Assistant Treasurer David Bradbury today announced a Productivity Commission inquiry into the National Access Regime.
This inquiry is a milestone in the Council of Australian Governments' (COAG) Seamless National Economy National Partnership and will satisfy clause 8.1 of the COAG Competition and Infrastructure Reform Agreement.
The inquiry is also timely, given the implications for the Regime from the recent High Court decision in relation to the Pilbara railways case. That decision found that a key criterion for declaration - concerning whether it is uneconomical for anyone to develop another facility - is a test of whether anyone could profitably construct another facility, rather than a test concerned with natural monopoly characteristics.
"The National Access Regime, which is set out under Part IIIA of the Competition and Consumer Act 2010, promotes efficient investment in infrastructure and ensures its efficient operation and use, to encourage effective competition in dependent markets," said Mr Bradbury.
"The Productivity Commission inquiry into the Regime provides an excellent opportunity to review how the Regime balances these objectives today and other matters relating to the Regime."
The inquiry will also look at whether the Regime reaches an appropriate balance between access and private property rights as originally envisaged by the Hilmer Review, which led to the Regime's creation.
The Productivity Commission will hold public hearings and release a draft report for public comment, before delivering a final report to the Government in twelve months.
The Terms of Reference for the inquiry are attached. For more information, visit the Productivity Commission's website.
Attachment
Terms of Reference
Inquiry into the National Access Regime
I, David Bradbury, Assistant Treasurer, pursuant to Parts 2 and 3 of the Productivity Commission Act 1998, hereby refer clause 6 of the Competition Principles Agreement (CPA), Part IIIA of the Competition and Consumer Act 2010 (CCA) and the operation and terms of the Competition and Infrastructure Reform Agreement (CIRA) to the Productivity Commission (Commission) for inquiry and report within twelve months of receipt of this reference.
Through this inquiry, which is a milestone in the Seamless National Economy National Partnership, the Commission is to assess the role and efficacy of the National Access Regime (the Regime) and propose ways of improving its operation to ensure the efficient operation of and investment in essential infrastructure to promote competition and efficient investment in dependent markets.
Background
The Regime is a regulatory framework that provides an avenue for firms to access certain 'essential' infrastructure services owned and operated by others, when commercial negotiations on access are unsuccessful. The Regime is intended to promote the economically efficient operation of, use of and investment in the infrastructure by which services are provided, thereby promoting effective competition in upstream and downstream markets.
The Regime was introduced in 1995 as a key part of the National Competition Policy (NCP), which brought in broad-ranging reforms to enhance productivity and growth in the Australian economy. The regulatory provisions of the Regime are contained in Part IIIA of the CCA and clause 6 of the CPA, which was signed by the Commonwealth and States and Territories in April 1995 to underpin the NCP.
In 2001, the Commission conducted an inquiry into the operation of the Regime. The Commission supported continuation of the Regime and made a number of recommendations to improve its operation - including in relation to clarifying the Regime's objectives and scope, encouraging efficient infrastructure investment, strengthening incentives for commercial negotiation, and improving the certainty and transparency of regulatory processes. The Australian Government supported most of the Commission's proposed measures and a number of operational reforms to Part IIIA have since been introduced.
The Council of Australian Governments (COAG) agreed on a new National Reform Agenda in February 2006. As part of that Agenda, COAG signed the CIRA to provide for a simpler and more consistent national system of economic regulation for nationally‑significant infrastructure, including for ports, railways and other key infrastructure. The CIRA included some specific reforms to improve the operation of the Regime, building on the Commission's 2001 recommendations. Clause 8.1 of the CIRA provides that once it has operated for five years, the Parties will review its operation and terms.
Scope of the inquiry
In reporting on the Regime and the CIRA, the Commission is to:
- examine the rationale, role and objectives of the Regime, and Australia's overall framework of access regulation, and comment on:
- the full range of economic costs and benefits of infrastructure regulation, including contributions to economic growth and productivity;
- the operation of the Regime relative to other access regimes, including its consistency with those regimes and the effectiveness of the certification process; and
- the roles of the National Competition Council, the Australian Competition and Consumer Commission and the Australian Competition Tribunal in the administration of the Regime, and the Minister as decision maker, and the relationship between the institutions;
- assess the performance of the Regime in meeting its rationale and objectives, including:
- the effectiveness of enhancements made to the Regime and the regulatory reforms agreed under COAG's National Reform Agenda; and
- how the Regime has been variously applied by decision makers, but not so as to constitute a review or reconsideration of particular decisions;
- report on whether the implementation of the Regime adequately ensures that its economic efficiency objectives are met, including:
- whether the criteria for declaration strike an appropriate balance between promoting efficient investment in infrastructure and ensuring its efficient operation and use;
- whether the criteria for declaration are sufficiently well drafted in the legislation to ensure that its objectives will be met;
- provide advice on ways to improve processes and decisions for facilitating third party access to essential infrastructure, including in relation to:
- promoting best-practice regulatory principles, such as those pertaining to regulatory certainty, transparency, accountability and effectiveness;
- measures to improve flexibility and reduce complexity, costs and time for all parties;
- options to ensure that, as far as possible, efficient investments in infrastructure are achieved; and
- 'greenfield' infrastructure projects and private sector infrastructure provision;
- review the effectiveness of the reforms outlined in the CIRA, and the actions and reforms undertaken by governments in giving effect to the CIRA; and
- comment on other relevant policy measures, including any non-legislative approaches, which would help ensure effective and responsive delivery of infrastructure services over both the short and long term.
Process
The Commission is to undertake an appropriate public consultation process including holding hearings, inviting public submissions and releasing a draft report.
The Government will consider the Commission's recommendations, and the Government's response will be announced as soon as possible after the receipt of the Commission's final report.
SIGNED
David Bradbury
Assistant Treasurer