent area in respect of a State or the NT.  How it applies will affect whether the relevant adjacent area is part of the ‘jurisdictional area’ (defined in item 2 of Schedule 1 of the South Australian Act, which is part of the Gas Pipelines Access Law) of the Commonwealth, or of the State or NT.

          Clause 10 - Application of Gas Pipelines Access Regulations under the P(SL) Act

90.     The operation of clause 10 of the Bill is identical to that of clause 9 of the Bill, except that it applies the Gas Pipelines Access Regulations (as the Gas Pipelines Access (Commonwealth) Regulations) in the adjacent area in respect of a State or Territory, if that State or Territory does not enact gas pipelines access legislation that applies in that adjacent area.

         

Clause 11 - Extended operation of certain State and Territory Laws

91.     The effect of subsections 9(1) and 11(1) of the P(SL) Act is to apply the laws of a State or the NT, that apply in the 3-nautical mile territorial sea, in the adjacent area in respect of that State or NT, to the extent that that extended operation is not inconsistent with the P(SL) Act or any other law of the Commonwealth.  Those laws as so applying in the adjacent area apply as laws of the Commonwealth, because they apply in that area by  virtue of a Commonwealth Act (the P(SL) Act).

92.     Paragraphs 11(1)(a) and (b) of the Bill provide for the operation and administration of State or Territory gas pipelines access legislation as that legislation is applied in the adjacent area by subsection 9(1) or 11(1) of the P(SL) Act.

93.     Paragraph 11(1)(a) provides that anything done under and for the purposes of the State or Territory gas pipelines access legislation, as applying in the State or Territory and the territorial sea, is taken also to be done under that legislation as applied in the adjacent area.  This allows an action or decision of (for example) a regulator, tribunal or court, or of a pipeline operator or prospective user, taken or made for the purposes of State or Territory legislation, to take effect also under that legislation as applied offshore by subsection 9(1) or 11(1).  (Subclause 11(12) provides that a reference in section 11 to an act or thing done includes a reference to a decision made).

94.     Paragraph 11(1)(a) also makes the same provision in relation to any act or thing that is taken to have been done for the purposes of the State or Territory legislation.  This refers to actions or decisions that were done or made for the purposes of a law of the State or Territory other than the gas pipelines access legislation, that are nevertheless deemed by a law of the State or Territory to have been done for the purposes of that gas pipelines access legislation.  Subject to subclause 11(2) (see clausenote paragraph 96 below), by operation of paragraph 11(1)(a), such actions or decisions are also taken to have been done for the purposes of the State or Territory gas pipelines access legislation as applied offshore by subsection 9(1) or 11(1) of the P(SL) Act.  This can apply to acts or decisions made under another State or Territory law either before or after the enactment of the State or Territory gas pipelines access legislation.  An example of the acts or decisions that could be applied in the adjacent area by this means is:

          a decision to approve a competitive tender process made under another State law that is deemed, for the purposes of the State’s gas pipelines access legislation, to be a decision of the Relevant Regulator made under section 3.32 of the Code; the pipeline would then become a Covered Pipeline under section 1.21 of the Code, both as applied by the State’s gas pipelines access legislation in its own jurisdiction and as that legislation is applied in the adjacent area.

          (Subclause 11(12) provides that a reference in section 11 to an act or thing taken to have been done includes a reference to a decision taken to have been made).

95.     Paragraph 11(1)(b) provides for the gas pipelines access legislation of a State or Territory, as applied in the adjacent area, to be administered by the same persons or bodies, and in the same manner, as that law is administered within the limits of the State or Territory.  This will ensure uniformity of administration of the legislation both onshore and offshore.  The two areas will be within the same ‘jurisdictional area’ (see the definition of ‘jurisdictional area’ in item 2 of Schedule 1 to the South Australian Act, which is part of the Gas Pipelines Access Law).

96.     Subsection 11(2) qualifies the operation of paragraph 11(1)(a) where an act or thing is taken to have been done (but was not in fact done) for the purposes of the gas pipelines access legislation of a State or Territory.  In these circumstances, the act or thing will be taken to have been done under the gas pipelines access legislation as applied in the adjacent area only if the Commonwealth Minister makes a written determination that the act or thing is to be taken to have that effect.

97.     The Gas Pipelines Access Law and the Gas Pipelines Access Regulations will apply in the adjacent area of a State or the NT either by virtue of s.9(1) and s.11(1) of the P(SL) Act, or by virtue of clauses 9 and 10 of this Bill, read with proposed sections 9(1A) and 11(1A) of the P(SL) Act.  Either way, it will apply as Commonwealth legislation.  Accordingly, any payments made under the Law or Regulations in the adjacent area are required by section 81 of the Constitution to be paid into the Consolidated Revenue Fund (CRF).  If the legislation as applied in those areas is administered by the relevant State or NT (see subclause 11(1)(b)), then those payments will be collected by that State or Territory.  Subclause 3(a) clarifies that those payments will be received on behalf of the Commonwealth, and imposes an obligation on the State or Territory to pay the payments to the Commonwealth.

98.     However subclause 11(3)(b) imposes an obligation on the Commonwealth to pay an equivalent amount back over to the State or Territory (subclause 11(3)(b)). 

99.     Subclause 11(4) provides that these payments can be set-off against each other.  In practice, then, no payments need to physically pass between the Commonwealth and the relevant State or Territory, although the Commonwealth’s accounts will need to show the full amount of the payments that are notionally made to each State or NT.  Such an arrangement reflects the provisions of the Financial Management and Accountability Act 1997 (see section 23 of that Act).

100.   Subclause 11(5) makes provision corresponding to subclause 11(1) to apply in circumstances where the gas pipelines access legislation of a State or Territory is, by operation of the Commonwealth constituting legislation, applied in an external Territory and its adjacent area or in the Jervis Bay Territory.  See clausenotes paragraphs 81 to 86, and 91 to 95 above.

101.   Subclause 11(6) makes provision corresponding to subclause 11(2), to apply in the same circumstances as in subclause 11(5).  See clausenote paragraph 96 above.

102.   Subclauses 11(7)-(8) provide an identical arrangement in relation to payments made under the gas pipelines access legislation of a State, the ACT or the NT applying in an external Territory, as subclauses 11(3)-(4) provide in relation to payments made in the adjacent area of a State or the NT.  See clausenotes paragraphs 97 to 99 above.

103.   Section 83 of the Constitution requires an appropriation made by law before money can be drawn down from the Treasury of the Commonwealth.  Accordingly, subclause 11(9) of the Bill appropriates the Commonwealth’s CRF to the extent necessary to make the payments to a State or the ACT or NT as may be required by subclauses 11(3)(b) and 11(7)(b).  (Although those payments may be set-off against amounts payable to the Commonwealth under subclauses 11(3)(a) and 11(7)(a), they must still be made (if only notionally), and reflected in the Commonwealth’s accounts).

104.   Subclause 11(10) requires the Commonwealth Minister to cause a copy of each determination under subclauses (2) or (6) to be laid before each House of Parliament within 5 sitting days of that House after the determination was made.

105.   Subclause 11(11) provides that clause 11 does not affect the application of laws of a State, the ACT or the NT.

106.   Subclause 11(12) provides that a reference in section 11 to an act or thing done or taken to have been done includes a reference to a decision made or taken to have been made.  This includes decisions of a Minister, Regulator, Arbitrator, tribunal or court.

          Clause 12 - Interpretation of some expressions

107.   Clause 12 contains the following definitions of for the purposes of the Gas Pipelines Access (Commonwealth) Law and the Gas Pipelines Access (Commonwealth) Regulations:

          Code means the National Third Part Access Code for Natural Gas Pipeline Systems, a copy of which is set out in Schedule 2 to the South Australian Act (ie the Gas Pipelines Access (South Australia) Act 1997 , to be enacted as the ‘lead legislation’ for the national scheme), as amended, and as it applies as a law of the Commonwealth because of clauses 8 and 9 of the Bill.  The Code is part of the Gas Pipelines Access Law (see the definition of ‘Gas Pipelines Access Law’ in clause 5 of the Bill).

          Consolidated Fund means the Consolidated Revenue Fund of the Commonwealth.

          Gas Pipelines Access Law means the Gas Pipelines Access (Commonwealth) Law (which is defined in clause 5).

          Legislature means the Parliament of the Commonwealth.

          local Regulator means the ACCC.

          the Court means the Federal Court of Australia.

          this law means the Gas Pipelines Access (Commonwealth) Law.

          this scheme participant means the Commonwealth. 

108.   Subclause 12(2) contains further definitions for the purposes of the Gas Pipelines Access (Commonwealth) Law and the Gas Pipelines Access (Commonwealth) Regulations.

          Part 3 - National Administration and Enforcement

          Division 1 - Conferral of functions and powers

          Clause 13 - Functions and powers conferred on Commonwealth Minister

109.   The gas pipelines access legislation of a State, the ACT or the NT may confer functions or powers on the Commonwealth Minister.  Clause 13 of the Bill provides for the ‘acceptance’ of any such conferral of functions or power.  If a function is conferred on the Commonwealth Minister, subclause 13(b) confers on the Commonwealth Minister any power necessary or convenient to permit the performance of that function.

110.   The note at the end of clause 13 is self-explanatory.

          Clause 14 - Functions and powers conferred on local bodies

111.   The gas pipelines access legislation of each scheme participant will confer certain functions and powers on the ‘local Minister’, ‘local Regulator’ and ‘local appeals body’ within the meaning of that legislation.  In certain circumstances, for example with respect to cross-boundary pipelines that lie partly within the Commonwealth’s jurisdictional area (as defined in item 2 of Schedule 1 to the South Australian Act, which is part of the Gas Pipelines Access Law), those functions or powers may be intended to be performed or exercised in the jurisdictional area of the Commonwealth.  Clause 14 permits that local Minister, local Regulator or local appeals body to perform that function or power in that area, as well as to exercise any power necessary or convenient to permit the performance of that function.

          Clause 15 - Conferral of functions on Code Registrar

112.   The South Australian Act establishes a statutory office known as the Code Registrar.  The Gas Pipelines Access (Commonwealth) Law (which is the Gas Pipelines Access Law as applied by the Bill, and which includes the Code (see clause 5 of the Bill)), is expressed to confer certain functions and powers on the Code Registrar, for example to make available for public inspection the most up to date version of the Code (see clause 7 of the Gas Pipelines Access Law).  Clause 15 of the Bill confers those functions and powers on the Code Registrar, as well as a power to do all things necessary or convenient to be done in connection with the performance of those functions or powers. 

         

Division 2 - Federal Court

          Clause 16 - Jurisdiction of Federal Court

113.   Regulations made under the Gas Pipelines Access (South Australia) Act 1997 (the South Australian Act) may provide that certain provisions of the Code are ‘civil penalty’ provisions (see section 11 of the South Australian Act).  The Gas Pipelines Access Law also imposes certain conduct obligations that are stated to be ‘civil penalty’ provisions.  The Gas Pipelines Access Law provides for a person (generally the Regulator) to apply to ‘the Court’ for an order in respect of a civil penalty provision.  (For the purposes of the Gas Pipelines Access (Commonwealth) Law, the ‘Court’ is the Federal Court (see clause 12 of the Bill)).  The Gas Pipelines Access Law also prescribes certain offences in relation to the power of the Regulator to obtain information and documents (see Part 7 of the Gas Pipelines Access Law).  Subclause 16(1) of the Bill confers jurisdiction on the Federal Court in relation to these civil and criminal matters arising under the Gas Pipelines Access (Commonwealth) Law.

114.   Subclause 16(2)(a) confers jurisdiction on the Federal Court in relation to civil and criminal matters arising under the Gas Pipelines Access Law of jurisdictions other than the Commonwealth.  See further clause note paragraph 113 above.

115.   Certain scheme participants intend to apply the Administrative Decisions (Judicial Review) Act 1977 (the AD(JR) Act) regime to certain administrative decisions made under their respective legislative schemes.  The AD(JR) Act provides for the review by the Federal Court of certain administrative decisions.  Where a scheme participant does apply the AD(JR) Act to decisions made under its legislation, subclause 16(2)(b) confers jurisdiction on the Federal Court with respect to applications made to it under that Act.

          Clause 17 - Cross-vesting law

116.   Clause 17 makes it clear that the conferral of jurisdiction on the Federal Court by the gas pipelines access legislation of a scheme participant other than the Commonwealth does not affect the operation of any legislation relating to cross-vesting of jurisdiction.

          Division 3 - Administrative Decisions

          Clause 18 - Application of the AD(JR) Act

117.   It is intended that the Administrative Decisions (Judicial Review) Act 1977 (the AD(JR) Act) apply to decisions of certain Commonwealth bodies (called ‘Code bodies’) made under the Gas Pipelines Access (Commonwealth) Law and Gas Pipelines Access (Commonwealth) Regulations.  The AD(JR) Act applies to certain decisions ‘made under an enactment’.  To ensure that the AD(JR) Act does apply to decisions of Code bodies, subclause 18(1) of the Bill provides that decisions made by those bodies are taken to be decisions made under an enactment within the meaning of the AD(JR) Act.

118.   Subclause 18(2) provides that, for the purposes of clause 18, a Code body means the National Competition Council (the Council), the Australian Competition and Consumer Commission (the Commission), the Australian Competition Tribunal (the Tribunal), the local Minister, or an arbitrator appointed by the Commission.  (The local Minister is defined in clause 12 (read with clause 5(2)) of the Bill as the Minister having responsibility for the administration of the Act (ie the Bill when enacted).

          Clause 19 - Application of AD(JR) Act in relation to other scheme participants

119.   Clause 19 applies the AD(JR) Act to decisions made by certain Commonwealth bodies (‘Code bodies’) in the jurisdictional area of the Commonwealth, but under the gas pipelines access legislation of a scheme participant other than the Commonwealth.  (This may occur in relation to cross-boundary pipelines).

120.   Subclause 19(1) applies the AD(JR) Act to decisions of Code bodies made under the gas pipelines access legislation of a scheme participant other than the Commonwealth.  Because the AD(JR) Act applies to decisions made under an ‘enactment’, subclause 19(1) provides that the AD(JR) Act applies to decisions of Code bodies under the gas pipelines access legislation as if it were an ‘enactment’ within the meaning of the AD(JR) Act.

121.   Similarly, subclause 19(2) provides that a matter arising in relation to a decision of a Code body under the gas pipelines access legislation of a scheme participant other than the Commonwealth is taken to be a matter arising in relation to the laws of the Commonwealth in the same way as if that legislation were a law of the Commonwealth, and is not taken to be a matter arising in relation to laws of that scheme participant.

122.   Subclause 19(3) makes it clear that clause 19 does not require, prohibit, empower, authorise or otherwise provide for the doing of an act outside the jurisdictional area of the Commonwealth.  (The jurisdictional area of the Commonwealth is defined in item 2 of Schedule 1 to the South Australian Act, which is part of the Gas Pipelines Access (Commonwealth) Law).  This makes it clear that the application of the AD(JR) Act to a matter arising in relation to a decision of a Code body under the legislation of a scheme participant other than the Commonwealth by clause 19, is limited to decisions made in the jurisdictional area of the Commonwealth.

123.   Subclause 19(4) provides that, for the purposes of clause 19, a Code body means the National Competition Council (the Council), the Australian Competition and Consumer Commission (the Commission), the Australian Competition Tribunal (the Tribunal), the local Minister within the meaning of the Gas Pipelines Access (Commonwealth) Law, or an arbitrator appointed by the Commission. 

         

Part 4

          Clause 20 - Exemption from Commonwealth Taxes

124.   Subclause 20(1) provides that a prescribed tax imposed by or under a law of the Commonwealth is not payable in relation to an ‘exempt matter’, or anything done because of, or arising out of, an ‘exempt matter’.  (Under subclause 23 the Governor-General may make regulations prescribing matters required or permitted by the Act (ie the Bill when enacted) to be prescribed). 

125.   Subclause 20(2) provides that, for the purposes of clause 20, ‘exempt matter’ means a transfer of assets or liabilities, that the Commonwealth Minister and the Treasurer are satisfied is made by a person as required by the Code, or for the purpose of ensuring that a person does not breach the Code.  ( ‘Code’ is defined in clause 12 of the Bill).

          Clause 21 - Exemption from State and Territory taxes

126.   Subclause 21(1) provides that stamp duty or other tax imposed by or under a law of a State or Territory is not payable in relation to an ‘exempt matter’, or anything done because of, or arising out of, an ‘exempt matter’. 

127.   Subclause 21(2) provides that, for the purposes of clause 21, ‘exempt matter’ means a transfer of assets or liabilities, that the Commonwealth Minister is satisfied is made by a person as required by the Code, or for the purpose of ensuring that a person does not breach the Code.  (‘Code’ is defined in clause 12 of the Bill).

          Clause 22 - Actions in relation to cross-boundary pipelines

128.   Subclause 22(1) provides that, in relation to ‘cross-boundary’ pipelines, action taken by, or in relation to, certain persons or bodies under the legislation of one scheme participant in whose jurisdictional area a part of the pipeline is located, is taken to be action taken by, or in relation to, the corresponding persons under the gas pipelines access legislation of each other scheme participant in whose jurisdictional area a part of the pipeline is situated.  As a result, action taken in relation to a cross-boundary pipeline need only be taken under the legislation of one scheme participant through whose jurisdictional area the pipeline passes; it will then be deemed to have been taken under the legislation of all other relevant scheme participants, and will affect so much of the pipeline as falls within the jurisdictions of scheme participants accordingly. (The terms ‘relevant Minister’, ‘relevant Regulator’, and ‘relevant appeals body’ are defined in item 2 of Schedule 1 to the South Australian Act).

129.  

The persons and bodies whose actions are given an extended application by subclause 22(1) are:  a relevant Minister, a relevant Regulator, an arbitrator appointed by a relevant Regulator, the Federal Court, the Supreme Court of a State or a relevant appeals body, and also other persons who do things in relation to a pipeline under the gas pipelines access legislation, such as a service provider, a user or a prospective user.

130.   Subclause 22(2) provides that, for the purposes of subclause 22(1), ‘cross-boundary pipeline’ means a transmission pipeline, or a distribution pipeline, that is, or is to be, situated in the jurisdictional areas of 2 or more scheme participants.  This definition is broader than the definition of ‘cross-boundary pipeline’ contained in item 2 of Schedule 1 to the Gas Pipelines Access Law.

          Clause 23 - Regulations

131.   Clause 23 is a standard provision conferring a regulation-making power on the Governor-General.  The Governor-General may, for example, prescribe taxes that a service provider may be exempted from paying under clause 20.

         

          Schedule 1 - Amendment of Commonwealth Acts

          Australian Capital Territory (Self-Government) Act 1988

          Item 1:        After section 48A (New section 48AA ACT laws may give concurrent jurisdiction on the Federal Court of Australia)

132.   Item 1 inserts a new section 48AA into the Australian Capital Territory (Self-Government) Act 1988 to provide that a law of the Australian Capital Territory (the ACT) may confer original or appellate jurisdiction on the Federal Court in any matter in respect of which jurisdiction is conferred on the Supreme Court of the ACT by s.48A of that Act.  It is expected that the gas pipelines access legislation of the ACT will confer jurisdiction on the Federal Court in relation to certain matters.  Any such conferral will be ‘accepted’ by the Commonwealth under clause 16 of the Bill.

          Moomba-Sydney Pipeline System Sale Act 1994

          Item 2:       Part 6 (Repeal)

133.   Item 2 repeals Part 6 of the Moomba-Sydney Pipeline System Sale Act 1994 (‘Sale Act’).  Part 6 established a third party access regime for the Moomba-Sydney Pipeline.  The repeal of Part 6 will enable the Gas Pipelines Access Law, as applied by the States through which the Moomba-Sydney Pipeline passes, to apply to the Pipeline in their respective jurisdictions.  Part 6 of the Moomba Sale Act, being a Commonwealth law, would otherwise override the State legislation by operation of section 109 of the Constitution.  The result of tying the commencement of Items 2, 3 and 4 of Schedule 1 to the commencement of the later of the South Australian and New South Wales Acts (see subclause 2(2) of the Bill) is that Part 6 of the Sale Act will be repealed once the national scheme has been implemented in the two States in which most of the Moomba-Sydney Pipeline is situated.  While the Pipeline also passes through Queensland, it is not expected that any person will require access to the part of the Pipeline that is in Queensland at least until after the Queensland Law is enacted.

          Item 3:        Compensation for any acquisition of property

134.   Subitem 3(1) provides for the payment of reasonable compensation to a person if, but for this clause, the repeal of Part 6 would result in the acquisition of property from that person, and that acquisition would be invalid because of paragraph 51(xxxi) of the Constitution.  Under paragraph 51(xxxi) of the Constitution, the Commonwealth Parliament has power to make laws with respect to the acquisition of property on just terms from any State or person.  However, not every acquisition of property necessarily requires the payment of just terms.  Accordingly, compensation is only payable under item 3 where paragraph 51(xxxi) of the  Constitution requires just terms be paid.

135.   Subitem 3(2) requires that any compensation payable under subitem 3(1) be reduced by the amount of any damages or compensation (or other remedy given) in proceedings which are instituted otherwise than under item 3, and that arise out of the same event or transaction as gave rise to the obligation to pay compensation under subitem 3(1).  This prevents persons from ‘double-dipping’ by being compensated for the same event or transaction two or more times.

136.   Subitem 3(3) provides that ‘ acquisition of property ’ has the same meaning in item 3 as it does in paragraph 51(xxxi) of the Constitution. 

          Item 4:        Saving provisions

137.   Subitem 4(1) continues the provisions of Part 6 in force in relation to any access dispute under that Part which the ACCC has been notified of before the commencement of item 4, and which has not been withdrawn or resolved.  Part 6 continues to apply until the notification of the dispute is withdrawn, or the dispute is resolved.

138.   Subitem 4(2) continues in force determinations made under Part 6 that are in force immediately before the commencement of item 4.

139.   Subitem 4(3) provides that if an access dispute is resolved under Part 6, as continued in force under subitem 1, by the making of a determination after the repeal of Part 6, that determination continues in force despite the repeal of Part 6.

140.   Subitem 4(4) also continues Part 6 in force for certain purposes of review and enforcement of determinations continued in force under subitems (2) and (3).

141.   Subitem 4(5) contains certain self-explanatory definitions.

         

Petroleum (Submerged Lands) Act 1967

          Item 5:       Subsection 5(1) (Definition of Gas Pipelines Access Law )

142.   Item 5 inserts a definition of Gas Pipelines Access Law into subsection 5(1) of the P(SL) Act that applies the definition in subclause 5(1) of the Bill.

          Item 6:       Subsection 5(1) (Definition of gas pipelines access legislation)

143.   Item 6 inserts a definition of gas pipelines access legislation into subsection 5(1) of the P(SL) Act, that applies the definition in the Gas Pipelines Access Law.

          Item 7:       Subsection 5(1) (Definition of Third Party Access Code)

144.   Item 7 inserts a definition of Third Party Access Code into subsection 5(1) of the P(SL) Act, that is in similar terms to the definition of Code in clause 12 of the Bill, except that it means the Code as it applies in the area where the pipeline concerned is situated.

          Item 8:       After subsection 9(1) (New subsections 9(1A) and 9(1B))

145.   Item 8 inserts new subsections 9(1A) and 9(1B) into the P(SL) Act.  The effect of these new subsections will be to apply the Gas Pipelines Access (Commonwealth) Act 1997 (ie. this Bill, when enacted) in the adjacent area in respect of a State if that State does not enact gas pipelines access legislation which will apply in that area.  The gas pipelines access legislation of a State will apply in the adjacent area in respect of that State if:

          •        that State enacts gas pipelines access legislation, and

          •        that legislation applies on the landward side of the adjacent area in      respect of that State (broadly, in the 3-nautical mile territorial sea) (s.9(1)      of the P(SL ) Act).  Whether or not such legislation applies in the        territorial sea will depend on the terms of that legislation, and for    example the operation of the relevant Acts Interpretation and Coastal        Waters legislation.

146.   Under clauses 9 and 10 of the Bill, if the Bill applies in the adjacent area in respect of a State because of the operation of subsection 9(1A) read with subsection 9(1B), the Gas Pipelines Access Law and the Gas Pipelines Access Regulations apply in that area, and as so applying may be referred to as the Gas Pipelines Access (Commonwealth) Law and the Gas Pipelines Access (Commonwealth) Regulations.

147.   The adjacent area in respect of each State is described in section 5A of the P(SL) Act.

148.   Proposed subsection 9(1A) is expressed to be subject to section 73 of the P(SL) Act.  Section 73 is also proposed to be amended by the Bill.  For the effect of section 73, as amended, see clause note paragraph 153 below.

          Item 9:       After subsection 11(1) (New subsections 11(1A) and 11(1B))

149.   Item 9 inserts new subsections 11(1A) and 11(1B) into the P(SL) Act.  The effect of these new subsections will be to apply the Gas Pipelines Access (Commonwealth) Act 1997 (ie. this Bill, when enacted) in the adjacent area in respect of the Northern Territory (the NT) if the NT does not enact gas pipelines access legislation which will apply in that area.  The gas pipelines access legislation of the NT will apply in the adjacent area in respect of the NT if:

          •        the NT enacts gas pipelines access legislation, and

          •        that legislation applies in the area on the landward side of the adjacent          area in respect of the NT (ie. broadly, in the 3-nautical mile territorial        sea) (s.11(1) of the P(SL) Act).   Whether or not such legislation applies           in the territorial sea will depend on the terms of that legislation, and     for example the operation of the NT Acts Interpretation and Coastal        Waters legislation.

150.   Under clauses 9 and 10 of the Bill, if the Bill applies in the adjacent area of the NT because of the operation of subsection 11(1A) read with subsection 11(1B), the Gas Pipelines Access Law and the Gas Pipelines Access Regulations apply in that area, and as so applying may be referred to as the Gas Pipelines Access (Commonwealth) Law and the Gas Pipelines Access (Commonwealth) Regulations.

151.   The adjacent area in respect of the NT is described in section 5A of the P(SL)   Act.

152.   Proposed subsection 11(1A) is expressed to be subject to section 73 of the P(SL) Act.  Section 73 is also proposed to be amended by the Bill.  For the effect of section 73, as amended, see clause notes paragraph 153 below.

          Item 10:     At the end of section 73 (New subsections 73(2) and 73(3))

153.   Item 10 inserts new subsections (2) and (3) into section 73 of the P(SL) Act.  Section 73 gives the ‘Joint Authority’ (as defined in the P(SL) Act) power to direct a pipeline licensee to be a ‘common carrier’ of petroleum in respect of the pipeline.  New subsection 73(2) provides that such a direction cannot be given in relation to a pipeline if:

          (a)     the pipeline is covered within the meaning of the Third Party Access   Code (the definition of which is intended to be inserted into subsection 5(1) of the P(SL) Act - see item 7 paragraph 144 above);

          (b)     the service provided by means of the pipeline is the subject of a          declaration under section 44H of the Trade Practices Act 1974 (the TPA).        (Under section 44H of the TPA, the designated Minister can ‘declare’ a           service; if a service is declared under section 44H, certain consequences      attach to the service under Part IIIA of the TPA).

          (c)     the service provided by the pipeline is the subject of an undertaking    accepted by the Australian Competition and Consumer Commission      (the Commission) under section 44ZZA of the TPA.  (Section 44ZZA of     the TPA allows the Commission to accept an undertaking from a person who is, or who expects to be, the provider of a service).

154.   New subsection 73(3) provides that, while a direction is in force under subsection 73(1), the pipeline cannot become covered by the Third Party Access Code, and Part IIIA of the TPA does not apply in relation to any service provided by means of the pipeline.  Consequently, the pipeline cannot be declared under section 44H of the TPA, nor can an access undertaking in respect of the pipeline be accepted by the Commission under section 44ZZA of the TPA.

          Trade Practices Act 1974

          Item 11:     Extended application of Part IIIA (New section 4N)

155.   This item inserts section 4N into the Act.  Subsection 4N(1) extends the application of Part IIIA of the Act, and other provisions of the Act so far as they relate to Part IIIA, to services provided by means of facilities that are, or will be, wholly or partly within an external Territory or the adjacent area in respect of a State, of the Northern Territory, or of an external Territory, as specified in section 5A of the Petroleum (Submerged Lands) Act 1967 .

156.  Subsection 4N(2) provides that, for the purposes of subsection 4N(1), the adjacent area in respect of Queensland includes the Coral Sea area as defined in subsection 5A(7) of the Petroleum (Submerged Lands) Act 1967 .

157.  Subsection 4N(3) makes clear that subsection 4N(1) does not affect the operation of section 15B of the Acts Interpretation Act 1901 in respect of the application of Part IIIA, and of the other provisions of the Act so far as they relate to Part IIIA, in any part of the coastal sea of Australia or the coastal sea of an external Territory that is on the landward side of each of the adjacent areas referred to in subsection 4N(1).

158.  Subsection 4N(4) states that for the purposes of section 4N, service includes a proposed service covered by Subdivision C of Division 2 of Part IIIA (see items 17 to 19, 21, 23 & 24).

          Item 12:     Functions and powers of Council (New subsections 29B(2) and 29B(2A))

159.  This item amends section 29B of the Act by repealing and replacing subsection 29B(2) and inserting new subsection 29B(2A).  New subsection 29B(2) provides that the National Competition Council (the Council) may perform functions or exercise powers conferred on it by a law of a State or Territory.

160. 

New subsection 29B(2A) provides that the Council must not perform a function or exercise a power under subsection 29B(2) unless the conferral of that function or power is in accordance with the Competition Principles Agreement (one of the inter-governmental agreements signed at the April 1995 Council of Australian Government’s meeting).

          Item 13:     Functions and powers of Council (Amendment to subsection 29B(3))

161.  This item amends subsection 29B(3) to replace the words “carrying out” with the word “performing”.  This brings the subsection into line with new sections 44ZZM (item 25) and 44ZZOA (item 26).

          Item 14:     The principles in the Competition Principles Agreement have status as guidelines (New section 44DA)

162.   In deciding whether an access regime established by a State or Territory that is a party to the Competition Principles Agreement is an effective access regime, the Council and the relevant Minister must apply the relevant principles set out in that agreement.  There has to date been some uncertainty as to how strictly the Council and the relevant Minister must apply those principles.  New section 44DA clarifies the situation by providing that in applying the principles the Council and the relevant Minister must treat each individual relevant principle as having the status of a guideline rather than a binding rule.

163.   New subsection 44DA(2) provides that an access regime established by a State or Territory may still be considered an effective access regime, even though it contains matters additional to those in the Competition Principles Agreement, so long as those additional matters are consistent with the Competition Principles Agreement principles.

          Item 15:     Limits on the Council recommending declaration of a service (Amendment to paragraph 44G(3)(b))

164.  This item amends paragraph 44G(3)(b) to provide that, in deciding whether a State or Territory access regime is an effective access regime for the purposes of a declaration application, the requirement that the Council not consider any matters other than the relevant principles of the Competition Principles Agreement is subject to section 44DA.

         Item 16:      Designated Minister may declare a service (Amendment to paragraph 44H(5)(b))

165.  This item amends paragraph 44H(5)(b) to provide that, in deciding whether a State or Territory access regime is an effective access regime for the purposes of a declaration application, the requirement that the designated Minister not consider any matters other than the relevant principles of the Competition Principles Agreement is subject to section 44DA.

        

Items 17 to 19:    
Recommendation for a Ministerial decision on effectiveness of access regime (Amendments to subsections 44M(1), 44M(2) and 44M(3))

166.  Subdivision C of Division 2 of Part IIIA of the Act allows for the responsible Minister of a State or Territory to apply to the Council to have an access regime established by that State or Territory certified as an effective access regime.  The Council must make a recommendation to the Commonwealth Minister as to whether the State or Territory regime should be certified as effective.  For the avoidance of doubt, amendments are being made to relevant provisions to make clear that such State or Territory access regimes may apply to proposed services (ie. services which are to be provided by infrastructure facilities that are yet to be completed).

167.  These items amend subsections 44M(1), 44M(2) & 44M(3) respectively to make it clear that an access regime established by a State or Territory which applies to a proposed service may be the subject of an application to the Council for a recommendation on its effectiveness.

         Item 20:      Recommendation for a Ministerial decision on effectiveness of access regime (Amendment to paragraph 44M(4)(b))

168.  This item amends paragraph 44M(4)(b) to provide that, in considering what recommendation it should make to the Commonwealth Minister on the effectiveness of a State or Territory access regime, the requirement that the Council not consider any matters other than the relevant principles of the Competition Principles Agreement is subject to section 44DA.

         Item 21:      Ministerial decision on effectiveness of access regime (Amendment to subsection 44N(1))

169.  This item amends subsection 44N(1) to make clear that a State or Territory access regime which applies to a proposed service may be the subject of a recommendation to the Commonwealth Minister by the Council as to whether it is an effective access regime (see items 17-19).

         Item 22:      Ministerial decision on effectiveness of access regime (Amendment to paragraph 44N(2)(b))

170.  This item amends paragraph 44N(2)(b) to provide that, in deciding whether a State or Territory access regime is an effective access regime, the requirement that the Commonwealth Minister not consider any matters other than the relevant principles of the Competition Principles Agreement is subject to section 44DA.

         Item 23:      State or Territory ceasing to be a party to Competition Principles Agreement (Amendment to section 44P)

171.  This item amends section 44P to make clear that it also has application in respect of a State or Territory access regime which applies to a proposed service (see items 17-19).

        

Item 24:     
Register of decisions and declarations (Amendment to subsection 44Q(a))

172.  This item amends subsection 44Q(a) to make clear that it also has application in respect of a State or Territory access regime which applies to a proposed service (see items 17-19).

         Item 25:      Commission may perform functions and exercise powers under other access regimes (New section 44ZZM)

173.  This item repeals and replaces current section 44ZZM.  New subsection 44ZZM(1) provides that the Australian Competition and Consumer Commission (the Commission) may perform functions or exercise powers conferred on it by a law of a State or Territory, where that law establishes an access regime.

174.  Subsection 44ZZM(2) specifies that the Commission may not perform a function or exercise a power under subsection 44ZZM(1) unless the conferral of that function or power is in accordance with any relevant agreement between the Commonwealth and the State or Territory concerned.

         Item 26:      Tribunal may perform functions and exercise powers under other access regimes (New section 44ZZOA)

175.  This item inserts new section 44ZZOA.  Subsection 44ZZOA(1) provides for the Australian Competition Tribunal (the Tribunal) to perform functions or exercise powers conferred on it by, and for the purposes of, a law of a State or Territory, where that law establishes an access regime, and where those functions relate to the review of particular decisions under that law.

176.  Subsection 44ZZOA(2) provides that a law made for the purposes of subsection 44ZZOA(1) may specify the circumstances in which, and by whom, a review by the Tribunal may be sought, and the procedures to be followed by the Tribunal in conducting such a review.

177.  Subsection 44ZZOA(3) provides that the Tribunal must not perform a function or exercise a power under subsection 44ZZOA(1) unless the conferral of that function or power is in accordance with any relevant agreement between the Commonwealth and the State or Territory concerned.

         Item 27:       Definition (New section 87D)

178.  This item inserts new section 87D into Part VII of the Act to include a definition for ‘a proposal of the Commission’.  The definition is necessary to determine the point at which the Commission initiates a revocation of an authorisation or the revocation and substitution of an authorisation.

        

Item 28:
      Power of Commission to grant authorisations (Amendment to subsections 88(7), (7A) and (8))

179.  This item amends subsections 88(7), (7A) and (8) to provide that an application for authorisation to engage in boycotts or the practice of exclusive dealing may be lodged on behalf of the party seeking authorisation - presently such applications can only be made directly by a party seeking authorisation.  This proposed amendment will make subsections 88(7), (7A) and (8) consistent with subsections 88(1) and (5), which deal with the power of the Commission to grant authorisations in relation to horizontal agreements and covenants.

         Item 29:       Power of Commission to grant authorisations (New subsections 88(8AA) and (8AB))

180.  This item amends section 88 to provide that the Commission may grant an authorisation for exclusive dealing practices identified in a contract, arrangement, understanding or industry code of practice which protects, in addition to the applicant, all other persons named in the application and other persons who subsequently become parties to the contract, arrangement, understanding or code, after the authorisation is granted.  Proposed subsection 88(8AA) will make the Commission’s power to grant authorisations for exclusive dealing involving multiple parties, consistent with its power in relation to horizontal agreements.

181.  Therefore, authorisations for exclusive dealing conduct involving more than one party will be able to be granted so as to encompass all parties to the conduct but, for certainty, the conduct must be expressly required or permitted by a contract, arrangement, understanding or industry code of practice, and the participants to the conduct must be named or referred to in the application or become parties to the contract, arrangement, understanding or code after the authorisation has been granted.  Thus, where no referable contract, arrangement, understanding or industry code of practice exists, the ACCC would be unable, in the same application, to accommodate the authorisation needs of parties additional to the applicant.

182.  Proposed subsection 88(8AB) provides that the Commission may grant an authorisation to encompass parties additional to the applicant where the exclusive dealing conduct is identified in a proposed contract, arrangement, understanding or industry code of practice.

         Item 30:       Power of Commission to grant authorisations (Amendment to subsections 88(8A) and (9))

183.  This item amends subsections 88(8A) and (9) to provide that an application for authorisation to engage in the practice of resale price maintenance or to acquire shares or a controlling interest in a company or assets of a person (in contravention of sections 50 or 50A) may be lodged on behalf of the person engaging in the conduct - presently such applications can only be made directly by the person seeking the authorisation.  The proposed amendment will make subsections 88(8A) and (9) consistent with subsections 88(1) and (5) and the amended subsections 88(7), (7A) and (8).

         Item 31:       Power of Commission to grant authorisations (Amendment to subsection 88(13))

184.  This item  amends subsection 88(13) to enable the Commission to grant a single authorisation (or a number of separate authorisations) in relation to exclusive dealing conduct identified in a contract, or one or more other contracts, that are in similar terms to the original contract.  This amendment (together with that in Item 32) brings the Commission’s power to grant authorisations for exclusive dealing involving multiple parties into line with its power in relation to horizontal agreements.

         Item 32:       Power of Commission to grant authorisations (Amendment to paragraph 88(15)(a))

185.  This item amends paragraph 88(15)(a) to extend the definition of “contract” for the purposes of subsections 88(13) and (14), to include industry codes of practice.  Hence, subsections 88(13) and (14) will extend to applications for authorisation relating to contracts, arrangements, understandings or industry codes of practice.

         Item 33:       Procedure for applications (Amendment to subsection 89(1))

186.  This item amends subsection 89(1) to require that, in addition to applications for authorisations, applications to the Commission for minor variation of an authorisation, revocation of an authorisation, or revocation of an authorisation and substitution of a replacement authorisation, shall be in writing in the form prescribed by the Trade Practices Regulations.

         Item 34:       Procedure for applications (Amendment to subsection 89(2))

187.  This item amends subsection 89(2) to provide that, in addition to applications for authorisations, the Commission is required to make public all applications received for minor variation to an authorisation, revocation of an authorisation, and revocation of an authorisation and substitution of a replacement authorisation.

         Item 35:       Procedure for applications (Amendment to subsection 89(3))

188.  This item amends subsection 89(3) to provide that, in addition to applications for authorisations, the Commission is required to maintain a public register of all applications received for minor variation to an authorisation, revocation of an authorisation, and revocation of an authorisation and substitution of a replacement authorisation.

189.  In addition, the proposed amendment will require the Commission to include on the register proposals by the Commission for revocation of an authorisation or revocation of an authorisation and substitution of a replacement authorisation.  Also, applications or proposals withdrawn or abandoned must be included on the register.

         Item 36:       Saving provision

190.  This item is a saving provision included to ensure that the existing register of applications for authorisation, maintained pursuant to the current subsection 89(3), continues to have effect when subsection 89(3) is amended as proposed by item 35.

         Item 37:       Procedure for applications (Amendment to paragraphs 89(4)(a), (aa) and (ab), repeal of paragraph 89(4)(aaa))

191.  This item amends subsection 89(4) to extend the requirement for certain documents to be included on the register to include documents that are furnished pursuant to an application for a minor variation to an authorisation, the revocation of an authorisation and the revocation of an authorisation and substitution of a replacement authorisation, or furnished pursuant to a proposal by the Commission for the revocation of an authorisation or the revocation of an authorisation and substitution of a replacement authorisation.  This amendment also requires that draft determinations, summaries of reasons, records of conferences and other relevant documents concerning such applications and proposals be included on the register.

         Item 38:       Procedure for applications (Amendment to paragraph 89(4)(b))

192.  This item extends paragraph 89(4)(b) to require that any oral submission made to the Commission in relation to a proposal by the Commission for the revocation of an authorisation or the revocation of an authorisation and substitution of a replacement authorisation, is included on the register.

         Item 39:       Procedure for applications (Amendment to paragraph 89(4)(c))

193.  This item extends paragraph 89(4)(c) to require that any determination of the Commission or statement of reasons given by the Commission for a determination, in relation to a proposal by the Commission for the revocation of an authorisation or the revocation of an authorisation and substitution of a replacement authorisation, be included on the register.

         Item 40:       Procedure for applications (Amendment to subsection 89(5))

194.  This item extends subsection 89(5) to enable persons to request that documents furnished or oral submissions made to the Commission in relation to a proposal by the Commission for the revocation of an authorisation or the revocation of an authorisation and substitution of a replacement authorisation, be excluded from the register on the grounds of confidentiality.

195.  In addition, this item amends the heading of section 89 to reflect that the section deals with the keeping of a register, as well as the procedure for the making of applications.

        

Item 41:     
Grant, revocation and variation of authorisations (New subsections 91(1B) and (1C))

196.  This item inserts new subsections 91(1B) and (1C) to govern the time at which minor variations to an authorisation, and authorisations which are substituted for revoked authorisations, resulting from either an application to the Commission or a proposal by the Commission, come into force.

         Items 42, 43 and 44:      Grant, revocation and variation of authorisations (Amendments to subsection 91(2))

197.  Paragraph 91(2)(a) is amended to provide that the Commission may, if it considers it appropriate to do so, grant an interim authorisation for the purpose of giving due consideration to an application for a minor variation of an authorisation or the revocation of an authorisation and substitution of a replacement authorisation.

198.  Paragraph 91(2)(b) is extended to enable the Commission to grant an interim authorisation pending the expiration of the time allowed for the making of an application to the Tribunal for review of a determination by the Commission in relation to an application referred to in paragraph 91(2)(a), and if such an application is made, pending the making of a determination by the Tribunal on the review.

199.  Subsection 91(2) is further amended by inserting new paragraphs 91(2)(d), (e) and (f) which provide that where a minor variation of an authorisation is applied for, the Commission may only grant an interim authorisation dealing with the matter that is the subject of the minor variation; the original authorisation remains unchanged.  Accordingly, if the Commission grants an interim authorisation for the minor variation of an authorisation, there would then be two authorisations: an interim authorisation dealing only with the minor variation, and the original authorisation.  If the interim authorisation is later revoked by the Commission, the original authorisation will remain unless the Commission has issued a determination granting the minor variation, whereupon the original authorisation is varied as indicated in the determination (refer to Item 48).

200.  Where the revocation of an authorisation and substitution of a replacement authorisation is applied for, the Commission may suspend the authorisation sought to be revoked and grant an interim authorisation in substitution for the authorisation suspended.  The proposed amendment will make the Commission’s power to grant an interim authorisation for a substituted authorisation consistent with its power in relation to authorisations.

         Item 45:       Grant, revocation and variation of authorisations (New subsections 91(2AA) and (2AB))

201.  This item inserts new subsection 91(2AA) to provide that, an interim authorisation comes into force on the day specified for the purpose in the interim authorisation, not being a date before the interim authorisation is granted.  This gives the Commission discretion to determine when an interim authorisation comes into force.  This item also inserts a new subsection 91(2AB) which provides that the Commission may, at any time, revoke an interim authorisation and, where that interim authorisation was granted in substitution for an authorisation suspended pursuant to proposed paragraph 91(2)(f), the revocation by the Commission of the substituted interim authorisation has the effect of reviving the operation of the suspended original authorisation.

         Item 46:       Grant, revocation and variation of authorisations (Repeal of subsection 91(4))

202.  This item repeals subsection 91(4).  In addition, this item amends the heading of section 91 to omit “revocation”, and this reflects the repeal of subsection 91(4).

         Item 47:       Saving provision

203.  This item is a saving provision included to ensure that action initiated, but not yet completed (ie. no determination has been made), by the Commission under current subsection 91(4) prior to its repeal will continue to be governed by the processes in that subsection as if the amendments made by items 27 to 56 had not been made.

         Item 48:       Minor variations of authorisations, revocation of an authorisation, and revocation of an authorisation and substitution of a replacement (New sections 91A, 91B and 91C)

204.  This item amends Part VII of the Act by inserting three new sections to provide for the variation, revocation and revocation and substitution of authorisations.

205.  Proposed section 91A provides that a person to whom an authorisation has been granted (or someone on behalf of that person) may apply for a minor variation to an authorisation.  It also defines the circumstances in which the Commission may grant a minor variation.

206.  A minor variation is a variation that does not involve a material change in the effect of the authorisation.  If the Commission is satisfied that the variation sought is a “minor variation”, the Commission must then notify all persons who appear to the Commission to be interested in the variation sought and invite submissions within a specified period.  After considering any submissions received within this time the Commission may either vary the authorisation or dismiss the application.

207.   The Commission must not make a determination varying an authorisation, unless:

·       in the case of conduct authorised pursuant to subsections 90(6) or (7), the Commission is satisfied that the variation would not result (or would not be likely to result) in a reduction in the extent to which the benefit to the public of the authorised conduct outweighs any detriment to the public from the authorisation; or

·       in the case of conduct authorised pursuant to subsections 90(8) or (9), the Commission is satisfied that the variation would not result (or would not be likely to result) in a reduction in the benefit to the public arising from the authorisation.

208.  The focus in these tests is on the effect of the minor variation, rather than on the public benefit/detriment of the conduct as varied.  (Variations which would not meet these tests can be applied for under new section 91C).  Thus, the Commission may not grant a minor variation if these tests are not met, even though the conduct as varied would continue to result in public benefits that outweigh any detriments to the public from the authorised conduct, or continue to result in a benefit to the public (as the case may be), albeit by a lesser margin or a lesser public benefit.

209.  In the interests of administrative efficiency, a number of minor variations can be sought in the one application and a number of minor variation applications (from the same party) can be dealt with together if they were made at the same time or received in close succession, but they can only be dealt with together if the Commission is satisfied that the combined effect of the variations would not involve a material change in the effect of the authorisation.

210.  An application for a minor variation of an authorisation may be withdrawn by notice in writing to the Commission at any time.

211.  Proposed section 91B provides that a person to whom an authorisation has been granted (or someone on behalf of that person) may apply to the Commission for revocation of the authorisation.  The Commission may also initiate the revocation of an authorisation in certain specified circumstances, including where there has been a material change of circumstances since the original authorisation was granted.  This provision will facilitate the termination of redundant authorisations.

212.  On receipt of an application for revocation or if the Commission on its own initiative is considering revoking an authorisation, the Commission must notify all persons who appear to the Commission to be interested in the revocation and invite submissions within a specified period.  After considering any submissions received within this time the Commission may either revoke or decide not to revoke the authorisation.

213.  However, if the Commission receives an objection to the revocation within the time specified by the Commission for the making of submissions, the Commission must not revoke unless the test for revocation in proposed subsection 91B(5) is satisfied.  The test provides that the authorisation must not be revoked unless the Commission is satisfied that it would be prevented under subsection 90(6), (7), (8), or (9) from granting an authorisation for the conduct.  For example, an application for revocation of an authorisation concerning an exclusive dealing arrangement, must not be revoked by the Commission where there is an objection from a third party, unless the conduct could not be authorised by the Commission due to insufficient public benefits, if it were currently considering the authorisation of the matter.

214.  This restriction on the revocation of authorisation where there has been an objection is intended to protect third party interests flowing from or arising out of an authorisation.  In many cases the revocation of an authorisation is not likely to have much effect on such interests because the applicant can cease to engage in the authorised conduct and would not be bound by any conditions in the authorisation in that situation.  However, in some cases, third party interests might be affected.  For example, where contracts have been entered into following authorisation, such as contracts containing exclusive dealing provisions, or where an acquisition is approved subject to certain conditions.  This restriction is also designed to protect the interests of those who may be affected by a revocation at the initiative of the Commission.

215.  An application for a revocation of an authorisation may be withdrawn by notice in writing to the Commission at any time.

216.  The Commission may disregard any objection that, in its opinion is vexatious or frivolous.  This provision is intended to save the Commission having to undertake a public benefit/detriment evaluation of an application for revocation in circumstances where an objection is made that clearly has no substantive merit and is made only to frustrate the revocation process.

217.  Proposed section 91C provides that a person to whom an authorisation has been granted (or someone on behalf of that person) may apply for the revocation of that authorisation and the substitution of a replacement authorisation.  This will enable variations of a major kind to be made to authorisations. 

218.  The Commission may also initiate the revocation of an authorisation and the substitution of a replacement authorisation in certain specified circumstances, including where there has been a material change of circumstances since the original authorisation was granted.

219.  On receipt of an application for the revocation of an authorisation and the substitution of a replacement authorisation or if the Commission on its own initiative is proposing the revocation of an authorisation and the substitution of a replacement authorisation, the Commission must notify all persons who appear to the Commission to be interested and invite submissions within a specified period.  After considering any submissions received within this time the Commission may either revoke the authorisation and grant a new authorisation in such terms as it considers appropriate, or decide not to revoke the authorisation.

220.  Before making a revocation and substitution decision, the Commission must comply with the requirements of section 90A.  Therefore, the Commission is required to issue a draft determination and offer to hold a pre-decision conference in relation to the draft determination before making a final determination.

221.  The Commission must not make a determination revoking an authorisation and substituting a replacement authorisation, unless the Commission is satisfied that the proposed substitute authorisation would meet the relevant requirements in subsections 90(6), (7), (8) or (9) for the grant of an application for authorisation.  For example, the Commission may not grant a substitute authorisation in respect of conduct pursuant to an agreement (not being an exclusionary provision) unless the conduct has resulted, or is likely to result in a benefit to the public that outweighs any detriment to the public from the conduct.

222.  An application for the revocation of an authorisation and the substitution of a replacement authorisation may be withdrawn by notice in writing to the Commission at any time.

         Item 49:       Applications for review (Amendment to subsection 101(1) and new subsection 101(1AA))

223.  This item amends section 101 to provide that persons dissatisfied with a determination of the Commission in relation to an application for authorisation, minor variation to an authorisation, revocation of an authorisation, revocation of an authorisation and substitution of a replacement authorisation, or a proposal by the Commission for the revocation of an authorisation or the revocation of an authorisation and substitution of a replacement authorisation, may apply to the Australian Competition Tribunal for a review of the determination.

224.  Proposed subsection 101(1AA) provides that where an application for review is lodged pursuant to subsection 101(1) (as amended), the Tribunal must review the determination if the applicant for review was the applicant for the authorisation, minor variation to an authorisation, revocation of an authorisation, or revocation of an authorisation and substitution of a replacement authorisation, or if the Tribunal is satisfied that the person has a sufficient interest in the matter.

         Item 50:       Saving provision

225.  This item is a saving provision included to ensure that an application for review of a determination pursuant to subsection 101(1) will continue to be valid when subsection 101(1) is amended as proposed by item 49.

         Item 51:       Applications for review (Amendment to subsection 101(1B))

226.  Subsection 101(1B) currently provides for a presidential member of the Tribunal to shorten the time allowed under the Trade Practices Regulations within which an application for review may be made of a determination of the Commission in relation to an application for authorisation of an acquisition.  This item extends subsection 101(1B) to encompass an application for a minor variation to an authorisation, the revocation of an authorisation, and the revocation of an authorisation and substitution of a replacement authorisation.  Subsection 101(1B) will continue to be relevant only to the authorisation of acquisitions.

         Item 52:       Applications for review (Amendment to subsection 101(2))

227.  This item amends subsection 101(2) to provide that the Tribunal must apply the relevant tests in sections 90, or proposed sections 91A, 91B or 91C, when reviewing a determination of the Commission to grant an application for a minor variation to an authorisation, a revocation of an authorisation, the revocation of an authorisation and substitution of a replacement authorisation, and proposals by the Commission for the revocation of an authorisation or the revocation of an authorisation and substitution of a replacement authorisation.

228.  For example, when reviewing a determination of the Commission to grant an application for a minor variation of an authorisation, the Tribunal is required to apply the relevant test in proposed subsection 91A(4) or (5).

         Item 53:       Functions and powers of Tribunal (Amendment to subsection 102(1))

229.  This item amends subsection 102(1) to provide that when reviewing a determination of the Commission in relation to an application for a minor variation to an authorisation, the revocation of an authorisation, the revocation of an authorisation and substitution of a replacement authorisation, or proposals by the Commission for the revocation of an authorisation or the revocation of an authorisation and substitution of a replacement, the Tribunal may affirm, set aside or vary the determination, and may perform all the functions and exercise all the powers of the Commission.

         Item 54:       Functions and powers of Tribunal (Amendment to paragraph 102(1A)(b) and new paragraph 102(1A)(c))

230.  This item amends paragraph 102(1A)(b) and inserts new paragraph 102(1A)(c) to provide that, when reviewing determinations of the Commission relating to minor variations to, or revocations of, authorisations granted under subsection 88(9), or determinations relating to the revocation of an authorisation granted under subsection 88(9) and the substitution of another authorisation, the Tribunal must make its determination within 60 days after receiving the application for review.

         Item 55:       Functions and powers of Tribunal (Amendment to subsection 102(2))

231.  This item repeals and substitutes subsection 102(2) to provide that a determination of the Tribunal affirming, setting aside or varying a determination of the Commission in relation to an application for a minor variation to an authorisation, the revocation of an authorisation, the revocation of an authorisation and substitution of a replacement authorisation, or proposals by the Commission for the revocation of an authorisation or the revocation of an authorisation and substitution of a replacement, shall be deemed to be a determination of the Commission.

         Item 56:       Disclosure of documents by Commission (Amendment to paragraphs 157(1)(a) and (b))

232.  This item makes consequential amendments to paragraphs 157(1)(a) and (b) to require the Commission to provide, upon request, a copy of certain documents furnished to, obtained by, or in the possession of, the Commission relating to an application for a minor variation to an authorisation, the revocation of an authorisation, the revocation of an authorisation and substitution of a replacement authorisation, or proposals by the Commission for the revocation of an authorisation or the revocation of an authorisation and substitution of a replacement.