N EW SOUTH WALES GOVERN MEN T Report to the National Competition Council on the Application of National Competition Policy in New South Wales for the year ending December 2000 June 2001 Table of Contents 1 2 Introduction .......................................................................................................................... 1 Application of Competitive Neutrality ................................................................................ 3 2.1 Ap p lication of Com p etitive N eu trality to Significant Governm ent Bu siness Enterp rises (GBEs) ……………………………………………………………………… ...3 2.2 Ap p lication of Com p etitive N eu trality to Significant Bu siness Activities of General Governm ent Agencies ...................................................................................16 2.3 Ap p lication to Local Governm ent ...................................................................................20 2.4 Recip rocal Charging Arrangem ents betw een State and Local Governm ent Bu sinesses ....................................................................................................21 2.5 Com p etitive N eu trality Com p laints Mechanism ..........................................................22 Structural Reform of Public Monopolies ......................................................................... 27 Electricity ............................................................................................................................ 31 4.1 Review s of Cod e Provisions .............................................................................................31 4.2 Market Arrangem ents .......................................................................................................33 Gas ....................................................................................................................................... 42 Water.................................................................................................................................... 45 6.1 Introd u ction ........................................................................................................................45 6.2 General Policy ....................................................................................................................46 6.3 Pricing: General .................................................................................................................51 6.4 Pricing: Urban Water Services .........................................................................................56 6.5 Pricing: Metrop olitan Bu lk Water ...................................................................................59 6.6 Pricing: Ru ral Water Su p p ly ............................................................................................59 6.7 Pricing: Grou nd w ater .......................................................................................................64 6.8 Water Allocations or Entitlem ents ..................................................................................65 6.9 Water Trad ing ....................................................................................................................75 6.10 Institu tional Reform ..........................................................................................................79 6.11 Consu ltation and Pu blic Ed u cation ................................................................................87 6.12 The Environm ent ...............................................................................................................92 6.13 Research ............................................................................................................................100 6.14 Taxation ............................................................................................................................101 6.15 Rep orting ..........................................................................................................................102 Road Transport ................................................................................................................. 104 7.1 Prop osed Fram ew ork for the Third Tranche Paym ent .............................................. 104 7.2 Review of Legislation ..................................................................................................... 104 Rail ..................................................................................................................................... 107 8.1 N ational Rail Corp oration (Agreem ent) Act 1991 ...................................................... 107 8.2 Rail Freight Corp oration ................................................................................................ 107 8.3 Rail Safety Act 1993......................................................................................................... 107 3 4 5 6 7 8 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 i 9 Taxi Services .................................................................................................................... 109 9.1 Regu latory Fram ew ork .................................................................................................. 109 9.2 N CP Review ..................................................................................................................... 109 9.3 Recom m end ations ........................................................................................................... 109 9.4 Policy Resp onse ............................................................................................................... 110 Other Transport Services ................................................................................................ 111 10.1 Marine Safety ................................................................................................................. 111 10.2 Ports Corp oration and Waterw ays Managem ent ..................................................... 111 Agriculture and Related Activities .................................................................................. 113 11.1 Priority Areas ................................................................................................................... 113 11.2 N on-Priority Areas .......................................................................................................... 117 Forestry and Fisheries ..................................................................................................... 119 12.1 Com p etitive N eu trality ................................................................................................... 119 12.2 Stru ctu ral Reform ............................................................................................................ 121 12.3 Forestry Legislation ......................................................................................................... 123 12.4 Regu latory Fram ew ork ................................................................................................... 127 12.5 Fisheries Managem ent Act 1994 .................................................................................... 128 12.6 Other Fisheries Legislation ............................................................................................ 129 Mining ................................................................................................................................ 131 13.1 Legislation Review Up d ate ............................................................................................131 Health and Pharmaceutical Services ............................................................................. 133 14.1 Term s of Reference. .........................................................................................................133 14.2 Review Bod y and Consu ltative Mechanism s .............................................................. 134 14.3 Priority Areas ................................................................................................................... 134 14.4 N on-Priority Areas .......................................................................................................... 136 Legal Services .................................................................................................................. 137 15.1 Reform s in Recent Years................................................................................................. 137 15.2 Interstate Practitioners .................................................................................................... 137 15.3 Incorp orated Legal Practices ......................................................................................... 137 15.4 Mu lti-Discip linary Practices .......................................................................................... 138 15.5 Com p laints And Discip line ........................................................................................... 138 Other Professional and Occupational Licensing .......................................................... 139 Progress On Fair Trad ing Review s Of Pr ofessional And Occu p ational Licensing .............. 139 Professional Licensing (chap ter 18 of the N CC Assessm ent Fram ew ork) ............................ 146 10 11 12 13 14 15 16 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 ii 17 Fair Trading Legislation and Consumer Legislation .................................................... 149 N SW Progress In Finalising Fair Trad ing Review s .................................................................. 149 Fair Trad ing Legislation - Review of the Fair Trad ing Act 1987 and Door to Door Sales Act 1967 .................................................................................................................. 150 Consu m er Cred it Legislation - Review of the Consu m er Cred it (N ew Sou th Wales) Act 1995........................................................................................................ 151 Trad e Measu rem ent Legislation – Review of the Trad e Measu rem ent Act 1989 ................. 154 Finance, Insurance and Superannuation Services ....................................................... 155 Com p u lsory Third Party Motor Insu rance ................................................................................ 155 Workers’ Com p ensation Insu rance ............................................................................................. 155 Tru stee Com p anies ........................................................................................................................ 156 Retail Trading Arrangements .......................................................................................... 157 Social Regulation with Implications for Competition ................................................... 158 Child Care ....................................................................................................................................... 158 Planning, Construction and Development Services ..................................................... 159 Reform ing Planning, Land u se and N atu ral Resou rce Ap p rovals System s .......................... 159 Reform s to the Develop m ent and Bu ild ing Control System ................................................... 159 Im p lem entation of the Develop m ent and Bu ild ing Control Reform s ................................... 160 Plan First – Reform s to the Plan Making Process ...................................................................... 161 Legislation Review ........................................................................................................................ 163 Service Provid ers ........................................................................................................................... 165 18 19 20 21 Annexures ...................................................................................................................................... 168 Annexu re 1: N SW Tem p late Term s Of Reference For N CP Review s ..............................169 Annexu re 2: N SW Legislation For Which N CP Review And Reform Activity Was Previou sly Rep orted To The N CC As Incom p lete ...............................171 Annexu re 3: N SW Legislation For Which N CP Review And Reform Activity Was Previou sly Rep orted To The N CC As Being Com p lete ......................209 Annexu re 4: State Review s Of Regu latory Restrictions On Com p etition - Planning, Land Use And N atu ral Resou rce Ap p rovals System s .................................220 Annexu re 5: State Forests' N SW Log Allocation And Pricing ...........................................223 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 iii 1 1.1 Introduction This Report is the N ew Sou th Wales Governm ent‟s fifth annu al report to the National Com petition Cou ncil (N CC) on the Governm ent‟s progress in im plem enting N ational Com petition Policy (NCP). It covers the im plem entation of N CP over the 12 m onths to 31 Decem ber 2000. The report w ill be u sed by the N CC in u nd ertaking its third tranche assessm ent of the Governm ent's progress in im plementing the agreed reform s. In April 1995 the Cou ncil of Australian Governm ents (COAG) ratified the N CP. The Policy is aim ed at increasing consu m er and business choice, im proving efficiencies and creating an overall business environment in w hich to improve Australia‟s international com petitiveness. Three Intergovernm ental Agreem ents constitu te the N CP. These Agreem ents are: the Conduct Code Agreement; the Competition Principles A greement; and the A greement to Implement N ational Competition Policy and Related Reforms. 1.2 1.3 1.4 The specific com ponents of the National Com petition Policy are: the extension of the com petition provisions of the Trade Practices A ct (Cwth) 1974 to persons in each ju risd iction in the m anner specified in the Conduct Code Agreement; the im plem entation of principles to facilitate the creation of com petitive markets for public sector good s and services in the Competition Principles A greement; and the im plem entation of reform s in the electricity, gas, w ater and road transport sectors id entified in the A greement to Implement N ational Competition Policy and Related Reforms. 1.5 N CP is of cou rse only one part of the N SW Government‟s policy aim s and its application is intend ed to sit alongsid e the Governm ent‟s other econom ic, social and environment policy objectives. When applied , com petition policy shou ld be able to prom ote these other policy aims by creating a policy environm ent in w hich the costs and benefits of governm ent regu lation and service provision are su bject to transparent assessm ent. Exposing pu blic policy to this kind of transparency is essential for the efficient and effective allocation of resou rces for the benefit of the com m u nities that governm ents serve. 1 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 1.6 Im portantly, N CP provid es an opportu nity for governm ents to ensu re that the principles of com petition: prom ote increased consu m er choice; prom ote increased business choice and innovation; facilitate the efficient allocation of resou rces in the econom y; and increase the opportu nities for Australian bu siness to effectively com pete for international market share. 1.7 The N SW Governm ent is com m itted to achieving these goals w hilst ensu ring that: com petition policy is not im plem ented as an end in itself; all custom ers continu e to have access to good s and services; good s and services are equ itably d istribu ted ; and consu m ers are protected in the choices they make. 1.8 N ew Sou th Wales is lead ing the w ay in im plem enting many of the reform s need ed to m ake Australia m ore com petitive N ew Sou th Wales and Au stralian econom y. Report Structure 1.9 The report has separate chapters ad d ressing N CP reform obligations relevant to particu lar sectors of the econom y. This is consistent w ith the stru ctu re used by the N CC in its pu blication entitled : N CP Third Tranche Assessment Framework, March 2001. Id eally, the report shou ld be read in conju nction w ith the N CC's Assessm ent Fram ew ork. Reporting on priority review s is d ealt w ith in the ind u stry sector chapters. Line item reporting on non -priority review s for w hich N CP review and reform activity has previously been reported to the N CC as incom plete, can be fou nd in Annexu re 2. In relation to som e legislation, the Governm ent has previously reported to the N CC that it has com pleted its review and reform obligations. In cases w here the NCC has not signalled any ou tstand ing issu es in relation to these review s, the Governm ent consid ers that it has m et its NCP obligations. Legislation in this category is listed in Annexu re 3. The Governm ent d oes not propose to report fu rther on these review s. 1.10 1.11 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 2 2 2.1 Application of Competitive Neutrality Application of Competitive Neutrality to Significant Government Business Enterprises (GBEs) Requirement s of t he Compet it ion Principles Agreement 2.1.1 The principle of com petitive neu trality requ ires that Governm ent Bu siness Enterprises (GBEs) operate w ithou t net com petitive ad vantage in relation to other bu sinesses as a resu lt of their public ow nership. The Agreem ent [in Clauses 3(4) and 3(5)] requ ires governm ents to im plem ent com petitively neu tral arrangem ents w herever the benefits to be realised from im plementation ou tw eigh the costs. Overall it is generally believed that there are net econom ic and social benefits in im plem enting competitive neu trality principles. The onu s is on the GBE to d em onstrate that this is not the case for it to be eligible for exem ption from the requ irem ents of the Agreem ent. Governm ents w ere requ ired to prepare a policy statement on the application of competitive neu trality in their respective ju risd ictions by Ju ne 1996 and to pu blish an annual report thereafter. The Agreem ent [Clau se 3(4)], w ith respect to significant GBEs classified as Pu blic Trad ing Enterprises and Public Financial Enterprises by the Australian Bu reau of Statistics, requ ires governm ents, w here appropriate, to: ad opt a corporatisation mod el; and im pose on GBEs fu ll Com m onw ealth, State and Territory taxes or tax equ ivalent system s, d ebt gu arantee fees d irected tow ard s offsetting the com petitive ad vantages provid ed by governm ent gu arantees, and those regu lations to w hich private sector businesses are norm ally su bject on an equ ivalent basis to GBEs‟ private sector com petitors. Applicat ion in New Sout h W ales 2.1.5 In N ew Sou th Wales, GBEs inclu d e: Public Trad ing Enterprises (PTEs); Public Financial Enterprises (PFEs); and Som e N on Bu d get Depend ent General Governm ent agencies. 2.1.2 2.1.3 2.1.4 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 3 2.1.6 PTEs are businesses that have generally been su bject to com m ercialisation reform s and have im plem ented m easu res to im prove prod u ctive efficiency. Comm ercialisation reform s involve the ad option of the follow ing measu res: clear and non-conflicting objectives; su fficient management responsibility, au thority and au tonom y; ind epend ent, objective monitoring of perform ance; and an effective system of rew ard s and sanctions. 2.1.7 PFEs are PTEs engaged in financial interm ed iation and financial au xiliary services as d efined by the Australian Bu reau of Statistics in Standard Economic Sector Classifications of A ustralia (SESCA ) 1998. Most of these GBEs are subject to the fu ll rigou r of the N ew Sou th Wales Com m ercial Policy Fram ew ork (see later - w hich is cu rrently u nd er review ). In Ju ne 1996, the NSW Governm ent pu blished its Policy Statement on the A pplication of Competitive N eutrality. The Statem ent mad e it clear that in N ew Sou th Wales the onu s is on a GBE to im plem ent com petitive neu trality principles unless it can show that the econom ic and social costs of im plem entation ou tw eigh the econom ic and social benefits. Accord ingly, a benefit–cost analysis, show ing a net cost to the com m u nity, needs to be com pleted by GBEs that consid er it inappropriate to im plem en t these principles. The requ irements of clause 3(4) are being achieved throu gh the application of the Com m ercial Policy Fram ew ork, inclu d ing the corporatisation of a large nu m ber of „com m ercial‟ sector agencies in N ew Sou th Wales. Corporatisation involves all the above „com m ercialisation‟ reform s, and ad d itionally requ ires the ad option of m easu res that increase the level of com petition in the m arket the entity is operating in. Corporatisation involves d eveloping appropriate legal, regu lato ry, institu tional and market fram ew orks for the business and requ ires that enabling legislation pu rsuant to the State Owned Corporations A ct 1989, as am ended , be pu t in place. (SOCs are d iscu ssed fu rther in 2.1.14ff). The forthcom ing N SW Government Policy Statement on Competitive N eutrality, 2001 w ill provid e an u pdate to the 1996 Statem ent in relation to: the Com m ercial Fram ew ork applying to N SW Governm ent businesses; 4 2.1.8 2.1.9 2.1.10 2.1.11 2.1.12 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 form alisation of com petitive neu trality com plaints m echanisms; and N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 5 finalisation of gu id elines for the costing and pricing of N SW Governm ent business ou tpu ts incorporating an „avoidable cost‟ approach to pricing d ecisions. (This section is related to the forthcom ing N SW Treasu ry Policy and Gu id elines Paper: Guidelines for Pricing of User Charges, 2001. Accord ingly, the tw o policy d ocu m ents shou ld be read in conju nction). 2.1.13 The Gu id elines for Pricing of User Charges are d esigned to m eet the requ irements of clau se 5(a) of the Com petition Principles Agreem ent w hereby agencies w hich und ertake significant bu siness activities as part of a broad er range of fu nctions need to apply Com petitive N eu trality (CN ) based prices to their business ou tpu ts. Significant business u nits of General Governm ent Agencies are therefore covered and are largely the target of the Gu id elines. State Ow ned Corporations 2.1.14 The State Owned Corporations A ct (N SW) 1989 (am end ed in 1995) and the State Owned Corporations A mendment A ct (N SW ) 1995 provid e a com prehensive fram ew ork for the corporatisation of GBEs as proxy pu blic com panies called State Ow ned Corporations (SOCs). Those GBEs that have been and are intend ed to be subject to corporatisation are listed in Table 2.1. There are tw o classes of SOC: the company SOC, and the statu tory SOC. Both classes of SOC have a Board of Directors, share capital and a m emorandu m and articles of association like a public com pany lim ited by shares. Unlike a pu blic com pany, how ever, the sharehold ers consist of the Treasu rer and one other Minister (or potentially tw o or m ore Ministers for a com pany SOC). Both statu tory SOCs and com pany SOCs are su bject to certain Com m onw ealth statu tes. For exam ple, Part IV of the Trade Practices A ct (Cth) 1994 applies to both entities. Com pany SOCs are su bject to the Corporations Law . How ever, statu tory SOCs are only subject to the provisions relating to officers‟ d u ties and liabilities. The principal objectives of every SOC, regard less of class, are to operate: efficiently; in a w ay that maxim ises the net w orth of th e State‟s investm ent; in a socially responsible manner; in accord ance w ith the principles of ecologically su stainable d evelopm ent; and w ith consid eration of regional d evelopm ent. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 6 2.1.15 2.1.16 Each of these objectives shou ld be w eighted equally in the SOC‟s operations. Commercial Policy Framew ork 2.1.17 All significant N SW Governm ent bu sinesses are subject to the Com m ercial Policy Fram ew ork that is based on the com m ercialisation and corporatisation principles d iscu ssed earlier. These principles attem pt to reflect the environm ent faced by a private sector firm in a com petitive m arket. The Fram ew ork provid es for the application of: com m ercially based targets, d ivid end s and capital stru ctu res; regu lar perform ance monitoring; State taxes and Com m onw ealth tax equ ivalents; risk-related borrow ing fees; the explicit fu nd ed "Social Programs" or Com m unity Service Obligations (CSOs); and regu lation equ ivalent to that faced by private sector com panies. 2.1.18 All significant N SW GBEs are m onitored on a quarterly (Category 1) or half–yearly (Category 2) basis by N SW Treasu ry (see Table 2.1). N ote that in 2000 there are no Category 2 GBEs. GBEs fall into 3 categories: those GBEs that have been or are intend ed to be corporatised u nd er the State Owned Corporations A ct 1989; those GBEs that have not been corporatised or privatised , bu t are su bject to the Com m ercial Policy Fram ew ork; and those GBEs that, on the basis of risk and m ateriality, have not been corporatised or mad e part of the Com m ercial Policy Fram ew ork 2.1.20 The key elem ents of the Com m ercial Policy Framew ork are su m marised in Table 2.1. 2.1.19 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 7 Table 2.1 N SW GBEs that have been or are intend ed to be corporatised . N o. 1 2 3 4 5 6 7 8 9 10 11 12 13 Industry Electricity Government Business Enterprise Ad vance Energy Australian Inland Energy Water Delta Electricity Energy Australia Great Southern Energy Integral Energy Macquarie Generation N orthPow er Pacific Pow er Eraring Energy Pow er Coal Pty Ltd Snow y Mountains H yd ro Electricity Authority TransGrid ABS PTE1 x x x x x x x x x x x x Treasury Monitor2 x x x x x x x x x x Cat.3 1 1 1 1 1 1 1 1 1 1 3 x 1 x Already Priv’n Corp’n x x x x x x x x x D ate Priv’n/Corp’n 1/ 1/ 1/ 1/ 1/ 1/ 1/ 1/ 3/ 3/ 3/ 3/ 3/ 3/ 3/ 3/ 96 96 96 96 96 96 96 96 Comments To be m erged into Country Energy in 2001 To be m erged into Country Energy in 2001 To be m erged into Country Energy in 2001 2/ 8/ 00 later in 2001 (target) 1/ 12/ 98 Subsid iary of Pacific Pow er. Jointly owned w ith Victoria and the Comm onw ealth. 14 15 16 17 18 19 20 21 22 23 Finance Axiom Fund s Managem ent Corporation Governm ent Insurance Office (GIO) N SW Treasury Corporation (TCorp) State Bank of N SW N SW Lotteries Totalizator Agency Board of N SW (TAB) Zoological Parks Board of N SW PFE x x x x x x x x x x x x x x 3 4 1 4 1 4 1 1 1 1 X x x x x 16/ 5/ 97 16/ 7/ 92 1983 31/ 12/ 94 1/ 1/ 97 6/ 98 Gaming & Recreation x Housing City West Housing Pty Ltd Departm ent of Housing H om e Purchase Assistance Authority To be absorbed into Departm ent of H ousing in 2001 24 25 26 27 Ports & Waterways Darling Harbour Authority N ew castle Port Corporation Port Kembla Port Corporation Syd ney Ports Corporation x x x x x x x x 1 1 1 1 X x x 1/ 7/ 95 1/ 7/ 95 1/ 7/ 95 Absorbed into Syd ney Harbour Foreshore Authority in 2001. 28 29 30 31 32 33 Transport Freight Rail Corporation Rail Access Corporation (abolished 1.1.01) Rail Services Australia (abolished 1.1.01) State Rail Authority of N SW State Transit Authority Rail Infrastructure Corporation x x x x x x x x x x x x 1 1 1 1 1 1 X x x x 1/ 7/ 96 1/ 7/ 96 1/ 7/ 98 1/ 1/ 01 Govt announced intention to privatise in 2001 in conjunction w ith sale of N RC Merged into Rail Infrastructure Corp Merged into Rail Infrastructure Corp N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 8 N o. Industry Government Business Enterprise ABS PTE1 Treasury Monitor2 Cat.3 Already Priv’n Corp’n D ate Priv’n/Corp’n Comments Merger of RAC and RSA Absorbed into Australian Inland Energy and Water 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 Water Broken H ill Water Board Cobar Water Board Coleam bally Irrigation Fish River Water Supply Authority H unter Water Corporation Murrum bid gee Irrigation Syd ney Water Corporation Syd ney Catchm ent Authority x x x x x x x x x x x x x x x x x x x x x x x 3 3 1 1 1 1 1 1 3 1 5 3 3 1 3 1 1 1 1 x x x x 9/ 6/ 00 1/ 1/ 92 12/ 2/ 99 1/ 1/ 95 Misc Chipping Norton Lake Authority Departm ent of Public Works and Services First Australian N ational Mortgage Acceptance Fish Marketing Authority Jenolan Caves Reserve Trust Landcom Lord H ow e Island Board State Forests of N SW Syd ney Harbour Foreshore Authority Superannuation Ad m inistration Corporation Waste Service N SW X N SW Gov 25% sharehold er only Business of Syd ney Fish Market Pty Ltd sold & site leased on 31/ 10/ 94. Comm ercial Advisory Board has been established . Landcom has been review ed for further restructuring, corporatisation from 1/ 7/ 01. x 26/ 7/ 99 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 9 The Key to Table 2.1 is as follow s: 1 . Public Trad ing Enterprises (PTEs) and Pu blic Financial Enterprises (PFEs) as d efined by the Au stralian Bu reau of Statistics (ABS) in Standard Economic Sector Classifications of A ustralia (SESCA ) 1998. GBEs monitored by Treasu ry on a quarterly or half–yearly basis are w ithin the Com m ercial Policy Fram ew ork (CPF). On the basis of a risk and materiality assessm ent, Treasu ry has id entified five financial monitoring program s. These are categorised as follow s: (1) Quarterly reporting and monitoring for: all State Ow ned Corporations (SOCs); all d ivid end paying GBEs; those GBEs w hich are assessed as having the potential in the med iu m term to becom e d ivid end paying; and (2) (3) (4) high risk/ materiality GBEs. H alf–yearly monitoring for GBEs in the med iu m risk/ materiality category. Portfolio monitoring exclu sively by the relevant Minister, w ith relatively low risk exhibited . Post–privatisation m onitoring for GBEs that are no longer ow ned by the Governm ent. As the Governm ent may bear ongoing financial risks, these requ ire id entification and m anagem ent. Frequ ency of monitoring w ill vary d epend ing u pon circu m stances of sale and the right of the Governm ent to access inform ation. Major privatised GBEs are to be review ed at least on a qu arterly basis. Bu sinesses w here the State has a minority interest as a sharehold er are monitored quarterly, assu m ing that the sharehold ing is material and / or the business is exposed to particu lar trad ing/ operating risks. 2 3 (5) Performance Targets 2.1.21 GBE board s and m anagem ent have clear performance targets, against w hich perform ance is assessed . These are set ou t in an annual contractual agreem ent betw een the Governm ent business and the Governm ent called a Statement of Financial Perform ance (SFP) for PTEs, or a Statem ent of Corporate Intent (SCI) for SOCs. The perform ance targets focus on com m ercially based capital stru ctu res, retu rn on capital and d ivid end s, as w ell as the econom ic 2.1.22 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 10 and business assum ptions that u nd erlie the financial projections and targets. The first such agreem ents w ere entered into in 1993. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 11 (a) Capital Structures 2.1.23 The Governm ent has sought to ensu re that the balance sheets of GBEs‟ are com m ercially sou nd w ith capital stru ctu res based on appropriate mixes of d ebt and equ ity. The Governm ent‟s „Capital Stru ctu re Policy‟, w hich w as introd u ced in 1994, establishes target capital structu res on a case-by-case basis accord ing to a d ebt level w hich: su pports a good investm ent grad e cred it rating (ie „A‟ or above) over the long term (generally five years); enables the financing of an approved capital expend itu re program having regard to the cu rrent phase of the GBE‟s investm ent cycle; is capable of being repaid w ithin a reasonable period ; and provid es flexibility for relevant contingencies. 2.1.25 The approach u su ally involves: d evelopm ent of a bu siness profile; review of business plans and forecasts; analysis of bu siness risks; m od elling of cash flow s; sensitivity analysis of key variables; and d eterm ination of a notional cred it rating as a stand -alone entity. 2.1.26 This approach enables the Governm ent‟s business m anagers to cond u ct their bu sinesses w ith a greater d egree of confid ence and provid es a fram ew ork for setting financial targets. It also provid es m ore certainty to m anagers by constraining the Governm ent‟s ability to seek excessive d ivid end s. It ensu res that investm ent d ecisions are mad e having regard to the tru e cost of capital for the entity. (b) Return on Capital – Shareholder Value Added 2.1.27 Once the capital stru ctu re is set at an appropriate level then the focus of management is on attaining a com m ercial return on that capital. Sharehold er Valu e Ad d ed (SVA) is a profitability m easu re that takes accou nt of how a Governm ent bu siness is using its capital. It com pares the cost of capital for a Governm ent business w ith benchmark rates of retu rn appropriate for that bu siness, given the 12 2.1.24 2.1.28 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 risks involved . The SVA approach provid es gu id ance as to how effectively a bu siness is using its capital. By ensu ring the rem oval of any accou nting measu res that d istort the m easu rem ent of w ealth, it objectively m easu res the creation of value to its sharehold ers, w ho are u ltimately N ew Sou th Wales taxpayers. 2.1.29 The benchmark, ie opportu nity cost of capital for each business, is established by calcu lation of its w eighted average cost of capital (WACC). The WACC is d erived throu gh the application of the capital asset pricing m od el (CAPM). There are three basic elem ents of WACC - the cost of d ebt; the cost of equ ity; and the capital stru ctu re or mix of d ebt and equ ity. The first tw o elem ents are ad d ressed in the Capital Structu re Policy. A governm ent bu siness‟ cost of d ebt is equal to the cost of servicing d ebt, w hich includ es interest paym ents and any Governm ent gu arantee fee applicable. The cost of equ ity is specified as the prevailing retu rn on a 10 year Com monw ealth Bond plu s the risk prem iu m for the particu lar Government business. The debt/ equ ity ratio is set u nd er the Capital Stru ctu re Policy, d iscussed above. Most significant N SW GBEs are m onitored u nd er the SVA fram ew ork inclu d ing both corporatised and non -corporatised businesses. The d ate of SVA im plem entation is show n in Table 2.2. GBEs u sing sharehold er valu e ad d ed analysis to set financial targets. Commenced 1997-98: Ad vance Energy Australian Inland Energy and Water EnergyAustralia Great Southern Energy Integral Energy N orthPow er Macquarie Generation Delta Electricity TransGrid Freight Rail Corporation Departm ent of H ousing Departm ent of Public Works and Services Land and Property Inform ation N SW Marine Ministerial H old ing Corporation (since abolished ) Commenced 1999-2000: Syd ney H arbour Foreshore Fish River Water Supply 13 2.1.30 2.1.31 Table 2.2. (form er) Rail Access Corporation State Transit Authority H unter Water Syd ney Water Port Kem bla Ports N ew castle Ports Syd ney Ports Land com State Forests of N SW Waste Service N SW N SW Lotteries (form er) Rail Services Australia Registry of Births Deaths & Marriages Zoological Parks Board of N SW N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 Authority Public Trustee Commenced 2000-01: Parram atta Sports Ground Trust Syd ney Cricket & Sports Ground Trust Syd ney Catchm ent Authority Eraring Energy (form erly part of Pacific Pow er) N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 14 (c) Financial D istributions (D ividends) 2.1.32 Assu m ing satisfactory d ebt/ equ ity stru ctu res and retu rn on capital are appropriate, the focus is on setting d ivid end s that broad ly reflect private sector practice. N SW Treasu ry‟s Financial Distribu tion Policy d eals explicitly w ith Governm ent's role as sharehold er of its bu sinesses. The basic principle u nd erlying th e financial d istribu tion policy is that Governm ent bu sinesses shou ld be subject to the d iscipline of m aking d ivid end paym ents and capital repaym ents based on an evalu ation of w hether or not retention of earnings ad d s valu e for the sharehold er. A target d ivid end paym ent is negotiated as part of the process of d eveloping a SFP/ SCI before the com m encem ent of the financial year. The Treasu ry has ad opted a m od ified resid ual approach to d ivid end policy, w hereby the quantu m of d ivid end s is a fu nction of the availability of acceptable investm ent proposals and the d ivid end preferences of the Governm ent as sharehold er. Und er the pu re resid u al d ivid end approach, as long as the business has investm ent projects w hose retu rns exceed those that are requ ired , it w ou ld u se retained earnings and the am ou nt of increased d ebt the equ ity base w ill support, to finance these projects. The residu al approach is m od ified to take into accou nt the Governm ent‟s preference as sharehold er for a higher level of d ivid end s than the private sector becau se of the greater difficu lty in obtaining d istribu tions in the form of capital gain. The resid ual d ivid end approach is fu rther m od ified to take into accou nt the Governm ent sharehold er‟s preference for a stable str eam of d ivid end s d u e to its fu nd ing com m itments. 2.1.33 2.1.34 2.1.35 2.1.36 2.1.37 Performance Monitoring 2.1.38 Since the start of the 1990s, Treasu ry has u nd ertaken regu lar financial m onitoring of significant GBEs from a sharehold er perspective. These businesses provid e Treasu ry w ith quarterly reports inclu d ing su ch information as bu siness plans, operating bu d gets, cash flow statem ents, incom e and expend itu re statem ents, balance sheets and m anagem ent accou nting d ata. The GBEs also report, on an exception basis, any risks that arise th rou ghou t the financial year. The reports are intend ed to provid e early w arning of problem s w hich m ight arise, so that appropriate action m ay be taken w here necessary. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 15 2.1.39 The need for su ch m onitoring arises becau se of the interaction of variou s interests that influ ence the perform ance of these businesses. Som e Governm ent bu sinesses, particu larly corporations, face real com petition in the m arket place. H ow ever for others, perform ance m onitoring also prom otes yard stick com petition in the provision of Governm ent services that otherw ise face little com petition. Performance m onitoring can act as a pow erfu l internal managem ent tool to exam ine the reasons for poor perform ance. Payment of Taxes and Tax Equivalents (a) State Taxes 2.1.40 Since 1 Ju ly 1994, all m ajor N SW GBEs have been progressively requ ired to make direct paym ents of State taxes, principally payroll tax, stam p d u ty and land tax. These State taxes w ere applied to m ost GBEs from 1 July 1995 w ith all com m ercial Governm ent businesses paying tax equ ivalents from 1997-98. (b) Commonw ealth Tax Equivalents 2.1.41 At the March 1994 Prem iers‟ Conference it w as agreed in principle that States and Territories w ou ld impose u niform tax-equ ivalent regim es (TERs) on all GBEs by 1997, w hile the Com monw ealth w ou ld am end its incom e and sales tax legislation to u nambiguously exem pt State enterprises from Com monw ealth tax liabilities. Com m encing in Ju ly 1994, all m ajor NSW PTEs w ere progressively requ ired to make incom e and sales tax equ ivalent payments to the Consolid ated Fu nd . Su ch a requ irem ent helped pu t them on a com petitively neu tral footing w ith private sector bu sinesses. In 1998 the Com m onw ealth, States and Territories agreed , as part of the Intergovernm ental Agreem ent to Reform Com m onw ealth-State Financial Relations, to introd u ce a National Tax Equ ivalent Regim e (N TER). Und er the N TER, GBEs nom inated by State and Territory Governm ents w ill be subject to an incom e tax equ ivalent regim e ad m inistered by the Au stralian Taxation Office (ATO) from 1 Ju ly 2001. The use of the ATO as tax ad m inistrator w ill facilitate consistency in approach across ju risd ictions and betw een the public and private sectors. With the abolition of Wholesale Sales Tax (WST), States and Territories aband oned WST equ ivalent paym ents. All GBEs pay GST in the sam e manner as private enterprises. 2.1.42 2.1.43 2.1.44 2.1.45 D ebt Guarantee Fees N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 16 2.1.46 GBEs benefit from the Governm ent's Triple–A cred it rating by virtu e of their Governm ent ow nership and are able to obtain borrow ings through Treasu ry Corporation (TCorp) more cheaply than com parable private sector firm s. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 17 2.1.47 Since 1990, GBEs w ith Governm ent-gu aranteed borrow ings have been requ ired to pay a cred it–rating–based fee to the Consolidated Fu nd . The schem e is intend ed to: m ake u p the d ifference betw een the interest paid by GBEs and w hat they w ou ld have paid had they been in the private sector; correct any d istortions in GBE investm ent and d ecisions; pricing encou rage better d ebt-m anagem ent practices by GBEs by m aking them aw are of the fu ll cost of borrow ing; and com pensate the Governm ent for the gu aranteeing d ebt repaym ent by GBEs. 2.1.48 financial risk of The application of this policy ensu res com petitive neu trality w ith private sector bu sinesses of sim ilar risk w hich la ck governm ent backing and face correspond ingly higher borrow ing costs. Equivalent Regulation 2.1.49 Many Governm ent businesses gain exem ptions from certain State legislation and regu lations as a resu lt of their statu s as an entity of the Crow n or statutory au thority. When a Governm ent business is corporatised as a SOC, it au tomatically loses this status and therefore its exem ption. While a statu tory SOC is an exem pt pu blic bod y for the pu rposes of the Corporations Law, the N SW State Owned Corporations A ct d oes provid e for various provisions of the Corporations Law to apply to statu tory SOCs. The Act also provid es for the constitu tion of a statu tory SOC to contain Corporations Law provisions. The Competition Policy Reform (N ew South Wales) A ct also su bjects SOCs and other N SW governm ent bu sinesses to Part IV of the Fed eral Trade Practices A ct 1974 dealing w ith restrictive trad e practices. The review and reform , u nd er clause 5 of the CPA, of legislation w hich u nju stifiably restricts com petition is closely related to the com petitive neu trality principle of im posing private sector equ ivalent regu lation on Government businesses. N ew Sou th Wales is subjecting legislation of u ncertain com petitive stand ing to a com prehensive review process w hich inclu d es exam ination of the net pu blic benefits of retaining or removing com petitive restrictions. Rem ed ial action is being taken w here legislative restrictions are show n not to be in the public interest (ie. costs ou tw eigh benefits and / or less competition-restricting m ethod s of achieving the Governm ent's objectives are available). 18 2.1.50 2.1.51 2.1.52 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 2.1.53 Consistent w ith clause 5 (3), N ew Sou th Wales has developed a tim etable for the review , and w here appropriate, the reform of all existing legislation that restricts com petition. Social Program Policy 2.1.54 The Government‟s Social Program Policy w ill be the main vehicle for m eeting its social justice objectives throu gh transparent paym ents from the Consolid ated Fu nd to Governm ent businesses that have either corp oratised or ad opted general pricing principles. The Social Program Policy explicitly recognises that, in pu rsu ing its core social responsibilities, the Governm ent m ay w ish to u se Governm ent businesses to achieve certain social ju stice objectives. The Policy has been carefu lly d esigned to ensu re that social program s m eet specified and relevant social objectives in a w ay that d oes not pu t the com m erciality of the Governm ent bu siness at risk. The key objectives of the Social Program Policy are to: provid e a fram ew ork for the effective separation of comm ercial and non-com m ercial activities of Governm ent bu sinesses so that m anagem ent m ay be given clear and non -conflicting objectives, thu s enabling it to be held accountable for both com m ercial perform ance and the d elivery of social program s; ensu re social expend itu res by Governm ent businesses are subject to id entified Bu d get fu nd ing, thereby making them transparent and enhancing Parliam entary accou ntability. Inform ation on the fu nd ing of social program expend itu res can be obtained from Bu d get Paper N o 3 and inform ation on social program fu nd ing received by ind ividu al GBEs can be obtained from their respective annual reports (annu al accou nts); and provid e a fram ew ork to im prove the effectiveness of social program expend itu res throu gh the application of appropriate review and evalu ation processes. Financial Appraisal Guidelines 2.1.57 In Ju ly 1997, the N SW Treasu ry issu ed the Financial Appraisal Gu id elines to assist in the financial appraisal of the follow ing projects: capital projects of GBEs and SOCs; and all projects of General Governm ent sector agencies and Com m ercial sector agencies w hich involve a financing d ecision, inclu d ing projects involving joint pu blic/ private sector infrastru ctu re provision. 2.1.55 2.1.56 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 19 2.1.58 The Gu id elines ou tline the necessary steps in preparing a financial appraisal, inclu d ing: d efining the objectives and the scope of the project; id entifying alternative options w hich m eet the objectives of the project; id entifying and measu ring cashflow s and their sensitivity for each of the options; selecting an appropriate d iscou nt rate; calcu lating su m mary m easu res of com m ercial m erit for each option; and seeking ind epend ent review of the appraisal. 2.1.59 The Gu id elines help im prove the d ecision m aking process for significant projects u nd ertaken by Governm ent organisations. In so d oing they ensu re that GBE capital investm ent d ecisions are su bject to sim ilar project evaluation criteria that w ou ld be applied by the private sector. Application of Competitive Neutrality to Significant Business Activities of General Government Agencies 2.2 Requirement s of t he Agreement 2.2.1 Clau se 3(5) of the Agreem ent applies to agencies that are not significant GBEs w ithin the m eaning of Clause 3(4), bu t u nd erta ke significant business fu nctions as part of a broad er range of fu nctions. Clau se 3(5) ind icates that w ith respect to these bu siness activities, the Parties w ill: w here appropriate, im plem ent the principles ou tlined in clau se 3(4); or ensu re that the prices charged for good s and services w ill take accou nt, w here appropriate, of fu ll Com m onw ealth or State taxes or tax-equ ivalent regim es, debt gu arantee fees and equ ivalent regu lation, and reflect fu ll cost attribu tion for these activities. Applicat ion in New Sout h W ales 2.2.2 In N ew Sou th Wales, significant bu siness activities of General Governm ent agencies inclu d e those significant business activities u nd ertaken by both: 20 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 sm all non-bu d get-d epend ent General Governm ent agencies; and bu d get-d epend ent General Governm ent agencies. 2.2.3 The N SW Treasu ry has d eveloped costing and pricing principles for General Governm ent agencies that com pete (or potentially m ay com pete) w ith private sector entities. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 21 2.2.4 A revised N SW Treasury Policy and Guidelines Paper: Guidelines for Pricing of User Charges (referred to above in 2.1.12) w ill be released in early 2001 as an u pd ate of gu id elines released to agencies in 1997. It end orses an approach w hereby prices for good s and services at least cover their „avoid able costs‟ (ie. the costs that the business u nit w ou ld not incu r if it w ere to cease operations). This approach is consistent w ith the Prod u ctivity Comm ission‟s Cost A llocation and Pricing1 paper that also ad vocates the u se of an avoid able cost allocation method . The approach taken in the Pricing Principles recognises that if a fu lly d istribu ted cost base is used to set a m inim u m revenu e target, then an agency cou ld neglect opportu nities to efficiently su pply good s and services. To price in the short term at less than the fu lly d istribu ted cost (provid ed avoid able costs are covered ) also imbues governm ent businesses w ith the sam e flexibility as their private sector cou nterparts in engaging in loss lead er activities. Overall, it m ore closely replicates th e pricing flexibility of com peting private businesses. Significant business activities of General Governm ent agencies may be exem pt from applying the principles w here they can dem onstrate that the cost of applying the principles exceeds the benefits of com petitively neu tral pricing. Where an exem ption is sought the onus is on the Governm ent bu siness or parent agency to show and d ocu m ent that the econom ic and social costs of im plem entation ou tw eigh the econom ic and social benefits. Broad ly the aim is for agencies to recover, in the short term , their m arginal costs. How ever, the policy ad vises that engaging in su ch activities should be restricted to special market circu m stances and shou ld not contravene the provisions of Part IV of the Trade Practices A ct. In d eterm ining a com petitively neu tral cost base, all inpu t costs and benefits accru ing from governm ent ow nership are to be inclu d ed . Costs w ill inclu d e, am ong other things, em ployee costs, m aterials, m aintenance, d epreciation, taxes, and a retu rn on capital. A listing of the NSW General Governm ent agencies requ ired to im plem ent the pricing principles is provid ed in Table 2.3. The agencies su pply good s or services subject to „u ser charges‟ as d efined by the Australian Bu reau of Statistics. 2.2.5 2.2.6 2.2.7 2.2.8 2.2.9 1 Wilson, S., Douglas, I., and Martyn, B., Cost Allocation and Pricing, Staff Working Paper, Productivity Commission, Canberra, 1998. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 22 Table 2.3 N SW General Governm ent Sector Agencies Requ ired to Im plem ent Pricing Principles. Governm ent Agency/ Activity GGE (ABS)2 x x x x x x x x x x x x x x x x x x x x x x x x x x x x Treasury Monitor 3 X X X X X X X X X X X X X X X X X X X X X X X X X X X X User 4 Charges x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x Sig 5 Min 6 N o. Governm ent Purpose (ABS)1 (01) General Public Services 1 2 3 4 5 6 7 8 9 10 11 12 13 (03) Public Order & Safety 14 15 16 17 18 19 20 21 22 23 24 25 26 (04) Education 27 28 (05) Health 29 30 (06) Social Security & Welfare 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 (07) Housing & Community Amenities State Record s Aud it Office of N SW Cabinet Office Ind epend ent Com m ission Against Corruption Legislature Local Governm ent, Dept of Om bud sm an's Office Parliam entary Counsel's Office Prem ier's Departm ent Public Trustee Registry of Births, Deaths and Marriages State Electoral Office Treasury Attorney General's Dept Rural Fire Service Corrective Services, Dept of Crim e Com m ission, N SW Director of Public Prosecutions, Office of Fire Brigad es, N SW Jud icial Com m ission of N SW Juvenile Justice, Dept of Legal Aid Com m ission Police Integrity Com m ission Police, Ministry for Police Service, N SW State Em ergency Service Board of Stud ies, Office of the Departm ent of Ed ucation and Training x x x x x x x H ealth Care Com plaints Com m ission H ealth, Dept of Aboriginal Affairs, Dept of Departm ent of Ageing, Disability and H om ecare Comm ission for Child ren and Young People Comm unity Services Com m ission Comm unity Services, Dept of Ethnic Affairs Comm ission Wom en, Dept for Aboriginal Housing Office Environm ental Trust Environm ent Protection Authority H oneysuckle Developm ent Corporation Ministerial Developm ent Corporation Urban Affairs and Planning, Dept of Art Gallery of N SW Arts, Ministry for the Syd ney Entertainm ent Centre Australian Museum Bicentennial Park Trust Casino Control Authority Centennial Park and Moore Park Trust Film and Television Office, N SW Gam ing and Racing, Dept of H eritage Office x x x x x x x x X X X X X X X X X X X X X X X X X X X X X X X x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x (08) Recreation & Culture N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 23 54 55 H istoric Houses Trust of N SW Museum of Applied Arts and Sciences x x X X x x x x N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 24 N o. 56 57 58 59 60 61 Government Purpose (ABS)1 Government Agency/Activity N ational Parks and Wild life Service Olym pic Coord ination Authority Royal Botanic Gard ens and Dom ain Trust SOCOG Sport and Recreation, Dept of State Library of N SW GGE Treasury (ABS)2 Monitor3 x x x x x x x x x x x x x x x x x x X X X X X X X X X X X X X X X X X X User4 Charges x x x x x x x x x Sig 5 Min 6 x x x x x x x x x (09) Fuel & Energy 62 63 64 65 66 67 68 69 70 71 72 73 (11) Mining, Mineral Resources, Manufacturing & Construction (10) Agriculture, Forestry, Fishing & Hunting Coal Com pensation Board Ministry of Energy and Utilities Mineral Resources, Dept of Sustainable Energy Developm ent Authority Agriculture, Dept of Fisheries, N SW Land and Water Conservation, Dept of Luna Park Reserve Trust State Valuation Office (part of Dept of Public Works & Services since 1/ 4/ 99) Meat Ind ustry Au thority (abolished 4/ 8/ 00; functions transferred to Safe Food Prod uction N SW) Rural Assistance Authority Safe Food Prod uction N SW x x x x x x x x x x x x x x 74 75 76 77 78 79 80 81 Build ing & Construction Ind ustry - Long Service Paym ents Corporation Public Works and Services, Departm ent of Marine Ministerial H old ing Corporation (abolished 1/ 7/ 00) Motor Accid ents Authority Olym pic Road s and Transport Authority Road s and Traffic Authority Transport, Dept of Waterways Authority Fair Trad ing, Dept of Registry of Encum bered Vehicles Ind epend ent Pricing & Regulatory Tribunal Ind ustrial Relations, Dept of Insurance Ministerial Corporation Land and Property Information NSW State and Regional Developm ent, Dept of Tourism N SW WorkCover Authority Worker's Com pensation (Dust Diseases) Board x x x x x x x x x x x x x x x x x x X X X X X X X X X X X X X X X X X x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x (12) Transport & Communications (13) Other Economic Affairs 82 83 84 85 86 87 88 89 90 91 (14) Other Purposes 92 Crown Transactions x X Key to Table 2.3: 1 2 3 4 Categories as per the Australian Bureau of Statistics (ABS) in Standard Economic Sector Classifications of A ustralia (SESCA ) 1998. General Governm ent Enterprises (GGEs) as d efined by the ABS in GFS A ustralia: Concepts, Sources and M ethods. These agencies/ activities are m onitor ed by Treasury on the basis of a risk and m ateriality assessm ent. A user charge is a volu ntary paym ent to a PTE or a general governm ent entity paid by a consu m er for services provid ed . It is of a com m ercial rather than a regulatory nature and provid es an id entifiable benefit to the payer. (ABS: GFS Australia: Concepts, Sources and M ethods). The existence of user charges is a broad ind icator of a business activity. 25 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 5 6 Significant > $2 m illion user charges revenue p.a. as based on 2000–01 Bud get estim ates. Minor < $2 m illion user charges revenue p.a. as based on 2000–01 Bud get estim ates. Application to Government Businesses N ot Subject To Executive Control 2.2.10 In N ovem ber 2000, the Cou ncil of Australian Governm ents (CoAG) approved a nu mber of chan ges to N ational Com petition Policy arrangements. One of the changes relates to Governm ents' CN obligations in cases w here a Government bu siness is not subject to the execu tive control of the Government (e.g. u niversities). CoAG agreed that in su ch cases governm ents w ere expected to ad opt a 'best end eavou rs' approach in applying CN . It w as fu rther agreed that this w ou ld requ ire parties, at a m inim u m , to provid e a transparent statement of CN obligations to the entity in qu estion. The Governm ent's revised policy statem ent on CN w ill make it clear that it is N SW Governm ent policy to encou rage these businesses to com ply w ith Governm ent policy and gu id elines on com petitive neu trality. Application to Local Government In its Policy Statement on the A pplication of N ational Competition Policy to Local Government pu blished in Ju ne 1996, the Government set ou t how the principle of com petitive neu trality w ou ld be applied to local governm ent in N SW. The Policy Statem ent w as prepared in consu ltation w ith local governm ent and m akes a series of com m itm ents w ith respect to the ongoing im plementation of com petition reforms. The Governm ent has also issu ed the follow ing gu id elines for the assistance of cou ncils: Competitive Tendering Guidelines (January 1997); Pricing and Costing for Council Businesses: A Guide to Competitive N eutrality (Ju ly 1997); and Guidelines on the M anagement of Competitive N eutrality Complaints (N ovem ber 1997). 2.3.3 The Governm ent also cond u cted w orkshops across N SW and continu es to provid e assistance, via the Departm ent of Local Governm ent, to cou ncils in applying N CP principles. As ind icated in the Policy Statem ent, d ifferent requ irem ents apply to cou ncil businesses d epend ing on w hether they are category 1 or category 2 businesses. Category 1 businesses have an annu al sales tu rnover of $2 m illion and above, w hile category 2 bu sinesses have a tu rnover of less than $2 m illion. 26 2.2.11 2.3 2.3.1 2.3.2 2.3.4 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 2.3.5 As category 2 bu sinesses are less likely to have significant ad verse resou rce allocation im pacts at either State or national levels, the requ irements applying to these businesses are less strict. For exam ple, cou ncils can d eterm ine the extent to w hich category 2 business activities are to be separated from its associated m ainstream activities. Sim ilarly, cou ncils are only requ ired to apply fu ll cost attribu tion w here practicable. In contrast, these requ irements are mand atory for category 1 businesses. How ever, in all other respects (eg. m aking su bsid ies explicit and com plying w ith the same regu lation as the private sector) the requ irem ents are the sam e. Previou s N SW Governm ent annu al reports to the N CC have ind icated a high level of com pliance in applying com petitive neu trality principles to cou ncil bu sinesses. Reciprocal Charging Arrangements between State and Local Government Businesses 2.3.6 2.4 Requirement s of t he Agreement 2.4.1 Und er the principle of com petitive neutrality, there is a requ irem ent to ensu re there is com petitive neutrality betw een State, Local Governm ent and privately ow ned bu sinesses selling into m arkets Applicat ion in New Sout h W ales 2.4.2 Und er existing arrangem ents betw een State and Local Governm ent businesses, the State benefits from a variety of cou ncil rate exem ptions for its GBEs. Sim ilarly, Local Governm ent bu sinesses benefit from som e services either provid ed at no charge by GBEs and SOCs or on a non-com m ercial basis. A Reciprocal Charging Com m ittee has been form ed to und ertake a Review into the Reciprocal Charging Arrangem ents betw een State and Local Governm ent Bu sinesses. The prim ary focu s of the Review is to inventory existing concessional charging arrangem ents betw een State and Local Governm ent bu sinesses, assess them w ith regard to charging principles and set a tim etable (su bject to Governm ent endorsem ent) for phasing in a reciprocal charging regim e and rem oving the concessional arrangem ents. The Com m ittee has d eveloped the broad principles u pon w hich a reciprocal charging regim e w ou ld be based and has com piled ind icative d ata regard ing the likely financial im pact of m aking State GBEs and Local Governm ent bu sinesses su bject to su ch a regim e. A 27 2.4.3 2.4.4 2.4.5 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 m ore d etailed assessm ent of the financial im pact is sched u led for com pletion by end of 2001. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 28 2.5 Competitive Neutrality Complaints Mechanism Requirement s of t he Agreement 2.5.1 Clau se 3(8) of the Agreem ent requ ires governm ents to inclu d e a com plaints hand ling m echanism in their Policy Statem ents on Com petitive N eu trality and pu blish allegations of non -com pliance in their annual reports. Applicat ion in New Sout h W ales 2.5.2 This section d eals w ith the Government‟s com plaints system s and d etails of com plaints received except in relation to Local Governm ent. Local Governm ent com plaints and com plaint hand ling arrangements are ad d ressed below at 2.5.24. An actual or potential com petitor of a GBE m ay w ish to make a com plaint if it perceives it is being ad versely affected or being d enied a market opportu nity because of a GBE‟s net com petitive ad vantage resu lting solely from its public ow nership. The arrangem ents ou tlined in the Policy Statement on the A pplication of Competitive Neutrality consist of tw o stages: 1. the party lod ging a com plaint is to approach the relevant governm ent agency to clarify and attem pt to resolve the m atter (this first step also acts as a filter to elim inate trivial complaints or misu nd erstand ings); and 2. if necessary, to refer the m atter for ind epend ent assessment by a third -party complaints m echanism in circu m stances w here the com plainant is not satisfied w ith the response of the agency involved . 2.5.4 Previou sly, interim arrangem ents existed w hereby all stage-tw o com plaints w ere to be investigated by IPART u nd er section 9 (1)(b) of the Independent Pricing and Regulatory Tribunal A ct 1992. Form al com p laints hand ling arrangem ents w ere introdu ced w ith the passing of the Independent Pricing and Regulatory Tribunal and other Legislation A mendment A ct 2000. The Act establishes a d ual m echanism for dealing w ith com petitive neu trality com plaints against significant governm ent bu sinesses w hich involves the IPART and the State Contracts Control Board (the SCCB). The relevant sections of the Act com m enced on 17 Ju ly 2000. The SCCB w ill investigate com plaints that a government bu siness has failed to comply w ith com petitive neu trality principles in relation to tend er bid s m ad e by a N SW Governm ent bu siness in response to an invitation for tend ers. The IPART w ill d eal w ith other com plaints. Com plaints involving local cou ncil businesses 29 2.5.3 2.5.5 2.5.6 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 w ill continu e to be d ealt w ith separately u nd er the arrangem ents established by the Departm ent of Local Governm ent, except w here the com plaint also involves a N SW Governm ent business. 2.5.7 Und er the new arrangements the Prem ier m ay refer to the SCCB/ IPART, for investigation and report, a com plaint abou t a significant governm ent business, w ith respect to: (a) an alleged failu re of a Governm ent business to com ply w ith com petitive neu trality principles in relation to any or all of its pu blic trad ing activities; or (b) the inappropriate m anner in w hich com petitive neu trality principles are applied by or to a Governm ent business. The IPART/ SCCB report is to contain a statem ent of its find ings and recom m end ations abou t the com plaint. Where a com plaint is u pheld , the report w ill also contain a statem ent abou t: (a) any need for changes to the condu ct of the governm ent business to ensure fu tu re com pliance w ith com petitive neu trality principles; and (b) any consequ ent policy changes that shou ld be consid ered by the Minister or Governm ent. The Prem ier may also refer to the IPART a matter relating to any ad verse or u nforeseen consequ ences of applying com petitive neu trality principles to a pu blic au thority or class of pu blic au thorities for investigation and report. This w as for eshad ow ed in the Governm ent's 1996 Policy Statem ent on com petitive neu trality. IPART and SCCB are requ ired to u se their best endeavou rs to com plete an investigation and report w ithin 10 w eeks after receiving a com plaint. Within 8 w eeks of receiving an IPART/ SCCB report, the portfolio Minister is requ ired to prepare a w ritten response to the report. The response m ust inclu d e a statem ent as to w hether or not the recom m end ations have been ad opted or are proposed to be ad opted , and m u st inclu d e a statement of the reasons w hy any recom m end ation w ill not be ad opted . IPART/ SCCB reports and the portfolio Minister's response are to be m ad e pu blicly available. 2.5.8 2.5.9 2.5.10 2.5.11 Complaints about Government Businesses 2.5.12 Du ring 2000 the Prem ier d id not receive any n ew requests for com petitive neu trality com plaints to be referred to the IPART or the SCCB for investigation. H ow ever, The Cabinet Office continu ed to provid e ad vice to interested parties on com petitive neu trality policy and com plaint hand ling arrangem ents in N SW. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 30 Rail Freight Corporation 2.5.13 As reported in the Governm ent's previous annual report a com plaint w as received from a party w ho fu nd and ad vise a private sector com petitor of the N SW Governm ent-ow ned Rail Freight Corporation (FreightCorp). Th e complainant w rote to the Prem ier in Septem ber 1999 alleging that FreightCorp receives the follow ing benefits as a resu lt of its public sector ow nership: preferential access to strategic assets inclu d ing port and m etropolitan rail term inals; exclu sive receipt of Obligations (CSOs); paym ents for Com m u nity Service paym ents for CSOs w hich are u nconnected to the costs incu rred and services d elivered ; the Departm ent of Transport tend s to act as an agent of FreightCorp rather than as a neu tral regu lator; and the ability to price w ithou t regard for rates of retu rn. 2.5.14 The Prem ier‟s response noted that the Departm ent of Transport had alread y com m enced a review of FreightCorp‟s CSO arrangem ents and that it w as expected to ad d ress a nu m ber of the issues raised in the com plainant‟s letter. The objective of the review w as to im prove the CSO contract betw een the Departm ent and FreightCorp. Consequ ently, the Prem ier d eferred a d ecision on the IPART reference u ntil the review w as com plete and the Governm ent had consid ered its recom m end ations. To assist the review , the Departm ent of Transport engaged consu ltants Booz Allen and H am ilton (BAH ) to cond u ct a thorou gh and ind epend ent assessm ent of FreightCorp's CSO arrangem ents. Consu ltants BAH affirm ed the general u nd erstand ing that an exclu sive contract w ith a pu rchaser of freight services (ie the Minister for Transport) d oes not, on face valu e, contravene com petitive neu trality principles. The key requ irem ent for com petitive neu trality is of cou rse to ensu re that CSO arrangem ents are fu lly transparent. BAH fou nd that there w as room for im provem ent in this area and m ade recom m end ations aim ed at achieving greater clarity of pu rpose and transparency in relation to CSO arrangem ents. The Governm ent has d eveloped new CSO contracts w ith FreightCorp that are su bstantially in accord w ith BAH 's recom m end ations. The new 2000-01 contracts requ ire FreightCorp, am ong other things, to d evelop separate bu siness cases for each 31 2.5.15 2.5.16 2.5.17 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 CSO service to fu rther d efine revenu es and costs on a d isaggregated basis. 2.5.18 The Governm ent's policy response to the com plaint is add ressed in paragraphs 2.5.22 - 2.5.23 below . N ational Rail Corporation Ltd 2.5.19 In October 1999 the Com m onw ealth Com petitive N eu trality Com plaints Office (CCN CO) received and investigated a com plaint against the N ational Rail Corporation Ltd (N RC). N RC is ow ned by the Com m onw ealth (73 per cent), N SW (19 per cent) and Victorian (8 per cent) Governm ents. The com plainant alleged that N RC w as in breach of the com petitive neu trality policies of its ow ner governm ents because it had not earned a com m ercial rate of retu rn on its assets for the financial years 1995-96, 1996-97 and 1997-98. The CCN CO‟s find ings noted that: the N RC has not earned a com m ercial retu rn on its assets over the last three years; given the circu mstances facing the NRC‟s formation and recent operation, the failu re to retu rn a com m ercial rate is not su fficient to find that the N RC‟s perform ance has been in breach of CN requ irem ents; the N RC‟s corporate plan projections to 2002 are not su fficient to m eet CN requ irem ents in the longer term , even thou gh they provid e for a com mercial rate of retu rn; and if a governm ent business is u nable to operate com m ercially in the longer term , one option is for the ow ner governm ent to sell the business (the CCN CO noted that this is the annou nced intention of the ow ner ju risd ictions). Government Response 2.5.22 In Septem ber 2000 the N SW Government annou nced its intention to privatise its su pplier of rail freight services, FreightCorp. The sale of FreightCorp w ill be u nd ertaken in parallel w ith the Comm onw ealth Governm ent's sale of the N ational Rail Corporation. The sale is likely to occu r in 2001 and w ill be su bject to a nu m ber of cond itions pertaining to regional services and em ploym ent levels. The Governm ent agrees w ith the N CC's assessm ent that "Privatisation of FreightCorp would remove any competitive neutrality obligations facing N ew South W ales in relation to this business" (Third Tranche Assessm ent Fram ew ork, p 10.3). Given the Governm ent's d ecision to privatise FreightCorp, and the prospective natu re of the 32 2.5.20 2.5.21 2.5.23 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 com plaint m echanism , the Governm ent sees little point in referring the com plaint to IPART for investigation at this point in tim e. H ow ever, should for any reason, this context change the Governm ent w ou ld give fu rther consideration to an IPART referral. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 33 ARRB Transport Research Ltd 2.5.24 In N ovem ber 2000 the CCN CO w rote to the Prem ier ad vising that it had received a com plaint from Capricorn Capital against the Au stralian Road Research Board (ARRB). ARRB Transport Research Ltd is a pu blic com pany, lim ited by $20 guarantee per m em ber. Mem bers are the State/ Territory road au thorities, the Com m onw ealth Departm ent of Transport and Regional Services and the Local Governm ent Association. It is noted that the m em bers d o not have any equ ity in the com pany. H ow ever, they d o have som e control over the bu siness, thereby giving it a 'governm ent' statu s, even though technically, it is not a government -ow ned business. As w ith the com plaint against National Rail, N SW has agreed to the com plaint being investigated by the CCN CO. As at 31 December 2000, the CCN CO's investigation w as still in progress. 2.5.25 Applicat ion t o Local Gov ernment 2.5.26 As ind icated in the Policy Statem ent, local councils are responsible in the first instance for d ealing w ith com plaints regard ing the application of competitive neu trality principles. The Departm ent of Local Governm ent review s those com plaints w hich cou ncils are u nable or have failed to resolve or w here, after consid eration by the cou ncil, the com plainant requ ests a review by the Departm ent, and in the circu m stances, the requ est is reasonable. Com plainants are also able to approach the Departm ent of Local Governm ent in ord er to obtain ad d itional information concerning the application of com petitive neu trality principles. As ind icated in the Policy Statem ent, a d ecision by a council not to apply com petitive neu trality principles to a particu lar business activity requ ires an ind epend ent cost benefit analysis to su bstantiate the d ecision. To d ate, no su ch exem ptions have been sought. Accord ingly, all com petitive neu trality com plaints are investigated as per the above arrangem ents. Com plaints d ealt w ith by cou ncils are reported in their annual reports. The NCC has previously ad vised that only those com plaints that progress to the second stage (those form ally investigated by the Departm ent of Local Governm ent) are requ ired to be inclu d ed in annu al reports to the N CC. 2.5.27 2.5.28 Complaints about Local Government 2.5.29 Du ring 2000 the Departm ent of Local Governm ent d id not receive any com petitive neu trality com plaints that need ed to be referred to a local cou ncil for initial investigation. Sim ilarly, the Departm ent 34 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 w as not requ ested to review any responses to com plaints against cou ncils d u ring 2000. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 35 3 Structural Reform of Public Monopolies Requirement s of t he Agreement 3.1.1 Clau se 4(2) of the Agreem ent ind icates that, before com petition is introd u ced to a sector trad itionally supplied by a pu blic m onopoly, the non–contestable regu latory or other fu nctions of the m onopoly need to be separated from those comm ercial activities that can be subject to com petition. This elim inates any conflict of interest w ith com m ercial fu nctions and facilitates com petitively neu tral regu lation of pu blic and private bu sinesses. Clau se 4(3) also specifies that w hen introd u cing com petition to a m arket trad itionally su pplied by a pu blic m onopoly, and before a pu blic m onopoly is privatised , governm ents are requ ired to u nd ertake a review into the follow ing m atters: the appropriate com m ercial objectives for the pu blic monopoly; the m erits of separating any natu ral m onopoly elem ents from potentially com petitive elem ents of the pu blic monopoly; the m erits of separating potentially com petitive elem ents of the pu blic monopoly; the m ost effective m eans of separating regulatory fu nctions from com m ercial functions of the pu blic monopoly; the m ost effective m eans of im plem enting the competitive neu trality principles set ou t in the Agreem ent; the m erits of any com m u nity service obligations u nd ertaken by the pu blic m onopoly and the best m eans of fu nd ing and d elivering any mand ated com m u nity service obligations; the price and service obligations to be applied to the ind u stry; and the appropriate financial relationships betw een the ow ner of the public monopoly and the pu blic m onopoly, inclu d ing the rate of retu rn targets, d ivid end s and capital structu re. Applicat ion in New Sout h W ales 3.1.3 The N SW Governm ent has been system atically applying the principles of stru ctu ral reform to its pu blic monopolies. 3.1.2 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 36 3.1.4 In the energy sector the generation assets of Pacific Pow er w ere transferred to Eraring Energy w hich w as incorporated on 2 Au gu st 2000. The objectives of this reform w ere to: establish a focu sed generation com pany w ith clear comm ercial objectives; enable effective perform ance m onitoring by allow ing the separation and separate m easu rem ent of the generation activities; and establish a governance arrangem ent consistent w ith other electricity su pply participants by subjecting the corporatised entity to the State Owned Corporations A ct rather than the Pacific Power A ct. 3.1.5 The Governm ent has recently approved a proposed m erger of three N SW Governm ent d istribu tor-retailers consisting of Ad vance Energy, Great Sou thern Energy and N orthPow er. The new entity is to be called Cou ntry Energy. Im plem entation of the m erger w ill be subject to clearance by the Au stralian Com petition and Consu m er Com m ission (ACCC). Until this is obtained the three businesses w ill continu e to be m anaged separately. The m erger has been proposed to enhance the scale and hence the com m ercial viability of cou ntry retailers in ad vance of fu ll retail contestability. In Septem ber 2000, IPART released a d iscu ssion paper and d raft gu id elines on the Ring Fencing of N ew South W ales Electricity Distribution N etwork Service Providers. The gu id elines provid e for the accou nting and fu nctional separation of prescribed m onopoly d istribu tion services from other contestable services provid ed by electricity d istribu tion businesses. The gu id elines aim to m aintain the econom ic benefits of com petition by ensu ring that electricity d istribu tion bu sinesses d o not use their m onopoly positions to influ ence ou tcom es in u nregu lated com petitive m arkets throu gh preferential d ealings w ith their associated contestable business or cost shifting betw een their com petitive and m onopoly business segm ents. The N SW Governm ent is participating in the finalisation of ring fencing arrangem ents. In the transport sector, prior to 1996, all passenger and freight services w ere provid ed by the vertically integrated State Rail Au thority (SRA). The Transport Adm inistration Am end m ent (Rail Corporatisation and Restructuring) A ct 1996, separated the operation of rail services from the ow nership, provision of access and the m aintenance com ponents of the SRA. The fou r transport entities created w ere: State Rail Au thority – focu sed on provid ing cu stomer services; Rail Services Au thority – responsible for track maintenance; 3.1.6 3.1.7 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 37 Rail Access Corporation – responsible for managing the rail netw ork and ad m inistering access by public and private operators; and FreightCorp – responsible for non–passenger freight services. 3.1.8 In its first tranche assessm ent, the N CC ju d ged that N ew Sou th Wales had generally m et its obligations in relation to structu ral reform of pu blic monopolies. The 2000 Glenbrook Rail Inqu iry found , how ever, that the issue of rail safety had not been given su fficient w eight follow ing the 1996 reform s. In response to the find ings of the Inqu iry‟s interim report, the N SW Parliam ent passed legislation in late 2000 w hich: m erged the Rail Access Corporation and Rail Services Au thority into a new Rail Infrastru cture Corporation (RIC) that ow ns and operates track infrastru ctu re; established the Office of Rail Regu lator to control and m onitor service stand ards; allow ed netw ork control fu nctions to be transferred to other operators inclu d ing the SRA (for CityRail netw ork); and form alised the Office of Co-ord inator General, w ith su fficient pow ers to im plem ent stru ctu ral changes as necessary. 3.1.10 The Governm ent w ill m ake d ecisions on the responsibility for safety regu latory functions follow ing the release of the Inqu iry‟s final report in 2001. As noted in Chapter 2, the N SW Governm ent annou nced its intention to privatise its su pplier of rail freight services, FreightCorp in parallel w ith the Com m onw ealth Governm ent‟s sale of N ational Rail Corp. The sale is likely to occu r in 2001 and w ill be subject to a nu m ber of conditions pertaining to regional services and em ploym ent levels. In the ru ral bu lk w ater sector, all irrigation schem es have been privatised . Follow ing the corporatisation of the Mu r ru mbid gee and Colleambally irrigation schem es on 1 Ju ly 1997, the Governm ent shifted ow nership of both schem es to local w ater u sers, respectively on 12 February 1999 and 9 Ju ne 2000. Regu lation is now explicitly applied by the Environm ent Protection Au thority (w aste w ater and d rainage controls throu gh licences) and the Departm ent of Land and Water Conservation (access to w ater und er a w ater m anagem ent w orks licence). The new com panies are also requ ired to com ply w ith land and w ater m anagem ent plans as a cond ition of their w ater managem ent w orks licences. 38 3.1.9 3.1.11 3.1.12 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 3.1.13 The Syd ney Catchm ent Au thority (SCA) com m enced operation in Ju ly 1999. The Au thority has responsibility for w ater catchm ent m anagem ent and took over the ow nership, operation and m aintenance of bu lk w ater storage facilities in the catchm ent. Syd ney Water Corporation (SWC) retained the d istribu tion and retail fu nctions of w ater su pply in its existing areas of operation. The Minister responsible for the SCA is separate from the Minister responsible for the SWC. State Water w as established by the Departm ent of Land and Water Conservation in response to a need to internally ring fence responsibility for bu lk w ater su pply services. The w ater business became fu lly operational on 1 Ju ly, 1998 and its accou nts have been restru ctu red w ith separate reporting. Water su pply and sew erage services u nd ertaken by local government in N ew Sou th Wales have been internally separated from the cou ncils‟ planning and regu latory functions. On 26 Ju ly 1999 the Su perannuation Ad m inistration Au thority (SAA) w as corporatised . The SAA provid ed schem e ad m inistration services to the tru stees of State pu blic sector su perannuation schem es. The Superannuation A dministration A uthority Corporatisation A ct 1999 provid ed for the execu tion of transitional contracts betw een the new Corporation (SAC) and the tru stees of pu blic sector d efined benefit and accu mu lation schem es. The transitional contracts expire on 30 Ju ne 2005 and 31 Decem ber 2002 respectively. At the end of the respective contract period s, the contracts w ill be pu t ou t to tend er and the SAC w ill have to com pete w ith private sector provid ers to retain the bu siness. The 1999 legislation also enabled the SAC to com pete for superannuation ad ministratio n business ou tsid e the N SW pu blic sector. On 5 Ju ly 2000 the Independent Pricing and Regulatory Tribunal and Other Legislation Amendment A ct took effect. In au gm enting its m onopoly pricing, ind u stry investigation and third party access fu nctions, the new legislation provid es for IPART to assu m e a u tilities regu lation fu nction for electricity, gas and w ater in w hich it w ill: ad vise the portfolio Minister on the grant and cond itions of licences; au d it com pliance w ith licences, inclu d ing taking on the fu nctions of the electricity Licence Com pliance Ad visory Board and the w ater Licence Regu lator, w ith the help of an ad visory grou p; and im pose sanctions for breach of licence w ith cancellation pow ers to rem ain w ith the Minister. 3.1.14 3.1.15 3.1.16 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 39 The rationale for th ese changes is to ensu re a m ore transparent ind epend ent regu latory approach and over tim e m ore closely align the regu latory regim es consistent w ith the objective of best practice regu lation. 3.1.17 In ad d ition to these initiatives, the State is com m itted to m eeting the requ irements of the A greement to Implement N ational Competition Policy and Related Reforms. This entails stru ctu ral reform of the State‟s w ater, gas and road transport sectors and establishm ent of an interstate electricity m arket. Detail on the application of these reform s is provid ed in Chapter 8 Application of the Agreement to Implement Related Reforms. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 40 4 4.1 4.1.1 Electricity Reviews of Code Provisions The N CC has requested information on the progress mad e on the review s requ ired by the Au stralian Com petition and Consu m er Com m ission (ACCC). The key review s of interest to the N CC are d iscussed below . Capacity Mechanisms 4.1.2 The ACCC published a final d eterm ination on Volu m e of Lost Load (VoLL) and capacity m echanisms and the price floor on 20 December 2000. This review is therefore com plete and its recom m end ations are cu rrently being im plem ented in accordance w ith the ACCC d eterm ination. Transmission and D istribution Pricing 4.1.3 In accord ance w ith the Cod e, N ational Electricity Cod e Ad m inistrator (N ECA) su bm itted an application to the ACCC in Ju ly 1999 in relation to netw ork pricing and m arket netw ork service provid ers. The ACCC pu blished a d raft d eterm ination on 12 December 2000. N ew Sou th Wales consid ers that the m ost significant element of d elay in resolving this review has been the tim e taken by the ACCC, a factor beyond the control of the ju risd ictions and National Electricity Market (N EM) institu tions. Ancillary Services 4.1.4 Clau se 3.11.1(c) of the Cod e requ ires N ational Electricity Market Managem ent Company (N EMMCO) to „investigate, consu lt w ith Cod e Participants in accordance w ith the Cod e consu ltation proced u res and report to N ECA by 1 March 1999 on the possible d evelopm ent of m arket-based arrangem ents for the provision of ancillary services‟. The Ancillary Service Reference Group (ASRG) w as established in m id 1998, to carry ou t the review requ ired by Clau se 3.11.1(c). The ASRG had representation from the generation, d istribu tion, retail and transm ission sectors of the ind u stry, as w ell as N ECA and N EMMCO. In ad d ition the ACCC have nom inated an observer w ho attend ed all ASRG m eetings. Until the review w as com pleted , sched u le 9G of the Cod e w as intend ed to operate. At the com m encem ent of the d evelopm en t of Sched u le 9G, the Jurisd ictions anticipated that: 4.1.5 4.1.6 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 41 the Ancillary Services arrangements provid ed for in Sched u le 9G w ou ld be im plem ented in m id to late 1997 u nd er the N EM1 arrangements; the tim e allow ed to com plete the Ancillary Services review w as tw o years follow ing com m encem ent of the N EM; and the N EM w ou ld com m ence in March 1998. 4.1.7 This original tim etable w ou ld have allow ed the Ancillary Services Review , requ ired by clause 3.11.1(c), to be based u pon u p to tw o years of operational experience of the Sched u le 9G arrangem ents. H ow ever: the Sched u le 9G Ancillary Service arrangements w ere not im plem ented as part of the N EM1; the ACCC, as a cond ition of the Interim Au thorisation of the Cod e, red u ced the tim efram e for the Ancillary Services review so that it w ou ld be im plem ented , by 1 Ju ly 1999; and the N EM d id not com m ence u ntil Decem ber 1998. 4.1.8 These d elays w ould have im pacted on the effectiveness of the Ancillary Services Review if it w ere to be conclu d ed by 30 March 1999, because there w ou ld h ave only been lim ited experience of the strengths and w eaknesses of the Sched u le 9G Ancillary Service arrangements at that tim e. Fu rther, the com plex and challenging natu re of the Ancillary Services Review w as clearly u nd erestim ated . There w as also a need to have a consid erable consu ltation period , as there w ere a nu m ber of firm ly held d ivergent view s amongst ind ustry participants. Du e to the com plexity of the issu es u nd er review and the d iverging view s of the ind ustry, this review w as not com pleted u ntil October 1999. The major recom mend ations of the report w ere: the rem oval of mand atory provision of Frequ ency Control Ancillary Services (FCAS); the introd u ction of market arrangem ents for the procu rement of certain Ancillary Services; the allocation of Ancillary Services costs on a “cau ser pays” principle or to those w ho benefit, w here possible; and the introd u ction of these new arrangem ents in three phases. 4.1.11 N EMMCO su bm itted Cod e changes to the Cod e Change Panel to give effect to the recom m end ations of the report in Decem ber 1999. These Cod e changes (w ith am end m ents proposed by Cod e Change 42 4.1.9 4.1.10 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 Panel) w ere su bm itted to the ACCC for au thorisation in Au gu st 2000. In the interim , the Sched u le 9G arrangem ents have been extend ed to Au gust 2001. 4.1.12 N SW has m et or is w ell ad vanced to m eeting its com m itm ents on stru ctu ral reform . Generation, transm ission and d istribu tion are separated , w ith several com petitors in the generation sector and m any com petitors in the retail sector. Market Arrangements 4.2 Transitional and Institutional Arrangements (i) 4.2.1 Derogat ions N ew Sou th Wales cu rrently has a num ber of Cod e d erogations in place w ithin chapter 9, part B of the Cod e. At this stage, N SW has no intention to extend the existing d erogations in chapter 9 beyond their present term s. H ow ever, ad d itional d erogations m ay be necessary to su pport the introd u ction of fu ll retail com petition (FRC) for the sm allest cu stom ers. (ii) Vest ing Cont ract s 4.2.2 4.2.3 As part of the package of retail reform s the Governm ent has d eterm ined that there shou ld be a safety net tariff for sm all cu stom ers. To achieve this objective in the absence of vesting contracts the N SW Governm ent im plem ented the Electricity Tariff Equalisation Fu nd (ETEF). The ETEF provid es a m echanism for m anaging the risks of su pplying electricity to sm all retail cu stom ers at fixed , regu lated tariffs. Und er the ETEF arrangem ent, all cu stom ers that consu m e less than 160 MWh per annum have the right to an offer of su pply at a tariff d eterm ined by IPART, and from 1 January 2002 w ill have the choice of rem aining on or retu rning to a standard regu lated contract. The Fu nd is d esigned to ensu re that the bu sinesses that are obliged to d eliver regu lated tariffs to sm all cu stomers are not com m ercially d isad vantaged nor given a com petitive benefit. The recent experience of retailers in California highlights the potential for m ajor losses if there is no m echanism in place to m anage the volatility of w holesale prices. Sim ilarly, an arrangem ent that allow s retailers to earn a w ind fall on sales to regu lated cu stom ers w ou ld have d istortionary consequ ences for the retail m arket if the w ind fall w as used to subsid ise sales to contestable cu stom ers. 4.2.4 4.2.5 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 43 4.2.6 The N SW Treasu ry Position Paper, Replacement for Vesting Contracts, N ovember 2000, exam ined a series of options for managing w holesale price volatility and em phasised the need for a set of arrangem ents that w ere com petitively neu tral: As a matter of principle the Government believes that retailers su pplying regu lated cu stom ers shou ld earn a regu lated retu rn. To the extent that financial su rpluses or d eficits arise from the fact that the price paid by custom ers m ay not be the sam e as the price retailers receive, arrangements need to be pu t in place to ensu re that retailers w ill not earn a w ind fall nor suffer financial loss (p.8). 4.2.7 The Fu nd guarantees stand ard retailer su ppliers a fixed m argin for su pplying small custom ers at prices determ ined by IPART. IPART w as asked to set the m argin based on the costs and risks of su pplying regu lated cu stom ers. Retailers cannot earn any m ore than the regulated retail margin on sales to regu lated custom ers. A regu lated energy charge (REC) has been calcu lated in ord er to provid e stand ard retailers w ith a regulated retail m argin w ithin the range d eterm ined by IPART. For the six m onths end ing period 30 Ju ne 2001, the retail m argin assu m ed is 8.5 per cent of projected regu lated sales revenu e, inclu d ing a 1.5 per cent allow ance for greenhouse com pliance. For each stand ard retailer, the REC w as calcu lated after d ed u cting projected average netw ork charges, pool fees, energy losses and assu m ed 8.5 per cent retail m argin from the cu rrent average regu lated retail price. Stand ard retail suppliers (initially the state-ow ned retailers) are requ ired to pay into the Fund w hen w holesale prices are low er than the REC com ponent they recover from regu lated cu stomers. When w holesale prices are higher than the REC com ponent in the regu lated tariff, the ETEF w ill com pensate stand ard retailers from the su rplu ses collected earlier to ensu re they earn a regu lated retu rn. In the event there is a sustained rise in pool prices and there are insu fficient fu nds, N SW Government ow ned generators are requ ired to top -u p the ETEF to the extent they have benefited from the high w holesale prices that cau sed the Fu nd to be d epleted . 4.2.8 4.2.9 4.2.10 ETEF and Full Retail Competition 4.2.11 The im plem entation of FRC w ill allow any licensed retailer to m ake an offer to any cu stom er in N ew Sou th Wales from 1 Janu ary 2002. While the Governm ent has a policy of ensu ring that regu lated retail tariffs are available to sm all retail cu stom ers, there is nothing preventing any retailer from entering into a com m ercially negotiated contract w ith these custom ers. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 44 4.2.12 The Governm ent w as eager to prom ote the scope for retail com petition by ensu ring that there is a su fficient retail m argin to attract entrants into retailing. IPART w as therefore asked to take into accou nt the Governm ent‟s policy of encou raging com petition for all cu stom ers in the setting of regu lated retail tariffs. To this end , the REC in the regu lated tariff is based on the long ru n m arginal cost of electricity generation. Therefore, if a retailer can enter into a hed ging contract w ith a generator to su pply electricity at less than the LRMC, the retailer shou ld be able offer incentives for cu stom ers to sw itch aw ay from regu lated arrangem ents. (iii) Inst it ut ional Framew ork 4.2.13 The N CC states the ju risd ictions are u ltim ately responsible for N ECA and N EMMCO and that it intend s to d iscuss a possible review of the N EM institu tional fram ew ork w ith the EMG. N ew Sou th Wales is of the view that som e refinem ent of N EM institu tional arrangem ents m ay be d esirable to ensu re effectiveness and appropriate allocation of responsibility. Structure of the Generation Sector 4.2.14 The third tranche assessm ent fram ew ork (p6.7-6.8) has listed the stru ctu re of the generation market as an issu e, in part because of high pool prices. The N CC is qu estioning w hether higher prices are d u e to the stru ctu re of the generation m arket not being su fficiently com petitive, perhaps because the market is too thin or perhaps because there is a bias against ad d itional transm ission capacity in the cod e. The Cou ncil d oes note that higher prices have led to ad d itional generation capacity and seem s to favou r ad d itional interconnection. Althou gh the N CC has raised the issu e of higher pool prices, and the potential influ ence of the structu re of the generation sector, it d oes not d irectly d raw a link betw een pricing and structure. While N ew Sou th Wales agrees that links betw een higher pool prices and the stru ctu re of the generation sector are not evid ent, new generation and interconnection u nd ertaken on a com petitively neu tral basis w ou ld continu e to be w elcom e. Stru ctu ral reform com m itm ents, ow nership neu trality and m inim ising intervention in m arket ou tcom es also continu e to be im portant as priorities for ongoing reform in the generation secto r. 4.2.15 4.2.16 4.2.17 4.2.18 Interconnects (i) Regulat ed Int erconnect s 45 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 4.2.19 As previou sly argued , N ew Sou th Wales notes that the Governm ent has d one everything in its pow er to prom ote interconnection w here econom ic. N SW and the governm ent-ow ned transm ission netw ork service provid er, TransGrid , have given their fu ll su pport to Qu eensland -N ew Sou th Wales Interconnect (QN I) as w ell as to Sou th Au stralia-N ew Sou th Wales Interconnects (SN I) in light of the lack of generating capacity and com petition in Sou th Australia and su rplu s capacity in N SW. The progress of the SN I approval process has been as follow s: In early 1998 TransGrid requ ested N EMMCO that the Inter -regional Planning Com m ittee (IRPC) evalu ate SN I for a regu lated statu s. N EMMCO hand ed d ow n a d eterm ination on 15th Ju ne 1998 that a regu lated status for the proposal could not be justified u nd er the Cod e gu id elines that existed at that tim e. Du ring the d ebate follow ing this d eterm ination, it w as generally recognised that the existing „Cu stom er benefit test‟ in the Cod e w as u nw orkable. Subsequ ently, N EMMCO requested N ECA to prepare a Cod e change to allow application of a new test to be determ ined by the ACCC. It w as expected that the new test w ou ld be based on “m arket benefit”. TransGrid su bm itted another application to N EMMCO on 27 th October 1998 to re-evalu ate the revised SN I proposal in expectation that the test w ou ld be replaced w ith a w orkable alternative w ithin the tim efram e of NEMMCO/ IRPC d eliberations. Du e to uncertainties as to the tim ing of the ad option of a new regu latory test and w hat the test w ou ld actually involve, TransGrid requ ested N EMMCO/ IRPC to suspend consid eration of TransGrid ‟s application on 30th Ju ly 1999. On 23rd Septem ber 1999, the ACCC hand ed d ow n a d raft d eterm ination on the Cod e change and released a d raft of the proposed regu latory test. The ACCC gave final approval to the Cod e changes on 20th October 1999 and they w ere gazetted in Sou th Au stralia on 18th N ovem ber 1999. H ow ever, the ACCC d id not release the regu latory test u ntil 22nd Decem ber 1999. On 7th March 2000, TransGrid requ ested N EMMCO/ IRPC to recom m ence the evaluation of the SN I project. Since this d ate the IRPC and the Interconnector Options Working Grou p (IOWG) have been carrying ou t technical analysis of the SN I and alternative projects and gathering d ata for the evaluation. H ow ever, m ost of the Transm ission N etw ork Service Provid er (TN SPs) involved in this w ork have also been involved in the QN I comm issioning program . QN I com m issioning w as given priority over SN I w ork because of the very significant econom ic benefits of QN I and the 46 4.2.20 4.2.21 4.2.22 4.2.23 4.2.24 4.2.25 4.2.26 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 resu lting integration of Qu eensland into the National Electricity Market and the resu lting enhancem ents to w holesale competition. 4.2.27 Com pou nd ing these d elays fu rther w ere the d elays affecting the Transm ission and Distribu tion Pricing Review . As d iscussed above, N ECA su bm itted an application to the ACCC in Ju ly 1999 in relation to netw ork pricing and m arket netw ork service provid ers. This application w as w ith the ACCC from Ju ly 1999 to Decem ber 2000. The absence of certainty on transm ission pricing m atters has mad e it im possible for interested parties to assess the im pact of transm ission charges on Sou th Au stralian customers from SN I or u nregu lated alternatives. Ind eed , vested interests opposing SN I have been able to exploit this u ncertainty to m isinform stakehold ers and attem pt to bu ild more w id espread opposition to the project. Taken together the im pact of QN I com m issioning, the uncertainties over the status of TransEnergy‟s Mu rraylink Project, and the u nresolved transmission pricing framew ork, the approval process for SN I has been d elayed abou t another nine m onths, none of w hich can reasonably be attribu ted to the cond u ct of the N SW Governm ent or TransGrid . 4.2.28 Concerns w ith Regulatory Test 4.2.29 N SW has som e concerns that the regu latory test promu lgated by the ACCC in December 1999 to be applied to SN I is capable of being gam ed by participants w ith a vested interest in continu ing high price d ifferentials betw een regions. This risk arises because the ACCC‟s regu latory test requires that a proposed regu lated au gm entation maxim ise net benefits in light of committed or anticipated d evelopments w ithin the market. This m ight allow , for exam p le, generators in a high -price region to create the im pression that new generation or u nregu lated netw ork capacity w ill be d eveloped to alleviate tight su pply cond itions, even w hen these plans are at best tentative. Thus, rather than being consid ered as an alternative option to a regu lated link, the proposed new capacity is taken as a given, thereby redu cing the projected benefits of a proposed regu lated link and consequ ently the chances for such a link to pass the test. (ii) Unregulat ed Int erconnect s 4.2.31 N ew Sou th Wales shares m any of the concerns of the N CC in relation to u nregu lated interconnects. In particu lar, w e believe that the ACCC has not clearly m ad e a pu blic benefit case for the au thorisation of Market N etw ork Service Provid er (MN SP) provisions in light of potential market pow er concerns. This m atter is cu rrently before the ACCC as part of the Transm ission and Distribu tion Pricing Review process and N SW w ill be m aking a subm ission setting ou t ou r concerns. 47 4.2.30 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 Full Retail Competition (FRC) (i) 4.2.32 Benefit s Realised t o Dat e The N CC has id entified tw o possible ind icators of su ccess in the introd u ction of retail contestability, price red u ctions achieved and the proportion of cu stomers w hich have changed su pplier. Price Reduct ions 4.2.33 Accord ing to Electricity Prices in Australia 2000/ 2001, published by the Electricity Su pply Association of Au stralia, N SW has the cheapest electricity prices on average across mainland Au stralia (contestable and non -contestable). Only Tasmania is cheaper w ith its low operating cost hyd ro-electricity plant. N SW Treasu ry estim ates that betw een May 1995, w hen the Governm ent com menced its electricity reform s, and Decem ber 2000, N SW electricity custom ers have saved over $1.6 billion in real term s on their pow er bills. All grou ps of custom ers have benefited from those reforms (see Table 1). 4.2.34 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 48 Table 1: N SW Electricity Prices Electricity Retail Price Reductions May 1995 to D ecember 2000 In real term s in 2000/ 2001 $s Customer Class 40 GWh pa 4 GWh pa 750 MWh pa 160 MWh pa Sm all Com m ercial Resid ential Total 4.2.35 Regulated 51.77 74.71 56.57 80.32 199.22 171.34 633.93 $m illion N egotiated 464.40 314.06 157.97 55.96 Total 516.17 388.78 214.53 136.28 199.22 171.34 1626.32 992.39 Across the N EM capital cities, Syd ney and Melbou rne still have the low est retail prices by a significant margin (5.61c/ kWh in Syd ney and 5.38c/ kWh in Melbou rne com pared w ith 7.07c/ kWh in Ad elaid e). Cust omer Transfer Rat es 4.2.36 Transfer rates ind icate the d egree to w hich cu stom ers m ove to a d ifferent retailer, bu t care m ust be taken in u sing transfer rates as an ind icator of the su ccess of com petition. This is becau se transfer rates d o not accou nt for benefits cu stom ers d erive w hen they stay w ith their existing retailer. Price red u ctions and services that better m eet cu stom er needs, w hether they sw itch or not, are the tru e ind icators of the su ccess of com petition. N evertheless, transfer rates can provid e som e insights to the operation of the contestable m arket. A nu m ber of su rveys have been condu cted on custom er sw itching rates since cu stomers started becom ing contestable. The Electricity Su pply Association of Au stralia cond ucted a su rvey in Septem ber 1997 w hen only customers consu m ing above 4 GWh per annu m w ere contestable. The su rvey fou nd that 47.6% had changed su pplier since retail com petition com m enced in October 1996. An Au stralian Ind u stry Grou p su rvey from Decem ber 1999 found that cu stom er chu rn w as still very pronou nced w ith som e 30% of su rvey respond ents w ho have negotiated a contract in the last 12 m onths changing su pplier. Respond ents are still preferring short contract period s of arou nd tw o years. This m eans that the majority of cu stom ers w ill com e 49 4.2.37 4.2.38 4.2.39 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 back to the market at regu lar intervals, encou raging com petition and new er retail entrants. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 50 (ii) Progress in Implement ing FRC 4.2.40 The N SW Governm ent is continu ing to im plem ent fu ll retail com petition in keeping w ith its annou nced tim etable. In accordance w ith the Governm ent‟s tim etable 100-160 MWh per annu m cu stom ers becam e contestable on 1 Janu ary 2001. Treasury expects that the remaining cu stom er tranches of 100-40MWh per annu m and 40-0MWh per annum w ill becom e contestable on 1 Ju ne 2001, and 1 Janu ary 2002, respectively. An im portant proviso is that bu siness systems necessary to su pport customer transfers mu st be in place, tested and operational prior to this final tranche being able to choose their su pplier. This is to ensu re that cu stomer choice is m eaningfu l, and that d ifficu lties w ith systems d o not ad versely affect cu stom er perceptions of the benefits of choice. The Governm ent is w orking closely w ith N EM MCO and ind u stry to ensu re that bu siness system s are in place w ithin the Governm ent‟s tim etable. Implementation of system s is at this stage on sched u le. (iii) Approach t o FRC 4.2.42 The N SW Governm ent is com m itted to least cost im plem entation of FRC, and to encou raging innovation in the d elivery of retail electricity and related services. To ensu re this is the case, the Governm ent is: taking an active role in overseeing the contract for procu rem ent of centralised national system s; and d eveloping a regu latory fram ew ork for the im plem entation of com petition w hich w ill allow , w herever possible, m arket forces to d rive ou tcomes (see d iscussion below on m etering approach). 4.2.43 FRC w ill extend the benefits of competition. The Governm ent is firm ly of the view that these benefits w ill ou tw eigh the costs of im plem enting FRC. 4.2.41 N ational Consistency 4.2.44 N SW has led a move by the N EM ju risd ictions to take a national approach to the im plem entation of FRC. A form al Mem orand u m of Und erstand ing prepared by the N SW Governm ent has been signed betw een each of the N EM Ju risd ictions to provid e a framew ork for consu ltation and decision m aking on national systems. This process has led to the sw ift resolu tion of a significant nu m ber of issu es and allow ed procu rement of centralised system s to comm ence in a relatively tight tim efram e. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 51 4.2.45 Victoria and N ew Sou th Wales are lead ing the im plem entation of FRC in the N EM and are w orking together to ensu re a high level of consistency in FRC arrangem ents. In particu lar, m etrology proced u res are being d eveloped in parallel across New Sou th Wales and Victoria and are substantially consistent. Furtherm ore, d iscussions are ongoing w ith the Office of the Regu lator General in Victoria, w ith a view to maintaining consistency in arrang em ents for regu lating marketing and retailer/ netw ork relationships. It is anticipated that as other ju risd ictions im plem ent FRC, they w ill take u p the regu latory arrangem ents in place in N ew Sou th Wales and Victoria as appropriate. N ew Sou th Wales w ill strongly su pport this approach. 4.2.46 Metering Approach 4.2.47 The N SW Governm ent is seeking to m inim ise barriers to cu stom er sw itching. A key barrier could be the requ irement for custom ers to install interval meters, w hich m easu re consu m ption for each half hou r, before they are able to transfer to a d ifferent retailer. To avoid im posing these costs on cu stom ers, the Governm ent is im plem enting load profiling, w hich w ill allow cu stomers to sw itch retailer w hile using their existing m eter. H ow ever, the Gov ernm ent is also seeking to ensu re interval m eters are u tilised w here the ad d itional information from those m eters is able to d eliver valu e to cu stom ers. The N CC has flagged su pport for approaches to FRC for small cu stom ers that d o not im pose u njustifiably high u pfront costs, bu t leave scope for innovation. The N ew Sou th Wales solu tion balances these com peting objectives by providing a low cost load profiling approach for the prod u ction of half hou rly data bu t at the sam e time encou raging the installation of interval m etering technology by allow ing any cu stom er (or the cu stom er‟s retailer) to install an interval m eter w here the benefits of d oing so (ie more accu rate allocation of consum ption over tim e) ou tw eigh the costs. Over tim e, as the profile shape becom es m ore reflective of consum ption by sm aller custom ers, the incentives for custom ers w ith m ore favou rable consu mption patterns to m ove to interval m eters w ill increase. The costs of the m etering solu tion com pared to the profiling solu tion have been analysed in Victoria and N ew Sou th Wales by variou s parties inclu d ing: 1. Intelligent Energy System s 2 (IES) for the Victorian Distribu tion Bu sinesses; 4.2.48 4.2.49 Evaluation of Metering Strategies for Full Retail Contestability, Intelligent Energy Systems, December 1999 (Minor Revisions January 2000) 2 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 52 2. 3. 4. 4.2.50 The Energy Policy Division of the Departm ent of N atu ral Resou rces and Environm ent; The Office of the Regu lator-General3 (Office); and SRC International4 and N ew Sou th Wales Treasu ry 5 for N ew Sou th Wales Governm ent. The stu d ies conclud e that at this stage roll-ou t of interval m eters is econom ic for only a small grou p of cu stomers in the sub 160MWh per annu m grou p. Based on the stu d ies com pleted to d ate, KPMG Consu lting acting on behalf of the Victorian and N ew Sou th Wales Governm ents has estim ated the increm ental costs of the m etering solu tion and com pared that w ith the estim ated cost for the profiling solu tion. The KPMG report fou nd that the profiling solu tion is significantly cheaper for small cu stomers based on a $75 cost for interval m eters. Meters have som e ad d itional benefits, bu t these are not consid ered to ju stify their ad d itional costs. This position w ill change over tim e as meter costs fall. The Governm ent is keen to ensu re that there are no barriers to efficient take u p of interval meters. 4.2.51 4.2.52 The N CC shou ld note that there w ill be a N EM w id e review in 2003, w hich w ill explicitly consid er, inter alia, w hether there are barriers to „consu m ers ad opting econom ically efficient m etering solu tions or other econom ically efficient technology‟. Office of the Regulator-General, Consultation paper No.4, Electricity Retail Competition for Small Customers – Customer Metering, May 2000 4 Contestability for Residential and Other Low Use Electricity Customers, SRC International, December 1998 5 Metering and Settlement Strategies for Full Retail Competition – Discussion Paper, NSW Treasury, Full Retail Competition Group, NSW Treasury, August 2000 3 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 53 5 5.1.1 Gas The N CC has id entified tw o third tranche gas com m itm ents: effective im plem entation of the 1997 Gas Agreem ent, in term s of im plem entation of a national regime for third party access to natu ral gas pipelines, satisfactory progress in phasing out transitional arrangem ents, and the introd u ction of retail com petition; and review and appropriate reform of legislative and regu latory barriers to free and fair trad e in gas. Access 5.1.2 5.1.3 As noted in the Fram ew ork, N ew Sou th Wales has enacted the Gas Pipelines Access Law and National Gas Access Cod e. The N SW access regim e w as certified effective by the Minister for Financial Services and Regu lation on the 29 th March 2001. Certification had been d elayed ow ing to the H igh Cou rt d ecision in Re Wakim ex parte McN ally. The N SW Federal Courts (Consequential Provisions) A ct 2000, w hich ad d ressed the re Wakim issu e in the N SW access legislation, com m enced on 23 N ovem ber 2000. Phasing Out of Transitional Arrangements 5.1.4 N ew Sou th Wales phased in access rights for all rem aining cu stom ers on 1 July 2000, w ell w ithin the 1997 Gas Agreem ent tim etable of 1 Septem ber 2001 for the phasing ou t of all transitional arrangements. Contestability has not been an issu e in N ew Sou th Wales as there w ere no exclu sive franchises for either the retailing or reticu lation of natural gas. Retail Competition 5.1.5 The COAG agreements d o not extend to an obligation to d evelop or im plem ent arrangem ents to su pport fu ll retail com petition (FRC) in gas, or to im plem ent an appropriate cu stom er protection regim e, and the N SW Governm ent‟s Policy Fram ew ork to Su pport Rail Com petition in Gas recognises that the d evelopm ent of systems to su pport FRC in gas is a matter principally for the gas businesses. H aving said that, the N SW Governm ent continu es to actively facilitate the w ork of ind ustry to en sure that the su pporting system s are d esigned to allow efficient, cost effective and tim ely transfer of cu stom ers betw een retailers. 54 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 5.1.6 N ew Sou th Wales has m ad e significant progress in assisting ind u stry to d evelop the arrangem ents necessary to enable m u ltiple retailers to operate w ithin netw orks and to transfer cu stom ers betw een each other, inclu d ing the follow ing: business ru les have been d eveloped to govern transactions betw een retailers and netw ork operators. These are to be approved by the Minister for Energy in the near fu tu re; the business ru les form the basis of the su pporting retail m arket systems to be provid ed to retailers and netw ork operators to carry ou t the fu nctions of: d elivery point registration and transport; m anagem ent of metering d ata; and nom ination, balancing and reconciliation proced u res. An ind ustry-based bod y (the Gas Retail Market Com pany) has been established to ad m inister the bu siness ru les and to engage and fu nd the retail m arket system s. 5.1.7 N ew Sou th Wales is also revising its cu stomer protection regu latory fram ew ork in a num ber of areas, for exam ple: to ensu re appropriate service quality stand ard s are met; to im plem ent a retailer of last resort schem e; to im pose an obligation to offer supply to custom ers w hose prem ises are p hysically connected to the netw ork. 5.1.8 The bu siness ru les and the retail m arket system s are being d eveloped to take accou nt of convergence opportu nities betw een gas markets in d ifferent ju risd ictions and betw een gas and electricity markets (ie energy m arkets). The retail m arket schem e proposed for N SW has been expressly d esigned to facilitate its ad option in other ju risd ictions to prom ote consistency and cost m inim isation in the provision of retail market systems. Fu rther, the d evelopm ent of an appropriate custom er protection regim e for fu ll retail com petition has sou ght to balance the need s of cu stom ers in the transition to fu ll com petition against the creation of new barriers to entry for retailers. The issu e of d ifferent ad m inistrative and policy arrangem ents applying in d ifferent m arkets is being ad d ressed by the Gas Policy Foru m (GPF), com prising ju risd ictions, indu stry and regu lators. N ew Sou th Wales is an active participant in the GPF and w ill w ork w ith other ju risd ictions to encou rage the ad option of com patible 55 5.1.9 5.1.10 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 arrangements and to prom ote inter-jurisd ictional harm onisation of business ru les w here this is plausible and appropriate. Legislative Reform 5.1.11 The agreement to ad opt AS 2885 to achieve u niform national pipeline constru ction stand ard s has been m aintained in the m aking of the N SW Pipelines Regulation 2000 w hich requ ires licensed pipelines to be constru cted to that stand ard . A com petition review of the N SW Pipelines A ct 1967 conclu d ed that there w ere no significan t anti-com petitive provisions in the legislation. As su ch, no legislative am end m ents w ere requ ired in ord er to fu lfil N ew Sou th Wales obligations und er the COAG agreem ent. In term s of the effectiveness of the Pipelines Act generally, particu larly the approval processes, New Sou th Wales has consu lted w ith ind u stry on an extensive revision of the legislation throu gh an Issues Paper. The resu lts of that consultation have been incorporated into a Proposals Paper w hich w ill be released for fu rther consu ltation, to be follow ed by d rafting of the new legislation. 5.1.12 5.1.13 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 56 6 6.1 6.1.1 Water Introduction This chapter presents inform ation abou t the progress of N ew Sou th Wales in achieving the ou tcom es set ou t in the Council of Australian Governm ents (COAG) Strategic Water Fram ew ork 1994. For ease of reference, the inform ation is presented w ithin the stru ctu re of the COAG Fram ew ork d ocu m ent. Each section contains: the text of the Framew ork; w here consid ered necessary, N SW‟s interpretations of the Fram ew ork w ord ing; a su m m ary of the N CC third tranche assessm ent requ irem ents; and the N SW report against the Fram ew ork and N CC criteria. 6.1.2 Key acronym s in this chapter are: AN ZECC: Au stralian and N ew Zealand Environm ent and Conservation Council ARMCANZ: Agricu ltu re and Research Managem ent Council of Au stralia and N ew Zealand AWT: Au stralian Water Technology BAR: Bu lk Access Regime DLG: Departm ent of Local Governm ent DLWC: Departm ent of Land and Water Conservation DUAP: Departm ent of Urban Affairs and Planning EPA: Environm ent Protection Au thority H RC: H ealthy Rivers Com m ission H WC: H u nter Water Corporation IBAR: Initial Bu lk Access Regim e IPART: Ind epend ent Pricing and Regu latory Tribu nal LIS: Line in the Sand LWRRDC: Land and Water Resou rces Research and Developm ent Corporation MDBC: Mu rray Darling Basin Com m ission MDBMC: Mu rray Darling Basin Ministerial Council MUs: Metropolitan u rban w ater su ppliers N MUs: N on-m etropolitan u rban w ater services provid ers N WQMS: N ational Water Quality Managem ent Strategy S&RD: State and Regional Developm ent SCA: Syd ney Catchm ent Au thority SCARM: Stand ing Com m ittee on Agricu ltu re and Resou rce Managem ent SWC: Syd ney Water Corporation TCM: Total Catchment Managem ent WMA: Water Managem ent Act N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 57 WSAA: WSD: 6.2 Water Services Association of Au stralia Water Su pply, Sew erage and Storm w ater Drainage General Policy Framew ork Requirement s 6.2.1 In relation to w ater resou rce policy, the Cou ncil agreed : 1. that action need s to be taken to arrest w id espread natu ral resou rce d egradation in all ju risd ictions occasioned , in part, by w ater u se and that a package of m easures is requ ired to ad d ress the econom ic, environm ental and social im plications of fu tu re w ater reform ; 2. to im plem ent a strategic fram ew ork to achieve an efficient and sustainable w ater ind u stry com prising the elem ents set ou t in 6.3.1 through 6.12.1 below ; NSW Int erpret at ion N atural Resource D egradation 6.2.2 There are essentially tw o categories of im pacts occasioned by w ater u se: (i) im pacts du e to changes in flow regim es and inu nd a tion patterns (d istu rbance of the ecology of rivers and w etland s) as a resu lt of w ater extraction and regu lation of flow s by d am s and w eirs; and (ii) im pacts relating to w ater quality (tu rbid ity, salinisation and chem ical pollu tion). Reform s ad d ressing these im pacts mu st end eavou r to balance the com plex econom ic, social and environm ental d im ensions of the problem s and prod u ce net public gains. In cases w here environm ental reform requ ires changes in w ater use, the im pacts on local com m u nities m u st be consid ered . 6.2.3 Strategic Framew ork 6.2.4 The strategic framew ork is interpreted to be a set of integrated , w hole-of-governm ent w ater reform objectives. The m ajority of these objectives are being im plem ented and fu nd ed throu gh the N SW Governm ent‟s 1995 and 1997 w ater reform packages and the Water Managem ent Act 2000. An Efficient and Sustainable Water Industry N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 58 6.2.5 An efficient w ater ind u stry pu ts w ater to the highest value u se and recovers the fu ll attribu table user share of the economic costs of resou rce m anagem ent, w hile m axim ising w ater-u se efficiency throu gh best practice in w ater d elivery and on -farm usage. A sustainable w ater ind u stry preserves and su pports the environm ental and social system s on w hich it d epend s. NSW Report Action to Arrest Widespread N atural Resource D egradation 6.2.6 Follow ing the COAG and Mu rray Darling Basin Ministerial Council (MDBMC) cap initiatives, the N SW Governm ent began a com prehensive w ater reform process. A m ajor w ater reform package w as annou nced in Septem ber 1995, follow ed by a second $117 m illion package in Au gu st 1997, w ith an ad d itional $3.01 billion package to fix u rban w astew ater and storm w ater problems, referred to as the Waterw ays Package. In 2000, new and com prehensive w ater m anagem ent legislation w as passed by the N SW Governm ent. The prim ary aim of the w ater reform s is to arrest natu ral resou rce d egrad ation and place the N ew Sou th Wales w ater ind u stry on an ecologically and econom ically sustainable footing. 1995 Water Reform Package 6.2.7 The first initiatives in 1995 w ere to: d evelop interim river flow and w ater quality objectives for the State‟s w aters; provid e w ater to the environm ent in tw o major river system s the Gw yd ir and the Macqu arie; introd u ce w ater pricing reform ; and establish a Water Ad visory Cou ncil of com m u nity and ind u stry representatives to ad vise the Minister for Land and Water Conservation on reform im plem entation. 1997 Water Reform Package 6.2.8 The second phase of the agend a, launched in 1997, aim ed to achieve three major ou tcomes: Better environm ental ou tcom es for w ater m anagem ent, throu gh expansion of the program for provid ing w ater to m eet environm ental need s to cover all the regu lated river system s (ie those w ith major ru ral d ams) and the Barw on -Darling River system . The environm ental flow ru les for these systems com m enced in 1998. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 59 Enhancem ent of investm ent strategies for the ru ral sector throu gh im proved w ater access rights and a better w ater m arket, d irect Governm ent su pport (inclu d ing stru ctu ral ad ju stm ent) to w ater u sers an d through find ing a balance in cost sharing arrangem ents throu gh the Ind epend ent Pricing and Regu latory Tribu nal process. A com mu nity/ governm ent partnership approach to w ater m anagem ent through the establishm ent of w ater m anagem ent com m ittees to ad vise on the annual environm ental flow ru les for the regu lated rivers and the Barw on -Darling and to d evelop w ater m anagem ent plans for the u nregu lated rivers and grou nd w ater system s. This inclu d ed the establishm ent of an Ind epend ent Ad visory Com m ittee on Socio-Econom ic Analysis to provid e ad vice on the assessment of social and econom ic im pacts associated w ith w ater m anagem ent plans and to au d it the on-going assessm ent process. Water Management Act 2000 6.2.9 The Governm ent also embarked on a com prehensive review of its w ater legislation. After some tw o and a half years of public consu ltation the W ater M anagement A ct 2000 w as passed in December 2000. The principal objects of the Act are to provid e for the su stainable and integrated m anagem ent of the State‟s w aters for the benefit of both present and futu re generations. The Act encom passes and bu ild s on m ost of the initiatives of the Governm ent‟s w ater reform agend a by: (i) provid ing for im proved environm ental health of the State‟s w aters throu gh form al recognition of environm ental w ater sharing provisions, w hich requ ire w ater to be set asid e for environm ental health as a priority, and provisions for the m anagem ent of activities that threaten w aters and their d epend ent ecosystem s; (ii) provid ing for shared governm ent/ com m u nity responsibility for w ater m anagem ent, throu gh the establishm ent of a com prehensive com m u nity-based planning fram ew ork, particu larly the form al establishm ent of w ater m anagem ent com m ittees to prepare statu tory w ater m anagem ent plans and the inclusion in the statu te of the Water Ad visory Cou ncil; and (iii) provid ing greater econom ic benefits for ind ivid uals and com m u nities by clarifying and strengthening w ater rights; im proved com pliance tools and m ore efficient pricing and allocation of resou rces. 6.2.10 6.2.11 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 60 Implementing the Strategic Framew ork 6.2.12 Im plem entation of the strategic fram ew ork in N ew Sou th Wales is being u nd ertaken for the u rban, non -m etropolitan u rban and bu lk w ater sectors throu gh an integrated w hole-of-governm ent process. Lead agencies are DLWC, EPA, H RC, DLG and IPART. N ew Sou th Wales progress in im plem enting the eight elem ents of the fram ew ork is d escribed in d etail u nd er the relevant section head ings bu t may be su m marised as follow s: Pricing 6.2.13 Oversighted by IPART, pricin g reform is being im plemented for all w ater sectors. IPART has pricing oversight for all sectors except for the N MUs, for w hich it has provid ed pricing principles. In line w ith the Fram ew ork objectives: consu m ption-based pricing has been or is being introd u ced across the ru ral bu lk w ater, MU and NMU sectors; cross subsid ies are being rem oved or m ad e transparent; and price paths tow ard s fu ll cost recovery are being established (SWC, H WC, SCA and prices for bu lk w ater u sers in som e valleys are alread y at fu ll cost recovery). 6.2.14 DLWC has prepared Developer Charges Gu id elines to assist cou ncils (N MUs) to calcu late fu ll cost recovery d evelopm ent charges for grow th w orks in cou ntry N ew Sou th Wales. These have been prod u ced u nd er the principles applied by IPART for Syd ney Water and H u nter Water. Water Allocation 6.2.15 Im proved certainty in w ater users‟ access to w ater is being provid ed via the d evelopm ent of w ater sharing plans w hich once approved , w ill be in effect for 10 years. These w ater sharing plans w ill provid e firstly for environm ental requ irem ents and basic land hold er rights and set the ru les w hich d eterm ine the w ater available for licensed w ater u sers. These ru les w ill be set for the 10 years. The resu lt w ill be greater certainty for w ater users regard ing the availability to u sers. Water sharing plans for the m ajor regu lated river systems, grou nd w ater system s and a nu m ber of u nregu lated river sub catchm ents w ill be d eterm ined by Decem ber 2001. In ad d ition the Water Managem ent Act now provid es for mu ch longer licence period s and the linkage of licences to the w ater management plans. Im plem entation programs are to be d eveloped by the (DLWC) for the practical d ay to d ay im plem entation of w ater managem ent plans. There w ill be a m id -term review of the plans, w hich w ill 61 6.2.16 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 inclu d e an au d it of the im plem entation of actions and ou tcom es specified in the plan. 6.2.17 They w ill be publicly exhibited before they are finally approved by the Minister. Healthy Rivers Commission 6.2.18 The H ealthy Rivers Com m ission (H RC) w as established in Septem ber 1995 to exam ine, and recom m end to Governm ent, river flow and w ater quality objectives for critical coastal catchm ents. The H RC has com pleted its inqu iries into the William s, Haw kesbu ry N epean, Shoalhaven, Claren ce and Bega catchments. The Com m ission has also com pleted a report on strategic issu es arising from inqu iries into coastal catchm ents and m ore recently a specific inqu iry into coastal lakes. Inqu iries are proposed or have com m enced for the Tw eed / Bru nsw ick, H astings/ Manning, Richm ond , Georges and H u nter Rivers. Trading 6.2.19 N ew Sou th Wales has a long history of both tem porary and perm anent trad ing of regu lated su rface w ater allocations. More recently, transfer m echanism s have been extend ed to accom m od ate the trial of inter-valley and inter-state transactions. The separation of access licences from the approvals und er the Water Managem ent Act for w ater u se and the w ater m anagem ent w orks, w ill m ean that w ater rights are no longer tied to land . This w ill open u p and extend opportu nities for w ater trad ing. Statew id e w ater trad ing principles are now being d eveloped and w ill be the basis for the local trad ing ru les to be d eveloped in the w ater sharing plans. A pu blic register of access licences and approvals is also being established . Institutional Reform 6.2.20 Com prehensive institu tional reform s have been, or are in the process of being implem ented to ensu re: a fu lly integrated , w hole-of-governm ent approach to resou rce m anagem ent; the institu tional separation of managem ent, regu latory and service provision; im proved efficiency in service d elivery; that all N ew Sou th Wales w ater sectors ad d ress the corporatisation / privatisation and adm inistrative requ irem ents of the Com petition Principles Agreem ent (CPA); an d N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 62 ad option of a partnership approach to the management of w ater resou rces, to give constitu ents a greater d egree of responsibility. Consultation and Public Education 6.2.21 The im plem entation of the Fram ew ork is su pported by extensive consu ltation and pu blic ed u cation programs d escribed u nd er the section on consu ltation and public ed ucation later in the report. The Environment 6.2.22 The N ew Sou th Wales 1995 and 1997 w ater reform s and the W ater M anagement Act 2000 com prise a pow erfu l integrated package of initiatives (ou tlined in sections 6.2.1 and 6.12.1). Pricing: General 6.3 Framew ork Requirement s 6.3.1 in relation to pricing, the Cou ncil agreed : (a) in general (i) to the ad option of pricing regim es based on the principles of consu m ption-based pricing, fu ll-cost recovery and d esirably the removal of cross-su bsid ies w hich are not consistent w ith efficient and effective service, use and provision. Where cross-su bsid ies continu e to exist, they be m ad e transparent; (ii) that w here service d eliverers are requ ired to provid e w ater services to classes of custom er at less than fu ll cost, the cost of this be fu lly d isclosed and id eally be paid to the service d eliverer as a comm u nity service obligation. NSW Int erpret at ion 6.3.2 The N ew Sou th Wales approach explicitly recognises that existing asset bases are a fu nction of investment practices and Governm ent policies (policies that preced ed the d evelopm ent of the COAG Water Reform Fram ew ork and the ad option of com m ercial approaches by w ater businesses). The approach is d esigned to ensu re that after d raw ing the „line in the sand ‟ (LIS) all costs are fu lly recovered inclu d ing the fu ll opportu nity cost of capital. N ew Sou th Wales notes that d ifferent m ethod s for measu ring a cross-su bsid y provid e a range of results that can be u sed to either su pport or refu te the existence of the cross-su bsid y. It is consid ered d esirable to use one or more of the follow ing approaches to red u ce the likelihood of inefficient cross-su bsid ies: 63 6.3.3 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 location-specific costing and pricing arrangem ents; appropriate stru ctural and / or accou nting separation; and / or u se of d eveloper charges d esigned to ensu re that charging for new d evelopm ents reflects the tru e costs of provid ing w ater and w aste w ater services in those areas. 6.3.4 Und er the N SW Social Policy Program , CSOs are d efined as non com m ercial activities w hich are carried ou t pu rsuant to a Governm ent d irective, have a clear social benefit and are fu nd ed from the State Bu dget. In circu m stances w here service provid ers are requ ired by Governm ent d irection or sim ilar m echanism to provid e su ch services to consu m ers at less than the fu ll cost of the service, this mu st be d isclosed and mad e transparent. Id eally, the service shou ld be paid as a CSO, equ ivalent to the d ifference betw een the charge paid by consu m ers and the fu ll price of the service. NCC Third Tranche Assessment Crit eria Dem onstrate id entification and transparent objectives and size of all cross-su bsid ies. reporting of Where a cross-su bsid y has efficiency or effectiveness im plications that are sufficient to u nd erm ine the policy objectives of the COAG Fram ew ork, ju stify the rationale for retaining the cross-su bsid y, inclu d ing the objectives of the cross-su bsid y and w hy these objectives cou ld not be achieved m ore effectively by another means. Mechanisms in place to ensu re ongoing effective treatment of cross-su bsid ies in the fu tu re (for exam ple, gu idelines, ind epend ent regu lation, fu tu re review s). Where prices are below increm ental cost, any shortfall in total revenu e recovered throu gh prices above stand alone cost shou ld be transparently reported . Where inconsistent w ith efficient and effective service provision and use, cross-su bsid ies shou ld be rem oved or replaced w ith a transparent CSO. State and local governm ent w ater businesses to pr ovid e inform ation on the size and objectives of CSOs. An effective fram ew ork for id entifying, costing, fu nd ing, d elivering and reporting on State and local governm ent CSOs. Evid ence that this fram ew ork is lead ing to CSOs that are clearly d efined , have an explicit pu blic benefit objective, are transparently reported and are consistent w ith the aim s of COAG pricing reform s. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 64 NSW Report Compliance w ith Consumption-based Pricing, Full Cost Recovery and Treatment of Cross-subsidies 6.3.5 In N ew Sou th Wales, IPART has oversighted the prices of SWC, H WC, Gosford and Wyong Cou ncils since 1992. The Tribu nal released m ed iu m term price paths for all the m etropolitan u rban service provid ers (MUs) in 2000. The SCA w as established in 1999. Initially, the SCA‟s charges to SWC w ere set in a Bu lk Water Su pply Agreem ent. The term s of this agreement w ere review ed by IPART, and in October 2000, IPART released a price path that runs till Ju ne 2005. The price path for the other service provid ers runs till Ju ne 2003. IPART also released a new price d eterm ination for d eveloper charges im posed by the MUs in October 2000. Und er the d eterm ination, the fou r agencies mu st have new d evelopm ent servicing plans, w hich d etail the basis on w hich d eveloper charges are calcu lated , in place by 1 Ju ly 2001. IPART also sets charges for State Water on an annual basis and d eterm ines a resou rce managem ent charge w hich is im posed by DLWC on SCA and H WC. In relation to N MUs, IPART u nd ertook an inqu iry into pricing principles for local w ater au thorities w hich w as released in Septem ber 1996. Those principles are cu rrently being applied to the 124 N MUs in N ew Sou th Wales. N ew Sou th Wales has been at the forefront in introdu cing tw o -part tariffs, com prising access and usage com ponents to MUs and N MUs. The usage com ponent takes into accou nt the opportu nity cost of w ater u sage and is consistent w ith the recom mend ations of the Ind u stry Comm ission‟s 1992 Inqu iry into w ater resou rces and w aste w ater d isposal. The progress of the w ater ind ustry sectors tow ard s achieving fu ll econom ic cost recovery is d etailed below u nd er the relevant specific sections of the Strategic Fram ew ork. IPART has ad opted a policy of tw o part tariff pricing and the phasing ou t of property valu e based charges. Im plem entation has significantly red u ced the scope for inefficient cross-subsid isation w ithin the N SW w ater ind u stry. Consid erable progress has been m ade tow ard s elim inating crosssubsid ies in the NSW MU sector. SWC‟s rem aining non -resid ential property valu e based charges are being phased ou t, w ith only $12 m illion in revenue estimated for 2003. Previou sly property valu e based rating system s resu lted in su bstantial cross-subsid ies in charging arrangements. 65 6.3.6 6.3.7 6.3.8 6.3.9 6.3.10 6.3.11 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 6.3.12 For instance, in 1992-93 resid ential custom ers accounted for 64% of w ater u se and m ad e u p 90% of custom ers served . H ow ever, their contribu tion to revenu e w as only 50%. The non -resid ential sector contribu ted 50% of revenu e, bu t accou nted for only 10% of properties and u sed only 36% of w ater. The cross-subsidy from the non-resid ential sector to the resid ential sector w as estimated to be $300 million per year. Betw een 1992-93 and 1999-2000, property valu e based rates (the m ajor sou rce of the cross su bsid ies), w ere redu ced by $376 m illion or 90%, from a peak of $418 m illion per annu m . The proportion of revenu e from non-resid ential properties fell to 28% and the proportion of usage based revenu e increased from 20% to 46% over the sam e period . On cu rrent projections, revenu e from pr operty value based rates w ill d ecrease to $12 m illion for the SWC and to $1 m illion for the H WC by 2003. Developer charges are being used to recover the fu ll costs of provid ing w ater and sew erage infrastru ctu re to new d evelopm ent areas. These charges have red u ced the scope for cross-su bsid ies in relation to new d evelopm ents. H WC has elim inated price d ifferences for all custom ers, inclu d ing sew er use charges for resid ential and non -resid ential cu stom ers. Both SWC and H WC have location specific d eveloper charges, w hich aim to ad dress locational cross-subsid ies inherent in their u niform annual (postage stam p) charging stru ctu re. HWC has also introd u ced a location -based w ater u sage charge for custom ers w ith u sage exceed ing 50,000 kilolitres per year and applying only to u sage exceed ing 50,000 kilolitres. The new charge reflects the level of infrastru ctu re com m and ed by these cu stom ers. For bu lk ru ral w ater, tw o-part tariffs have been introdu ced or are being introd u ced for all w ater sou rces (this entails the introd u ction of m etering on u nregu lated rivers), and pricing reform has seen a stead y increase in revenu e on a path to fu ll cost recovery. Com prehensive reporting by State Water and DLWC of costs on a regional and activity basis has mad e it possible to id entify subsid ies and to estimate the u ser share of attribu table operation, regu lation and resou rce managem ent costs. To provid e fu ll transparency, DLWC has published its w ater -related costs, fu lly d isaggregated by fu nction (ie. operator, regu lator, resou rce manager), regional location (the 35 State Water valleys and areas plus SWC and H WC) and w ater sou rce (regu lated su rface w ater, u nregu lated su rface w ater and grou nd w ater). IPART used the d ifferentiated cost inform ation in d etermining 199798 bu lk w ater prices, w hich w ere valley and w ater source based . IPART's latest d eterm ination in Septem ber 2000 w ill resu lt in an 66 6.3.13 6.3.14 6.3.15 6.3.16 6.3.17 6.3.18 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 average increase in bu lk w ater prices of 8% across all w ater sou rces. By generating an ad d itional $3.3m the 2000-01 bu lk w ater prices continu e progress tow ard s IPART's fu ll cost recovery target established in Ju ly 1998. 6.3.19 Rem aining subsid ies for the N ew South Wales ru ral w ater ind u stry are provid ed from w ithin DLWC's various w ater program s. Bu d get fu nd ing for these programs cu rrently covers the cost of most resou rce m anagem ent and regu latory activities as w ell as the balance of State Water‟s operational and capital costs that are u nrecovered from u sers. IPART d eterm ines the pace at w hich costs attribu table to w ater u sers can be recovered . Am ong other things, IPART is requ ired to take into accou nt the im pact of price increases on custom ers. Fu rther d etails on progress in this area are provid ed u nd er the section d ealing w ith progress in achieving COAG‟s specific requ irem ents for ru ral w ater reform . Applying IPART‟s pricing principles for local w ater au thorities is a cru cial first step tow ard s system atic reform and the rem oval or transparency of cross subsid ies in the N MU sector. More than 40% of N ew Sou th Wales‟s 126 N MUs are subject to consu m ption -based pricing throu gh tw o-part tariffs. 6.3.20 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 67 6.3.21 DLWC has prepared Developer Charges Gu id elines to assist cou ncils to calcu late fu ll cost recovery d evelopm ent charges for grow th w orks in cou ntry N SW. These h ave been produced u nd er the principles applied by IPART for Syd ney Water and H u nter Water. The N SW Governm ent presently provid es fu nd ing to local cou ncils u nd er its Cou ntry Tow ns Water and Sew erage Program . Consistent w ith COAG principles, m ajor reforms to this program u nd er the Au gu st 1997 w ater reform package involve encou raging cou ncils to be financially self-su fficient, together w ith increased em phasis on initiatives to im prove planning and operational managem ent. Governm ent fu nd s have been entirely d irected to „backlog‟ w orks requ ired to m eet pu blic health and environm ental stand ard s, and reasonable operational levels of service for present popu lations. Local cou ncils are now responsible for meeting the fu ll cost of w orks to meet grow th need s as w ell as renew als. 6.3.22 Community Service Obligations 6.3.23 Und er the N SW Social Policy Program (SPP), CSOs are d efined as non-com m ercial activities that are carried ou t pu rsuant to a Governm ent d irective, have a clear social benefit and are fu nd ed from the State Bu d get. N ew Sou th Wales consid ers that w ater su pply agencies shou ld seek to recover the fu ll economic costs of su ch activities. Accord ingly, w here the Governm ent d irects an agency to carry ou t activities for w hich the costs cannot be fu lly recovered from custom ers then in principle, these shou ld be fu nd ed via transparent CSOs. The SPP provid es for costing of CSO paym ents for subsid ised operations u sing the avoid able cost m ethod . In the case of CSO paym ents for price concessions (eg pensioner rebates) it is consid ered that these shou ld u ltimately be costed on the basis of fu lly d istribu ted efficient costs (ad ju sted , if appropriate, for ad d itional d emand generated by the low er price). H ow ever as an interim m easu re, w here the im m ed iate introd u ction of fu lly d istribu ted costing w ou ld resu lt in a significant com pliance bu rd en, the foregone revenu e approach is consid ered an acceptable alternative. The MU agencies receive CSO payments from the State Bu d get, prim arily for pensioner rebates and exem ption of certain categories of properties from paym ent of access charges (eg charities and schools). For exam ple, SWC has a w ell-established rebate program to assist pensioners and families in need of special help, su ch as the aged and people on d isability su pport and service pensions. These cu stom ers receive SWC services at less than full cost. The cost to SWC of the 68 6.3.24 6.3.25 6.3.26 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 rebate program is m ad e transparent throu gh the IPART processes and annual Statements of Corporate Intent negotiated w ith N SW Treasu ry. These rebates and sim ilar concessions are paid to SWC as a CSO in accordance w ith the SPP. Sim ilarly, the valu e of rebates provid ed by H WC to pensioners and exem pt property hold ers (eg. schools, chu rches, nu rsing hom es) are fu lly costed and fu nd ed by the Governm ent throu gh the SPP. 6.3.27 In relation to NMUs, u nd er the Local Governm ent Act 1993, local cou ncils are requ ired to red u ce w ater su pply and sew erage charges for eligible pensioners by 50%, u p to a maxim u m red uction of $87.50 per annu m for each service. Of this rebate, cou ncils are reim bu rsed for 50% of each service via a paym ent from the Departm ent of Local Governm ent. CSO paym ents are cu rrently not provid ed to State Water. In the irrigation sector, paym ents are provid ed from the State Bu d get to rectify backlog maintenance (as agreed betw een the Governm ent and the respective privatised and corporatism irrigators) and to assist w ith the implem entation of Land and Water Managem ent Plans. The ongoing process of reform w ithin the N ew Sou th Wales w ater ind u stry, particu larly the ru ral sector, is expected to fu rther enhance the transparency of cu rrent fu nd ing arrangements and the separation of comm ercial and non -com m ercial activities. Pricing: Urban Water Services 6.3.28 6.3.29 6.4 Framew ork Requirement s 6.4.1 In relation to pricing, the Cou ncil agreed : (b) u rban w ater services (i) to the ad option by no later than 1998 of charging arrangements for w ater services com prising an access or connection com ponent or com ponents to reflect u sage w here this is cost effective, (ii) that in ord er to assist ju risd ictions to ad opt the aforem entioned pricing arrangem ent, an expert grou p, on w hich all ju risd ictions are to be represented , report to COAG at its first m eeting in 1995 on asset valuation m ethod s and cost-recovery d efinitions, and (iii) that su pplying organisations, w here they are pu blicly ow ned , aim to earn a real rate of retu rn on the w ritten d ow n replacem ent cost of their assets, com m ensu rate w ith the equ ity arrangem ent of their pu blic ow nership. NSW Int erpret at ion N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 69 6.4.2 N ew Sou th Wales d oes not su pport the proposition that w ater agencies shou ld earn a pred eterm ined rate of retu rn on the fu ll quantu m of asset valued on a replacem ent cost basis. N ew Sou th Wales has d eveloped a „line in the sand ‟ ap proach to the valuation of existing assets for pricing pu rposes. This is an econom ic approach based on the fu tu re net cash inflow s and is therefore consistent w ith aspects of the d eprival valu e m ethod ology su pported by the Expert Grou p. This approach recognises that past investm ent d ecisions w ere m ad e for a variety of reasons and in m any instances w ere not econom ically based ; for exam ple, the d esire to encou rage regional d evelopm ent and to com pensate and resettle retu rned servicem en. NCC Third Tranche Assessment Crit eria Com plete assessments of the cost effectiveness of tw o -part tariffs for service provid ers w ith greater than 1000 connections. Provid e copies of any review s w hich show that im plem entation is not cost effective, particu larly w here this involves large service provid ers. Where assessm ents show tw o-part tariffs to be cost effective, com m itm ent to tim ely im plem entation. A strong net pu blic benefit ju stification to be provid ed w here im plem entation is to be phased beyond 2001. Metropolitan w aste w ater charges to reflect the level of services received (volu m e and pollu tant load) w here practicable (for exam ple, throu gh effective trad e w aste charges). Free w ater allow ances to be rem oved . Where low level free w ater allow ances are retained or are to be phased ou t over tim e, ju risd ictions to provid e evid ence that a significant proportion of cu stom ers and w ater su pplied still face a strong volu metric signal. Where charges are based on property values, ensu re that they d o not u nd erm ine the principle of consu m p tion-based pricing. NSW Report Charging Arrangements Comprising Access and Usage Components 6.4.3 SWC and H WC have introd u ced w ater u sage charges as part of tw opart tariff pricing stru ctu res d eterm ined by IPART. In the case of SWC, w ater usage revenu e as a proportion of total w ater revenu e has increased from 21% in 1989 to 80% in 2000. Usage charges are projected to m ake u p arou nd 91% of H WC‟s w ater revenu e over the cu rrent price path from 2000 to 2003. Gosford and Wyong Cou ncils‟ w ater and sew er age businesses also ad opt tw o-part tariffs set by IPART. IPART rem oved the prepaid w ater allow ance from both local cou ncils in the 2000 pricing 70 6.4.4 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 review s. This w ill m ove the u sage charge closer to the m arginal cost of su pply. 6.4.5 Local council NMUs have been m oving to tw o-part tariffs since the 1980s. Fifty six of the 112 cou ncils responsible for w ater su pply in N SW now have a „pay for use‟ tariff. At the tim e of the second tranche assessm ent, an analysis of councils that had not ad opted the Ind epend ent Pricing and Regu latory Tribu nal (IPART)‟s recom m end ation of a tw o-part tariff based on a fixed access charge and a consu m ption charge show ed that there w ere seven cou ncils w ith w ater business u nd ertakings greater than $2M per year, 14 cou ncils w ith bu siness u nd ertaking betw een $1M and $2M per year, and 30 w ith w ater businesses valu ed at less than $1M per year. N ew Sou th Wales proposed to proceed to negotiate on a case by case basis w ith those cou ncils w ith businesses w orth greater than $1M per year w hich had m ad e little or no progress tow ards an appropriate tariff stru ctu re. For those below $1M, it w as not consid ered to be cost-effective to introd u ce tw o-part tariffs. The Departm ent of Local Governm ent w rote to all cou ncils w ith businesses w orth greater than $1M per year in early 2000, ad vising them that they w ere requ ired to im plem ent national w ater reform and com petition policy reform policies, inclu d ing usage-based pricing and elim ination of subsid ies. Since then, three of the largest cou ncils have resolved to ad opt fu ll usage pricing, one is review ing its position and three have ind icated that they are u nw illing to do so. Of the 14 m ed iu m -sized cou ncils, fou r have m oved to introd u ce pricing reform . Three of the sm all cou ncils have also resolved to introd u ce fu ll usage pricing. 6.4.8 Property based charges remain for m inor storm w ater d rainage charges by H WC to non -resid ential cu stomers. As part of its 2000 price d eterm ination, IPART introdu ced a phased red u ction of the property value com ponent of H WC‟s stormw ater charges. Property based charges remain at a red u ced level for SWC‟s comm ercial and ind u strial cu stomers (estimated to be red u ced to $12 m illion for SWC in 2003). 6.4.6 6.4.7 Asset Valuation and Cost Recovery Definitions 6.4.9 N ew Sou th Wales‟s position in relation to asset valuation and the d efinition of fu ll econom ic cost recovery is d escribed above in the general pricing principles section. The MU corporations and Gosford / Wyong aim to recover their fu ll econom ic costs throu gh their pricing su bm issions to IPART. In ad d ition, as ou tlined above, H WC and SWC also receive Governm ent fu nd ing for specified CSOs. 71 6.4.10 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 6.4.11 In d eterm ining prices for these organisations, IPART takes into accou nt appropriate rates of retu rn as w ell as the r ange of other factors specified in the IPART Act. Real Rates of Return on the Replacement Cost of Assets 6.4.12 As d etailed above, N ew Sou th Wales d oes not su pport the valuation of pre-existing assets on a replacem ent cost basis. Appropriate rates of retu rn for N SW w ater businesses are d eterm ined on the basis of the LIS approach tow ards asset valuation and the ind ivid u al businesses‟ w eighted average costs of capital. N evertheless SWC, H WC and Gosford Cou ncil and Wyong Cou ncil all achieve a positive rate of retu rn on the w ritten d ow n replacem ent cost of their assets. The N MU sector also achieves positive rates of retu rn on the replacem ent cost of assets. Pricing: Metropolitan Bulk Water 6.4.13 6.4.14 6.5 Framew ork Requirement s 6.5.1 In relation to pricing, the Cou ncil agreed : (c) m etropolitan bu lk w ater su ppliers (i) to charging on a volu m etric basis to recover all costs and earn a positive real rate of retu rn on the w ritten -d ow n replacem ent cost of their assets. NSW Int erpret at ion 6.5.2 A volu m etric basis of charging has been taken to includ e not only charging for all w ater solely on a volu m etric basis bu t also as an appropriately stru ctu red tw o-tiered tariff arrangem ent. Bu lk w ater is sold by SCA to SWC and various local councils for the pu rposes of re-su pply. The maxim u m price for bu lk w ater is set by IPART on a volu metric basis to reflect the fu ll valu e of the w ater provid ed . H WC provid es bu lk w ater to Du ngog Cou ncil and Great Lakes Cou ncil (for part of Karu ah) u nd er a contract w ith a tw o-part tariff. The charges incorporated in these contracts are d eterm ined by IPART. For both SCA and H WC, pricing provid es for a positive real rate of retu rn on bulk w ater assets. NSW Report 6.5.3 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 72 6.6 6.6.1 Pricing: Rural Water Supply In relation to pricing, the Cou ncil agreed : (d ) ru ral w ater su pply (i) that w here charges d o not cu rrently fu lly cover the costs of su pplying w ater to u sers, agree that charges and costs be progressively review ed so that no later than 2001 they com ply w ith the principle of fu ll-cost recovery w ith any subsid ies mad e transparent consistent w ith 3(a)(ii) above, (ii) to achieve positive real rates of return on w ritten -d ow n replacem ent costs of assets in ru ral w ater su pply by 2001, w herever practicable, (iii) that fu tu re investm ent in new schem es or extensions to existing schem es be u nd ertaken only after appraisal ind icates it is econom ically viable and ecologically sustainable, (iv) w here trad ing in w ater cou ld occu r across State bord ers, that pricing and asset valuation arrangem ents be consistent, (v) w here it is not cu rrently the case, to the setting asid e of fu nd s for fu tu re asset refu rbishm ent and / or u pgrad ing of governm ent-su pplied w ater infrastru ctu re, and (vi) in the case of the Mu rray-Darling Basin Com m ission, to th e Mu rray-Darling Basin Ministerial Council pu tting in place arrangements so that ou t of charges for w ater, fu nds for the fu tu re maintenance, refu rbishm ent and / or u pgrad ing of the head w orks and other stru ctu res und er the Com m ission‟s control be provid ed . Framew ork Requirement s NSW Int erpret at ion 6.6.2 The costs of ru ral bu lk w ater inclu d e the total of operations and m aintenance expenses, ad m inistration costs, externalities and attribu table resou rce m anagem ent costs, and asset costs. Asset costs inclu d e econom ic d epreciation (ie the am ou nt of capital consu m ed in service prod u ction) and the opportu nity costs of capital (assu m ed to be the w eighted average costs of capital). Som e of DLWC's river regu lation and resou rce m anagem ent activities generate joint benefits for w ater u sers, flood plain resid ents, recreational interests and certain ru ral land hold ers. N ew Sou th Wales has interpreted fu ll cost recovery as requ iring the costs of these activities to be paid for by those w ho are responsible for cau sing, or benefit from , those services. It is d ifficu lt to be precise abou t cost-sharing and ju d gem ent is requ ired . Those w ho cau se 73 6.6.3 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 m ore services to be requ ired , or benefit m ore, shou ld pay m ore. State Water can only charge licensed w ater u sers and the assu m ption is that the N SW Govern m ent contribu tes a share of these costs on behalf of other (non -chargeable) beneficiaries. 6.6.4 It is necessary to ensu re that w ater u sers contribu te appropriate fu nd s tow ards asset refu rbishment and / or the u pgrad ing of w ater infrastru ctu re. For States w here cross bord er trad ing could occu r, it is im portant that w ater be priced in line w ith the principles of fu ll cost recovery, inclu d ing the associated resou rce managem ent costs. A u niform approach of this natu re w ill facilitate the market for w ater trad ing and ensu re that w ater moves to its highest valu ed use. N ew Sou th Wales is of the view that the COAG agreem ent requ ires all signatories to price accord ing to fu ll-cost recovery principles by the year 2001 and to inclu d e resou rce m anagem ent costs in the costs to be recovered . 6.6.5 6.6.6 NCC Third Tranche Assessment Crit eria Provid e information on the d egree to w hich each aspect of the COAG gu id elines has been m et. Inclu d e among other things, inform ation on m ethod ologies for assets valuation and provision for asset consu m ption, inform ation on the treatm ent of taxes and tax-equ ivalent regimes (TERs), externalities, d ivid end s and retu rn on capital. Inform ation on w ater and w astew ater services shou ld be provid ed separately. For vertically integrated provid ers, processes shou ld be in place to establish the contribu tion to total cost of m ajor functional areas su ch as head w orks, bu lk w ater, reticu lation and retail services. For ru ral w ater pricing: fu ll cost recovery; a price path to achieve fu ll cost recovery beyond 2001, w ith transitional CSOs m ad e transparent; or for schem es w here fu ll cost recovery is u nlikely to be achieved in the long term , CSO requ ired to su pport the scheme m ade transparent; and cross-su bsid ies transparent; a su bstantial proportion of schem es to be recovering at least the low er band of the agreed gu id elines; w herever practicable, schem es to earn a positive rate of retu rn on assets; ru ral service provid ers to establish an annu ity for u pgrad ing or refu rbishing w ater su pply infr astru ctu re or ad opt other approaches, w here consistent w ith the objectives of this aspect of the COAG Fram ew ork; N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 74 - - a sou nd public benefit ju stification for those schem es that are unlikely to attain the low er bou nd even in the long run, and the nu m ber and m ateriality of these schem es to be sm all; and regu lators to take into account externalities in the setting of prices (eg a proxy for environm ental externalities as the costs to w ater agencies of mitigating environm ental problem s). Assessment processes to provid e for appropriate ind epend ence and pu blic consu ltation and scru tiny; Arrangem ents to be su fficiently flexible to m atch the d epth of analysis w ith the size and significance of the project; For large d evelopm ents in particu lar, assessm ents to be based on the best information available w ith any assu m ptions and lim itations clearly stated ; All relevant econom ic, social and environm ental costs and benefits to be factored into the analysis. For large d evelopm ents, a robust cost benefit analysis to be provid ed ; For assessm ents of ecological su stainability, information provid ed on the natu re of the assessment, the d ecision -making processes and mechanism s to monitor the im pacts of the d evelopm ent and its com pliance w ith environm ental standard s. NSW Report Compliance w ith Full Cost Recovery and Transparency of Subsidies for Rural Bulk Water 6.6.7 In Septem ber 1995, ru ral bu lk w ater pricing w as referred to IPART. Since 1995, IPART has u nd ertaken inqu iries into bu lk w ater pricing and set annual prices. It is expected that IPART w ill review charges again in 2001. DLWC is requ ired to m ake a subm ission to IPART ind icating its anticipated costs for ru ral bu lk w ater for each com ing year. The DLWC su bmissions are set ou t in d etail to ind icate the costs by: sou rce (regulated , u nregu lated and grou nd w ater); region or valley; and cost type (operation, regu lation, resou rce managem ent and assets). In term s of transparency, the extent of su bsid ies is ind icated by a com parison of charges w ith fu ll cost recovery, w hich is available in IPART's report of Septem ber 2000 d etailing the cu rrent d eterm ination. The level of subsid y w as assessed on a valley -byvalley basis. Ru ral w ater charges in N ew Sou th Wales vary by sou rce (regu lated , u nregu lated and grou nd w ater) and by valley. 75 6.6.8 6.6.9 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 Tw o-tiered tariffs are being im plem ented w hich are regionally (or valley) based and also vary by sou rce. 6.6.10 In 1995-96, the N SW Governm ent introd u ced an interim resou rce m anagem ent charge (for regu lated rivers and grou nd w ater u sers) in a move tow ards achieving fu ll cost recovery. The 1996-97 ru ral w ater charges w ere held at 1995-96 levels, w hich inclu d ed the resou rce m anagem ent charge. Charges for unregu lated streams w ere introd u ced for the first tim e. The 1997-98 ru ral w ater charges w ere increased by arou nd 10% on average, based on IPART‟s price d eterm ination. The level of price increase varied from valley to valley betw een 0% and 20%. The 1998 price d eterm ination by IPART set ru ral w ater charges for a tw o year period to Ju ne 2000. The d eterm ination established a target of fu ll cost recovery by region, based on best available inform ation. Price increases w ere lim ited to 20% in any one year for the sam e am ou nt of w ater usage. The d ifference betw een ind ustrial and other w ater use prices w as elim inated . Where w ater is m etered , a price stru ctu re based on the relationship betw een final and variable cost w as established . Where relevant, the d eterm ination also established : a clear statem ent of the remaining cost gap to achieve full cost recovery and broad equ ivalence w ith prices in other states. 6.6.14 The 2000-01 d etermination w ill resu lt in an average increase in bu lk w ater prices of 8% across all w ater sou rces. Prices in each valley w ere increased by betw een 1% and the m axim u m of 20% d epend ing on w hether fu ll cost recovery had alread y been reached . Since 199798, cost recovery has increased from an estimated 55% to 82% in 2000-01. Fu ll cost recovery has alread y been achieved (based on IPART‟s estimates of efficient costs) in a nu m ber of valleys, inclu d ing Macqu arie and Mu rru mbid gee regu lated rivers, Barw on, Mu rray and Hunter u nregu lated rivers, and Central West, Mu rru m bid gee and Mu rray grou nd w ater systems. In its 2000-01 d eterm ination, IPART noted that since its last d eterm ination DLWC had created the com m ercial w ater bu siness State Water, and had m ad e progress in im plementing its recom m end ations. In April 2001, DLWC lod ged a comprehensive m ed iu m -term su bm ission w ith IPART that m eets the inform ation requ irements of IPART, and proposes im plem entation of the rem aining bu lk w ater pricing reform s. As ind icated in the d iscu ssion of u rban w ater services, N ew Sou th Wales and SCARM in general, have concerns w ith using w ritten d ow n replacem ent cost as a basis for charging a rate of retu rn. 76 6.6.11 6.6.12 6.6.13 6.6.15 Positive Real Rate of Return on Assets 6.6.16 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 6.6.17 As a w ay forw ard , IPART d oes not allow for a rate of retu rn on existing infrastru ctu re. H ow ever, a rate of retu rn on new infrastru ctu re is allow ed (w here the infrastru ctu re has been constru cted on the basis that beneficiaries are w illing to pay the fu ll econom ic cost). This approach is expected to be follow ed by IPART in d eterm ining bu lk ord er prices from Ju ly 2001. Economic and Ecological Sustainability 6.6.18 In N ew Sou th Wales, an econom ic appraisal is requ ired as a prerequ isite for governm ent fu nd ing of capital projects above $0.5 m illion. This requirem ent applies to both new investm ents and capital w orks on existing structu res. The econom ic appraisal m ust m eet certain gu id elines, w hich inclu d e: id entifying variou s options for the capital investm ent (inclu d ing „d o nothing‟); id entifying all the benefits and costs associated w ith the options, both qu antitative and qualitative; u nd ertaking sensitivity analysis; and assessing the net benefits (inclu d ing a rate of retu rn). 6.6.19 There are cu rrently rigorous policies in place u nd er the N SW Environmental Planning and A ssessment A ct 1979, w hich inclu d e certain environm ental im pact assessm ents. The W ater M anagement A ct also helps to prom ote ecological sustainability. See the later section on w ater trad ing. Cross-border Trading 6.6.20 Setting Aside Funds for Future Asset Refurbishment 6.6.21 As ind icated in (i) above, charges for ru ral w ater inclu d e contribu tions tow ard s asset renew al and r efu rbishm ent of w ater infrastru ctu re. In m aking its d eterm ination IPART includ es an asset renew al annu ity to ensu re that the econom ic cost of maintaining and renew ing assets are reflected in prices. There is an issu e of w hether a specific reserve shou ld be established w ithin an au thority‟s accounts. The optim al financial m anagem ent of the State is likely to be enhanced by u tilising all available fu nd s to retire d ebt and red u ce interest costs, rather than trying to attain a retu rn on any qu arantined balances. Au thority reserves are inconsistent w ith this. In general, it is stand ard practice for governm ents, as ow ners of au thorities, to strategically manage cash pools pend ing fu ture d ecisions abou t m ajor asset replacem ents and renew als. DLWC p roposes to IPART variou s valley-based asset renew al annuities to account for the consu m ption of service capacity of the 77 6.6.22 6.6.23 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 asset base in each valley. Positive rates of retu rn on fu tu re infrastru ctu re refurbishm ent investm ents that m aintain cu rrent service levels have been inclu d ed in DLWC‟s su bmission for a price path for 2001-04. 6.6.24 The refu rbishm ent plans and a separate capital annu ity to cover capital costs for environm ental and safety com pliance are based on a 30-year Total Asset Managem ent Plan. A pr elim inary plan has been prepared throu gh a rigorou s process that has u nd ergone an external quality au d it. Murray D arling Basin Commission Setting Aside Funds for Future Asset Refurbishment 6.6.25 Prices for 2001-2004 are expected to inclu d e the N SW share of MDBC operational and capital costs in line w ith other N SW bu lk ru ral w ater services. Pricing: Groundwater In relation to pricing, the Cou ncil agreed : (e) grou nd w ater (i) that managem ent arrangem ents relating to grou ndw ater be consid ered by Agricu ltu re and Resou rce Managem ent Cou ncil of Australia and N ew Zealand (ARMCAN Z) by early 1995 and ad vice from su ch consid erations be provid ed to ind ivid u al ju risd ictions and the report be provid ed to COAG. 6.7 6.7.1 Framew ork Requirement s NSW Report 6.7.2 DLWC contribu ted to the ARMCAN Z report. In Au gu st 1997, the N SW Governm ent end orsed a State Grou nd w ater Managem ent Policy Fram ew ork d ocu m ent w hich took into accou nt ARMCANZ recom m end ations. The first com ponent policy on grou nd w ater quality has been pu blished and the grou nd w ater quantity and grou nd w ater-d epend ent ecosystem s are cu rrently being finalised . IPART has cu rrent oversight of grou nd w ater pricing, und ertaken in a manner consistent w ith the other w ater sou rces. The Water Managem ent Act enhances provisions for the m anagem ent of grou nd w ater to give it the sam e protection as su rface w ater and to integrate its m anagem ent w ith that of other w ater sou rces. The Act makes no d istinction betw een the m anagem ent of grou nd w ater and other w ater sou r ces, apart from approval of activities that are u niqu e to grou ndw ater. 6.7.3 6.7.4 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 78 6.8 Water Allocations or Entitlements Framew ork Requirement s 6.8.1 in relation to w ater allocations or entitlem ents, the Cou ncil agreed : (a) the State governm ent m em bers of the Coun cil, w ou ld im plem ent com prehensive systems of w ater allocations or entitlem ents backed by separation of w ater property rights from land title and clear specification of entitlem ents in term s of ow nership, volum e, reliability, transferability and , if approp riate, quality, (b) w here they have not alread y d one so, States w ou ld give priority to formally d eterm ining allocations or entitlem ents to w ater, inclu d ing allocations for the environm ent as a legitim ate user of w ater, (c) in allocating w ater to the environm ent, m em ber governm ents w ou ld have regard to the w ork u nd ertaken by ARMCANZ and Au stralian and N ew Zealand Environm ent and Conservation Cou ncil (AN ZECC) in this area, (d ) that the environm ental requirem ents, w herever possible, w ill be d eterm ined on the best scientific inform ation available and have regard to the inter-tem poral and inter-spatial w ater need s requ ired to m aintain the health and viability of river systems and grou nd w ater basins. In cases w here river system s have been over allocated, or are d eem ed to be stressed , arrangem ents w ill be institu ted and substantial progress m ad e by 1998 to provid e a better balance in w ater resou rce use inclu d ing appropriate allocations to the environm ent in ord er to enhance/ restore the health of river system s, (e) in u nd ertaking this w ork, ju risd ictions w ou ld consid er establishing environm ental contingency allocations w hich provid e a review of the allocations five years after they have been d eterm ined , and (f) w here significant fu tu re irrigation activity or d am constru ction is contem plated , appropriate assessm ents w ould be u nd ertaken to, inter alia, allow natu ral resource m anagers to satisfy them selves that the environm ental requ irements of the river systems w ou ld be ad equ ately m et before any harvesting of the w ater resou rce occu rs. NCC Third Tranche Assessment Crit eria The legislative and institu tional fram ew ork to enable the d eterm ination of w ater entitlem ents and trad ing of entitlem ents to be in place. The fram ew ork to provid e a better balance in w ater resou rce u se, inclu d ing appropriate allocations to the environm ent as a N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 79 legitim ate user of w ater in ord er to enhance/ restore river health. Appropriate treatment of overland flow s. Ju risd ictions to have in place the necessary legislation, policy, ad m inistrative system s and institu tional arrangem ents to im plem ent com prehensive systems of entitlem ents backed by separation of property rights from land title and clear specification. Institu tional arrangem ents to set the rights and responsibilities of the Crow n, u sers and the environm ent. Institu tional arrangem ents to provid e for com m u nity involvem ent and pu blic ed u cation. consultation, Institu tional arrangem ents to provid e a m ethod ology for d eterm ining and review ing a sustainable balance betw een com peting uses (inclu d ing the environm ent); and Institu tional arrangem ents to d eal w ith intra and interstate consistency w here necessary. Property rights to strike an effective balance betw een w ater u sers‟ need for secu rity and the environm ent‟s need for ad aptive resou rce m anagem en t. Water property rights regim es to m axim ise efficient w ater trad e and investm ent subject to environm ental need s. Water property rights to be w ell specified so as to prom ote efficient trad e w ithin the social, physical and ecological constraints of catchm en ts; Property rights to be in d em and , w ell specified in the long term sense, exclusive, enforceable and enforced , transferable and d ivisible and provid e for sustainability and com m u nity need s. Ensu re w ater users get the highest possible level of security in regard to the natu re of the property right, and absolu te secu rity on the issu e of ow nership. While a „lease in perpetu ity‟ maxim ises secu rity, it is not requ ired to meet minim u m COAG com m itm ents. Com pensation m ay be payable, for instance, w here redu ctions in reliabilities and other relevant param eters are capriciou s or d isproportionate. Efficacy of w ater property rights system s. Water rights to be linked to a robust adaptive resou rce planning system . N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 80 Any constraints on w ater rights and trad e to be based on a sound pu blic benefit ju stification and im plem ented to m inim ise im pacts on efficient trad e. Environm ental contingency allocations m ad e, inclu d ing the planning process (allocation, managem ent, operation im plem entation, and u se), m onitoring and review m ech anisms (the m axim u m tim efram e allow ed before review and id entification of triggers prior to this tim e elapsing) after initial d eterm ination. A sustainable balance betw een the environm ent and other u ses achieved , inclu d ing form al w ater provisions for su rface and grou nd w ater consistent w ith the ARMCAN Z and ANZECC national principles. Specified property rights, inclu d ing the review of d orm ant rights. A Statew id e process in setting environm ental allocations. When issu ing new entitlem ents, have provid ed for environm ental allocations. Progress in im plem enting the end orsed allocation program s as pu blished in the Cou ncil‟s second tranche assessm ent. Report on river system s (inclu d ing stressed , and other over allocated system s) id entified in the second tranche on w hich N ew Sou th Wales has fu lly d elivered / partially d elivered / not yet com m enced allocations to the environm ent, as w ell as for river systems Report on the status of id entified stressed rivers w hich w ere not ad d ressed in a ju risd iction‟s endorsed „roll-ou t‟ plan. Inform ation on progress against im plem entation programs that d em onstrates regard to the w ork of ARMCAN Z and ANZECC principles. Show su bstantial progress in m eeting the com m itm ents w ith regard to stressed or over-allocated systems w ithin the tim elines provid ed in the im plem entation program s as pu blished in the second tranche assessm ent. Progress to inclu de allocations to the environm ent in all river systems w hich have been over-allocated , or are d eem ed to be stressed . Ju risd ictional program s in this a rea m ust be substantially com plete by 2005. Dem onstrate progress in setting allocations that are ad equ ate to m eet the environm ental requ irem ents of w ater sou rces and d epend ent ecosystem s. Dem onstrate that there are ad equate m onitoring and review arrangements in place, su ch that allocations m ay be revised N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 81 shou ld m onitoring reveal cu rrent allocation arrangem ents are inad equate. Planning and im plem entation m echanisms su bstantially in place, su ch that allocations to the environm ent can be im plem ented as per a ju risd iction‟s tim etable. Dem onstrate both the capacity and intention to form ally provid e and use scientifically based environm ental allocations for all w ater d epend ent ecosystem s (as d efined in the ARMCANZ and AN ZECC principles), thu s recognising the environm ent as a legitim ate user of w ater. For all rivers and aqu ifers not presently d eclared over -allocated or hyd rologically stressed , there be no im ped im ent to d eveloping a formal allocation for the environm ent if requ ired . Evid ence that ju risd ictions have forw ard -looking m echanisms in place and operating effectively for ad aptive natu ral resou rce m anagem ent. Evid ence of progress to ensu re that allocations and trad ing w ill be substantially com pleted for all river system s and grou nd w ater resources by 2005. Dem onstrate that ju risd ictions have not locked in allocations w hich, over tim e and in the light of better inform ation, cou ld be seen as being inad equate to m eet environm ental w ater requ irements. Ju risd ictions to have in place a clear pathw ay for review of allocations w ithin the tim efram e called for in the COAG Fram ew ork. NSW Report Implementing a Comprehensive Allocation Framew ork Introduction 6.8.2 The W ater M anagement A ct 2000 establishes a comprehensive allocation fram ew ork for w ater. It clearly and specifically allocates w ater to the environm ent as a first priority (see below ); basic land hold er need s as a priority; and clear, secu re and transferable access entitlem ents for u sers. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 82 Rights Established to Protect Landholders' Basic N eeds 6.8.3 The new Act secu res w ater for the basic need s of ru ral land hold ers. These fall into three categories: basic w ater rights for land hold ers for d om estic and stock use (both su rface w ater and grou ndw ater); harvestable rights (a percentage of rainfall ru n off from la nd captu red in a farm d am ); and recognition of native title rights and interests if d eterm ined by a cou rt, and these to have equ ivalent priority to other basic land hold er rights. 6.8.4 6.8.5 These basic rights d o not requ ire an access licence. Water can be extracted from a river or an aqu ifer w ithout an access licence to m eet basic d om estic and stock w ater needs. If a d am or a bore is u sed , a w ork approval w ill be requ ired . In ad d ition, land hold ers can captu re w ater on their land by the constru ction of small farm d ams w ithou t having to obtain an access licence. This is comm only know n as the harvestable right and allow s the captu re of 10% of the average regional rainfall ru n -off. Basic land hold er rights are tied to the property and cannot be transferred or sold . Du ring d rought period s, basic land hold er rights are to be afford ed priority over other uses. There are also provisions in the Act to allow these basic land hold er rights to be lim ited in critical situ ations. These can inclu d e protecting the environm ent or overcoming a threat to pu blic health. The Act also recognises native title w ater rights. Native title hold ers w ill be entitled to w ater as per basic land hold er rights for d om estic and trad itional purposes w ithou t an access licence. A native title hold er is a person w ho hold s native title rights as d etermined u nd er the Commonwealth N ative Title A ct 1993. 6.8.6 6.8.7 6.8.8 6.8.9 An Improved Licensing and Trading System Providing Greater Flexibility and Opportunities for Water Users 6.8.10 Und er the Act, all w ater u sers (exclu d ing those taking w ater for basic land hold er rights and native title rights) are requ ired to be licensed . The Act m akes major changes to the w ater licensing fram ew ork w hich w ill provid e greater flexibility and opportu nities for w ater users in N ew Sou th Wales. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 83 6.8.11 It is not expected that new licensing and approvals provisions w ill com m ence u ntil m id to late 2002. This w ill allow tim e for the systems and processes to be established to convert the 130,000 or so existing w ater licences in N SW. For exam ple, legal ow nership of all cu rrent w ater licences has to be verified , and the licences split into their access (qu antity or share) and u se (approval) com ponents. N ew application and renew al processes w ill be need ed , plu s a centralised system for m anagement of the inform ation, particu larly the pu blic register of all licences and approvals. The Act provid es specifically for access licences w hich are separate from a w ater user's approvals for their w orks or their use activit ies. Water access licences for private enterprises, su ch as irrigators (inclu d ing irrigation corporations) and ind ustries, w ill now be issu ed for 15 years provid ing a longer tim e fram e in w hich to plan their business activities. Water u tilities (eg Syd ney or H unter Water Corporation, local cou ncils) w ill have 20-year licences. Cu rrent licences w ill be rolled over for these new terms once the new licensing system is in place. An access licence can be held by any person and it entitles its hold er: (a) to shares in the available w ater from a specified w ater sou rce (the share com ponent); and (b) to take w ater at specified tim es, rates or circu mstances, and in specified areas or locations (the extraction com ponent). The separation of the access licence from the use approvals w ill stream line the process for w ater trad ing as it is the access licence and its com ponents that are the tradeable com m od ities. For m ost areas of N ew Sou th Wales, new comm ercial w ater licences cannot be granted . The trad ing of w ater access licences w ill therefore be the m ajor m eans by w hich new d evelopers can obtain w ater, or existing d evelopers can expand their prod u ction. Separation of the access licence also gives the holder greater flexibility in ind ivid u al financial arrangem ents. The w ater access licence can be managed like other bu siness assets. The Act provid es greater pow ers for DLWC to ensu re com pliance w ith licence cond itions. This is an important part of protecting the rights of all w ater users. As p art of their 20-year access licence, all local w ater u tilities, like other licensed w ater u sers w ill be subject to a m axim um volu m e w hich they can extract, althou gh tow n su pply (together w ith major u tilities and d om estic and stock licences) is accord ed the highest priority of licensed u se. 6.8.12 6.8.13 6.8.14 6.8.15 6.8.16 6.8.17 6.8.18 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 84 6.8.19 The volu m e per year in the local w ater u tility licences w ill be set, based on one of the follow ing: the existing volum e allocation (many tow ns alread y have a volu m e entitlem ent specified on their w orks licence or in a legal agreem ent or contract); a volu me of w ater calcu lated by reference to the d em ographic and geographic characteristics of the city or tow n, assu m ing reasonable d em and management strategies are in place; and a volu m e of w ater calcu lated on the basis of the cu rrent yield of the w ater managem ent w orks. 6.8.20 The access licences of local w ater u tilities are to be review ed every five years and varied accord ing to changes in population and associated com m ercial activities (ie resu lting from the increased popu lation). Where a tow n is experiencing rapid grow th, the u tility can apply to the Minister for a review of its licence at any tim e. Dem and for w ater for new ind ustries w ithin the tow n can be m et via: the d efined licence volu m e; w ater efficiency gains; su pplied ou t of the tow n‟s su rplus - this w ill apply to ind ustries connected to the tow n‟s reticu lation provid ing the criteria for the tow n's w ater use approval are met; and the ind u stry obtaining their ow n access licence through the norm al process or by pu rchasing w ater from other u sers. 6.8.21 6.8.22 Any ad d itional w ater sou ght for new or expand ed ind ustries w ithin the tow n w ater supply system w ill not be provid ed throu gh the popu lation ad ju stm ent process. This w ill pu t indu stries w ithin a tow n on a sim ilar footing to ind ustries ou tsid e of tow n system s. Once local w ater u tility licences are converted to a volu me lim it they w ill be able to trad e any u nneed ed w ater on a tem porary, one-year basis. Previously, local u tilities cou ld not trad e w ater. 6.8.23 A 10-year Period of Security, w ith Compensation for Change, Providing Confidence for Business D evelopment 6.8.24 Water to su stain w ater-reliant eco system s need s to be protected to ensu re healthy, viable w ater resou rces in the fu tu re. At the sam e tim e, to m ake business planning and investm ent d ecisions, w ater users need to know the possible fu tu re im pacts on their w ater rights. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 85 6.8.25 A balance betw een these tw o objectives is requ ired . The N SW Governm ent has adopted 10-year plans as a m eans of specifying this balance. The w ater m anagem ent com m ittees have been asked to prepare d raft w ater sharing plans for the high priority rivers and aqu ifers. By Decem ber 2001, the initial BAR d eterm ination for these system s m u st be mad e by the Governm ent. The w ater sharing plans w ill be in effect for a 10-year period . Access licences are su bject to any cond itions im posed on them by the relevant plan. Com pensation is claimable by access licence hold ers if w ater allocations are redu ced as a consequence of the va riation of a bu lk access regim e du ring the term of a m anagem ent plan, or w here w ater licences are com pu lsorily acqu ired . 6.8.26 6.8.27 D etermining Allocations or Entitlements to Water, Including Allocations for the Environment Water Reforms 6.8.28 The N SW Governm ent, in its Au gu st 1997 w ater reform package, agreed to im plem ent the MDBMC cap on d evelopm ent of w ater resou rces in the Mu rray-Darling Basin, to lim it total d evelopm ent to 1993-94 d evelopm ent levels. Each year N ew Sou th Wales m onitors its perform ance against cap in each regu lated valley and the Barw on-Darling River. The „cap‟ w ill be incorporated into the w ater sharing ru les for the inland river system s inclu d ing appropriate ad ju stm ent mechanism s if cap is being exceed ed . Interim w ater quality and river flow objectives for all rivers across N SW w ere set in 1998. The objectives for 31 catchm ents across New Sou th Wales w ere approved by Governm ent in October 1999 and released to w ater m anagement com m ittees. The H ealthy Rivers Com m ission Inqu iries into specific catchm ents is recom m end ing longer term environm ental objectives as the Inqu iries progress. 6.8.29 Water Management Act 2000 6.8.30 The W ater M anagement A ct explicitly provid es for w ater to be set asid e for the environm ent as w ell as provisions to control land based activities w hich can im pact on the quantity and quality of w ater resou rces. Water for the Environment as a Priority 6.8.31 A significant requirem ent of the new Act is that w ater for the fu nd am ental health of the environm ent be protected as a pr iority in the sharing of w ater resou rces. Environm ental protection is to be achieved throu gh a nu m ber of mechanism s: 86 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 W at er Management Principles 6.8.32 The Act sets ou t general w ater m anagem ent principles and specific principles relating to w ater sharing, w ater use, d rainage m anagem ent, flood plain m anagem ent, controlled activities and aqu ifer interference activities. The focus of these principles is ecological sustainability. The Act states that it is the d u ty of all persons exercising fu nctions u nd er the Act to take all reasonable steps to d o so in accordance w ith, and so as to promote, these principles. This is a very pow erfu l tool for ensu ring accountability. St at e W at er Management O ut comes Plan 6.8.33 A State Water Managem ent Ou tcom es Plan w ill set the over-arching policy context, targets and strategic ou tcom es for managem ent of the State‟s w aters, prom ote the w ater m anagem ent principles of the Act and give effect to any governm ent policy relating to salinity strategies. It m ust also be consistent w ith inter-governm ental and international obligations, su ch as the Mu rray Darling Basin Agreem ent. A d raft plan is expected to be released in Ju ly 2001. Classificat ion of Wat ers and Set t ing Init ial Bulk Access Regimes 6.8.34 There is provision in the Act to classify w ater sou rces in term s of their d egree of risk, stress or conservation valu e. These classifications w ill enable priorities to be set for action, inclu d ing the d evelopm ent of w ater management plans. The Act also requ ires that an initial „bulk access regim e‟ (BAR) be set by Decem ber 2001 for high risk, high stress or high conservation value w ater sou rces. The BAR is the w ater available for extraction after provision has been m ad e for environm ental w ater and basic land hold er rights. Classification of w ater sou rces for the pu rposes of setting the initial BAR has been com pleted . The Minister, on ad vice of w ater management com m ittees, w ill be setting the initial BARs, via a Minister‟s w ater sharing plan. These plans w ill have effect for 10 years, and are subject to com pensation provisions. 6.8.35 Classes of Env ironment al W at er 6.8.36 There are three classes of environm ental w ater recognised for the pu rposes of the Act. They are: environmental health water for fu ndam ental ecosystem health at all tim es; supplementary environmental water, to be u sed for specific environm ental pu rposes at specific tim es bu t w hich m ay be u sed for non-environm ental pu rposes ou tsid e of these tim es; and N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 87 adaptive environmental water, that is subject to an access licence bu t is used for environm ental pu rposes. 6.8.37 Ru les for the id entification, establishm ent and m aintenance of the d ifferent environmental classes for all w ater sou rces in the State are requ ired to be established in w ater sharing plans as soon as practicable, beginning w ith the priority systems for w hich BARs are to be set this year. Env ironment al Prot ect ion Prov isions 6.8.38 The Act provid es m u ch clearer arrangem ents for controlling land based activities that affect the qu ality or qu antity of ou r w ater resou rces. It provid es for fou r types of approvals: 1. Water use approvals au thorise the use of w ater at a specified location for a particu lar pu rpose and m ay be issu ed for up to 10 years. 2. Water managem ent w ork approvals au thorise the constru ction and u se of w orks for w ater supply, d rainage or flood m anagem ent and m ay be issu ed for up to 20 years. 3. Controlled activity approvals au thorise the hold er to carry ou t a controlled activity in, on or u nd er w aterfront land . „Controlled activity‟ refers to a bu ild ing, a w ork, land fill, rem oval of m aterial, etc. Controlled activity approvals may be issu ed for u p to three years. 4. Aqu ifer interference activity approvals au thorise the hold er to cond u ct activities that affect an aqu ifer. This approval is for activities that intersect grou nd w ater, other than w ater su pply bores. These approvals may be issu ed for u p to 10 years. For controlled activities and aqu ifer interference activities, the Act requ ires that the activities avoid or m inim ise their im pact on the w ater resou rce and land d egrad ation and , w here possible, the land m u st be rehabilitated . To sim plify the process, the range of approvals need ed for a particu lar activity or d evelopm ent w ill be able to be obtained throu gh a single application. In ad d ition to the w ater approvals process, a w ater m anagem ent plan may contain environm ental protection provisions that: (a) id entify zones in w hich id entified d evelopm ent shou ld be controlled ; (b) id entify provisions to w hich State agencies and local au thorities (inclu d ing local councils) should be subject w hen taking action; (c) id entify d evelopment that requ ires the Minister‟s concu rrence to the granting of developm ent consent; and 88 6.8.39 6.8.40 6.8.41 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 (d ) requ ire the establishm ent of action plans to m inim ise or alleviate any harm caused to w ater resou rces by the continuance of existing u ses. 6.8.42 These environm ental protection provisions are to be inclu d ed in a regional environm ental plan to be m ade w ithin six m onths (after the w ater managem ent plan) by the Minister for Urban Affairs Planning. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 89 Regard to the Work of ARMCAN Z and AN ZECC 6.8.43 In allocating w ater to the environm ent, N ew Sou th Wales is taking into accou nt the w ork u nd ertaken by ARMCAN Z and Au stralian and N ew Zealand Environm ent and Conservation Cou ncil (AN ZECC). Appropriate Allocations 6.8.44 Water managem ent in N ew Sou th Wales is based on an adaptive m anagem ent approach w hich retains su fficient flexibility to incorporate new inform ation (scientific, social and econom ic) and appropriate assessm ent over tim e. Althou gh plans w ill be for 10 year period s there are requ irem ents for m id term au d it and review . A program of m onitoring of environm ental responses is u nd er w ay in the regu lated rivers and w ill be established for the unregu lated river and grou ndw ater system s. Contingency Allocations and Review 6.8.45 N ew Sou th Wales d oes not have „environm ental categories‟ as such. The W ater M anagement A ct provid es a m ore clear and robu st fram ew ork to provid e d ifferent types of w ater for the environm ent and to give these statu tory force w ithin w ater managem ent plans. Plans are of ten years‟ d u ration w ith review and au d it provisions. Assessments Prior to D evelopment 6.8.46 The w ater managem ent plans w ill provid e an integrated process for assessing and review ing environm ental requ irem ents both for existing and for new d evelopm ents. Cond itions for licences and approvals w ill be linked to the w ater m anagem ent plans. Where w ater managem ent plans contain provisions for environm ental protection, these m u st be consid ered by statu tory land u se plans and d ecisions m ade u nd er the EP&A Act, and incorporated into regional statu tory land u se plans. Water Trading 6.9 Framew ork Requirement s 6.9.1 In relation to trad ing in w ater allocations or entitlem ents, the Cou ncil agreed : (a) that w ater be used to m axim ise its contribu tion to national incom e and w elfare, w ithin the social, physical and ecological constraints of catchm ents, (b) w here it is not alread y the case, that trad ing arrangements in w ater allocations entitlem ents be institu ted once the entitlem ent arrangements have been settled . This shou ld occu r no later than 90 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 1998, N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 91 (c) w here cross-bord er trad ing is possible, that the trad ing arrangements be consistent and facilitate cross-bord er sales w here this is socially, physically and ecologically su stainable, and (d ) that ind ivid u al ju risd ictions w ou ld d evelop, w here they d o not alread y exist, the necessary institu tional arrangem ents, from a natu ral resou rce managem ent perspective, to facilitate trad e in w ater, w ith the proviso that in the Mu rray-Darling Basin the Mu rray-Darling Basin Com m ission be satisfied as to the sustainability of proposed trad ing transactions. NSW Int erpret at ion 6.9.2 N ew Sou th Wales has long recognised the need to d evelop efficient and effective w ater licence transfer arrangem ents to provid e users w ith flexibility in m anaging their w ater requ irem ents in systems w here w ater has been fu lly allocated . Governm ent has provid ed this flexibility by allow ing licence holders to trad e their licence w ith other ind ivid u als, w ithin som e broad param eters (ie natu re of the licensed allocation) and ru les (physical, social and environm ental constraints). In d oing so, it has recognised the d u al benefit of u sing m arket m echanism s to effect transfers, provid ing flexibility in ow nership and an incentive for w ater to be u sed in its m ost prod u ctive applications. It is the N ew Sou th Wales Governm ent‟s stated position that m arket mechanism s for w ater licence transfers w ill be extend ed w herever feasible, w ithin physical, social and environm ental constraints. NCC Third Tranche Assessment Crit eria Provid e inform ation on d evelopm ents since the second tranche assessm ent, inclu d ing cu rrent trad ing ru les and the legislative and institu tional arrangem ents, as w ell as the valu e, volu m e, location and natu re (for exam ple, perm anent versu s temporary trad es, transfers from low er to higher valu e u ses) of inter and intrastate trad es. Where cross-bord er trad e is possible, trad ing arrangem ents m u st be consistent betw een ju risd ictions and facilitate trad e. Where trad ing across State bord ers can occu r, relevant ju risd ictions mu st review pricing and asset valu ation policies to d eterm ine w hether there is any su bstantial d istortion to interstate trad e. Ju risd ictions shou ld d evelop proposals for fu rther extend ing interstate trad e in w ater, given the fram ew ork requ irement for cross-bord er trad e to be as w id espread as possible (for exam ple, the second tranche assessm ent calls for interstate trad e betw een N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 92 N ew Sou th Wales and Qu eensland and the ACT and N ew Sou th Wales). Dem onstrate that w here restrictions rem ain, the benefits of the restriction ou tw eigh the costs (for exam ple, show that m echanism s in place for w ater are not ecologically u nsu stainable). NSW Report The Water Management Act 6.9.3 The W ater M anagement A ct 2000 provid es for significant im provem ents in relation to setting new regu latory fram ew ork for w ater trad ing via separation of w ater and land - access rights can be held ind epend ently of any requ irement to ow n land ; im proved levels of certainty abou t w ater u sers‟ rights of access to and use of w ater; m anagem ent of w ater access rights and u se approvals throu gh a planning fram ew ork lead ing to greater levels of certainty and efficiency in d ecision-m aking processes; provid ing specifically for Inter-State w ater trad ing; d evelopm ent of State-w id e w ater transfer principles to gu id e m anagem ent of w ater trad ing in a consistent and equ itable m anner; and provision for access rights and use approvals registers to better protect third party interests (m ainly financial) in rights, and to provid e better inform ation for w ater markets. 6.9.4 Relevant provisions of the W ater M anagement A ct are not likely to becom e operational before 2002 pend ing d evelopm ent of regu lations, new business ru les, com pu ter system s etc. In the m eantim e the licensing provisions of the W ater A ct 1912 rem ain in operation. Regulated Rivers 6.9.5 N ew Sou th Wales has a long history of both tem porary and perm anent trad ing of regu lated su rface w ater allocations and entitlem ents respectively. Division 4C of Part 2 of the N SW W ater A ct 1912 provid es for both tem porary and perm anent trad ing w ithin ind ivid u al valleys. Tem porary transfers w ere introd u ced in 1983, w hile perm anent transfers w ere introdu ced in 1989. Significant levels of tem porary interstate trad ing (N SW/ Victoria) have continu ed . Trials of interstate perm anent trad ing (the MDBC 93 6.9.6 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 pilot project) and tem porary intra-State inter-valley trad ing have continu ed . Unregulated Rivers 6.9.7 The conversion of u nregu lated licences from an area base to a volu m e base w ill facilitate trad ing activity. Alm ost all (arou nd 10,000) irrigation licences, have been converted . Abou t 1,500 (m ostly ind u strial pu rpose licences) remain to be converted . Revised interim gu id elines for permanent trad ing in unregu la ted rivers have been introd u ced . N ot a great nu m ber of trad es have taken place to date, bu t the nu mber of trad es is expected to increase significantly in the short term . Tem porary trad ing is not yet perm itted , bu t ru les are expected to be d eveloped w ithin tw elve m onths. 6.9.8 Groundw ater 6.9.9 Tow ns 6.9.10 The W ater M anagement A ct m akes provision for tow ns to enter tem porary markets - one year only trad es perm itted . This w ill be im plem ented once the process of converting tow n w ater licences to a volu m e base is com pleted . Interim gu id elines have been issued for trad ing in grou nd w ater. To d ate there has been minim al trad e in grou nd w ater. Interstate Trading 6.9.11 N ew Sou th Wales is com m itted to the w ork program for the MDBC pilot project w hich shou ld resu lt in perm anent inter-State trad ing being expand ed u p the Mu rray River to H u m e Dam , Mu rru mbid gee and Low er Darling Rivers; and general secu rity w ater being able to be trad ed perm anently inter-State. Issues su ch as the establishm ent of exchange rates and greater consistency in assessing environm ental im pacts are being ad d ressed to provid e for the im plem entation of both perm anent and tem porary inter-valley transfers w ithin N ew Sou th Wales. N ew Sou th Wales d oes not consid er that there are any p ricing or asset valuation issu es provid ing im ped im ents or d istortions to cu rrent inter-State trad e arrangem ent. In relation to trad ing betw een N ew Sou th Wales and Qu eensland , there are cu rrently no formal arrangem ents for trad ing of w ater 94 6.9.12 6.9.13 6.9.14 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 across the bord er. There has how ever been general agreem ent betw een relevant N ew Sou th Wales and Qu eensland agencies that trad ing w ill be introd u ced once joint environm ental w ater m anagem ent ru les have been agreed and Qu eensland has established a d iversion Cap for its w ater licence hold ers. 6.9.15 It is expected that a form al agreem ent covering trad ing, as w ell as environm ental w ater m anagem ent and d iversion caps w ill be ad opted by m id 2001. This w ill allow both states to m ake provision for cross bord er movem ents of w ater throu gh their respective w ater m anagem ent plans. It w ou ld be inappropriate for trad ing to be introd u ced beforehand . With reference to trad ing betw een N ew Sou th Wales and the ACT, at this stage ACT has not signed u p to the MDBC cap. Until th is occu rs trad ing betw een New Sou th Wales and the ACT cannot be introd u ced . 6.9.16 Trading Restrictions 6.9.17 With one exception, restrictions on trad e in N ew Sou th Wales are in place to d eal w ith w ater d elivery issu es, environmental issu es and / or potential ad verse im pacts on other au thorised w ater users. The exception relates to the w ater trad ing policies of the Irrigation Corporations (eg Mu rray Irrigation). The Corporations d o not perm it perm anent trad ing ou t of their areas, and DLWC has no pow ers to requ ire them to change this situ ation. The reasoning behind this restriction is to preserve the „rate base‟ for maintenance of internal w ater d istribu tion netw orks. The Departm ent is to explore options w ith the Irrigation Corporations to ad d ress this issue. One option that has been id entified alread y is the establishm ent of exit fees to contribu te equ itably tow ard s long term infrastru ctu re maintenance costs. Institutional Reform 6.9.18 6.9.19 6.10 Framew ork Requirement s 6.10.1 In relation to institu tional reform , the Cou ncil agreed : (a) that w here they have not alread y d one so, governments w ou ld d evelop ad m inistrative arrangements and d ecision -making processes to ensu re an integrated approach to natu ral resou rce m anagem ent, (b) to the ad option, w here this is not alread y practised, of an integrated catchment m anagem ent approach to w ater resou rce m anagem ent and set in place arrangem ents to consu lt w ith the representatives of local governm ent and the w id er comm u nity in ind ivid u al catchm ent, 95 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 (c) to the principle that, as far as possible, the roles of w ater resou rce m anagem ent, stand ard setting and regu latory enforcem ent and service provision be separated institu tionally, (d ) that this occu r, w here appropriate, as soon as practicable, but certainly no later than 1998, (e) the need for w ater services to be delivered as efficiently as possible and that ARMCANZ, in conju nction w ith the Steering Com m ittee on N ational Perform ance Monitoring of Governm ent Trad ing Enterprises, fu rther d evelop its com parisons of inter-agency perform ance, w ith service provid ers seeking to achieve international best practice, (f) that the arrangem ents in respect of service d elivery organisations in metropolitan areas in particu lar shou ld have a com m ercial focus, and w hether achieved by contracting-ou t, corporatism entities or privatised bod ies this be a m atter for each ju risd iction to d eterm ine in the light of its ow n circu mstances, and (g) to the principle that constitu ents be given a greater d egree of responsibility in the m anagem ent of irriga tion areas, for exam ple, throu gh operational responsibility being d evolved to local bod ies, subject to appropriate regu latory framew orks being established . NCC Third Tranche Assessment Crit eria Separate service provision from regu lation, w ater resou rce m anagem ent and standard setting. Dem onstrate adequate separation of roles to minim ise conflicts of interest. If the regu lator and service provid er are responsible to the same Minister, provid e inform ation abou t the m anner in w hich the resu lting potential con flict of interest has been effectively ad d ressed . Active participation in national processes for inter -agency com parisons and benchm arking. Appropriate stru ctu ral and ad m inistrative responses to the CPA obligations, covering legislation review , competitive neu trality and stru ctu ral reform . All im ped im ents to d evolu tion to be rem oved and local m anagem ent arrangem ents id entified in the second tranche assessm ent to be im plem ented . Decisions to be m ad e in regard to w hether d evolution of irrigation schem e m an agem ent takes place and , if so, advice on w hen this w ill occur. Where reform has been u nd ertaken, evid ence to be provid ed d em onstrating that an appropriate regu latory fram ew ork has been pu t in place. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 96 Dem onstrated adm inistrative arrangem ents and d ecision m aking processes to ensu re an integrated approach to natu ral resou rce management and integrated catchm ent managem ent. An integrated catchm ent m anagement approach to w ater resou rce managem ent inclu d ing consu ltation w ith local governm ent and the w id er com m u nity in ind ivid u al catchm ents. Ad d ress su ch areas as governm ent agency coord ination, com m u nity involvem ent, coord inated natu ral resou rce planning, legislation fram ew ork, inform ation and m onitoring systems, linkages to u rban and d evelopm ent planning, support to natu ral resou rce m anagem ent program s and land care practices contributing to protection of rivers of high environm ental value. Dem onstrate that the catchm ent managem ent planning process is free from d om ination by narrow sectoral interests to ensu re d ecisions reflect the balance of interests w ithin the w id er com m u nity. Genu ine stakehold er participation in catchm ent planning, inclu d ing agreem ent to the principles u nd erpinning the plan su ch as cost sharing arrangem ents, acceptable basin im pacts, and allow able trad e-offs am ongst w ater u sers. Appropriate institu tional arrangem ents shou ld id eally have a statu tory u nd erpinning. The overall coord inating bod y includ ing its com position and fu nctions relating to natu ral resou rce m anagem ent and links to regional/ local governm ent bod ies. The process w hereby catchm ent managem ent bod ies (tru sts, com m ittees, cou ncils, or grou ps) are form ed inclu d ing how the local com mu nity, local governm ent, and State agencies are involved . The statu tory basis of catchm ent managem ent pla ns/ strategies and capacity and m echanism s to enforce actions id entified in the plan. The fram ew ork u sed to assist catchm ent m anagers to evalu ate/ review the effectiveness of a catchm ent managem ent process. A d escription of land care practices (inclu d ing extent of coverage) that protect areas of river w hich have a high environm ental value. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 97 NSW Report Integrated Management 6.10.2 In Decem ber 1997, w ater legislation w as am end ed to ad opt ESD principles, m ake provision to license SWC and H WC, u pd ate provisions for ground w ater management to introd u ce com parability w ith su rface w ater m anagem ent, and facilitate interstate w ater transfers. The Au gust 1997 w ater reform s w ere d eveloped cooperatively by five agencies involved in natu ral resou rce managem ent. Th is w holeof -governm ent approach w ill continu e to be the basis for im plem entation of w ater reform s in New Sou th Wales. The N SW w ater reform s are stru ctu red to facilitate regional-focused m anagem ent based on Statew id e principles. This allow s for the recognition of regional d ifferences in term s of resou rce cond ition and the ind ustries and com m unities d epend ent u pon resou rces, w hile ensu ring consistency in the approach taken. In December 2000, after extensive pu blic consu ltation, the W ater M anagement Act 2000 w as passed w hich for the first time provid es for integrated and consolid ated w ater legislation for N ew Sou th Wales, covering all w ater sou rces of the State. 6.10.3 6.10.4 6.10.5 Integrated Catchment Approach 6.10.6 Total catchm ent m anagem ent (TCM) w as end orsed as N SW Governm ent policy in 1987. A fram ew ork for its operation w as pu t in place u nd er the Catchm ent Managem ent Act in 1989. On 31 May 2000, follow ing a m ajor review of TCM that m ad e recom m end ations for im proving the existing program and strengthening pa rtnerships betw een governm ent and com m u nity, N ew Sou th Wales established 18 new catchm ent m anagem ent boards to replace 43 of the existing catchm ent managem ent com m ittees. The first task of the new board s w ill be to id entify m ajor natu ral resou rce issu es an d options for action w hich aim to achieve specific natu ral resou rce targets d esigned to achieve sustainable ou tcom es. Water managem ent com m ittees are in place to oversee the im plem entation of interim w ater flow and qu ality objectives and prepare d raft w ater management plans. In the sou th of the State, Land and Water Managem ent Plans are now are being im plem ented throu gh a com m u nity and governm ent partnership arrangem ent. These are large sub -catchment action plans to help overcom e natu ral resou rces d egrad ation and provid e for longer term su stainability of the ru ral ind ustries in the area. 98 6.10.7 6.10.8 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 6.10.9 The term s of reference for the H ealthy Rivers Com m ission inclu d e consid eration of ad m inistrative and managem ent issu es to ad d ress catchm ent-w id e natu ral resou rce d egrad ation problems. SCA and N SW N ational Parks and Wild life Service are d eveloping plans of m anagem ent for the „special areas‟ for all w ater storage catchm ent areas in the Syd ney/ Illaw arra area. DLWC has prod u ced a d raft policy and fram ew ork d ocu m ent on Integrated Urban Water Cycle Planning to com plem ent the new Water Managem ent Act. This is being u sed to encou rage N MUs to m ake better use of all w ater resou rces inclu d ing storm w ater and efflu ent reuse. Several pilot stu d ies have been carried ou t this year to d em onstrate the effectiveness of this approach. A good exam ple is the tow n of Finley, w here the approach resu lted in a red u ction in capital expend itu re from $3 million to $300,000. As part of the w ater reform s, local coun cils are to prepare integrated w ater su pply, storm w ater and sew erage strategies. The EPA issu ed local cou ncils w ith a d irection und er the Protection of the Environm ent Operations Act 1991 to prepare storm w ater m anagem ent plans for u rban areas for tow nships w ith popu lations greater than 1000 people by m id 2001. A Stormw ater Managem ent Trust has been established to provide fu nd ing to local cou ncils for on-grou nd w orks. 6.10.10 6.10.11 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 99 D emonstrate Separation of Roles 6.10.12 6.10.13 Separation of operating and regu lating roles has occu rred to som e d egree in all the w ater sectors. In the MU sector, both SWC and H WC are corporatised and regu latory regim es have been established . In 2000, IPART‟s role w as extend ed so that it becam e u tility regu lator as w ell as price regu lator. As a resu lt IPART has taken over the role of regu lating SWC and H WC‟s operating licences, and is the regu lator of SCA‟s operating licence. IPART is cu rrently review ing SWC‟s system perform ance and cu stomer service stand ard s. It also finalised the annual licence au d its of both SWC and H WC in 2000. IPART w ill establish a new operating licence for HWC later in 2001 to take effect from 1 July 2002. The Syd ney Catchm ent Au thority is a statu tory bod y that formally cam e into operation in Ju ly 1999. It su pplies bu lk w ater to Syd ney Water Corporation and som e local governm ent areas ou tside Syd ney. Its responsibilities are: m anaging and protecting the catchment areas and catchm ent infrastru ctu re w orks; protecting and enhancing the quality of w ater harvested in its catchm ents; u nd ertaking research on catchm ents generally, and in particu lar on the health of its ow n catchm ents; and u nd ertaking an edu cative role w ithin the com m u nity on w ater m anagem ent and pollu tion control. 6.10.15 In ad d ition to service regu lation through the operating licences and price regu lation by IPART, the MUs are regu lated by a su ite of other regu latory instru ments inclu d ing MOUs w ith the EPA, DLWC and the H ealth Departm ent; and licence control of w aste w ater system s (both treatm ent and transport) by the EPA. Access to w ater is to be regu lated by w ater m anagem ent licences issu ed by DLWC. The first w ater managem ent licence w as issu ed to H WC in Decem ber 1998 and a public review of its initial operations w as com pleted in Ju ne 1999. For the NMUs, the provision of w ater su pply and sew erage services by local cou ncils are separated (financially ring -fenced) from the cou ncils‟ planning and regu latory fu nctions. All N SW local cou ncils are requ ired to separate their w ater service revenu e and expend itu re from general revenu e and expend itu re and are specifically restricted from allocating w ater service revenu e for other pu rposes. Com pliance is monitored by the local cou ncil‟s au d itor. 100 6.10.14 6.10.16 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 6.10.17 Local governm ent regu lations have been am en d ed so that provisions relating to the operation of cou ncil w ater u tility services are located in a separate regu latory instru m ent from provisions relating to cou ncil regu lation of plu mbing and d rainage on private land . Cou ncil land u se planning and regu la tion of land d evelopm ent is carried ou t u nd er a separate legislative fram ew ork w ith fu ll proced ural separation from cou ncil service fu nctions. There is a right of ju d icial appeal in relation to all cou ncil regu latory fu nctions. In the ru ral sector, all governm ent irrigation schemes have been privatised . Regu lation is now explicitly applied by EPA (w aste w ater and d rainage controls through licences) and DLWC (access to w ater u nd er a w ater m anagem ent w orks licence). The com panies and corporations are also requ ired to com ply w ith land and w ater m anagem ent plans as a cond ition of their w ater management w orks licences. On 1 Septem ber 1997 State Water w as established to separate DLWC‟s w ater managem ent fu nction from bu lk ru ral w ater su pply services. State Water is an internally ring fenced grou p w ithin DLWC. State Water is responsible for d elivery of bu lk w ater and m anagem ent of w ater assets. State Water is governed by instrum ents that cover three areas: au thorisation to und ertake the bu siness, statem ent of corporate intent and au thorisation to take and u se w ater. Regu latory requ irements are d efined form ally by other d ivisions of DLWC and in concert w ith the EPA in regard to river flow and w ater qu ality objectives. 6.10.18 6.10.19 6.10.20 Benchmarking/ARMCAN Z Interagency Comparison 6.10.21 SWC and H WC are participating in national benchmarking and perform ance monitoring throu gh ARMCAN Z and Water Services Association of Au stralia (WSAA). Mechanisms inclu d e: perform ance comparisons for a w id e range of operational perform ance ind icators pu blished in WSA A facts, a com pend ium prod u ced by WSAA each year; GTE perform ance Ind icator reporting by the Steering Com m ittee on N ational Perform ance Monitoring of GTEs; and N SW Treasu ry reporting on N SW Governm ent businesses. 6.10.22 In ad d ition, in 1997 SWC becam e the first non -United Kingd om w ater entity to participate in benchm arking w ith the UK w ater com panies throu gh the w ater regu lator, the Office of Water Services (Ofw at). Ofw at pu blishes com parisons of ind icators covering cu stom er services, costs and financial perform ance. The com panies 101 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 are assessed on each ind icator. SWC plans to use the find ings to id entify w here its bu siness perform ance can be im proved . 6.10.23 In the N MU sector, DLWC prepares an annu al report on perform ance com parisons for cou ntry cou ncils covering a w id e range of perform ance ind icators. DLWC provid es IPART w ith a su m mary report on each local cou ncil‟s perform ance. DLWC provid es data from the 25 NSW w ater u tilities w ith over 10,000 assessm ents for inclusion in the annual A ustralian N on-M ajor Urban W ater Utilities Performance Report. In regard to benchm arking, a joint pilot project on synd icate benchmarking involving grou ps of cou ncils has id entified significant cost savings. The Minister for Land and Water Conservation has released a report on the pilot project. This report inclu d es gu id elines for cou ncils on synd icate benchmarking. DLWC is facilitating synd icate benchm arking by cou ntry cou ncils. Privatised irrigation com panies cu rrently m u st provid e financial and managem ent efficiency d ata for com parison pu rposes. Efficiency gains alread y achieved in N ew Sou th Wales are as follow s: in the MU sector, stru ctu ral reform s implem ented by SWC have brou ght u nd erlying operating costs per property d ow n by 29% in real term s betw een 1992-93 and 1998-99. The cu rrent objective is a fu rther red u ction of 23% in real terms betw een 1998-99 and 2001-02. HWC achieved red u ctions in operating costs per property of m ore than 40% over the d ecad e to 2000. For the next three years, it expects that this trend w ill slow du e to m any of the major efficiency gains having been achieved , and d u e to increasing costs as it achieves higher stand ard s, particu larly in w astew ater services. For the period to 2003, H WC expects its real operating costs per property to be red u ced by arou nd 4.5% in total. in the NMU sector, operating costs have remained constant in real term s, bu t synd icate benchm arking is expected to lead to significant efficiency gains. State Water is to d evelop a program of efficiency gains for bu lk ru ral w ater services. IPART requ ires d em onstration of a program of cost efficiency before it consid ers price increases for any w ater sector that it regu lates (ie. MU and bu lk ru ral). the initiation of an efficiency reporting fram ew ork for ru ral w ater managem ent. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 102 6.10.24 6.10.25 6.10.26 6.10.27 Implement Measures such as Contracting Out, Corporatising Entities or Forms of Privatisation and Competition 6.10.28 All N SW w ater sectors are ad d ressing the corporatisation/ privatisation and adm inistrative requ irem ents of the Com petition Principles Agreem ent. More than 80% of H WC‟s ou tlays are d irectly contested on the open m arket or rigorou sly benchmarked . The rem aining small proportion is largely related to the costs of corp orate and asset managem ent and regu latory involvem ent, w hich are not read ily contestable. SWC has im plemented a stru ctu ral separation of activities into contestable and non -contestable. Contestable activities su ch as the constru ction of w ater filtration plants are subject to pu blic tend ering processes. Syd ney Water has institu ted internal ring -fencing arrangements for contestable service d elivery. H WC has created a subsid iary com pany, H u nter Water Au stralia, w hich covers contestable areas su ch as engineering services, w ater treatm ent processes, laboratory services, and su rvey and land information. IPART sought proposals from the MU sector in the 2000 price d eterm ination process for pricing reform to reflect the com petition agend a. H WC prop osed a d epartu re from postage stam p pricing for large volu m e custom ers w ith a pricing stru ctu re linked to the infrastru ctu re comm and ed by these cu stom ers. The new pricing stru ctu re provid es for a location -based tariff applying to custom ers u sing m ore than 50,000 kilolitres per year and applies only to consu m ption in excess of 50,000 kilolitres. This approach is w ell su ited to HWC becau se of its large ind u strial custom er base and because these custom ers tend to be located in trad itional indu strial areas close to w ater sou rces - thereby having com m and over a relatively small am ou nt of m ajor delivery infrastru ctu re. H WC‟s proposal w as end orsed by IPART in the 2000 price d eterm ination and w ill apply from 1 Ju ly 2001. SWC and H WC have com m ercial objectives u nd er enabling legislation, inclu d ing bu siness efficiency. SWC‟s cost red u ction objectives are 45% in real term s by 2000-01 com pared w ith 1992-93. For NMUs, com petition reforms are to be im plem ented based on the N SW Governm ent‟s „Policy Statement on the Application of N ational Com petition Policy to Local Governm ent‟. DLG has also prepared com petition gu id elines for local governm ent entitled „Pricing and Costing for Cou ncil Bu sinesses: A Gu id e To Com petitive N eu trality‟ and councils are requ ired to prepare special pu rpose financial reports w ith tax equ ivalent regim e (TER) paym ents w ith their annual financial statem ents. Cou ncils also need to prepare financial plans to d em onstrate the long term 103 6.10.29 6.10.30 6.10.31 6.10.32 6.10.33 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 financial su stainability of their w ater su pply and sew erage businesses to com ply w ith N ational Com petition Policy. 6.10.34 DLWC has prepared a report and cond u cted a series of w orkshops on options for provision and managem ent of w ater su pply and sew erage infrastru ctu re to assist local cou ncils to id entify and u tilise the most appropriate option for their projects. For ru ral w ater, State Water cu rrently contracts ou t m ajor asset m aintenance and rehabilitation w ork in combination w ith internal service agreem ents w ith other parts of DLWC. The interna l m echanism s w ill move tow ard s cost-com petitive tend ering. 6.10.35 Greater Responsibility to Constituents 6.10.36 Water managem ent com m ittees w ill have significant responsibilities w ith regard to w ater m anagem ent planning. The com m ittees w ill be set u p w ith clear term s of reference to u nd ertake specific tasks. Water m anagem ent plans can be prepared for w ater sharing, w ater u se, environm ent protection, d rainage and flood plain m anagem ent. The plans once approved w ill be statu tory plans for a 10 year period . Private irrigation com panies in N ew Sou th Wales are fu lly accou ntable for all financial management and investm ent. H ow ever, there are separation arrangem ents w here the Governm ent has agreed to contribu te to u pgrad e infrastru ctu re to agreed standard s u nd er negotiated arrangem ents (maxim u m period 15 years). With the corporatisation/ privatisation of all irrigation schem es, responsibility for capital stru ctu re and infrastru ctu re refu rbishm ent w as d evolved . Irrigation schem es have been managed u nd er sem iau tonom ou s financial and m anagerial accou ntability w ithin DLWC since 1979 and therefore special d isengagem ent arrangem ents w ere not necessary. State Water‟s operations are valley-based . Costs and pricing are being d eveloped on a valley basis. IPART is d eterm ining valleybased prices w hich reflect the fu ll cost of w ater d elivery and asset m anagem ent. Consultation and Public Education 6.10.37 6.10.38 6.10.39 6.11 Framew ork Requirement s 6.11.1 In relation to consultation and pu blic ed u cation, the Cou ncil agreed : (a) to the principle of pu blic consu ltation by government agencies and service d eliverers w here change and / or new initiatives are contem plated involving w ater resou rces; (b) that w here pu blic consu ltation processes are not alread y in train 104 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 in relation to recom m end ations (3)(b), (3)(d ), (4) and (5) in particu lar, su ch processes w ill be embarked u pon; (c) that ju risd ictions ind ivid u ally and jointly d evelop pu blic ed u cation programs in relation to w ater u se and the need for, and benefits from , reform ; (d ) that responsible w ater agencies w ork w ith ed u cational au thorities to d evelop a m ore extensive range of resou rce m aterials on w ater resou rces for u se in schools; and (e) that w ater agencies shou ld d evelop, ind ivid u ally and jointly, pu blic edu cation program s illustrating the cau se and effect relationship betw een infrastru ctu re perform ance, stand ard s of service and related costs, w ith a view of promoting levels of service that represent the best valu e for m oney to the com m u nity. NCC Third Tranche Assessment Crit eria Ju risd ictions mu st have consu lted on the significant COAG reform s (especially w ater pricing and cost recovery for u rban and ru ral services, w ater allocations and trad e in w ater entitlem ents). The Cou ncil w ill exam ine the extent and the m ethod s of pu blic consu ltation, w ith particu lar regard to pricing, allocations and w ater trad ing. Ed u cation program s related to the need for and benefits of reform to be d eveloped . Evid ence of agencies d eveloping public ed u cation program s that illustrate the need for reform , and general aw areness of w ater related issu es. This cou ld inclu d e the relationship betw een infrastru ctu re performance, standard s of service and related costs. These programs shou ld prom ote levels of service that represent the best valu e for money to the com m u nity. Evid ence that responsible agencies are w orking w ith edu cation au thorities to d evelop a m ore extensive range of resou rce m aterials for u se in schools. Inform ation on m easu res u sed by ju risd ictions to ad d ress the issu e of potential conflict in the service provid er being responsible for d eterm ining the level of ongoing pu blic ed u cation on w ater conservation w hen it has a financial interest in increased w ater consu m ption. NSW Report Adoption of the Principle of Public Consultation 6.11.2 The N SW Governm ent is com m itted to the principle of pu blic consu ltation, as is d em onstrated by the com prehensive approach ou tlined below . 105 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 Implementing Public Consultation Processes 6.11.3 Major foru ms for consu ltation for policy and plan making inclu d e: N SW Water Ad visory Cou ncil (WAC) - a com m u nity and ind u stry bod y, established in 1996 to ad vise the Minister for Land and Water Conservation on w ater issu es. State w orking grou ps w ith agency and key stakehold er representatives, w hich have been closely involved in the d evelopm ent w ith DLWC of w ater reform policies, inclu d ing the State Rivers and Estuaries Policy (1993), State Wetland Managem ent Policy (1996), State Grou nd w ater Policy (1997) and the W ater M anagement Act (1998-2000). Catchm ent managem ent board s w ith agency and key stakehold er grou ps w hich d evelop catchm ent managem ent strategies at the catchm ent level. Stakehold er su rveys. Water m anagem ent com m ittees have been established w ith a w id e range of interests - inclu d ing agency, w ater u sers, environm ental and Aboriginal representatives - to participate in establishing environm ental flow ru les for each regu lated valley and stressed u nregu lated rivers. 6.11.4 There has been a focus on id entifying Aboriginal interests in policy and plan-m aking and Aboriginal representatives m ust be inclu d ed on all board s and com m ittees. Extensive consu ltation w ith stakehold ers occu rred in the d evelopm ent of N ew Sou th Wales‟ integrated w ater reform package, approved by Cabinet in Augu st 1997. There w as d etailed consu ltation on individ u al elem ents such as w ater sharing proposals and associated licensing reform s, w ater access and use rights, bu lk w ater ad m inistration, and river health objectives. The review of N SW 's w ater legislation w as a m ajor exercise in „Water Sharing in N ew Sou th Wales – Access and Use‟. It set ou t policy options for som e 21 w ater sharing issu es as a basis for the review of the existing legislation. More than 200 w ritten responses w ere received and analysed and a su m m ary report w as pu blicly released . This w as follow ed in late 1999 w ith a White Paper, A Proposal for Upd ated and Consolid ated Water Managem ent Legislation for N ew Sou th Wales. This had been d eveloped in consu ltation w ith other key natu ral resources agencies and w ith peak comm u n ity and ind u stry interest grou ps, su ch as the NSW Farm ers‟ Association, the N SW Irrigators‟ Cou ncil, the Natu re Conservation Cou ncil, the 106 6.11.5 6.11.6 6.11.7 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 N SW Local Governm ent and Shires Association and the N SW Aboriginal Land Cou ncil. More than ten thou sand copies of the White Paper w ere d istribu ted and m eetings w ere held at 55 places, m ainly in regional N ew Sou th Wales. Eight hu nd red w ritten subm issions on the White Paper w ere also received and analysed . 6.11.8 The Water Managem ent Bill w as prepared and introd u ced into Parliam ent on 22 Ju ne 2000, w ith d ebate being d eferred u ntil Spring 2000 to allow tim e for fu rther pu blic consu ltation. Another rou nd of consu ltation occu rred , across governm ent, w ith peak stakehold er grou ps and through extensive regional pu blic meetings. More than 340 w ritten su bm issions w ere received from a w id e range of w ater user grou ps, conservation grou ps and ind ivid u als, local cou ncils and state and fed eral governm ent agencies. Most of the w ritten subm issions on the White Paper and the Bill su pported the need for new legislation, even thou gh they d id not agree on some of the d etail. State Water has established custom er service com m ittees to give cu stom ers a d irect say in operational and asset m anagem ent d ecisions on their ru ral bu lk w ater d elivery service. For pricing reform s, consid erable com m u nity inpu t has been m ad e throu gh open public hearings, w orkshops, representations and w ritten subm issions to IPART. After the 1996 pu blic hearings on bu lk w ater, there w ere som e 16 m eetings held arou nd the State w ith stakehold er grou ps. The H ealthy Rivers Com m ission, established in Janu ary 1996, cond u cts ind epend ent pu blic inqu iries into the health of selected rivers in N ew Sou th Wales and consults throu gh d iscu ssions w ith interest grou ps, public hearings and w ritten subm issions. H WC and SWC have established m echanisms for pu blic consu ltation, includ ing cu stom er cou ncils, focu s m eetings and cu stom er su rveys. SWC su rveys cu stom ers annu ally on a range of issu es and publish the resu lts of these su rveys. From 2001, H WC w ill replace its annu al cu stom er su rvey w ith „perception‟ and „satisfaction‟ su rveys to be carried ou t in alternate years. H WC has fou nd that, after cond u cting the annu al su rvey since the late 1980s, year-on-year resu lts now show very little annual change in com m u nity perceptions. For this reason, a perception su rvey w ill be carried ou t every second year to m onitor changes in trend s against the historical d ata. In the alternate years, a „satisfaction‟ su rvey w ill be carried out am ong com mu nity m em bers w ho have had recent d irect contact w ith H WC. This su rvey w ill provid e m ore d etailed d ata on cu stomer and com m u nity satisfaction levels w ith H WC‟s services. 107 6.11.9 6.11.10 6.11.11 6.11.12 6.11.13 6.11.14 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 6.11.15 Gu id elines on com m u nity consu ltation h ave been provid ed to N MUs in regard to their w ater services. Appropriate com m u nity consu ltation is a pre-requ isite for financial assistance for capital w orks projects. In October 1997, the N SW Governm ent released a d iscu ssion paper on Proposed Interim Environm ental Objectives for N SW Waters, and u nd ertook a com prehensive consu ltation exercise to d evelop the Interim Environm ental Objectives. A series of w orkshops, coord inated by the EPA, w ere held across N ew Sou th Wales betw een February and May 1998 to d iscuss the setting of w ater quality and river flow objectives. During the consu ltation period , 810 w ritten su bmissions w ere received . In October 1999, the Minister for the Environm ent annou nced the release of the Interim Environm ental Objectives for 31 N SW catchm ents. 6.11.16 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 108 Public Education Programs 6.11.17 N ew Sou th Wales is cu rrently u nd ertaking major com m u nity ed u cation program s. It is envisaged that these w ill be fu rther expand ed . Specific N SW program s inclu d e: W ater reform and legislation - an ongoing series of pu blications explaining the w ater reform s, progress to d ate and a series of d ocu m ents lead ing to the final Bill for the W ater M anagement A ct w ere publicly released . A booklet explaining the W ater M anagement A ct has been w id ely d istribu ted and m ore specific facts sheets w ill be d istribu ted in April 2001. Stakehold ers also regu larly receive new sletters on key initiatives. This inform ation is placed on the Internet. W aterwatch - involves over 450 schools, 80 com m u nity grou ps and 70 cou ncils. Elem en ts inclu d e M urder Under the M icroscope „eco-gam e‟; the Spring and Au tum n Water Bu g Su rveys; Frogw atch and the new ly initiated Ou tback Stream w atch Program . Em phasis is on environm ental au d iting and related aspects of w ater qu ality, flow and environm ental d egrad ation w ithin a catchm ent. W aterwise - prom oting w ater conservation practices. Program elem ents inclu d e Waterw ise in the Catchm ent, Urban Waterw ise and Waterw ise on the Farm . It focuses on local cou ncils, irrigators and land ow ners. RiverCare 2000 A ccreditation and A wards - a program acknow led ging best practice in riparian managem ent and rehabilitation, inclu d ing w ater qu ality and w ater conservation practices, targeting all sectors of the com m u nity. N ational W ater W eek - annu al event involving governm ent agencies, non governm ent grou ps and the broad er com m u nity in a program of activities. In 2001 N ew Sou th Wales w ill release inform ation to su pport the six m onth consu ltation process for w ater quality and river flow objectives, inclu d ing the release of 25 pu blications and a vid eo. Exploring the N ardoo - a CD-ROM for second ary to tertiary stu d ents, explaining w ater and the environm ent, focusing on w ater managem ent w ithin a catchm ent. Stormwater - in 1994-95, N ew Sou th Wales ran a mass pu blic aw areness cam paign for stormw ater pollu tion. The N SW Governm ent‟s $4 m illion Urban Storm w ater Ed u cation Program em ploys m ass m ed ia, com m u nity and school ed u cation, vocational edu cation and training and partnership projects w ith key sectors. Phase one of the project finished in Ju ne 1999 and established the them e „The Drain is Just for Rain‟. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 109 The second phase of the program continu es this them e throu gh to Ju ne 2001. Internet - this has a large range of w ater-related information, inclu d ing State of the Environm ent Report m a pping, electronic versions of the Interim Water Qu ality and River Flow Objectives and inform ation on the Storm w ater Trust. Formal curriculum resources - have been d eveloped and w ill continu e over the next 3 years. EPA Pollution Line - this is a State-w id e 1300 nu m ber that provid es information on the w ater reform process, amongst other fu nctions. SWC and H WC also have ad vertising cam paigns d esigned to attribu te value to w ater and encourage conservation. Each regional office of SWC has an edu cation officer w h o visits schools. SWC is d eveloping a program for school stu d ents for inclusion in an internet w eb site, a CD-ROM, brochu res and com prehensive school kits. H WC has a com prehensive school program involving Stream w atch su pport, H SC and K-6 syllabu s resou rce m aterial, w ater cycle tou rs, school visits, school environm ental aw ards and „w aterw ise‟ and „ed ucation and environm ent‟ pages on its w eb site. Resource Materials 6.11.18 Recognising that accu rate information abou t the w ater reforms (their intent, tim ing and processes for change) is essential for ind ivid u als and ind u stries to ad apt to change, consid erable effort has been pu t into the preparation of d iscu ssion docu m ents, inform ation sheets and w orkshops (as d etailed above). The Environment 6.12 Framew ork Requirement s 6.12.1 In relation to the environm ent, the Council agreed : (a) that ARMCAN Z, AN ZECC and the Ministerial Cou ncil for Planning, H ou sing and Local Governm ent exam ine the m anagem ent and ram ifications of m aking greater use of w astew ater in u rban areas and strategies for hand ling storm w ater, inclu ding its use, and report to the first Council of Au stralian Governm ents‟ meeting in 1995 on progress, (b) to su pport ARMCAN Z and ANZECC in their d evelopm ent of the N ational Water Quality Management Strateg y, through the ad option of a package of m arket-based and regulatory m easu res inclu d ing the establishment of appropriate w ater quality m onitoring and catchm ent managem ent policies and com m u nity consu ltation and aw areness, 110 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 (c) to su pport consideration being given to establishm ent of land care practices that protect areas of river w hich have a high environm ental value or are sensitive for other reasons, and (d ) to requ est ARMCAN Z and AN ZECC, in their d evelopment of the N ational Water Quality Managem ent Strategy , to u ndertake an early review of cu rrent approaches to tow n w astew ater sew age d isposal to sensitive environments, noting that action is u nd erw ay to red uce accessions to w ater cou rses from key centres on the Darling River system (It w as noted that the N ational Water Qu ality Managem ent Strategy is yet to be finalised and end orsed by governm ents). NSW Int erpret at ion 6.12.2 A national fram ew ork d ocu m ent for im proved w astew ater reuse and storm w ater m anagem ent in Au stralia w as prod u ced by ARMCANZ and AN ZECC in December 1996. It ou tlined the types of com plem entary m easu res linked to u rban w astew ater and storm w ater w ithin the w hole life cycle of w ater. This d ocu m ent also ou tlined the need to fu rther evaluate the econom ics of the u rban w ater life cycle. This w ou ld id entify opportu nities for cost-effectively im proving the su stainable m anagem ent of w ater resou rces, the health of inland and coastal w aters and maintaining custom er service and pu blic health. The key measu res to be consid ered are: to inclu d e d em and m anagem ent to increase efficiency of resou rce use recycling of treated w astew ater of second ary and potable quality better u nd erstand ing of the environm ental effects of retu rning w astew ater and biosolid s to the environm ent u sing existing environm ental allocations in a m ore ecologically sensitive manner im proving the qu ality of u rban stormw ater ru n off harvesting of storm w ater w ater sensitive d esign in new u rban d evelopm ents analysing the econom ics to id entify the m ost cost effective solu tions to the environm ental issu es. 6.12.5 The d evelopm ent of m arket-based and regu latory m easu res w hich su pport the National Water Quality Managem ent Strategy (N WQMS) inclu d es: 111 6.12.3 6.12.4 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 gu id elines for assessing and protecting w ater quality setting w ater quality objectives w ater quality monitoring and au d iting requ irem ents u sing econom ic tools su ch as im plem entation of the pollu ter pays principle and load -based licensing w ithin environm ental protection licensing regim es cond u cting ed ucation program s, all of w hich reflect catchm ent m anagem ent policies. 6.12.6 Com m u nity consu ltation and aw areness is vital to the su ccess of any econom ic and regu latory tools that aim to change com m u nity attitu d es and behaviou r for im proved environm ental ou tcom es. Mechanisms for im proved land care practices that protect areas of river w ith sensitive or high environm ental valu e encom pass policies and program s for gu id ing land , soil, w ater and chem ical u se and vegetation managem ent strategies prim arily. Riparian, flood plain and w etland system s are vital elem ents in protecting high environm ental valu es in rivers bu t are essentially subsets of the broad er catchm ent m anagem ent strategies w hich w ill integrate all land care practices affecting the w atercou rse. Tow n w astew ater and sew age d isposal into sensitive environm ents raises the issu es of the assessm ent of efflu ent im pacts on aquatic and terrestrial ecology, hu m an health im plications and contam ination of associated systems. Trials are u nderw ay in various locations, inclu d ing w etland s, streams, coastal lakes and flood plains, w hich w ill provid e information to assist in the review of these practices. 6.12.7 6.12.8 NCC Third Tranche Assessment Crit eria Dem onstrate a high level of political com m itm ent and a ju risd ictional response to ongoing im plem en tation of the principles contained in the N WQMS gu id elines. Inclu de the d evelopm ent of practical on -the-grou nd action. This m ay involve the use of legislation, policy instru m ents, program s or plans. These shou ld contain provisions w hich are consistent w ith the gu id elines and contain scope for review . A publicly stated com m itm ent to im plem enting the principles id entified in the Strategy. Im plem entation of an approach for ad opting the scientific fram ew ork outlined in the Au stralian Water Quality Gu id elines for Fresh and Marine Waters (AN ZECC 1992). Ad opt an appropriate statew id e approach to w ater quality m anagem ent. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 112 H ave in place a w ater reform program that integrates w ater quality and quantity m anagem ent requ irem ents in its approach to land -use planning. In relation to w ater qu ality, a program to target the am bient environm ental quality objectives set in consu ltation w ith the com m u nity. All relevant legislative, regulatory and policy m easures to protect w ater qu ality shou ld inclu d e measu res to prom ote integrated resou rce management; id entification of environm ental valu es and associated w ater quality objectives; and catchm ent, coastal and ground w ater managem ent planning. Dem onstrate u se of the relevant national gu id elines. Where necessary, ju risd ictions to prod u ce local gu id elines or cod es of practice consistent w ith the national gu id elines so far com pleted for those ind u stries covered u nd er the N WQMS. The strategy for achieving su stainable w ater qu ality m anagem ent should bu ild on a fu ll m ix of approaches inclu d ing, bu t not lim ited to, regu latory and market based approaches, ed ucation and gu idance. Market-based approaches to play a com plem entary role in achieving protection and enhancement of w ater quality, w here appropriate. Where m od u les have been finalised , ju risd ictions to finalise their approach and initiate m arket-based and regulatory activities and m easu res su ch as w ater qu ality m onitoring, catchm ent m anagem ent policies, tow n w aste w ater and sew erage d isposal and com mu nity consu ltation and aw areness to give effect to the N WQMS. Ju risd ictions to su pport AN ZECC and ARMCAN Z in the d evelopm ent of the rem aining mod u les of the N WQMS. NSW Report Waste and Stormw ater Management 6.12.9 N ew Sou th Wales has been exploring and encou raging the greater u se of w astew ater since the early 1990s w ith a nu m ber of pilot projects su ch as Rou se H ill, Shoalhaven H eads, Albu ry Wod onga, and the Quaker‟s H ill Water Factory. A nu m ber of significant reuse projects have been established also in the low er Hu nter. For exam ple, all the treated efflu ent form H WC‟s Dora Creek treatm ent plant is reu sed by the nearby Eraring pow er station. 113 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 6.12.10 In cou ntry N ew Sou th Wales, integrated u rban w ater cycle planning (IUWCP) is encou raged in all w ater infrastru ctu re projects and is a cond ition of the Cou ntry Tow ns Water Su pply and Sew erage backlog su bsid y program . In this planning process, councils m ust consid er all w ater sou rces and uses and m atch these w ith the other u sers in their catchm ent. Storm w ater is being u sed increasingly as a resou rce, w hile efflu ent reu se is u ndertaken by 47% of all NMUs and resu lts in 14% by volu m e reu se across the State's N MUs. The new Water Managem ent Act also allow s efflu ent cred its for fu tu re schem es, w hereby N MU's can free u p their w ater allocation for trad ing, by retu rning higher qu ality efflu ent to rivers. In May 1997, N SW lau nched a major $3.01 billion package to fix u rban w aste w ater and stormw ater problem s, referred to as the Waterw ays Package, covering the Syd ney, Blu e Mou ntains, H u nter and Illaw arra regions. A new sew age storage tu nnel w as also annou nced to m inim ise and captu re w et w eather sew erage overflow s from the N orth of Syd ney and prevent pollu tion of Syd ney H arbou r. A special Waterw ays Ad visory Panel w as also established to consid er the proposed solu tions and ad vise the Governm ent on options and their effectiveness. Technical and financial assistance is given to cou ncils to d evelop integrated strategies for w ater su pply, sew erage and storm w ater m anagem ent. These strategies are a pre-requ isite for State Governm ent financial assistance and need to com ply w ith broad catchm ent planning and environm ental objectives. DLWC has prepared a d raft policy and framew ork d ocu m ent on integrated u rban w ater cycle planning to assist cou ncils to p repare integrated strategies on a catchm ent and total w ater cycle basis. There is a 5year program for d evelopm ent of integrated WSD strategies by cou ntry cou ncils. In Septem ber 1997, the Government annou nced fu nd ing of over three years to tackle stormw ater pollu tion throu ghou t N SW. The fu nd s have been ad m inistered throu gh a Storm w ater Tru st to help im plem ent high priority projects, assisting local councils to prepare and im plem ent catchm ent-based storm w ater managem ent plans and for a stormw ater ed u cation program . One of the key initiatives is the d evelopm ent of partnerships betw een local cou ncils and the private sector to im plem ent innovative, cost-effective storm w ater m anagem ent technologies. This program has since provid ed grants w orth nearly $51 million, prim arily to local councils and com m u nity grou ps to help them u nd ertake storm w ater m anagem ent projects. N ew Sou th Wales is presently considering a second phase for the Storm w ater Program . A Storm w ater Trust Board consisting of CEOs and a peak local governm ent representative is oversighting the stormw ater program and ad vising governm ent on the strategic d irections. Com m u nity, 114 6.12.11 6.12.12 6.12.13 6.12.14 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 ind u stry and conservation grou ps are represented on a State Storm w ater Ad visory Com m ittee. The Com m ittee is a consu ltative bod y to the Storm w ater Board and provid es ad vice on the storm w ater managem ent issu es relating to im plem entation of the program . 6.12.15 The EPA has researched and produ ced gu id elines to encou rage the appropriate use of biosolid s. In the SWC‟s area of responsibility, m ore than 95% of all biosolid s prod uced are now beneficially used . SWC has been su pporting extensive research by N SW Departm ent of Agricu ltu re on the environm ental and health im pacts of biosolids reu se. In the low er H u nter region, biosolid s from HWC‟s w aste w ater treatm ent plants are recycled for coal m ine site rehabilitation, agricu ltu ral u se and for com posting w ith mu nicipal w aste at the State‟s first large-scale m u nicipal w aste co-com posting facility at Raym ond Terrace. A significant new initiative on w astew ater reuse is u nderw ay in the Shoalhaven area. The schem e w ill m anage all efflu ent on a regional basis throu gh the provision of a m ajor u pgrad e of treatm ent and reticu lation systems to allow u p to 70% of all w astew ater to be reu sed . The N SW Governm ent's SepticSafe Program provid es financial and technical assistance to cou ncils for the d evelopm ent of better on -site sew age managem ent strategies. Over 280,000 N SW household s (of w hich most are farm s) live in areas that d o not have access to centralised sew erage services and rely on septic systems and other on-site hou sehold reticu lated services. Cou ncil sew age m anagem ent strategies are u sed to id entify areas of potential sew age pollu tion risk and to gu id e the d elivery of appropriate regu lation, su pervision and su pport services. 6.12.16 6.12.17 Implement Water Quality Management Strategies 6.12.18 N ew Sou th Wales has been actively su pporting the d evelopm ent of the N ational Water Qu ality Managem ent Strategy (NWQMS) and im plem enting the Gu id elines w ithin variou s program s at the State level, inclu d ing the setting of w ater quality objectives based on both the m anagem ent and scientific fram ew ork of the w ater quality gu id elines u nd er the Strategy. In October 1999 the N SW Governm ent approved the release of interim environmental objectives for 31 N SW catchm ents, as gu id elines to local w ater m anagement com m ittees. The release inclu d ed a statem ent by the Minister of the Environm ent that the Governm ent is prou d of the pioneering w ork that has been d one to d evelop these tools w ithin the framew ork of the N WQMS. The objectives are being u sed as the basis for w ater m anagem ent plans to im prove river health and sustainability. 115 6.12.19 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 6.12.20 These interim objectives are the first stage of N SW‟s com plem entary, tw o stage process for setting environm ental objectives. Stage 2 involves H RC inqu iries w hich w ill recom m end longer term environm ental objectives. The H RC has completed final reports on the William s, H aw kesbu ry-N epean, Shoalhaven, Clarence and Bega catchm ents. The Com m ission has also com pleted a report on strategic issu es arising from inqu iries into coastal catchm ents. Inqu iries are u nd erw ay into the Woronora/ Georges River/ Botany Bay catchm ents and into coastal lakes. Inqu iries are proposed or have com m enced for the Tw eed / Bru nsw ick, H astings/ Manning, Richm ond and H unter Rivers. N ew Sou th Wales has a statew id e approach to w ater quality m anagem ent w hich targets the attainm ent of am bient environm ental objectives (for both w ater qu ality and riv er flow ) throu gh the process of w ater managem ent planning (w hich also inclu d es grou ndw ater). Catchm ent planning is prom oted throu gh the established catchm ent m anagem ent boards. The Governm ent has recognised the special d em and s of the high grow th areas of t he N ew Sou th Wales coastal area, w ith continu ed im plementation of the N SW Coastal Policy. N ew Sou th Wales has actively participated in the d evelopm ent of all national gu id elines com pleted to d ate. In N ew Sou th Wales the variou s national guid elines are used as key d ocu m ents for d efining w ater quality goals or for provid ing d irect gu id ance to ind u stry (eg reclaim ed w ater for agricu ltu ral ind ustries). For som e key sou rces (u rban stormw ater and sew age managem ent) N ew Sou th Wales has or is im plem enting key program s w hich are more ad vanced than the national gu id elines, althou gh consistent in the principles im plem ented . N ew Sou th Wales has condu cted im pact assessm ents for the national gu id elines w hich have provided a clearer u nd erstand ing of how these gu id elines w ill im pact on ind u stries and econom ic d evelopm ent and how to best im plem ent the gu id elines. The Protection of the Environment Operations A ct (POEO) A ct 1997 com m enced in Ju ly 1999 and consolidates, stream lines and strengthens the fram ew ork for environm ental regu lation, w ith a m ore integrated approach to environmental protection licensing. N ew Sou th Wales has mad e consid erable progress w ith d eveloping m arket based m echanisms such as load based licensing to provid e a pricing incentive for pollu ters to perform beyond their m inim u m com pliance stand ard s. The load based licensing schem e (u nd er the Protection of the Environm ent Operations (General) Regu lation 1998) com m enced on 1 Ju ly 1999. The H u nter Salinity Trad ing Schem e com m enced in Janu ary 1995 w ith the objective of ensu ring river salinity remains low enou gh to 116 6.12.21 6.12.22 6.12.23 6.12.24 6.12.25 6.12.26 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 allow the w ater to be u sed for all purposes. The Schem e has now been formalised via the Protection of the Environm ent Operations Act (H u nter River Salinity Trad ing Schem e) Regulation 2001 w hich has been m ad e possible by recent am end m ents to the Protection of the Environm ent Operations Act facilitating the d evelopm ent and im plem entation of trad ing schem es. 6.12.27 In Ju ly 1996 the Sou th Creek Bubble Licence Schem e w as introd u ced w hich allow s three sew age treatm ent plants to vary their nu trient load s d ischarged provid ed the total load from the three plants is not exceed ed . This enables red u ctions in pollu tion to be focu sed w here the costs are low est. The EPA has d eveloped environm ental ed u cation program s linked to environm ental priorities, inclu d ing „The Drain is Just for Rain‟ program as part of the governm ent‟s u rban storm w ater program , and Solu tions to Pollu tion stormw ater edu cation program to d em onstrate the link betw een people‟s actions and im pacts on w aterw ays. N ew Sou th Wales has established an Environm ental Ed u cation Cou ncil to assist in coord inating and prom oting this key tool. N ew Sou th Wales has established a State Water Monitoring Coord inating Comm ittee w hich has d eveloped a Statew id e strategy for m onitoring w hich provid es coord ination across agencies and both broad perform ance monitoring and cam paign m onitoring for special stu d ies. This program , together w ith State of Environm en t Reporting (at local and state levels), is a u sefu l tool for m onitoring the effectiveness of the N WQMS and other State-based initiatives. N ew Sou th Wales is actively su pporting the d evelopm ent of rem aining mod u les (gu id elines for sew er overflow s and biosolid s) throu gh active participation in the national Contact Grou p, and provid ing technical and policy assistance to the Com m onw ealth in finalising these gu id elines. SWC has been exploring possibilities of su pplying d ifferent qualities of w ater for d ifferent pu rposes. In particu lar, SWC has been investigating comm ercial opportu nities for non -potable su pply. Approxim ately 23 m illion litres of w astew ater is cu rrently being recycled from SWC sew erage treatm ent plants. This is equivalent to arou nd tw o percent of the Syd ney region‟s d aily d em and for w ater. H WC has an established track record of w astew ater reu se w ith m ajor ind ustry in the low er H u nter region. In 1999-2000 over 4000 m egalitres of efflu ent w as reused , w hich is arou nd 10% of average d ry w eather w astew ater flow s. 6.12.28 6.12.29 6.12.30 6.12.31 Landcare 6.12.32 The N SW Governm ent has d eveloped a broad su ite of policies to gu id e land care programs to protect rivers of high environm ental 117 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 values and sensitivities. The N ative V egetation Conservation A ct recognises sensitive areas, as d oes the stressed rivers classification d eveloped w ithin the N SW Water Reform s. 6.12.33 Initially, all u nregulated rivers in N ew Sou th Wales (some 680 su b catchm ents) w ere assessed as to their level of conservation valu e or stress. Und er the W ater M anagement A ct all w ater sou rces need to be classified by Decem ber 2001. This w ork is u nd erw ay w ith the initial focus on those rivers and aqu ifers that have been id entified as priority systems for the establishm ent of w ater sharing plans. A nu mber of w etland m anagem ent policies and gu id elines are assisting the protection of these sensitive areas. 6.12.34 N ational Water Quality Management Strategy 6.12.35 N ew Sou th Wales contribu ted to and is im plem enting the N ational Water Quality Managem ent Strategy and the pilot program s w ill provid e a firm basis for review ing cu rrent approaches to tow n w astew ater sew age d isposal. The Deepw ater Ocean Ou tfalls Stu d y off Syd ney has alread y provid ed a su bstantial research base for su ch a review . Regulating Environmental Impacts of Water Use Activities 6.12.36 In ad d ition to strategies for catchm ent and w ater qu ality m anagem ent and the protection of environm ental flow s, N ew Sou th Wales regu lates the im pacts of w orks and activities related to w ater u se to lim it their environm ental im pacts. This w ill be clarified and m ad e consistent by new approvals u nd er the W ater M anagement A ct, w hich inclu d e the follow ing: W ater use approvals w ill ensu re that the u se of w ater for a particu lar pu rpose at a specified location is a ppropriate. W ater management work approvals au thorise the constru ction and u se of w orks for w ater su pply, d rainage or flood managem ent and may be issu ed for u p to 20 years. Controlled activity approvals au thorise the hold er to carry ou t a controlled activity in, on or u nd er w aterfront land , w hich inclu d es the bed s and banks of rivers and bed s and land arou nd w etland s and estuaries. Controlled activity approvals m ay be issu ed for u p to 3 years. A „controlled activity‟ is d efined as the constru ction of a bu ild ing, the carrying ou t of a w ork, rem oval of m aterial, d eposition of m aterial, or any other activity that affects the quantity or flow of w ater in a w ater sou rce. „Waterfront land ‟ is d efined in the d ictionary as inclu d ing the bed of any river, estuary or lake, coastal w aters and land generally w ithin 40 m etres of the highest bank of a river or lake, or the mean high w ater mark of any tid al w aters. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 118 A quifer interference activity approvals au thorise the hold er to cond u ct activities that involve interference w ith an aqu ifer. This approval is intended for activities that intersect grou ndw ater other than the constru ction and operation of bores (su ch as excavations). These approvals may be issu ed for u p to 10 years. 6.13 Research Framew ork Requirement s 6.13.1 In relation to w ater and related research, the Cou ncil agreed m em ber governm ents w ou ld : (a) give higher priority to the research necessary to progress im plem entation of the strategic fram ew ork, inclu d ing consistent m ethodologies for d eterm ining environm ental flow requ irements; and (b) to greater coord ination and liaison betw een research agencies to m ore effectively u tilise the expertise of bod ies su ch as the Land and Water Research and Developm ent Corporation, the Mu rray-Darling Basin Com m ission and other State and Com m onw ealth organisations. NSW Report High Priority to Research 6.13.2 N ew Sou th Wales is u nd ertaking research on, or contribu ting fu nd ing to, a w id e range of w ater related research. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 119 Greater Co-ordination and Liaison 6.13.3 N ew Sou th Wales is w orking actively w ith LWRRDC, MDBC and other State and Com m onw ealth organisations to im prove liaison, inform ation sharing and the coord ination of research. Taxation 6.14 Framew ork Requirement s 6.14.1 In relation to taxation, the Cou ncil agreed : (a) that a sub-com m ittee of Com m onw ealth and State officials, established by the Working Grou p on Micro-econom ic Reform , m eet to d iscu ss taxation issu es of relevance to the w ater ind u stry w ith a view to reporting, throu gh the Working Grou p, to the Cou ncil w ithin 12 months; (b) to su pport w ater-related taxation issues being exam ined in the proposed Ind ustry Com m ission Inqu iry into Private Sector Infrastru ctu re Fu nding; and (c) to accept any futu re consid eration of tax com pensation paym ents involving the w ater ind u stry being d ealt w ith throu gh the Com monw ealth -State Working Grou p established at the Ju ly 1993 financial Prem iers‟ Conference. NSW Report Meeting to D iscuss Tax Issues 6.14.2 A Com m onw ealth-State stand ing comm ittee w as convened to pu t in place and m onitor a tax equivalent regim e (TER) for State business entities, as agreed u nd er the Statem ent of Policy Intent (SOPI). The stand ing com m ittee has not met for som e tim e. The issu e of the taxation of governm ent entities by other governm ents (or reciprocal taxation) has been the subject of review by Treasu ries as agreed u nd er an Inter-ju risd ictional Tax Agreem ent. The specially appointed com m ittee‟s w ork w as finalised in early 1998. The w ork d id not specifically ad d ress w ater, bu t its consid eration of how to im plem ent reciprocal taxation arrangem ents is pertinent to comm ercialised w ater bu sinesses. Follow ing Governm ents‟ agreem ent to the report of the com m ittee, the issu e of the application of reciprocal taxation to Local Governm ent (includ ing w ater and sew erage bu sinesses) is to be consid ered . N ew Sou th Wales and other States, consistent w ith the Com petition Principles Agreement, are m oving to position local councils‟ w ater 120 6.14.3 6.14.4 6.14.5 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 and sew erage operations as stand -alone com m ercial bu sinesses. The effect is to expose them to Com m onw ealth tax liability w here they m ay previously not have been liable. This constitu tes an unintend ed d isincentive to reform . 6.14.6 SCARM has separately flagged that im position of taxes ad d s to the am ou nt to be recovered from u sers and makes fu ll cost recovery m ore d ifficult. A process for achieving fu ll cost recovery is in place. Bu t IPART, the NSW ind epend ent regu lator, has flagged that the rate of price reform progress shou ld have regard to a tolerable annual im pact on u sers. This w ill m ean a lengthier process for achieving full cost recovery. On the m atter of tax treatm ent, a case w ou ld need to be m ad e for d ifferential tax treatm ent of w ater businesses relative to other tax paying businesses. Examination by Productivity Commission 6.14.7 It is u nd erstood that the proposed Prod u ctivity Com m ission inqu iry into private sector infrastructu re fund ing d id not proceed . N ew Sou th Wales regard s the specially appointed Com m onw ealth -State com m ittee as the appropriate forum for exam ination of w aterrelated taxation issu es. Tax Compensation Payments 6.14.8 N ew Sou th Wales is of the view that taxation issues affecting the w ater indu stry shou ld initially be ad d ressed as part of the generic coverage of the specially appointed Com m onw ealth-State com m ittee referenced above. Reporting 6.15 Framew ork Requirement s 6.15.1 In relation to recomm end ations (3) throu gh (8), the Cou ncil agreed : (a) that the Working Grou p on Water Resou rce Policy w ou ld coord inate a report to the Cou ncil for its first m eeting in 1995 on progress achieved in im plementing this framew ork inclu d ing red u ctions in cross-su bsidies, m ovem ent tow ards fu ll-cost recovery pricing in u rban and ru ral areas and the establishment of transferable w ater entitlem ents, and (b) that as part of the m onitoring and review process, ARMCAN Z, AN ZECC and , w here appropriate, the Mu rray-Darling Basin Ministerial Cou ncil and the Ministerial Cou ncil for Planning, H ou sing and Local Governm ent, w ou ld report annu ally over the su cceed ing fou r years, and again at its first m eeting in 2001, to the Cou ncil of Au stralian Governm ents on progress in im plem enting the variou s initiatives and reform s covered in this strategic fram ew ork. 121 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 NSW Report 1995 Progress Report 6.15.2 This is not a N SW requ irement. Annual Reporting Requirement 6.15.3 The present report w ill serve as the basis for the N SW report to N CC/ COAG. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 122 7 7.1 7.1.1 Road Transport Proposed Framework for the Third Tranche Payment N SW su pports the proposed fram ew ork for the third tranche assessm ent of road transport reform s, covering the follow ing key areas: Com bined Vehicle Stand ard s; Au stralian Road Ru les; Com bined Tru ck and Bu s Driving H ou rs; Consistent On-Road Enforcem ent for Road w orthiness; The Second H eavy Vehicle Charges Determ ination; and Ultra-low Floor Bu s Axle Mass Increase. 7.1.2 7.1.3 N SW has fu lly implem ented all bu t one of the nom inated reform s (Com bined Tru ck and Bu s Driving H ou rs). Am ongst other things, the Combined Bu s and Tru ck Driving H ou rs reform is intend ed to align the cond itions d efining hou rs of d riving and other w ork for bu s and tru ck d rivers. The effect of this reform in N SW w ou ld be to increase the potential w ork hours for bus d rivers. The N SW Governm ent is of the view that the responsibilities a nd d em and s placed on bu s d rivers carrying passengers are greater than those on truck d rivers carrying freight and , in those circum stances, it is appropriate that stricter lim its apply to bus d rivers. For this reason, and particu larly given the prem iu m the com m unity places on bus safety, this aspect of the reform s has not been im plem ented in N SW. In all other respects, the N SW Governm ent su pports and has im plem ented the reform s set ou t in the assessm ent framew ork. Review of Legislation 7.1.4 7.1.5 7.2 Tow Truck Act 1998 7.2.1 Since 1999, the N SW Governm ent has initiated a series of fu nd am ental reform s to the regu latory and enforcem ent arrangements in the tow truck ind ustry. The Tow Truck A ct 1998 (w hich replaced the form er Tow Truck A ct 1989) gives effect to a new legislative schem e recom m end ed by the 1998 Tow Truck Ind u stry Review . 123 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 7.2.2 The Act establishes a licensing and certification scheme for tow tru ck operators and d rivers. All operators mu st be licensed . The licence, w hich generally has a term of one year, au thorises the licensee to carry out the kind of tow ing w ork specified in the licence. The Tow Tru ck Au thority (TTA) is the regu latory and ad m inistrative au thority for the industry. The TTA may refu se an application for a licence: if the applicant is not a fit and proper person to hold a licence; or if the granting of the licence w ou ld be contrary to the pu blic interest. 7.2.3 7.2.4 7.2.5 The TTA also d eterm ines the maxim um charges for tow ing, salvage or storage of motor vehicles. The Act provid es for the establishm ent, ad m inistration and operation of a schem e for the allocation of tow ing w ork and the attend ance of tow tru cks at the scene of accid ents involving m otor vehicles (know n as the Job Allocation Schem e). It is an offence to tow a m otor vehicle involved in an accid ent from the scene of the accid ent before obtaining au thorisation for that job. The new schem e is being introd u ced to ensure fairer w orking cond itions w ithin the ind u stry, im proved pu blic safety and a red u ction of u nd esirable and u nlaw fu l activities w ithin the tow truck ind u stry. N SW has given an u nd ertaking to the N CC that a review of the Tow Truck A ct w ill be initiated six months after the Job Allocation Schem e has com menced . The schem e is still being negotiated w ith stakehold ers. It is expected that the term s of reference for the N CP review w ill follow the general form at (see Annexu re 1) and the agreed process for an external review . In May 2000, the NCC inqu ired as to w hether clau se 69(2) of the Tow Truck Industry Regulation d iscrim inates against interstate operators. Clau se 69(2) of the Regu lation perm its a tow tru ck operator licensed in another State to tow a vehicle from that State into N SW, bu t d oes not allow the operator to collect a vehicle in N SW and tow it to another State, u nless they also have a N SW license. The Crow n Solicitor‟s ad vice w as sought on the matter. That ad vice w as to the effect that the licensing and operating provisions and , in particu lar, clause 69 (2) of the Regu lation d o not d iscrim inate against interstate operators in an inappropriate w ay. 7.2.6 7.2.7 7.2.8 7.2.9 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 124 Dangerous Goods Legislat ion 7.2.10 The Dangerous Goods A ct 1975 consolid ates and am ends the law relating to explosives and other dangerou s su bstances. Legislative am end m ents involving the transport of dangerou s good s com m enced in April 1998 to give effect to the first m od u le of reform s to national road transport law d eveloped throu gh the N ational Road Transport Cou ncil. The Dangerous Goods (General) Regulation 1999 came into effect on 1 Septem ber 1999. Public com m ent has been received on the Draft N ational Stand ard on storage and hand ling, and the national stand ard is being finalised . N CP review w ill com m ence after the N ational Stand ard has been finalised . 7.2.11 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 125 8 8.1 8.1.1 Rail National Rail Corporation (Agreement) Act 1991 The N ational Rail Corporation (A greement) A ct 1991 gives effect to an agreem ent betw een N SW, the Com m onw ealth and other States relating to the N ational Rail Corporation Ltd (N RC). The N RC w as established prim arily to operate interstate containerised rail freight services. The Sharehold ers Agreem ent establishing the N RC provid ed for a transfer of responsibilities and assets to the corporation over a three year transition period . The Agreement also specified a five-year establishment period , after w hich the com pany w as expected to be fu lly established and to operate profitably. Du ring the pre-sale process, sharehold ers agreed to rem ove the restriction in s.7 of the Act w hich prevented the corporation from carrying intrastate freight. In N SW, the Statute Law (M iscellaneous Provisions) A ct 2000 repealed the restriction in Au gu st 2000. Rail Freight Corporation The N CC has asked N SW to confirm the status of the com petitive neu trality com plaint lod ged in Septem ber 1999 by Capricorn Capital against the Rail Freight Corporation (FreightCorp). The com plainant requ ested the Premier to refer the m atter to the Ind epend ent Pricing and Regu latory Tribu nal for investigation. Inform ation on the natu re of the com plaint and the N SW Governm ent position is provid ed in Section 2.5 of this report (paragraphs 2.5.13 to 2.5.23). On the tim etable for privatisation, it is intend ed that the sale of FreightCorp w ill be u nd ertaken in parallel w ith the Comm onw ealth Governm ent's sale of the N ational Rail Corporation. The sale is likely to occu r in 2001 and w ill be su bject to a nu m ber of cond itions pertaining to regional services and em ploym ent levels. Rail Safety Act 1993 In N SW, the sou rce of regu latory au thority over safety in respect of the rail ind ustry d erives from the Rail Safety A ct 1993. The Act w as d eveloped to cover all rail operations in N SW, separating the regu lator from operations for the first tim e and introd u cin g m ore accou ntability provisions w ithin the rail ind u stry. 8.1.2 8.1.3 8.2 8.2.1 8.2.2 8.2.3 8.3 8.3.1 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 126 8.3.2 The Rail Safety Act provid es for the establishm ent of an accred itation schem e for ow ners and operators of railw ays and for the certification of the com petency of railw ay em ployees perform ing railw ay safety w ork. It also provides for the d evelopm ent and m onitoring of safety perform ance stand ard s. The N SW Governm ent com pleted a statu tory review of the Act, to d eterm ine w hether the policy objectives of the Act rem ain valid , and w hether the terms of the Act remain appropriate for securing those objectives. The Governm ent tabled a report in Parliam ent on the ou tcom es of the statu tory review in Septem ber 1999. H ow ever, proposed am end m ents arising from the statu tory review w ere d eferred pend ing Governm ent consid eration of the Final Report of the Inqu iry into the Glenbrook Rail Accid ent. The Final Report w as presented to the Governor in April 2001. The N CP review has also been d eferred . This is to ensure that the N CP review is fu lly cognisant of the possibly w id e-ranging changes to the Rail Safety A ct 1993 that may arise as a resu lt of the Governm ent‟s response to the Final Report into the Glenbrook Rail Accid ent. 8.3.3 8.3.4 8.3.5 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 127 9 9.1 9.1.1 Taxi Services Regulatory Framework The N SW taxi indu stry is regu lated by the Passenger Transport A ct 1990, w hich is ad m inistered by the Departm ent of Transport. The m echanism s u sed to regu late the taxi ind u stry inclu d e: issu ing of licences; accred itation of taxi operators; au thorisation of d rivers and approval of training schools; controls on maximu m taxi fares; perform ance standard s, for exam ple, in relation to cu stom er service, vehicles and d river safety; and com pliance systems. 9.2 9.2.1 NCP Review In Ju ly 1998, the Prem ier referred the Passenger Transport A ct to the Ind epend ent Pricing and Regu latory Tribu nal (IPART) to d eterm ine w hether the legislation m eets the requ irem ents of the Com petition Principles Agreement and Part IV of the Com m onw ealth Trade Practices Act 1974 in relation to the taxi cab and private car hire ind u stries. The term s of reference and d etails of the review process are contained in IPART‟s Final Report of N ovember 1999 (w w w .ipart.nsw .gov.au ). Broad ly speaking, preparation of the Final Report follow ed the release of an Issu es Paper in October 1998, consid eration of pu blic subm issions, pu blic hearings and consid eration of subm issions m ad e in response to an Interim Report pu blished in Au gust 1999. Recommendations IPART w as satisfied that regu lating the quality of taxi services benefits passengers and the ind u stry. H ow ever, the Tribu nal fou nd that restricting the nu m ber of taxi licences d oes not appear to generate any significant benefits for passengers, d rivers, or anyone w orking in the indu stry other than the licence hold ers. Increasing the num ber of taxis in Syd ney w ou ld help im prove the ind u stry by au gmenting the su pply at peak tim es. How ever, the Tribu nal also noted som e u nsu ccessfu l attem pts at d ereg u lation in other ju risd ictions and therefore recom m end ed the ad option of a 128 9.2.2 9.3 9.3.1 9.3.2 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 phased approach to increasing the num ber of taxi licences in Syd ney by 5 per cent per annu m over the next five years. It also recom m end ed a review of im plem entation and passenger service ou tcom es in 2003. 9.3.3 9.3.4 9.4 9.4.1 On the m atter of price controls, the Tribu nal recom mend ed that m axim u m taxi fares shou ld continu e to be regu lated . The Tribu nal‟s pu blic interest ju stification for its recom m end ations is contained in the 1999 Final Report. Policy Response The m ajority of IPART‟s recom m endations have been end orsed by the Governm ent, inclu d ing the phased approach to increasing the nu m ber of taxi licences in Syd ney. The Governm ent agreed to release 450 ad d itional licences by Decem ber 2000. To date, 180 taxi licences have been issu ed : 60 short term (or sixyear) licences and 120 ord inary (or tw enty-year) licences restricted to w heelchair accessible taxis. It is planned that a fu rther 80 w heelchair accessible licences w ill be au ctioned in mid -2001. A Discussion Paper on regional taxi issu es w ill be prepared by the Governm ent, includ ing those recom mend ations mad e by IPART in its Final Report. The Departm ent has alread y comm enced prelim inary w ork to facilitate the review of im plem entation and passenger service ou tcom es in 2003. 9.4.2 9.4.3 9.4.4 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 129 10 10.1 10.1.1 Other Transport Services Marine Safety The N SW Governm ent has d em onstrated its w illingness to progressively reform m arine legislation. Som e anti-com petitive elem ents of form er Acts have been d ealt w ith u nd er the Licence Red u ction Program . In Febru ary 1997, ten licences and perm its w ere abolished u nder the Regulatory Reduction A ct 1996. The Governm ent also introdu ced the M arine Safety A ct in 1998 to repeal, consolidate and stream line the m aritim e safety provisions contained in the M aritime Services A ct 1935; M arine Pilotage Licensing A ct 1971; N avigation A ct 1901; Commercial V essels A ct 1979; Marine (Boating Safety – A lcohol and Drugs) A ct 1991; and certain other m arine legislation. In all, seven Acts and fifteen regu lations have been rationalised into three Acts and seven regu lations. The M arine Safety A ct w ill not comm ence until the Marine Safety Regulation and the W aterways Land and W ater M anagement Regulation are gazetted . Only Sched u le 3.5 and s.142 of the Act have been proclaim ed to d ate, how ever these provisions are m inor. They relate to the com m encem ent of an am end m ent to the Local Government A ct 1993 w ith respect to notices erected by local councils that prohibit or regu late the u se of any w ater by vessels. Ou tstand ing N CP issu es u nd er the M arine Safety A ct 1998 w ill be review ed by the Departm ent of Transport in conju nction w ith the Ports Corporatisation and W aterways M anagement A ct 1995. Ports Corporation and Waterways Management The Ports Corporatisation and W aterways M anagement A ct establishes statu tory state-ow ned corporations to m anage the State‟s port facilities on m ajor ports (ie, Port Kem bla, N ew castle and Syd ney) and creates the Waterw ays Au thority to ad m inister the Marine Safety A ct 1998. The Act also transfers the m anagement of w aterw ays and other m arine safety fu nctions to the Minister, and provid es for port charges, pilotage and other marine matters. A statu tory review of the Ports Corporatisation and W aterways M anagement A ct (requ ired by section 114) has been com pleted by the Departm ent of Transport. The N CP review is being progressed by the Departm ent as a m atter of priority and the term s of reference are cu rrently being finalised . The review is to be su pervised by a steering com m ittee chaired by the Departm ent of Transport and 130 10.1.2 10.1.3 10.1.4 10.2 10.2.1 10.2.2 10.2.3 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 com prising representatives from The Cabinet Office and N SW Treasu ry. 10.2.4 A review of N CP issu es u nd er the M arine Safety A ct w ill be u nd ertaken by the Waterw ays Au thority once the Act has been fu lly proclaim ed and has been in operation for a period of approxim ately one year. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 131 11 11.1 Agriculture and Related Activities Priority Areas Agricult ural and Vet erinary Chemicals 11.1.1 Agricu ltu ral and veterinary (agvet) chem icals are regu lated u nd er Com m onw ealth, state and territory legislation. These law s establish a national registration schem e controlling the evalu ation, registration, hand ling and control of agvet chem icals up u ntil the point of sale. Regu latory control, beyond the point of sale, is m anaged by each ju risd iction throu gh control-of-use legislation. The COAG national review of Agricu ltu ral and Veterinary Chem icals Legislation w as u nd ertaken by the Agricultu ral and Resou rce Managem ent Cou ncil of Au stralia and N ew Zealand (ARMCAN Z), using ind epend ent consu ltants. The Review exam ined the National Registration Schem e legislation and control-of-u se legislation in some states. In N SW the review of 'control-of-u se' legislation is being u nd ertaken as a separate Statebased review (see Append ix 2 for d etails). The Review w as com pleted in Janu ary 1999. Restrictions on com petition inclu d e: the licensing and registration requ irem ents w hich restrict entry to the agvet chem ical manu factu ring m arket and in some situations provide a com petitive ad vantage to existing m anufactu rers; the requ irement for agvet chem ical spray contractors to hold variou s forms of business licences or accred itations; exem ptions for veterinary su rgeons from provisions relating to su pply and u se, w hich are d iscrim inatory; a legislative monopoly w here the N ational Registration Au thority is the single provid er of registration d ecisions; the regu lation of prod u ct stand ard s; and the associated com pliance obligations w hich m ay im pose substantial costs and restrict new entrants to the market. 11.1.5 The Review mad e 20 recom m endations. Recom m end ations 1 to 11 relate to the Comm onw ealth, state and territory legislation w hich establishes the National Registration Schem e. Recom m end ations 12 to 20 relate to control of use legislation. 11.1.2 11.1.3 11.1.4 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 132 11.1.6 In February 1999 SCARM/ ARMCANZ consid ered the Final Report and established a Signatories Working Grou p (SWG) to d raft a co ord inated response to the Review . This inter-governm ental response w as com pleted in January 2000. The SWG su pported a nu mber of the recom m end ations, either fu lly, or by w ay of “the intent” of the recom m end ation. In it‟s response, the SWG proposed the establishm ent of specific Working Grou ps to ad d ress those recom m end ations in the Review Report w hich the SWG felt requ ired fu rther examination. These inclu d ed recom m end ations relating to the follow ing issu es: The id entification and regu lation of low risk chem icals. Chem icals that d o not fall w ithin the scope of the Agvet Cod e are regu lated u nd er the N ational Ind u strial Chem icals N otification and Assessment Schem e (N ICN AS). If the d efinition of chem icals covered by the Cod e w ere to be changed , there cou ld be significant im p lications for other chem ical regu latory arrangem ents/ schem es. These im plications w ere not evaluated in the Review . Su ppliers of assessm ent services. Matters relating to the quality and standard of assessm ents, and how these w ou ld be d eterm ined , m onitored and enforced , w ou ld need to be consid ered in fu rther d etail. Manu factu rer licensing. The SWG d id not su pport Recom m end ation 9 of the Review , relating to optional GMP (“Good Manu factu ring Practice”) standard s for m anufactu rers of low risk veterinary chem icals. The SWG felt that this cou ld lead to potential risks to pu blic health. The fact that agricu ltu ral m anu factu rers are presently exem pt from the licensing provisions w as of concern to the SWG. The Working Grou p w ou ld establish if licensing w as requ ired . Data protection. The SWG consid ered that the response to Recom m end ation 11 of the Review shou ld be incorporated in the cu rrent AFFA review of d ata protection. The ou tcom e of this review w ill be provid ed to SCARM/ ARMCAN Z u nd er the Ministerial Agreem ent establishing the Agvet Code. 11.1.7 11.1.8 The SWG d id not su pport Recomm end ation 6 of the Review , relating to the claim ed level of efficacy on the label of a chem ical. The SWG felt that, by not inclu d ing the “appropriateness” of the chem ical on labels, Australia‟s international obligations in relation to the protection of pu blic health, occu pational health and safety and protection of the environm ent may be com prom ised . The Taskforce set up to d evelop a nationally consistent approach to control-of-use matters su ch as off-label u se, licensing requ irem ents and exem ptions from su pply and u se provisions is still is yet to com plete its w ork. It is expected that the Taskforce w ill provid e 133 11.1.9 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 ARMCANZ (and possibly COAG) w ith recom m endations that ad d ress the specific anti-com petitive elem ents id entified by the Review relating to the cu rrent control-of-use regu latory regim e. 11.1.10 In Janu ary 2000, the COAG Com m ittee on Regu latory Reform w as asked to com m ent on a d raft final inter-governm ental response to the Review by the Chairm an of the SWG. N SW notes that the Com m ittee respond ed that it had no concerns w ith the d raft response or the term s of reference for the 'control of use' taskforce. New Sout h W ales Grains Board 11.1.11 A copy of the review report has previously been provided to the NCC and the Fram ew ork provid es a reasonable accou nt of the eventual ou tcom e of the Governm ent‟s d ecision on this issu e. The N CC has asked for an explanation of the d ifferences betw een the review recom m end ations and the eventu al Governm ent d ecision. A nu mber of the Governm ent‟s d ecisions w ent fu rther than the review recom m end ations in term s of rem oving restrictions on com petition. For exam ple: (i) the vesting pow ers over all grains other than barley, canola and sorghu m (ie oats, su nflow er, safflow er, linseed and soybeans) w ere rem oved im m ed iately, rather than after one year as recomm end ed in the review report; (ii) the vesting pow ers over d om estic canola and sorghu m w ere rem oved im m ed iately, rather than after one year as recomm end ed in the review report; (iii) the vesting pow er over export barley has been su nsetted at 5 years, w hereas the review recom m end ed that a fu rther review be cond u cted after 5 years to d eterm ine if the pow er shou ld continu e. The review recomm end ed that grain prod u cers be given the option of privatising the Board , su bject to the separation of its com m ercial and regu latory fu nctions. The issu e of privatisation becam e irrelevant w ith the Board ‟s insolvency, and the Board w ill instead be w ou nd u p after 5 years. The sole agency arrangem ent w ith Grainco, and the appointm ent of an ad m inistrator to the Board , has effectively separated the Board ‟s com m ercial and regu latory functions. The Governm ent retained vesting pow ers over d om estic m alting barle y and export canola and sorghu m for 5 years, rather than the 2 years extension recom m end ed by the review for d om estic m alting barley and export canola, and one year for export sorghu m . The Governm ent d ecid ed on the extend ed phase ou t of these three pow ers becau se of the u nusual circum stances arising as a resu lt of the Board ‟s insolvency becom ing apparent at the tim e of the d ecision on the 134 11.1.12 11.1.13 11.1.14 11.1.15 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 review ‟s recom m end ations. The inclu sion of these pow ers w ith the single export d esk for barley enabled Grainco, as the su ccessful cand id ate, im m ed iately take on the Board ‟s trad ing responsibilities and infrastru ctu re. 11.1.16 In ad d ition, the continuation of vesting on these com m od ities w as necessary in ord er that the au thorised bu yer fee (of $1.50 per tonne) cou ld be continu ed in ord er to fu nd the ou tstand ing pool payments to grow ers. It shou ld be noted that the review report d id not id entify any costs resu lting from single d esk arrangem ents for sorghu m and canola, and in its research report noted that the estim ated annu al net losses to the N SW econom y from the export and d om estic single d esk arrangem ents for barley w ere “negligible”. 11.1.17 Dairy 11.1.18 N SW im plem ented its d airy reform legislation on 30 Ju ne 2000. The food safety functions of the previous Dairy Corporation had alread y been incorporated into Safe Food , a recently created bod y w ith responsibility for food safety regu lation for all fresh food prod u cts to the “back of shopd oor”. Poult ry 11.1.19 The Poultry M eat Industry A ct 1986 regu lates the contractual arrangements betw een pou ltry grow ers and processors. The principal restriction on com petition is the requ irem ent for contracts betw een grow ers and processors to be ratified by a statu tory ind u stry com m ittee, the Pou ltry Meat Ind u stry Com m ittee. The Review Group w as chaired by N SW Agricu ltu re and had representatives from The Cabinet Office, N SW Treasu ry, pou ltry processors, pou ltry grow ers, the Pou ltry Meat Ind ustry Com m ittee and the N SW Farmers' Association. The Review Group released an issues paper in April 1998 and received over 180 su bm issions in response. The Review Grou p cond u cted public foru m s on the Issu es Paper in Seven H ills, Maitland and Tamw orth. The Review Group com pleted its final report in N ovem ber 1999, how ever several follow -u p actions recom m end ed by the review m eant that the review d id not fu lly report to the Minister for Agricu ltu re u ntil m id 2000. The final report is yet to be pu blicly released , as it is still u nd er active Governm ent consid eration. 11.1.20 11.1.21 11.1.22 Rice N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 135 11.1.23 As noted in the Fram ew ork, in Au gu st 2000, N SW gave in principle su pport to the possible introdu ction of a Com monw ealth single export d esk arrangem ent, and consequ ent d eregu lation of N SW rice m arketing arrangem ents. Since then the m od el has been fu rther d eveloped , and on 27 March N SW agreed that the Com m onw ealth cou ld com m ence consu ltation on the m od el w ith other ju risd ictions. N SW‟s agreem ent is cond itional u pon the Com m onw ealth noting in the d raft m od el that N SW consid ers that the proposed arrangem ent shou ld be of five years d u ration, and that the Ricegrow ers Co operative Lim ited shou ld have som e right of veto over rice exports by other parties. Follow ing the consu ltation these issu es w ou ld then be resolved betw een N SW and the Com m onw ealth . N SW has confirmed that it w ould d eregu late its d om estic rice m arketing arrangem ents concu rrently w ith the introd uction of any jointly agreed Comm onw ealth export arrangements. 11.1.24 Food Regulat ion 11.1.25 As agreed in the Intergovernm ental Agreem ent signed on 3 N ovem ber 2000, NSW w ill am end its Food Act in accordance w ith the Mod el Food Act. Vet erinary Surgeons 11.1.26 The V eterinary Surgeons A ct 1986 requ ires licensing of veterinary su rgeons and veterinary prem ises; restricts the use of the title „veterinary su rgeon‟ to licensed veterinarians; restrict the ow nership of veterinary prem ises; controls ad vertising; and provid es for d isciplinary proced u res against veterinary su rgeons. The Review Group w as chaired by N SW Agricu ltu re and had representatives from the N SW Veterinary Su rgeons Board , consu m ers of veterinary services, anim al w elfare interests, N SW Treasu ry, N SW Agricu ltu re and The Cabinet Office. This review w as cond u cted jointly w ith a review of the Stock (Artificial Breeding) A ct 1985. The Review Group released an issu es paper in May 1997 and received over 150 su bm issions. The Review Grou p cond u cted pu blic foru ms in Du bbo, Parramatta, Wagga Wagga and Arm id ale. A m eeting w as also held in Parram atta as a follow -u p to a w orkshop for invited ind u stry representatives that occu rred prior to com m encem ent of the review . The Review Grou p com pleted its final report in Decem ber 1998. The final report is yet to be publicly released , as it is still und er active Governm ent consid eration. Non-Priority Areas 136 11.1.27 11.1.28 11.1.29 11.2 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 11.2.1 Line item reporting on the follow ing legislation and m arketing boards is contained in Annexu re 2 M IA W ine Grapes Marketing Board M urray V alley Citrus M arketing A ct 1989 (com plem entary to the Victorian M urray V alley Citrus M arketing A ct) Rural Lands Protection A ct 1989 A piaries A ct 1985 Cattle Compensation A ct 1951 Exotic Diseases of A nimals A ct 1991 Banana Industry A ct 1987 Plant Diseases A ct 1924 Stock Diseases A ct 1982 Swine Compensation A ct 1928 Stock Foods A ct 1940 Stock (Chemical Residues) A ct 1975 Stock M edicines A ct 1975 N oxious W eeds A ct 1993 Seeds A ct 1982 Prevention of Cruelty to A nimals A ct 1979 A gricultural Tenancies A ct 1990 Farm Debt M ediation A ct 1994 Exhibited A nimals Protection A ct 1986 N on Indigenous A nimals A ct 1987 A nimal Research A ct 1985 Rural A ssistance A ct 1989 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 137 12 Forestry and Fisheries Forestry 12.1 Competitive Neutrality NSW Regulat ory Framew ork 12.1.1 Last year the N SW Governm ent am end ed the Independent Pricing and Regulatory Tribunal Act 1992 to provid e the Ind epend ent Pricing and Regu latory Tribu nal (IPART) w ith a role u nd er the State‟s com plaints m echanism (as contemplated in the Com petition Principles Agreement). IPART‟s role is to investigate com plaints referred by the Prem ier that concern the com m ercial activities of pu blic au thorities and their ad herence to com petitive neu trality principles. State Forests is a Governm ent Trad ing Enterprise and its activities are covered by the IPART Act. To d ate no com plaints have b een received by IPART in relation to forestry issu es. 12.1.2 Market Monopoly Issues 12.1.3 State Forests is not a public m onopoly, and neither d oes it enjoy any net ad vantage over its com petitors as a resu lt of pu blic ow nership. H ow ever, State Forests is the m ajor supplier of tim ber in N ew Sou th Wales and sells mu ch of its timber u nd er m ed iu m to long term w ood su pply agreem ents. Withou t su ch agreem ents the incentive for the tim ber-processing sector to invest the requ ired capital to constru ct an efficient and internationally com petitive ind u stry is u nlikely to occu r. The three m ain businesses can be split u p into softw ood plantations, hard w ood plantations and native forests. For 1998 (SF Annual Report) softw ood plantations represents 97% of the softw ood saw log market in N ew Sou th Wales, hard w ood plantations represents 100% (a new initiative and generally small volu m es) and native forests 87%. Private property log sales in N ew Sou th Wales are likely to be currently u nd erstated for native forests. Priva te property hard w ood saw log prod uction in 1990/ 91 w as 32%, w hen d ata collection w as m ore com prehensive. 12.1.4 Pricing of Logs 12.1.5 The N ew Sou th Wales Governm ent is com m itted to the pricing and allocation principles in the N ational Forest Policy Statem ent throu gh the N orth East and Ed en Regional Forest Agreem ents. 138 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 12.1.6 State Forests m aintains an accou nting system that takes into accou nt the fu ll costs of grow ing trees and the investm ent of capital in those areas. State Forests‟ financial reporting is p repared in accordance w ith the Public Finance A udit Act (1983), the Public Finance and A udit (General) Regulation 1995, Australian Accou nting Stand ard s, other m and atory professional reporting requ irements and Ind u stry Practice. State Forests‟ pricing system for hard w ood timber provid es for an objective approach to pricing by enabling a market valu e of tim ber to be d erived from the m arket price of end prod u cts rather than on costs or profit targets. This is consistent w ith the view expressed in the Prod u ctivity Com m ission‟s d raft report on Com petitive N eu trality in Forestry that a usefu l w ay of assessing the m arket value of logs is to com pare log prices w ith their residu al value. In 1997-98, State Forests im plem ented the H ard w ood Log Value Pricing System (H LVPS) in consu ltation w ith the ind u stry for d eterm ining the valu e of hard w ood tim ber sold by State Forests. This pricing system provid es for an objective approach to pricing that the tim ber indu stry d emand ed by enabling a market value of tim ber to be d erived from the market price of end prod ucts rather than on State Forests‟ costs or profit targets. Given that State Forests‟ log prices are influ enced to a large extent by external market factors, it m anages prod u ction costs to ensu re profitability and generate d ivid end s to the N SW Treasu ry. When there is a severe d ow ntu rn in d emand and price, State Forests ad opts cost cu tting m easu res and constrains its expend itu re to achieve acceptable financial ou tcom es and maintain target rates of retu rn. Softw ood contracts w ith ind u stry typically requ ire State Forests to su pply at a given rate and price and contain a „take or pay‟ clau se bind ing the bu yer to a proportion of their com m itm ent in the event of market or prod u ction flu ctuations. Softw ood logs read y for harvesting bu t not need ed to m eet su pply com m itm ents m ay be pu t to open tend er or offered to know n potential custom ers at market prices. Softw ood is a com m od ity com petitively trad ed across the w orld w ith m inim al import barriers. State Forests com petes against nu m erou s private pine plantation ow ners in N ew Sou th Wales, interstate and overseas. State Forests‟ pricing policy is to charge softw ood royalties at the international market price ad ju sted for regional variations in tim ber quality, prod u ction costs and m arket ou tlook. This occurs in the context of a volatile d om estic bu ild ing m arket. The recent Walcha tend er is a good exam ple of com petitive tend ering and market based pricing for the saw n tim ber. 12.1.7 12.1.8 12.1.9 12.1.10 12.1.11 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 139 12.1.12 More d etailed inform ation on State Forests' log allocation and pricing system is given in Annexu re 5. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 140 12.2 Structural Reform Separat ion of Regulat ory and Commercial Funct ions 12.2.1 Regu latory and com m ercial fu nctions for forestry operations in N ew Sou th Wales are separated . The Departm ent of Land & Water Conservation (DLWC) is the N ew Sou th Wales agency responsible for the Plantations & Reafforestation A ct (1999). When proclaim ed , this Act w ill cod ify environm ental standard s, and provid e a stream lined and integrated schem e, for the establishm ent, m anagem ent and harvesting of tim ber and other plantations on pu blic and private land in N ew Sou th Wales. Regu latory measu res covering native forestry operations on pu blic land s in N ew Sou th Wales are d etermined by agencies ind epend ent of State Forests (eg N SW N ational Parks & Wild life Service (conservation & biod iversity), Environm ental Protection Au thority (w ater pollu tion), N SW Fisheries (fisheries m anagem ent) and DLWC (soil conservation)). These agencies are also involved in the au d iting of com pliance to these regu latory requ irem ents. 12.2.2 Regulat ory Neut ralit y 12.2.3 The Plantations and Reafforestation A ct 1999 is a key com ponent of the N SW Governm ent forestry reform process. It m eets obligations u nd er the National Com petition Policy for both structu ral and com petitive neu trality. The Act covers all plantations established for tim ber prod u ction or for environmental pu rposes on both pu blic and private lands. It is ad m inistered by the Departm ent of Land and Water Conservation. The Forestry and N ational Park Estate A ct 1998 created a new system for forest managem ent on public land . The Act enabled the stream lining of regu lation of native forestry operations throu gh the Integrated Forestry Operation Approval (IFOA). The d evelopm ent of the IFOA w as coord inated by the Departm ent of Urban Affairs and Planning w ith inpu t from State regu latory au thorities N PWS, EPA and N SW Fisheries. The N ative V egetation Conservation A ct 1997 regu lates clearing on private land inclu d ing private forestry operations greater than 2 hectares, althou gh an exem ption for su stainable forestry cu rrently applies u nd er the Act. An ind ependent com m ittee is in the process of review ing exem ptions u nd er the Act, inclu d ing the one in respect of private forestry. The Departm ent of Land and Water Conservation, as ad m inistrators of the Act, are d eveloping a set of Best Operating Stand ard s for Private Forest Logging that w ill have the status of a Cod e of Practice u nd er the Act (see Native Vegetation Conservation Act below ). 141 12.2.4 12.2.5 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 Product ion Cont rols 12.2.6 Und er the N ational Forests Policy Statem ent the N SW Governm ent is obligated to set a regu latory framew ork for the u se of native forests in ord er to achieve social and environm ental objectives. Many of the attributes and valu es associated w ith forests are public good s, su ch as ecological processes, specified conservation and aesthetic valu es. The objective of regu lation is to ensu re that harvesting of native tim ber occu rs on a su stainable basis and in accordance w ith appropriate environmental practice. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 142 12.2.7 The Com m onw ealth Governm ent has accred ited N SW Forestry Agreem ents (d eveloped u nd er the auspices of the Forestry & N ational Park Estate A ct 1998). These State agreem ents specify environm ental regu latory controls and allow for long term w ood su pply agreem ents w ith ind u stry. Regional Forest Agreem ents (RFAs) have been im plem ented w ith the end orsem ent of the Com m onw ealth Governm ent. Cu rrent prod u ction controls are prem ised on su stainability requ irem en ts that w ere id entified throu gh scientifically based assessm ents across the eastern coastal areas. These assessm ents w ere u ndertaken by the Resou rce and Conservation Assessm ent Cou ncil and inclu d ed the environm ental, social, econom ic and cu ltu ral valu es of these forests. Market Ent ry 12.2.8 Regional Forest Agreem ents betw een the States and the Com m onw ealth provid e for long term su pply contracts that are d ivisible and trad eable. The arrangem ents therefore provid e opportu nities for new market entrants. State Forests has agreem ents w ith ind ustry that provid e for m ed iu m to long term w ood su pply. Agreem ent cond itions allow trad ing of Agreem ent hold ers‟ bu sinesses or logs on the open m arket, perm itting new ind u stry to gain m arket entry. Ad d itionally, State Forests openly ad vertises su rplu s softw ood and hard w ood resou rces for tend er. These arrangem ents replaced previou s practice w here State Forests allocated annual tim ber qu otas on a d iscretionary basis. Forestry Legislation The N SW regu latory fram ew ork is consistent w ith obligations u nd er a range of national agreem ents on forestry, biod iversity conservation and the environm ent, su ch as the National Forest Policy Statem ent, the Scoping Agreem ents for N SW Regional Forest Agreem ents and the Regional Forest Agreem ents them selves. As noted in previou s reports to the N CC, the Governm ent has been reform ing regu lations affecting forestry in N SW. An u pd ate on progress in reform ing legislation relevant to the forestry sector follow s. The Governm ent is satisfied that remaining restrictions on com petition are minor and in the pu blic interest. 12.2.9 12.3 12.3.1 12.3.2 Plant at ions and Reafforest at ion Act 1999 12.3.3 The Plantations and Reafforestation A ct 1999 covers all plantations established for tim ber prod u ction or for environm ental pu rposes on both pu blic and private land s. While som e land is exclu d ed from the operation of the Act (inclu d ing land d ed icated u nd er the 143 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 N ational Parks and W ildlife A ct 1974), State Forests are not exclu d ed . This m eans that, in accordance w ith com petitive neu trality principles, public ow ned plantations are faced w ith the sam e regu latory environm ent as private ow ned plantations. 12.3.4 A key objective of the above legislation is to prom ote and facilitate investm ent in timber plantations on essentially cleared land , and provid e a stream lined and integrated schem e for the establishm ent, m anagem ent and harvesting of timber and other forest plantations. The Act stream lines the regu latory fram ew ork by replacing a nu m ber of existing regu latory requ irem ents w ith a single approval, hence incorporating: The Environmental Planning and A ssessment A ct 1974 Threatened Species Conservation A ct 1995 Fisheries M anagement A ct 1994 Rivers and Foreshore Improvement A ct 1948 Timber Plantations (Harvest Guarantee) A ct 1995 Roads A ct 1993 (for operations in u nform ed Crow n road s) 12.3.5 A Cod e of Practice u nd er the Act is being d eveloped and has recently been placed on pu blic exhibition. The Act w ill be proclaim ed w hen the Cod e has been gazetted , anticipa ted in Ju ne 2001. The Act inclu d es provisions for ongoing regu latory reform inclu d ing review of the Cod e of Practice every five years and review of the Act five years from the d ate of assent. 12.3.6 Forest ry and Nat ional Park Est at e Act 12.3.7 The Forestry & N ational Park Estate A ct 1998 enables: Stream lined regulation of native forestry operations on pu blic land throu gh the Integrated Forestry Operation Approval (IFOA). The Departm ent of Urban Affairs and Planning w ith inpu t from State regu latory au thorities N PWS, EPA and N SW Fisheries coord inated the d evelopm ent of the IFOA. The Integrated Forestry Operations Approvals (IFOAs) for logging pu blic native forests, issu ed u nd er the Forestry and N ational Parks Estate Act have tw o parts: the general environm ental m anagem ent and protection cond itions d erived from the Environm ental Planning and Assessment Act; and a series of ind ivid u al licences relating to conservation, biod iversity, threatened species and soil and w ater protection. The licences inclu de a Threatened Species Licence issued u nd er N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 144 the Threatened Species Conservation Act, an Environm ent Protection Licence issu ed u nd er the Protection of the Environm ent Operations Act as w ell as the capacity to inclu d e a Threatened Fish Species Licence u nd er the Fisheries Managem ent Act. The FN PE Act provid es for joint or ind ivid u al prosecu tion of breaches by the responsible Ministers and / or their agencies u nd er this Act or their respective Acts (PEO Act, TSC Act or FM Act). N SW Forestry Agreem ents that specify environm ental regu latory controls and allow for long term w ood su pply agreem ents w ith ind u stry. Regional Forest Agreem ents (RFAs) have been im plem ented w ith the end orsem ent of the Com m onw ealth Governm ent. 12.3.8 The Act maintains the separation betw een regu lators (DUAP, EPA, N PWS and N SW Fisheries) and the com m ercial operator (State Forests). Forest ry Act 1916 12.3.9 The Minister for Forestry is responsible for the Forestry A ct 1916. The Act provid es for d ed ication, reservation, control and u se of State forests, timber reserves and Crow n land for forestry and other pu rposes and appoints a Com m ission to ad m inister the Act, w ith pow ers to sell timber and other forest prod u cts, and to purchase and sell animals on State forests and tim ber reserves. The Forestry Act establishes a comm ercial type licensing schem e ad m inistered by State Forests. Any person taking tim ber from land m anaged by State Forests requ ires a tim ber licence and a saw m ill licence, is requ ired by any person operating a m ill saw ing tim ber on crow n and private land s. Applicants for licences are protected from refusal on arbitrary or im proper consid eration grou nd s by general ad m inistrative law principles and there are no other barriers to granting of licences. Tim ber licences are refu sed if the person is regard ed as not being a fit and proper person to hold a licence or there is no com m ercial arrangement in place for the licensee to pu rchase timber resou rces from State Forests. Tim ber licences reflect com m ercial agreem ents betw een State Forests and the person requ iring a licence to harvest tim ber on State Forests' land . It is m erely a tool to ensu re com pliance w ith State Forests' requ irem ents on safety, licence cond itions im posed by regu latory agencies and com pliance w ith specified tim ber volu m es to be harvested . 145 12.3.10 12.3.11 12.3.12 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 12.3.13 Saw m ill licences are not refused u nless the applicant is not a fit a proper person to hold a licence. State Forests d oes not com pete against these licensees since it is not the core bu siness of State Forests. The majority of licence cond itions d eal w ith record keeping to prevent theft (especially on Crow n land ) and to allow the com pilation of statistics for the private property ind u stry. It d oes not im pact in any w ay w ith the business operations of State Forests given that the price, species or qu ality for su ch logs from private property is not mad e available to State Forests. State Forests is progressively introdu cing log m erchand ising for native forests and hard w ood plantations. Und er lo g m erchand ising State Forests u nd ertakes to d eliver specified tim ber d irectly to som e saw m ills. It d oes this by arranging long-term harvesting and hau lage contracts w ith private sector provid ers throu gh a com petitive, open tend er process. The prim ary objective is to optim ise the recovery of saleable log prod u cts from harvested areas, optim ise allocation of logs in accordance w ith State Forests su pply com m itm ents and optim ise safety ou tcomes, and to m inim ise total stu m p to m ill supply chain costs. 12.3.14 12.3.15 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 146 12.3.16 Tim ber com panies pu rchasing logs from State Forests u nd er log m erchand ising arrangem ents are not requ ired to hold a tim ber licence bu t instead a sale contract w hich confirm s the com m ercial arrangements for harvesting and hau lage of logs. In that case State Forests m anages com pliance of harvesting throu gh contracts w ith contractors and operator‟s licences. Threat ened Species Act 1995 12.3.17 Approvals und er this Act have been incorporated into the integrated approval process u nd er the Forestry and N ational Park Estate Act 1998 and the Plantations and Reafforestation A ct 1999. The Threatened Species A ct applies equ ally to pu blic and private forestry. A Parliam entary Joint Select Com m ittee reported on the Act in 1997 follow ing a statu tory review of w hether the policy objectives of the Act rem ained valid . The Com m ittee recom m end ed changes to the 8-part test (for d eterm ining w hether an activity has a significant im pact on threatened species). The N SW Governm ent is presently consid ering am end m ents to the Act to be presented to Parliam ent in the second half of 2001. 12.3.18 Nat iv e Veget at ion Conserv at ion Act 1997 12.3.19 The Native Vegetation Conservation Act regulates all clearing on private land throughout NSW. Clearing is defined to include forestry although an exemption for sustainable forestry is currently in place. The Department of Land and Water Conservation (DLWC), which administers the Act, assesses clearing applications and monitors the extent of vegetation. It also prepares codes of practice and promotes best management practice in relation to native vegetation management and private forestry. DLWC is currently preparing a set of Best Operating Standards for Private Forest Logging as a Code of Practice under the Act. In addition the exemption for sustainable forestry is under review.” Fisheries 12.4 12.4.1 Regulatory Framework The regulatory fram ew ork for the managem ent and adm inistration of fisheries in N SW is established by the Fisheries M anagement A ct 1994. It sets ou t the broad legal pow ers and the head of pow er for achieving the Governm ent‟s objectives. Detailed m anagem ent ru les are generally contained in su bord inate legislation, particu larly the 147 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 General Regu lations, and management plans w hich relate m ore specifically to particu lar fisheries or activities. 12.4.2 The Fisheries M anagement and Environmental A ssessment Legislation A mendment A ct 2000 provid es for the environm ental assessm ent of fishing activities; to restructu re the m anagem ent of com m ercial fisheries; to requ ire recreational saltw ater and freshw ater fishers to pay a fishing fee and to m ake fu rther provision for the protection of aquatic habitats. Other legislation, consid ered later in this section of the report, inclu d es the Fisheries Act 1935, Fish M arketing A ct 1994, Fish M arketing (Deregulation) A ct 1997 and M arine Parks A ct 1997. Fisheries Management Act 1994 The Fisheries M anagement A ct 1994 is based on an ecologically sustainable approach to m anaging the fishery resou rce. The objects of the Act w ere am end ed in 1997 to strengthen the conservation provisions, and they rem ain the same tod ay. The legislation aims to conserve, d evelop and share the resou rce by: licensing fishers and fish receivers; establishing fishery and season closu res; im posing inpu t controls on boats, gear, crew levels and fishing m ethod s; and im posing ou tpu t controls in the form of total allow able catches, share hold ings in share-managed fisheries, bag and size lim its and prohibitions on fishing certain species. In late 1999, the N SW Governm ent established a review com m ittee to oversee a review of the Fisheries M anagement Act, inclu d ing subord inate legislation and management plans, accord ing to N CP criteria u sing the standard term s of reference for State-based review s (see Annexu re 1). The review com m ittee is chaired by N SW Fisheries and com prises representatives from The Cabinet Office, N SW Treasu ry, the Departm ent of State and Regional Developm ent, N ational Parks & Wild life Service, and the Departm ent of Land and Water Conservation. The review com m ittee com m issioned the Centre for International Econom ics to prepare an Issu es Paper that w as d istribu ted to m em bers of m inisterial ad visory bod ies and other interested parties in N ovem ber 2000. The Issu es Paper w as a lso generally accessible on the Internet. Stakehold ers w ere invited to lodge w ritten subm issions w ith the review com m ittee. The Centre for International Econom ics has also been comm issioned to prepare a Final Report on the Act based on the pu blic 148 12.4.3 12.5 12.5.1 12.5.2 12.5.3 12.5.4 12.5.5 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 consu ltation process. That report is cu rrently being prepared for consid eration by Cabinet. It is im portant to note that the review process has incorporated the provisions of the new Fisheries M anagement and Environmental A ssessment Legislation A mendmen t A ct 2000. 12.5.6 This N CP Review w ill su pplem ent the broad er statu tory review com pleted by the Minister for Fisheries in Novem ber 2000 (u nd er s.290 of the Act) and subsequ ently tabled in each H ouse of Parliam ent. The statu tory review conclu d ed that the objectives of the Fisheries M anagement Act are valid and that its term s rem ain appropriate for secu ring those objectives. Other Fisheries Legislation The Fisheries A ct 1935 w as largely repealed in 1999. It provid ed the legal fram ew ork for requ iring comm ercial fishing and related activity operators to keep record s and to fu rnish record s w hen requ ired to d o so. The rem aining sections of the Act provid e for trou t and salm on acclim atisation societies. 12.6 12.6.1 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 149 12.6.2 The Fish M arketing A ct 1994 w as introd u ced to au thorise the sale of the assets, rights and liabilities of the Fish Marketing Au thority to the Syd ney Fish Market Pty Ltd (a consortiu m of fou r fish m arketing com panies). This w as d one for the pu rpose of d eregulating fish m arketing and is regard ed by N SW as a pro-com petition measu re. The Fish M arketing A mendment (Deregulation) A ct 1997 no longer exists, having been consolid ated into the Fish M arketing A ct. Until recently, the m arketing of fish in N SW w as regu lated u nd er the Fish M arketing A ct throu gh fish cooperatives or the Syd ney Fish Market. In som e cases this requ ired fish to be transported to the Syd ney m arket and then back again to the local tow n for sale in fish shops or restau rants. This form of regu lation ceased in N ovem ber 1999, bu t receivers of fish for resale are still requ ired to be registered u nd er the Fisheries M anagement A ct 1994. The M arine Parks A ct 1997 is ad m inistered by the Marine Parks Au thority and provid es for the creation and m anagem ent of m arine parks. The provisions in this Act are sim ilar to those granted in the Fisheries M anagement A ct 1994 for aquatic reserves. Because the effects of the aqu atic reserves provisions are cu rrently being review ed as part of the review of the Fisheries M anagement A ct, N SW d oes not intend to carry ou t a fu rther review of the M arine Parks A ct. 12.6.3 12.6.4 12.6.5 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 150 13 13.1 Mining Legislation Review Update Priority Review s Coal M ines Regulation A ct 1982 and the M ines Inspection A ct 1901 13.1.1 The CMRA regu lates occu pational health and safety in coal m ines (and oil shale and kerosene shale m ines) and certain related places. The MIA regu lates the occu pational health and safety of m ines, other than coal and shale m ines, and regu lates the treatm ent of the prod u cts of su ch m ines. In both cases, the costs associated w ith com plying w ith occu pational health and safety regu lation m ay im pact u pon com petition. The N CP review s of both the Coal M ines Regulation A ct 1982 (CMRA) and the M ines Inspection A ct 1901 (MIA) are being u nd ertaken as part of broad er fu ll-scale review s of these Acts. Issue papers have been d eveloped for both review s by the Departm ent of Mineral Resou rces. The issu e papers contain a prelim inary assessm ent of both Acts and their subord inate legislation in term s of N CP principles . For the CMRA, the Issues Paper w as released in conju nction w ith a d iscu ssion paper associated w ith the fu ll-scale review of the legislation. The MIA Issues Paper is expected to be released in early 2001, again, in conju nction w ith the release of a d iscu ssion paper associated w ith the fu ll-scale review . Issues raised in the N CP issu e papers have been inclu d ed in the fu llscale review d iscussion papers for both Acts and consu ltation has and w ill strongly em phasise that social and environm ental issues w ill be taken into accou nt in any legislative reform , together w ith econom ic consid erations. Cop ies of both Issu es Pap ers, inclu sive of term s of reference for the N CP review s, are (and soon w ill be in the case of the MIA) available from the Dep artm ent's w ebsite at ad d ress: w w w .m inerals.nsw .gov.au / safety 13.1.2 13.1.3 13.1.4 13.1.5 13.1.6 The consu ltation referred to in the term s of reference is com prehensive and inclu d es general pu blic exposu re throu gh the fu ll-scale review s of the tw o Acts along w ith specific consu ltation throu gh peak tripartite foru ms the Mine Safety Cou ncil, Coal Mine Safety Ad visory Com m ittee, Metalliferous Safety Ad visory Com m ittee and Extractive Ind ustries Safety Ad visory Com m ittee. Mem bership of these bod ies inclu d es all major stakeholder grou ps from ind u stry and u nions together w ith Governm ent. 151 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 13.1.7 Reform action and recom m end ations to ad d ress NCP in the legislation w ill be u nd ertaken throu gh the fu ll scale review processes. The rem aining m ilestones in the review of the MIA inclu d e the release of the Discussion Paper and Issu es Paper in April 2001 (final su bm issions d u e by Au gu st 2001); the d evelopm ent of d raft legislation by N ovem ber 2001; and the introd u ction of new legislation in March/ April 2002. For the CMRA, the m ajor rem aining m ilestones inclu d e the release of a position paper and exposu re bill arou nd Ju ne 2001; fu rther public consu ltation inclu d ing issu es of relevance to N CP; and new legislation introd u ced in late 2001/ early 2002. Petroleum (Submerged Lands) A ct 1982 13.1.8 The Petroleum (Submerged Lands) A ct 1982 relates to the exploration for, and exploitation of, petroleu m resou rces and certain other resou rces ad jacent to the coast of N ew Sou th Wales. A national review of the nation's petroleu m (su bmerged land s) legislation w as com m issioned by the Australian and New Zealand Minerals and Energy Cou ncil (AN ZMEC). The review w as u nd ertaken by ACIL Consu lting Pty Ltd . Their report entitled : 'N ational Competition Policy Review of the Petroleum (Submerged Lands) Legislation' w as mad e pu blic in May 2000. A response to ACIL Consu lting's recom m endations w as subsequ ently d eveloped by an AN ZMEC Review Com m ittee com prising representatives from the governm ents of the N orthern Territory, Victoria and the Com m onw ealth. The Review Comm ittee conclu d ed that the legislation is free of significant anti-com petitive elem ents that w ou ld im pose net costs on the com m u nity. To the extent that there are restrictions on com petition (for exam ple, in relation to safety, the environm ent, resou rce m anagement or other issu es), these w ere consid ered to provid e a net public benefit. The implem entation phase w ill now com m ence, w ith a focus on ad m inistrative stream lining and m easu res to enhance the certainty and tran sparency of d ecisionm aking. The Review Comm ittee's response w as su bsequ ently end orsed by AN ZMEC in Au gust 2000. Both ACIL Consu lting's report and the Review Com m ittee's response can be accessed via the Com m onw ealth Departm ent of Ind ustry Science and Resou rce's w ebsite at ad d ress: w w w .isr.gov.au / resou rces. N ew Sou th Wales u nd erstand s that copies of these d ocum ents have already been sent to the N CC. 13.1.9 13.1.10 13.1.11 13.1.12 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 152 14 14.1 14.1.1 Health and Pharmaceutical Services Terms of Reference The term s of reference for each review of health professional legislation are broad ly sim ilar. The term s of reference for the review of the N urses A ct 1991 are ind icative: 1. The N ew Sou th Wales Departm ent of H ealth w ill review the N urses A ct 1991 in accord ance w ith the term s for legislative review set ou t in the Com petition Principles Agreem ent. The gu id ing principles of the review are that legislation shou ld not restrict com petition u nless it can be d em onstrated that: i. The benefits of the restriction to the com m u nity as a w hole ou tw eigh the costs; and ii. The objectives of the legislation can only be achieved by restricting com petition. 2. Withou t lim iting the scope of the review , the Departm ent shall: i. clarify the objectives of the legislation and their continu ing appropriateness; ii. id entify the natu re of the restrictions on com petition; iii. analyse the effect of the id entified restrictions on the econom y generally; iv. assess and balance the costs and benefits of the restrictions; and v. consid er alternative m eans for achieving the sam e resu lts inclu d ing non-legislative approaches. 3. When consid ering the m atters in (2) the review shou ld also id entify potential problem s, for consu m ers seeking to use nu rsing services, w hich need to be ad dressed by the legislation. 4. In ad d ition to consid ering the m atters id entified above the Departm ent w ill consid er: i. the effectiveness of the cu rrent Act, in particular registration requ irem ents and d isciplinary arrangem ents; and ii. the interrelationship of the Act w ith the H ealth Care Com plaints A ct 1993. 5. The review w ill consid er and take accou nt of the relevant regu latory schem es in other Au stralian ju risd ictions and any recent reform s or proposals for reform, inclu d ing those relating to com petition policy. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 153 6. The Departm ent w ill consu lt w ith and take su bm issions from health professions, relevant ind ustry grou ps, Government and consu m ers. 14.2 Review Body and Consultative Mechanisms 14.2.1 14.2.2 Unless otherw ise noted all review s have been u nd ertaken by the Departm ent of H ealth‟s Legal and Legislative Services Branch. Each review has involved the pu blic release of an issu es paper w ith particu lar attention given to obtaining the view s of practitioners and their professional bod ies, com plaint hand ling bod ies (eg the H ealth Care Com plaints Com m ission) and consu m er bod ies (eg the H ealth Consu m ers Foru m). Follow ing a period of pu blic consu ltation, generally lasting three to fou r m onths, a report w ith recom m end ations for the Governm ent has been produ ced and follow ing Cabinet approval released to the pu blic. Key stakehold ers have been extensively consu lted d u ring the d rafting of any legislation. Priority Areas 14.3 Chiropract ors and O st eopat hs 14.3.1 The Report of the review of the Chiropractors and Osteopaths A ct w as released in January 2000. The review recom m end ed that both chiropractors and osteopaths continu e to be registered by title althou gh that registration be by separate Acts ad m inistered by separate registration board s. The review also recom m end ed that the practice of spinal m anipu lation continu e to be restricted w ith a d efinition of spinal m anipu lation and the restriction placed in the Public Health A ct. There are also mod ifications to the d isciplinary system and a revision of restrictions on ad vertising so that the restrictions only target condu ct that is false, m islead ing or d eceptive or that encou rages the u nnecessary or inappropriate use of a practitioner‟s services. The Governm ent has agreed that the pu blic interest requ ires continu ed regu lation of chiropractors and osteopaths. Legislation has been d rafted to im plem ent the review ‟s recom m endations. It is expected that the legislation w ill be introd u ced in the Bu d get 2001 session of Parliam ent. 14.3.2 14.3.3 Dent ist s and Dent al Paraprofessionals 14.3.4 The Issu es Paper for the review of the Dentist A ct 1989 w as released in Au gu st 1999. The Report of the review has been completed and subm itted to the Governm ent for approval. 154 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 Nurses 14.3.5 The Issu es Paper for the review of the N urses A ct 1991 w as released in Ju ly 1999. The Report of the review has been com pleted and w ill be su bm itted for the Governm ent‟s approval in the near fu tu re. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 155 O pt omet rist s 14.3.6 14.3.7 The Report of the review of the Optometrists A ct w as approved by the Governm ent in December 1999. The Report recom m end ed that optom etrists continu e to be registered by title. The Report also recom m end ed that the restriction on the practice of optom etry be rem oved and replaced by a restriction on the prescribing of optical appliances. The Report recom m end s that the prescribing of optical appliances is to be restricted to optometrists and m ed ical practitioners w ith orthoptists given a lim ited exem ption to prescribe glasses w here the patient has been exam ined and referred by a m ed ical practitioner. It is recom m end ed that the restriction be placed in the Public Health A ct alongsid e the restriction on spinal m anipu lation. Other key recom m end ations in the Report are: rem oval of the restriction on optom etrists accessing sched u le 4 therapeu tic d ru gs and the regu lation of pra ctice in this area via the Poisons and Therapeutic Goods A ct; rem oval of the restriction on ow nership of optometrical businesses; m od ifications to the d isciplinary system ; and a revision of restrictions on ad vertising so that restrictions only target cond u ct that is false, m islead ing or d eceptive or that encou rages the u nnecessary or inappropriate u se of a practitioner‟s services. 14.3.8 Draft legislation to im plem ent the Review 's recom m end ations w as prepared and exp osed to the profession as part of a co nsu ltation process. The Governm ent has fu rther consid ered the m atter, in the light of this consultation, and has agreed to introd u ce legislation d u ring 2001. The legislation w ill im plem ent a nu m ber of im portant reform s. A fu ll report on the m atter w ill be provid ed in the Governm ent's annu al report to the N CC for the year end ed 31 December 2001. Pharmacist s 14.3.9 The review of pharm acy legislation w as condu cted nationally throu gh COAG. The review reported in late 1999. Im plem entation of the review is cu rrently being consid ered by a w orking party w hich is d u e to report to COAG shortly. There is expected to be a coord inated national response to the review . Phy siot herapist s N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 156 14.3.10 The Issu es Paper for the review of the Physiotherapists A ct 1945 w as released in Septem ber 1999. The Report of the review has been com pleted and has been su bm itted to the Governm ent for approval. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 157 Podiat rist s 14.3.11 The Issu es Paper for the review of the Podiatrists A ct 1989 w as released in April 2000. The Departm ent of H ealth is cond u cting fu rther consu ltation in preparing the Report of the review . Psy chologist s 14.3.12 The review of the Psychologists A ct 1989 has been com pleted . Legislation to implem ent the review ‟s recom m end ations w as introd u ced to Parliam ent in the sp ring session 2000. H ow ever as a resu lt of concerns raised by the psychology profession the Bill has not proceed ed . Fu rther consu ltation has taken place w ith the profession and it is anticipated that legislation w ill proceed d u ring the Bu d get 2001 parliam entary session. O t her Healt h Professions 14.3.13 N ew Sou th Wales d oes not register the follow ing professions: occu pational therapists; rad iographers (althou gh there is a licensing system ad m inistered by the Environm ent Protection Au thority); speech pathologists; and trad itional Chinese med icine practitioners. 14.4 14.4.1 Non-Priority Areas Line item reporting on the follow ing legislation is contained in Annexu re 2 Poisons and Therapeutic Goods A ct 1992 Human Tissue A ct 1983 Public Health A ct 1991 N ursing Homes A ct 1988 Private Hospitals and Day Procedures Centres A ct 1988 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 158 15 15.1 15.1.1 15.1.2 Legal Services Reforms in Recent Years N ew Sou th Wales tabled its report on the national com petition policy review of the regu lation of the legal profession in 1998. The report of the review , and the im plem entation of the recom m end ations, shou ld be consid ered against a backgrou nd of the im plem entation of com petition based reforms to the regu lation of the legal profession since 1994. The 1996 Report to the Cou ncil of Australian Governm ents (COAG) by the Legal Profession Working Grou p, entitled „Reform of the Legal Profession in Au stralia‟, ou tlined key com petition policy reform s to be im plem ented in all ju risd ictions. The reform s have alread y been im plem ented in N ew Sou th Wales and inclu d e provision for the national recognition of solicitors‟ and barristers‟ practising certificates; the ind epend ent m onitoring of the com plaints and d iscipline schem e, by the Legal Services Com m issioner; fee d eregu lation, requirem en ts for fee d isclosu re and flexible fee arrangements; and m u lti-d isciplinary practices. Barristers in N ew Sou th Wales can appear in cou rt w ithou t a solicitor, clients can instru ct a barrister d irectly, and the rights to practice of solicitors and barristers are co-extensive. Solicitors can u se the title „solicitor and barrister‟. There are few restrictions on ad vertising, and the appointm ent of new Qu een‟s Cou nsel w as abolished som e years ago. Interstate Practitioners Provisions have now been enacted in N ew Sou th Wales, Victoria, Sou th Au stralia, the N orthern Territory, and the Australian Capital Territory, giving practitioners from those ju risd ictions reciprocal rights of practice. The schem e at present extend s only to solicitors and barristers from ju risd ictions w hich have correspond ing law s. The pu rpose of this requ irem ent w as to offer an incentive to Governm ents of all ju risd ictions to offer the sam e rights to interstate practitioners. H ow ever, it is now over 4 years since the provision s w ere enacted in N ew Sou th Wales. New Sou th Wales is consid ering that the Act be amend ed to rem ove the need for a correspond ing law to be passed in the state of origin of the solicitor or barrister, for an interstate practitioner to practise in N ew Sou th Wales. Incorporated Legal Practices In 2000, a key recom m end ation of the N CP review w as im plem ented , w hen the Legal Profession Am end m ent (Incorporated Legal Practices) Act w as enacted . The am end m ents w ill enable 159 15.1.3 15.2 15.2.1 15.3 15.3.1 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 solicitors to practise and take instructions from m embers of the pu blic from w ithin corporate stru ctu res that have lim ited liability, and are governed by the Corporations Law . The reform s w ill facilitate m u lti-d isciplinary practice, becau se in general any other person cou ld practise w ith a solicitor as an em ployee of a com pany. 15.3.2 The Act d oes not restrict ow nership of com panies provid ing legal services. The Act is sched u led to comm ence d u ring 2001, to allow tim e for regu lations and insu rance arrangem ents to be settled for incorporated practices. N ew Sou th Wales w ill be the first Au stralian ju risd iction to allow su ch bu siness stru ctu res. Multi-disciplinary Practices The N CP review recom m end ed that the Solicitors‟ Ru le, m ad e by the Law Society Cou ncil, requ iring a m ajority of solicitor m em bers of m u lti-d isciplinary partnerships, be review ed . On 5 N ovem ber 1999, the Law Society Council voted to rem ove the restrictions and a new ru le took effect on 5 December 1999. N ew Sou th Wales is the only ju risd iction to perm it mu lti-d isciplinary practice, free from restrictions on profit sharing. Complaints and Discipline The N CP review m ad e som e recom m end ations concerning the schem e for d ealing w ith com plaints and d isciplining m iscreant practitioners set out in the Act, althou gh the report conclu d ed that on the w hole, the schem e serves the public interest. To ensu re that the statu tory schem e and its operation are com prehensively review ed , on 3 March 2000, the form er Attorney General asked the Law Reform Com m ission to review the proced u res for d ealing w ith com plaints und er the Act. This response w ill incorporate consid eration of the recom mend ations m ad e in the N CP review . 15.4 15.4.1 15.5 15.5.1 15.5.2 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 160 16 16.1.1 Other Professional and Occupational Licensing N SW has been active in review ing occu pational licensing arrangements and a nu m ber of review s have either been com pleted or are in the process of being finalised . N SW has alread y respond ed to fair trad ing review s of professional and occu pational licensing, enacting legislation to repeal the H aw kers Act 1974 and the Business Licences Act 1990 (repealing A ct assented to 4 April 2001 but not yet commenced). Review s of the Motor Dealers Act 1974, Motor Vehicles Repair Act 1974, and the Property, Stock and Bu siness Agents Act 1941, have been com pleted and are aw aiting Cabinet consid eration. The N ational Review of the Travel Agents Act 1986 has also been com pleted and aw aits consid eration by the Ministerial Cou ncil on Consu m er Affairs (MCCA). A N SW report responding to this national review is in preparation. 16.1.2 16.1.3 16.1.4 Progress on Fair Trading Reviews of Professional and Occupational Licensing 16.1.5 Fair Trading reviews of professional and occupational licensing are currently underway or awaiting Government consideration: Conveyancers Licensing Act 1995 Credit (Finance Brokers) Act 1984 Employment Agents Act 1996 Motor Dealers Act 1974 Motor Dealers Repair Act 1980 Pawnbrokers and Second Hand Dealers Act 1996 Property, Stock and Business Agents Act 1941 Travel Agents Act 1986 Final report is in preparation Final report is in preparation Final report is in preparation Awaiting Cabinet consideration Awaiting Cabinet consideration Final report is in preparation Awaiting Cabinet consideration N ational Review find ings aw aiting consid eration by the Ministerial Council on Consum er Affairs Refer to fair trading section of Annexure 3 NSW Annual Report on Application of National Competition Policy – Status as at December 2000. 16.1.6 16.1.7 Details on review s of professional and occu pational licensing review s are provided below and are also referenced in Table 16.1. The review s covered below also inclu d e progress in review ing occu pations recomm end ed for d eregistration by the Vocational Ed u cation, Em ploym ent and Training (VEETAC) Working Party, 161 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 su ch as stock agents (see review of the Property, Stock and Business A gents A ct) and m otor m echanics (see review of the M otor Repairs Act). A m ore com prehensive list of progress to d ate is referenced in Table 16.2. Conv ey ancers Licensing Act 1995 Impact on Competition 16.1.8 16.1.9 The Conveyancers Licensing A ct 1995 regu lates the cond u ct of conveyancers in N SW by im posing various licensing requ irem ents. The legislation creates barriers to entry throu gh licensing proced u res governing th e right to practise as a conveyancer. It also im poses ongoing licensing requ irem ents for the cond u ct of conveyancing business, as w ell as com pliance and d iscipline. Specifically, the Act regu lates legal w ork carried ou t by conveyancers in connection w ith transactions for the sale of land and other legal interests, su ch as personal property. 16.1.10 Review Process 16.1.11 Draft term s of reference, based on Clause 5 (9) of the Com petition Principles Agreement w ere approved in 1999, and a Steering Com m ittee w as set u p to cond uct the review in early 2000. The Steering Comm ittee is being chaired by the Departm ent of Fair Trad ing and comprises representatives from Attorney General‟s Departm ent, The Cabinet Office, and N SW Treasu ry. A Reference Grou p com prising consu m er and ind u stry representatives has also been form ed to provid e inpu t throu ghou t the review . An Issues Paper w as released in March 2000 and a series of meetings w ere held w ith indu stry and consu m er representatives. The closing d ate for w ritten subm issions w as in May 2000. 16.1.12 16.1.13 16.1.14 Review Recommendations 16.1.15 Final Report is in preparation. Credit (Finance Brokers) Act 1984 Impact on Competition 16.1.16 The Act regu lates the bu siness cond u ct of finance brokers arranging cred it contracts betw een cred it provid ers and borrow ers. Specifically, the Act regu lates the cond u ct of finance brokers by 162 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 requ iring the ad vertising of the licence nam e and ad d ress, requ iring the keeping of record s, and controlling w hen and how mu ch com m ission is charged . Review Process 16.1.17 The d raft terms of reference, based on Clau se 5 (9) of the Com petition Principles Agreem ent w ere approved in 1999 and a Steering Com m ittee w as set u p to cond u ct the review in early 2000. The Steering Comm ittee is being chaired by the Departm ent of Fair Trad ing and com prises representatives from The Cabinet Office and N SW Treasu ry Corporation. A Reference Grou p com prising consu m er and ind u stry representatives has also been form ed to provid e inpu t throu ghou t the review . An Issu es Paper w as released in April 2000 and a series of m eetings w ere held w ith indu stry and consu m er representatives. 16.1.18 16.1.19 16.1.20 Review Recommendations 16.1.21 Final Report is in preparation. Employ ment Agent s Act 1996 Impact on Competition 16.1.22 16.1.23 The Act regu lates the condu ct of private em ploym ent agents in N SW throu gh variou s licensing requirem ents. The Act creates barriers to entry throu gh licensing proced u res, w hich requ ire applicants to: be fit and proper to hold a licence; be at least 18 years of age; and have reasonably su itable prem ises for the business. Review Process 16.1.24 The d raft terms of reference, based on Clau se 5 (9) of the Com petition Principles Agreem ent w ere approved and a Steering Com m ittee w as form ed in 2000. The Steering Comm ittee is being chaired by the Departm ent of Fair Trad ing w ith representatives from relevant governm ent agencies. 163 16.1.25 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 16.1.26 A Reference Grou p com prising consu m er and ind u stry representatives has also been form ed to provid e ad vice to the Steering Com m ittee. An Issu es Paper w as released in early 2000 to seek pu blic com m ent by May 2000, and a series of meetings w ere held w ith ind u stry and consu m er representatives. A d raft Final Report w as finalised December 2000. 16.1.27 Review Recommendations 16.1.28 Final Report is in preparation. Joint Rev iew of t he Mot or Dealers Act 1974 and t he Mot or Vehicles Repair Act 1980 Impact on Competition 16.1.29 The M otor Dealers A ct 1974 creates barriers to entry by im posin g restrictions on the granting of licences to m otor d ealers, w reckers, w holesalers, m otor vehicle parts reconstru ctors, car m arket operators, m otor vehicle consu ltants and prescribed businesses. The Act requ ires the keeping of certain record s and allow s licences to be refused on several grou nd s, inclu d ing: if the person d oes not have, or is unlikely to have sufficient financial resou rces to carry on the business; if the person is not likely to carry on su ch a business honestly and fairly; if the p erson d oes not have su fficient know led ge or experience; and if the applicant is not a fit and proper person. 16.1.31 The M otor V ehicles Repair A ct 1980 establishes the Motor Vehicle Repair Ind ustry Cou ncil (MVRIC) and gives it licensing fu nctions in relation to repair bu sinesses, trad espeople and loss assessors. The Act creates barriers to entry by requ iring applicants for a Repairers' Licence to: be a fit and proper person to hold a licence; have qu alifications or su fficient experience in a particu lar class of repair w ork; and have su fficient material, m anpow er and financial resou rces to carry on the business of a repairer. 16.1.30 16.1.32 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 164 Review Process 16.1.33 A Working Party su pervised the initial stages of this joint review . Chaired by the Departm ent of Fair Trad ing, it inclu d ed representatives from the Office of the Minister for Fair Trad ing, The Cabinet Office, and the Chair of the Motor Vehicle Repair Ind u stry Cou ncil. The consu ltancy firm ACIL Econom ics and Policy Pty Ltd w as engaged to assist the Working Party in u nd ertaking the review . The results of the review w ere considered by the N SW Governm ent in April 2000. In Febru ary 2001, the Minister for Fair Trad ing released an exposu re d raft Bill containing a nu m ber of key proposals arising from the review for pu blic com m ent by March 2001. 16.1.34 16.1.35 16.1.36 Review Recommendations 16.1.37 The review mad e the follow ing key recom m end ations, w hich have been incorporated into the d raft exposu re legislation: Mot or Dealers Act : licensees under Dealers A ct may operate from more than one place of business; and registers of stock and prescribed parts w ill only need to kept at one place of bu siness w here m u ltiple locations are operated by one licensee. Mot or Vehicles Repair Act : licensees may operate from more than one place of bu siness, rather than having a separate licence for each prem ises; revision of repair w ork categories to take into account national training d evelopm ents; prescribed qualifications requ ired as a prerequ isite to the grant of a trad esperson‟s certificate w ill be placed in a Regu lation and subject to review ; and aspects of the licensing schem e for motor vehicle repairers w ill be mad e consistent w ith the licensing schem e for motor d ealers. Policy Response 16.1.38 Stakehold er com ments on the d raft exposu re Bill are cu rrently being consid ered . Paw nbrokers and Second Hand Dealers Act 1996 Impact on Competition N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 165 16.1.39 The Act regu lates paw nbrokers and second -hand d ealers by im posing various licensing requ irem ents. A key rationale fo r regu lating d ealing in second -hand good s is the high risk of d ealing in stolen good s. The Act creates barriers to entry throu gh licensing proced u res, w hich requ ire that applicants: be at least 18 years of age; not be an u nd ischarged bankru pt; an d have no convictions for offences involving d ishonesty. 16.1.40 16.1.41 Licensees are also requ ired to keep record s of transaction d etails, inclu d ing the name and id entification d etails of cu stom ers and a d escription of the good s trad ed . Review Process 16.1.42 The d raft terms of reference, based on Clau se 5 (9) of the Com petition Principles Agreem ent w ere approved and a Steering Com m ittee w as set u p to cond uct the review in 1999. The Steering Comm ittee is being chaired by the Departm ent of Fair Trad ing and com prises representatives from the Attorney General‟s Departm ent, The Cabinet Office, and the N SW Police Departm ent. A Reference Grou p com prising consu m er and ind u stry representatives w as also form ed to provid e ad vice to the Steering Com m ittee. An Issu es Paper w as released in April 2000, and a series of m eetings w ere held w ith ind u stry and consum er representatives. Written subm issions closed in May 2000. 16.1.43 16.1.44 16.1.45 Review Recommendations 16.1.46 Final Report is in preparation. Propert y , St ock and Business Agent s Act 1941 Impact on Competition 16.1.47 The Property, Stock and Bu siness Agents Act 1941 regu lates the cond u ct of real estate, stock and station, business and m anaging agents in N SW. The Act creates barriers to entry th rou gh licensing proced u res, w hich requ ire applicants to: 166 16.1.48 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 be a fit and proper person to hold a licence; and have qu alifications and su fficient experience for the d esired class of licence(s). 16.1.49 The Act also prescribes how agents m ay carry on their bu sinesses, and in particu lar how they are to hand le tru st fu nds. Review Process 16.1.50 The d raft terms of reference, based on Clau se 5 (9) of the Com petition Principles Agreem ent w ere approved and a Steering Com m ittee w as form ed in 1997. The Steering Comm ittee is being chaired by the Departm ent of Fair Trad ing and comprises representatives from The Cabinet Office, N SW Treasu ry, indu stry and consu m er representatives. The Steering Com m ittee has been assisted by the Centre for International Econom ics and AT Cocks Consu lting. An Issu es Paper w as released in Septem ber 1997 and there has been extensive consu ltation w ith stakeholders, inclu d ing pu blic m eetings in both metropolitan and regional centres. 16.1.51 16.1.52 16.1.53 Review Recommendations 16.1.54 Final Report w as com pleted mid 2000. Policy Response 16.1.55 The review process is not com plete. The Final Report is yet to be pu blicly released – the report and related legislative proposals are aw aiting Cabinet consid eration. Trav el Agent s Act 1986 Impact on Competition 16.1.56 16.1.57 The Travel Agents A ct 1986 regu lates the cond uct of travel agents throu gh variou s licensing requ irem ents. The National Cooperative Schem e for the Regu lation of Travel Agents is enacted in various Travel Agents Acts in participating states and the A gents A ct 1968 in the ACT. In N SW, the ind u stry is regu lated by the Travel A gents A ct 1986. The main potential restrictions on competition inclu d e: licensing (inclu d ing qualification and experience requ irem ents and „fit and proper person‟ tests); N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 167 16.1.58 com pu lsory m em bership of the Travel Com pensation Fu nd (TCF) (w ith joining costs and annual fees); and com pliance requ irem ents w ith respect to participation in the TCF (costs associated w ith au d iting and capital requ irem ents). Review Process 16.1.59 16.1.60 N SW is participating in a national review coord inated by the Ministry of Fair Trad ing in Western Australia. The d raft terms of reference, based on Clau se 5 (9) of the Com petition Principles Agreem ent w ere approved in N ovem ber 1998. The Ministerial Cou ncil on Consu mer Affairs com m issioned t he Centre for International Economics to cond u ct the national review . An Issu es Paper w as released in Ju ne 1999 for extensive ind u stry and com m u nity consu ltation. In Ju ly 2000, the Ministerial Cou ncil agreed to release the d raft Final Report for fu rther consu ltation in late 2000. In Au gust 2000, COAG Senior Officials agreed that the Ministerial Cou ncil w ou ld be invited to consult the Com monw ealth -State Regu latory Reform Com m ittee (CRR). It is u nd erstood that ad vice has yet to be received from CRR. 16.1.61 16.1.62 16.1.63 Review Recommendations 16.1.64 The consu ltant‟s d raft Final Report proposes a nu m ber of changes to travel agent legislation. The report‟s m od elling su ggests that the costs of regu lation ou tw eigh the associated pu blic benefit. The key recom m end ations are that: a com petitive insu rance schem e be implem ented w hich w ou ld open u p com petition to the Travel Com pensation Fu nd ; som e of the licensing requirem ents for agents be rem oved (su ch as qualification and experience requ irem ents); and in the long term , d eregu lation of travel agents shou ld be consid ered . Policy Response 16.1.66 The N SW Governm ent‟s response has not been com pleted . A report to the Ministerial Cou ncil on Consu m er Affairs is in preparation. 16.1.65 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 168 Progress to be Monitored 16.1.67 Overall progress on review s of professional and occu pational licensing w ill continu e to be monitored . Professional Licensing (Chapter 18 of the N CC Assessment Framew ork) Table 16.1 - Status of Occu pational Licences Occupation Motor Vehicle Trad ers Real Estate Agents Status Currently und er review (see Priority Reviews – Motor Dealers Act 1974) Review com pleted and aw aiting consid eration (see Priority Review s – Property, Stock and Business Agents Act 1941) Currently und er review (see Priority Reviews Paw nbrokers and Second H and Dealers Act 1996) Second hand d ealers and paw nbrokers N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 169 Table 16.1 - Status of Occu pational Licences (Con't) Occupation Travel agents Status Currently und er review (see Priority Reviews – Travel Agents Act 1986) Currently und er review (see Priority Reviews – Conveyancers Licensing Act 1995) Currently und er review (see Priority Reviews – Employm ent Agents Act 1996) H aw kers Act repealed . Review com pleted and aw aiting consid eration (see Priority Review s – Property, Stock and Business Agents Act 1941) Conveyancers Em ploym ent agents H aw kers Property agents Table 16.2 - Status of Occu pations VEETAC Working Party Recom m end ed be Deregistered Occupation Onsite resid ential property m anager Strata m anaging agent Stock and station agent Valuer Valuer licensed prem ises Loss Assessor (Motor Vehicle) Paw nbroker Users of CFCs Status Review com pleted and und er consid eration (see Priority Review s – Property, Stock and Business Agents Act 1941). Review com pleted and und er consid eration (see Priority Review s – Property, Stock and Business Agents Act 1941). Review com pleted and und er consid eration (see Priority Review s – Property, Stock and Business Agents Act 1941). Review com pleted and report released (see Priority Review s – Valuers Registration Act 1975). Review com pleted and report released (see Priority Review s – Valuers Registration Act 1975). Requirem ent rem oved und er Regulatory Reduction Act 1996. Currently und er review (see Priority Reviews - Paw nbrokers and Second H and Dealers Act 1996). Although issues by the Motor Vehicle Repair Ind ustry Council this is a requirem ent und er the Ozone Protection Act 1989 and is not listed for review by the Departm ent of Fair Trad ing. Currently und er review . Exposure d raft legislation released in February 2001. Stakehold er com m ents currently being consid ered (see Priority Review s – Motor Vehicle Repairs Act 1980). Currently und er review . Exposure d raft legislation released in February 2001. Stakehold er com m ents currently being consid ered (see Priority Review s – Motor Vehicle Repairs Act 1980). Motor m echanic Motorcycle m echanic N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 170 Table 16.2 - Status of Occu pations VEETAC Working Party Recom m end ed be Deregistered (Con't) Occupation Brake m echanic Status Currently und er review . Exposure d raft legislation released in February 2001. Stakehold er com m ents currently being consid ered (see Priority Review s – Motor Vehicle Repairs Act 1980). Currently und er review . Exposure d raft legislation released in February 2001. Stakehold er com m ents currently being consid ered (see Priority Review s – Motor Vehicle Repairs Act 1980). Currently und er review . Exposure d raft legislation released in February 2001. Stakehold er com m ents currently being consid ered (see Priority Review s – Motor Vehicle Repairs Act 1980). Currently und er review . Exposure d raft legislation released in February 2001. Stakehold er com m ents currently being consid ered (see Priority Review s – Motor Vehicle Repairs Act 1980). Currently und er review . Exposure d raft legislation released in February 2001. Stakehold er com m ents currently being consid ered (see Priority Review s – Motor Vehicle Repairs Act 1980). Currently und er review . Exposure d raft legislation released in February 2001. Stakehold er com m ents currently being consid ered (see Priority Review s – Motor Vehicle Repairs Act 1980). Currently und er review . Exposure d raft legislation released in February 2001. Stakehold er com m ents currently being consid ered (see Priority Review s – Motor Vehicle Repairs Act 1980). Currently und er review . Exposure d raft legislation relea sed in February 2001. Stakehold er com m ents currently being consid ered (see Priority Review s – Motor Vehicle Repairs Act 1980). Currently und er review . Exposure d raft legislation released in February 2001. Stakehold er com m ents currently being consid ered (see Priority Review s – Motor Vehicle Repairs Act 1980). Front end specialist Bod y m aker Painter trad esm an Panel Beater Transm ission specialist Rad iator repairer Exhaust repairer Autom otive Electrician Although the National Competition Council notes in Table 18.2 that this licence is related to the general category of “Planning, building or developing service provider”, in NSW this occupation relates to VEETAC licence 281. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 171 17 17.1.1 17.1.2 Fair Trading Legislation and Consumer Legislation N SW has m ad e significant ad vances in fair trad ing and consu m er legislation N SW has been actively involved in review ing a range of legislative arrangements that im pose restrictions on variou s types of business cond u ct for the protection of consu m ers, su ch as com pliance requ irements for consu m er cred it provision and accu racy requ irements for measu ring good s in th e market place. N SW has alread y respond ed to fou r com pleted fair trad ing review s by: repealing the H aw kers Act 1974. repealing the Business Licences Act 1990. abolishing the Prices Com m ission and transferring prices regu lation pow ers to the Ind epend ent Pricing and Regu latory Tribu nal (follow ing review of the Prices Regu lation Act 1948). retaining certain requ irements for term inating the occupation rights of resid ents in retirem ent villages (Retirem ent Villages Act 1999). Fu rther d etails of the N SW Governm ent‟s response to com pleted fair trad ing review s are ou tlined in Annexure 3: N SW legislation for w hich N CP review and reform activity w as previously reported as being complete to the N CC. 17.1.3 17.1.4 N SW Progress in Finalising Fair Trading Review s 17.1.5 A nu m ber of fair trad ing review s have been com pleted and aw ait N SW Governm ent consid eration, inclu d ing review s of the Motor Dealers Act 1974, Motor Vehicles Repair Act 1974, the Property, Stock and Bu siness Agents Act 1941, and the Co-operatives Act 1992 (section 43). Other review s are very close to com pletion and are cu rrently being finalised , inclu d ing review s of the Fair Trad ing Act 1987, Cred it (Finance Brokers) Act 1984, Conveyancers Licensing Act 1995, and Resid ential Tenancies Act 1987 (Final Reports in preparation). 17.1.6 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 172 17.1.7 Fair Trad ing review s d ealing w ith professional and occu pational licensing are also u nd erw ay, and a nu m ber of review s have either been com pleted or are being finalised (refer Chapter 16). Cu rrent progress on all fair trad ing review s is ou tlined in Annexure 2: N SW Annual Report on Application of N ational Competition Policy – Status as at D ecember 2000 (refer Fair Trading section of table). 17.1.8 Priority Review s 17.1.9 Priority areas for fair trad ing as part of the national com petition policy review process are: fair trad ing legislation (ie, Fair Trad ing Acts); consu m er cred it legislation; and trad e measu rem ent legislation. Relevant N SW Review s com prise: Fair Trading legislation Review of the Fair Trad ing Act 1987 and Door to Door Sales Act 1967 Consumer Credit legislation Review of the Consum er Cred it (N ew South Wales) Act 1995 Trade Measurement legislation Review of the Trad e Measurem ent Act 1989 17.1.10 Final Report in preparation Report com pleted Decem ber 2000; aw aiting consid eration. N SW is participating in a national review by the Ministerial Council on Consum er Affairs – still und erw ay. Fair Trading Legislation - Review of the Fair Trading Act 1987 and D oor to D oor Sales Act 1967 Impact on Competition 17.1.11 The Fair Trading A ct 1987 and Door to Door Sales A ct 1967 establish a fram ew ork for fair d ealing in the m arketplace to red u ce risk associated w ith contractual d ealings. The legislation places lim its on m arket behaviou r throu gh com pliance cost im plications that the review is ad d ressing. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 173 17.1.12 The Fair Trading A ct 1987 regu lates the su pply, ad vertising and d istribu tion of good s and services and in certain respects, the d isposal of interests in land . The Door to Door Sales A ct 1967 controls and regu lates certain agreem ents relating to the sale or bailm ent of good s and the provision of services on cred it. Agreem ents relating to the sale or bailm ent of good s and services on cred it at the pu rchaser's hom e or place of w ork m ust be in clearly handw ritten or typed and given to the pu rchaser. A cooling off period applies to u nsolicited d oor to d oor sales on cred it. 17.1.13 Review Process 17.1.14 The d raft terms of reference, based on Clau se 5 (9) of the Com petition Principles Agreem ent w ere approved in late 1997 and a Steering Com m ittee w as form ed in February 1998. The Steering Comm ittee is being chaired by the Departm ent of Fair Trad ing and com prises ind ustry and consu m er representatives, as w ell as relevant governm ent agencies su ch as the Au stralian Com petition and Consu m er Com m ission. An Issu es Paper w as released to assist d iscu ssion in Au gust 2000 and a series of public foru m s w ere held throu ghou t N ew Sou th Wales. This w as follow ed u p w ith ind ivid ual m eetings w ith interested parties. 17.1.15 17.1.16 Review Recommendations 17.1.17 Final Report is in preparation. Consumer Credit Legislation - Review of the Consumer Credit (N ew South Wales) Act 1995 Impact on Competition 17.1.18 The Consu m er Cred it Cod e regu lates the provision of consu m er cred it throu gh state-based legislation w hich applies to all states and territories. In N ew Sou th Wales, the Cod e is ad opted throu gh the Consumer Credit (N ew South W ales) A ct 1995. Specifically, the Cod e governs the provision of inform ation and the cond u ct of cred it provid ers in relation to the provision of consu m er cred it, inclu d ing: inform ation d isclosu re to d ebtors, guarantors and m ortgagors at the pre-contractu al stage, the contractual stage and throu ghou t the life of the cred it con tract; N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 174 17.1.19 notification of any changes und er the cred it contract to the d ebtor; red ress m echanism s, w here cred it provid ers d o not com ply w ith the legislation; linked cred it provid ers; related insu rance contacts; ad vertising; and consu m er leases. 17.1.20 The legislation is intend ed to cou nter tw o areas of m arket failu re in the consu m er cred it ind u stry: inad equate d isclosu re of inform ation or inform ation asym m etries betw een cred it provid ers and consu m ers; and u nfair or frau d u lent cond u ct by market participants. 17.1.21 The main restrictions on com petition in the Cod e are: d isclosu re requ irem ents (su ch as requ iring contracts to inclu d e certain information, requ iring statem ents to be issu ed ); prod u ct innovation restrictions (su ch as requ iring cred it to be provid ed in cash or m oney‟s w orth, lim iting the secu rities over w hich a mortgage may be created ); potential com pliance costs (su ch as requ iring w ritten notices to be given, civil penalties); d iscrim ination betw een cred it provid ers (potential costs are im posed on linked cred it provid ers by attaching liability for representations mad e by a su pplier to a d ebtor. These potential costs are not borne by cred it provid ers that are not linked cred it provid ers); third line forcing restrictions (su ppliers are prohibited from requ iring a bu yer to apply for, or obtain, cred it from a particu lar cred it provid er); pricing restrictions (com m issions earned by cred it providers for introd u cing custom ers to a particu lar insu rer are limited to 20%); and cond u ct restrictions (su ch as regu lating the content of ad vertisem ents and restricting cred it provid ers from visiting a person at hom e for the pu rpose of ind u cing them to apply for cred it). Review Process N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 175 17.1.22 N SW is participating in a national review process w hich is being coord inated by the Ministerial Cou ncil on Consu m er Affairs. The Qu eensland Office of Fair Trad ing is the lead agency. The review is being cond u cted as the second stage of a post im plem entation review of the Uniform Consu m er Cred it Cod e, w hich inclu d es NCP analysis. Consu ltants KPMG w ere engaged to cond u ct the review , w ith the Uniform Consu m er Cred it Management Com m ittee acting as the Steering Com m ittee. 17.1.23 17.1.24 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 176 17.1.25 Consu ltation for the review inclu d ed release of an Issu es Paper in early 2000 to interested stakehold ers and posting of the paper on the national Consu m er Cred it Cod e w ebsite. Targeted consu ltations w ere also cond u cted w ith key ind ustry associations and consu m er ad vocacy grou ps. Issues consid ered by the Post Im plem entation Review ha ve inclu d ed : w hether the objectives of the Cod e are being achieved ; the im pact the Code has had on the marketplace, inclu d ing the costs and benefits of any restrictions on com petition; w hether the legislation contravenes the com petitive cond u ct ru les in Part IV of the Trad e Practices Act 1974 (Cth) and the Com petition Cod es of each ju risd iction; and opportu nities for im proving the national managem ent stru cture for the Cod e. 17.1.26 17.1.27 The review has consid ered Governm ent and m arket activities relevant to the objectives of the Consum er Cred it Cod e, and : a) review ed existing d efinitions and exem ptions contained in the legislation to d eterm ine w hether they are appropriate to the objectives of the Consu m er Cred it Cod e. b) assessed the need for the Consu m er Cred it Cod e having regard to the follow ing fair trad ing ou tcom es: access to appropriate inform ation to enable inform ed d ecisions to be mad e by participants; appropriate post contractual protection for consu m ers; provision of red ress mechanisms for consu m ers; m inim al restriction on prod u ct flexibility and consu m er choice; m inim al m islead ing, d eceptive or u nconscionable conduct by market participants; and c) d) m inim al com pliance costs for bu siness. consid ered fu tu re strategies that m ight influ ence those regu lated by the Consu m er Cred it Cod e tow ard s improved perform ance against fair trad ing ou tcom es. consid ered the recom m end ation of the Ministerial Council on Consu m er Affairs (MCCA) relating to the report of the Post Im plem entation Review of the Consum er Cred it Cod e. Review Recommendations N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 177 17.1.28 The consu ltant‟s report w as com pleted in Decem ber 2000 bu t has not been publicly released . Policy Response 17.1.29 The consu ltant‟s report is being considered . Trade Measurement Legislation – Review of the Trade Measurement Act 1989 Impact on Competition 17.1.30 The Act regu lates trad e m easu rem ent in the m arketplace, and inclu d es provisions requ iring verification of trad e m easu ring instru m ents, certification of instru m ents and inspections throu ghou t Au stralia. The Act provid es greater certainty in the m arketplace bu t has com pliance costs w hich may restrict com petition. 17.1.31 Review Process 17.1.32 N SW is participating in a national review cond ucted by the Ministerial Cou ncil on Consu mer Affairs, in accord ance w ith COAG agreed term s of reference and methodology. The review com m enced in 1999 and the Qu eensland Office of Fair Trad ing is the lead agency for the review . A “scoping stu d y” exam ining the com petition im pacts of the legislation w as cond u cted in early 2000. This stu d y is cu rrently being consid ered by ju risd ictions to d eterm ine how the review shou ld be progressed . 17.1.33 17.1.34 Review Recommendations 17.1.35 17.1.36 The review process is not com plete. Progress on all fair trad ing review s, inclu d ing these key p riority review s, w ill continu e to be closely monitored . N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 178 18 Finance, Insurance and Superannuation Services Compulsory Third Party Motor Insurance 18.1.1 N ew Sou th Wales has com petitive m arket arrangem ents for the provision of com pu lsory third party m otor vehicle insurance. The N CC‟s third tranche assessm ent fram ew ork has not raised any issu es regard ing the statu s of N SW arrangem ents that requ ire com m ent. Workers’ Compensation Insurance 18.1.2 In Ju ne 2000 the Minister for Ind u strial Relations annou nced the Governm ent‟s Strategic Directions and Actions for the N SW Workers‟ Com pensation Schem e; The key issu es to be ad d ressed in the overall strategic review inclu d e the need : to m aintain prem iu m s at an afford able level and ad d ress the schem e d eficit; to im prove inju ry m anagem ent processes and retu rn to w ork ou tcom es; to d evelop benefit stru ctu res that provid e adequate com pensation to inju red w orkers and prom ote retu rn to w ork practices; and for an efficient d ispu te resolu tion system . 18.1.4 The Governm ent has d eferred the transition to private u nd erw riting. It has ad opted the position that fu rther reform s need to be effected to red u ce scheme costs and thereby red u ce prem iu m s to an affordable level to assist in any transition to private u nd erw riting. It is noted that the recent collapse of the H IH Insu rance Grou p has heightened interest in the exposu re of statu tory insu rance schem es - inclu d ing w orkers com pensation - to the fortunes of com m ercial insu rers. H ad the schem e in N SW not been protected by Statu tory provisions, the collapse of H IH w ou ld have resulted in approximately $800 m illion of w orkers com pensation policies becom ing u nfu nd ed liabilities. The Governm ent w ill be consid ering this issu e in any d ecision abou t a transition to private u nd erw riting. The first tranche of legislative reforms w as passed by Parliam ent in December 2000. These reform s ad d ressed issu es related to inju ry m anagem ent and d ispu te resolu tion. The WorkCover Au thority is cu rrently consid ering a range of options to gra d ually rem ove crosssubsid ies in the existing prem iu m rating schem e. This is intend ed to 179 18.1.3 18.1.5 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 ensu re that the prem iu m rates applied to specific indu strial and business activities m ore closely reflect the cost of w orkers‟ com pensation arising from those activities; and 18.1.6 A fu rther reform package to red uce the nu m ber, d u ration and costs of claim s w as annou nced in April 2001 and legislation is expected d u ring the year. Trustee Companies 18.1.7 The one remaining area involving State regu lation of financial m arkets (w hich w as referenced in the Wallis Inqu iry) relates to Trustee Com panies. A revised regu latory fram ew ork incorporating nationally consistent provisions for tru stee com panies has long been on the agend a of the Stand ing Comm ittee of Attorneys General (SCAG). The need for su ch a nationally consistent regu latory fram ew ork w as also acknow led ged by the Com m onw ealth/ States Working Party that negotiated the agreem ent for the pru d ential regu latory transfer in relation to the above financial institution s. SCAG has com m enced a national N CP review of State and Territory statu tes pertaining to the regu lation of tru stee com panies. An issu es paper canvassing fu tu re regu latory options w as released for pu blic com m ent on 30 May 2001. 18.1.8 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 180 19 Retail Trading Arrangements 19.1.1 19.1.2 Part 4 of the Factories, Shops and Industries A ct 1962 regu lates shop trad ing hou rs in N ew Sou th Wales. While the Act contains an array of ru les for d ifferent types of shops selling d ifferent types of good s, the practice in N SW is m u ch sim pler. All shops in N SW can trad e u nrestricted from Mond ay to Satu rd ay. Sm all shops can also trade u nrestricted on Su nd ays and Public holid ays. It is only general shops that are restricted from trad ing on Su nd ays and certain d efined pu blic holidays u nd er the Act. In ord er to trad e on Su nd ays, they mu st apply for an exem ption. The Act also allow s u nrestricted trad ing hou rs on the last tw o Su ndays before Christmas Day each year. H ow ever, exem ptions are w id ely in place for Su nday trad in g. Therefore, in practice, shop trad ing hou rs are largely d eregu lated in N SW. The N ew Sou th Wales Governm ent has review ed the legislation and conclu d ed that the process in place for assessing applications to rem ove the few rem aining locality-based restrictions on shop trad ing hou rs involves a satisfactory cost-benefit analysis of each ind ivid u al case. The assessm ent and d eterm ination are m ad e by the Director-General of the Departm ent of Ind u strial Relations u nd er the Act. The Act d oes not contain specific statu tory gu id elines for assessing ind ivid u al applications. H ow ever, the Departm ent introd u ced a protocol in 1995 that requ ires the Departm ent to invite com m ent from interested parties as part of the process of comm u nity and pu blic consu ltation. This involves approaching local governm ent au thorities, retail ind u stry associations, sm all bu siness organisations in the affected areas, and the relevant trad e u nion. The applicant shopkeeper is also requ ired to provide inform ation and d ata abo u t the exem ption sou ght, u sing gu id elines d eveloped by the Departm ent. Any shopkeeper w ho is aggrieved by a d ecision mad e by the Director-General m ay apply to the Ad m inistrative Decisions Tribu nal (ADT) for a review . 19.1.3 19.1.4 19.1.5 19.1.6 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 181 20 Social Regulation with Implications for Competition Legislation relevant to the regulation of child care services in N SW inclu d es: the Children (Care and Protection) A ct 1987; Chapter 12 of the Children and Y oung Persons (Care and Protection) A ct 1998; the Family Day Care and Home Based Child Care Services Regulation 1996; and the Centre Based and M obile Child Care Services Regulation (N o 2) 1996. Child Care 20.1.1 20.1.2 Com m ercial child care services in New Sou th Wales are cu rrently regu lated u nd er the Children (Care and Protection) A ct 1987. H ow ever, Chapter 12 of the Children and Y oung Persons (Care and Protection) A ct 1998 w ill replace the existing regu latory provisions in m id to late 2001. The N CC has id entified the potential restrictions on competition in its Assessm ent Fram ew ork as being licensing requ irem ents, w hich are linked to fu nd ing arrangem ents. In N SW, the d etail of licensing requ irements are contained in the aforem entioned subord inate legislation. As noted in the N CC's Third Tranche Assessment Fram ew ork, N SW d id not sched u le legislation in this area for N CP review . The Governm ent is cu rrently red rafting the aforem entioned regu lations to su pport the provisions in the 1998 Act. The d raft regu lations w ill be released for public consu ltation as p art of the regu latory im pact statem ent (RIS) process established u nd er the Subordinate Legislation A ct 1989. The RIS, and related consu ltation process, w ill ad dress the requ irements of both NCP and the Subordinate Legislation A ct 1989. It is expected that this review process w ill ensu re the rem oval of any u nnecessary prescription in the cu rrent regu lations. 20.1.3 20.1.4 20.1.5 20.1.6 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 182 21 Planning, Construction and Development Services Planning, land u se and bu ild ing control issu es are d ealt w ith u nd er the Environm ental Planning and Assessm ent Act 1979. The Act has three principal parts that govern plan m aking, d evelopm ent and bu ild ing control and environm ental im pact assessment. The Governm ent has looked at the operation of these principal parts of the Environm ental Planning and Assessm ent Act as requ ired u nd er the Governm ent‟s Policy Statem ent on Legislation Review . To ad d ress the inefficiencies id entified in the Policy Statem ent com prehensive reform s of the d evelopm ent and bu ild ing control as w ell as the process of plan m aking have been u nd ertaken. There has not been a need for the review of the environm ental im pact assessm ent provisions as these are effectively just for activities carried ou t by the Crow n w hich are not subject to the d evelopm ent approvals process. The reform w ork of the Governm ent in this area has been broad er than the 30 projects listed in Attachment 2 of the Policy Statem ent. The su ccess of the Governm ent in rem oving the inefficiencies of the planning system id entified in the Policy Statem ent is su mm arised in Annexu re 4 of this report. The key areas of reform have been to the d evelopm ent and bu ild ing control system and the plan m aking system . These reform projects are d iscu ssed below . Reforming Planning, Land use and N atural Resource Approvals Systems 21.1.1 21.1.2 21.1.3 Reforms to the D evelopment and Building Control System 21.1.4 Su bstantial reforms to the w ay that d evelopm ent and bu ild ing proposals w ere hand led started in Ju ly 1998. The d etails of the reform s have been d iscu ssed in previous r eports from the Governm ent, althou gh it is im portant to rem em ber that the reform s: integrated the d evelopm ent, subd ivision and bu ild ing approvals into the one process; ad opted the perform ance based Building Code of A ustralia 1996 across the State; allow ed the private certification of bu ild ing and constru ction com pliance in competition. Cou ncils w ere also able to com pete w ith certifiers to provid e these services; created a form of „as-of-right‟ d evelopm ent called exem pt and com plying d evelopm ent; and N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 183 created a process that involved State agencies in the d evelopm ent approval process and prevented inconsistent subsequ ent approvals. 21.1.5 These reform s have benefited from subsequ ent reform s and ad m inistrative transfers of responsibility. Exam ples includ e: the responsibility for the im plem entation of the Building Code of A ustralia; the reform of the d evelopm ent and bu ild ing control process; the plan m aking process; and m em bership of the Development A ssessment Forum, all now falling w ithin the sam e area of the Departm ent of Urban Affairs and Planning. This has enabled greater consistency betw een all these projects; and the ad d ition of strata certification to the d evelopm ent and bu ild ing control process. This has allow ed accred ited certifiers as w ell as cou ncils to issu e these certificates. This has had an im m ed iate affect on both the price and tim efram es for strata certificates, w ith significant benefits to the d evelopm ent ind u stry Implementation of the D evelopment and Building Control Reforms 21.1.6 21.1.7 A report on the implem entation of the reform s w as provid ed in last year's report. A brief follow -u p on these issu es is provid ed below . Com plying d evelopm ent has now been introd u ced across the State, by w ay of local plans prepared by Cou ncils or a d efau lt State policy gazetted in March 2000. These plans have provid ed for a conservative am ou nt of d evelopm ent to be privately certified . H ow ever, the Governm ent is w orking to expand the range of d evelopm ents that can be certified and has had success in areas like Port Macquarie and is now w orking on the Western Syd ney new release areas. N u m bers of accredited certifiers are increasing. There have been no new accred itation bod ies approved, althou gh one professional association has subm itted a schem e for the Minister‟s consid eration. The nu m bers of accred ited certifiers are estimated to be ju st below 300. The market share of private certifiers continu es to grow for large com m ercial and resid ential types of bu ild ings. A m ajor review of the processes and proced u res for d evelopm ent and bu ild ing control (inclu d ing assessm ent and certification) has been com pleted . The Environm ental Planning and Assessment Regu lation 2000 cam e into effect on 1 January 2001 follow ing exhibition of a d raft regu lation and a regu latory im pact statem ent. The new Regu lation has allow ed many proced u ral issu es associated w ith the previou s regu lation to be stream lined . 21.1.8 21.1.9 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 184 21.1.10 The Governm ent has agreed , in principle, w ith the recom m end ations of the Ind epend ent Pricing and Regu latory Tribu nal on d evelopm ent assessm ent and related fees. Work is now proceed ing to com m ence a review of the d evelopm ent assessm ent fees contained in the Environm ental Planning and Assessment Regu lation 2000. The proposals for fee reform are: fees su bject to competition be d e-regu lated ; d efau lt fees for non-contestable d evelopm ent assessment by „consent au thorities‟ be set by regu lation; and qualifying consent au thorities be allow ed to set their ow n fee policies, provid ed their fee policies are acceptable to the Governm ent; enable cost accou nting and tracking; are based on benchmarked levels of service; and are subject to au dit and review by the Governm ent. 21.1.11 Ongoing m onitoring of the reform s has ind icated a need to d evelop clearer gu idance on the role of private certifiers in the oversight of constru ction w orks and the com pliance of these w orks w ith approvals. Provisions are being d eveloped that w ill ensure that the respective roles of cou ncils and certifiers in the m anagem ent of com pliance fu nctions are clear. This is seen as a su perior approach to provid ing confid ence to the com m u nity abou t enforcem ent proced u res than specifying that these fu nctions are ju st to be carried ou t by cou ncils. Plan First – Reforms to the Plan Making Process 21.1.12 The Governm ent has reached an ad vanced stage in the Review of Plan Making w ith the publication of a White Paper: Plan First – Review of Plan Making in Febru ary 2001. The White Paper ou tlines the Governm ent‟s proposals for changes to plan making in N ew Sou th Wales u nd er the EP&A Act. The proposals for change have been w id ely d iscussed w ith stakeholders and bu ild u pon an earlier d iscussion paper released in Febru ary 1999 and a series of d iscussion foru ms and focu s grou p meetings. The White Paper sets ou t clear d irections for m od ernising the planning system , w hile at the sam e time placing sustainability at the core of planning efforts. Key changes that w ill be initiated by the proposed reform s inclu d e: a strategic, w hole-of-governm ent approach to environm ental planning; regions and local areas planned and managed as w hole places – not ju st a collection of issu es, geographic featu res and land u ses; plans and strategies that are ou tcom es-focussed ; N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 185 21.1.13 21.1.14 encou raging u se of a greater d iversity of plan ning tools and approaches; m ore effective consu ltation w ith the com m u nity throu ghou t the plan preparation process; im proving accessibility to planning inform ation: plans w ritten in plain language and available on the Internet; com pu lsory monitoring and review of strategies and plans; and strategies and plans found ed on principles of su stainability 21.1.15 A com panion d ocu m ent Ideas for Community Consultation has accom panied the White Paper in d raft form w ith a view to fu rther refinem ent and the u ltim ate prod u ction of a best practice gu id eline for cond u cting comm u nity consultation. In the White Paper, a revised planning fram ew ork w ith a clear three-tier hierarchy is proposed . At the local, regional and state levels respectively, Local Plans, Region al Strategy, and a single d ocu m ent of State Planning Policies w ill replace the cu rrent hierarchy of State Environm ental Planning Policies, Regional Environm ental Plans, Local Environmental Plans and Developm ent Control Plans. A consolid ated State Planning Policies d ocu m ent w ill bring together all State level policies relevant to environm ental planning. Existing State Environm ental Planning Policies, Ministerial d irections and m od el provisions u nd er the EP&A Act w ill be replaced w ith m ore com prehensive policies. The policies of other agencies that affect or influ ence planning w ill be inclu d ed in this d ocu m ent. The proposal w ill strengthen the opportu nities for other agencies to prepare State environm ental policy on m ajor issu es that transcend regio ns (eg. salinity, biod iversity, m inerals, climate change) and d eliver these areas of policy throu gh the environm ental planning system . The pu rpose of State Planning Policies is to set the context for spatial planning and d ecision making at regiona l and local levels. The proposal w ill provid e a fram ew ork for planning policy outcom es for the State referenced to cu rrent best practice techniqu es. State Planning Policies w ill be regu larly upd ated in response to changing circu mstances. The prop osed Regional Strategies w ill be com prehensive, integrated environm ental planning strategies for every region in N SW. They w ill incorporate relevant State Planning Policies and in turn inform the preparation of Local Plans. The purpose of Regional Strategies is to provid e a context for local level actions and d evelopm ent d ecisions. Regional Strategies w ill provid e a set of agreed goals w ithin w hich State agencies and the non -governm ent sector can 186 21.1.16 21.1.17 21.1.18 21.1.19 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 im plem ent program s. Local governm ent w ill be in a position to d eliver and im plem ent Local Plans. 21.1.20 Governm ent policy relating to environm ental planning and m anagem ent w ill be contained in, or linked to, one w hole of governm ent Regional Strategy, so that all agencies are w orking tow ard s achieving com m on ou tcom es for the region. Regional Strategies w ill be the principal environm ental planning d ocu m ent for a region containing clear d irection, com m itments and accou ntabilities. Regional Strategies w ill d eal w ith a clu ster of issu es relating to that region. They w ill bu ild on research and planning w ork alread y being u nd ertaken by natu ral resou rce, econom ic and service d elivery grou ps. They w ill give higher visibility to various non statu tory plans throu gh linkages and consistent objectives. Issu es su ch as w ater and vegetation w ill still be m anaged accord ing to the land scape and bound aries of influ ence bu t the ou tcom es, strategies and targets contained in catchm ent m anagem ent strategies, and vegetation and w ater m anagem ent plans w ill be im ported into the Regional Strategy. The new Local Plan w ill consist of a single plan, containing all the planning controls applying to a parcel of land . This w ill replace requ irements cu rrently fou nd in Local Environm ental Plans and Developm ent Control Plans as w ell as State and regional controls that sit separately. It w ill overcom e one of the major shortcom ings of the cu rrent system - the need to refer to m any plans in ord er to d eterm ine the rights and obligations attached to a parcel of land . The new Local Plan w ill be consistent w ith and im plem ent the Regional Strategy. The Regional Forum w ill be requ ired to provid e ad vice to the Minister for Urban Affairs and Planning on a statem ent of regional consistency prepared by the cou ncil. The Minister for Urban Affairs and Planning w ill then ad vise the cou ncil w hether the plan can be mad e. A locality or place-based approach to local planning is advocated in the White Paper. Em phasis w ill be on assessing proposals accord ing to the objectives and ru les for the place. N ew Local Plans w ill use a m ix of regu latory m easu res su pplem ented by a su ite of non regu latory tools to achieve quality ou tcom es and encou rage the u ptake of best practice environm ental m anagem ent. In the fu tu re all plans w ill be available electronically. The Governm ent is cu rrently d eveloping an intelligent planning fram ew ork for N SW called „iPlan‟. The aim is to provide integrated online planning inform ation. Ultimately it w ill provid e access to all the ru les affecting regions and ind ivid u al parcels of land . The Plan First fram ew ork has been d eveloped to su pport this. 187 21.1.21 21.1.22 21.1.23 21.1.24 21.1.25 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 21.1.26 Plans at all levels w ill have to be regu larly m onitored and review ed (refer to page 14 of the White Paper). All Local Plans w ill be requ ired to inclu de ind icators and other m easu res to plot their achievem ent. These w ill be linked to regional level targets and ind icators performing the sam e role at that level. By linking processes su ch as State of the Environm ent reporting to the targets set in plans and strategies, better m onitoring of the cu mu lative effects of d ecisions and actions w ill take place. Legislation Review Local Government A ct 1993 St age 1 21.1.27 The Local Government A ct 1993 w as subject to a statu tory review d u ring 1999. This w as a general review to d eterm ine w hether the policy objectives of the Act remained valid , and w hether the term s of the Act rem ained appropriate for secu ring those objectives. This review ad d ressed , as part of that process, a nu mber of com petitive neu trality issu es. Follow ing the tabling of a report of that review in Parliam ent in 1999, a bill provid ing for a nu m ber of am end m ents to the Act w as passed by both H ou ses and w as assented to on 20 December 2000 (the Local Government A mendment A ct 2000). The com m encem ent date or d ates of the amend m ents m ad e has yet to be proclaim ed , bu t it is expected m ost of the am end m ents w ill com e into force on 1 April 2001. The Local Government A mendment A ct 2000 provid es for the follow ing am end ments in relation to com petitive neu trality issu es: (a) The Pu rchase by Cou ncils of Land at Au ction This am end m ent is intend ed to rem ove a competitive d isad vantage that Cou ncils m ight otherw ise face in competing w ith other private sector bid d ers at pu blic auctions of land . Were it not for this am end m ent Councils w ou ld have had to d isclose publicly in ad vance their intentions to seek to purchase the land s in qu estion. (b) Cou ncil Waste Managem ent Operations Previou sly, income earned by Councils from non -d om estic w aste managem ent operations or services, w hich cou ld be provid ed in com petition w ith private sector operators, w as calcu lated as part of the general incom e of Cou ncils. This incom e w as therefore subject to the rate pegging provisions of the Act, thereby lim iting the ability of the Cou ncil to set its ow n prices for these services. The am end m ents w ill rem ove this constraint. The dom estic w aste m anagem ent operations are alread y subject to separate ru les that requ ire cost recovery. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 188 21.1.28 St age 2 21.1.29 A second stage of the 1999 review is focu sing on N CP m atters, especially com petitive neu trality. A com m ittee com prising officers from the Department of Local Governm ent (Chair), The Cabinet Office and N SW Treasu ry is u nd ertaking this review . A reference group has been established to provide specific stakehold er inpu t to the cond u ct of the Review and its recom m end ations. The m embers of the Reference Group inclu d e representatives of relevant ind ustry bod ies, u nions and professional organisations. An issu es paper w as released for public com m ent in Ju ly 2000. It w as w id ely circu lated to interested parties, inclu d ing mem bers of the pu blic and stakehold ers id entified as likely to be affected by the review . Su bm issions w ere du e 1 Septem ber 2000. A total of 43 subm issions w ere received and consid ered , inclu d ing several late ones. A d raft report w as prepared and comm ents received in respect of it from the Reference Grou p. As at 31 December 2000, the report w as in the process of being finalised . 21.1.30 21.1.31 21.1.32 Service Providers A rchitects 21.1.33 The N CC's Assessm ent Fram ew ork contains a u sefu l su m m ary of the national review of architectu re legislation condu cted by the Prod u ctivity Comm ission. The Treasu rer pu blicly released the Com m ission's final report on the review in N ovember 2000. State and Territory governm ents su bsequ ently agreed to participate in a w orking grou p to d evelop a co-ord inated response to the review . The N SW Department of Pu blic Works and Services is chairing the Working Grou p. The Working Group w ill present its su ggested response to Prem iers and Chief Ministers for consid eration in m id 2001. Surveyors 21.1.34 The Surveyors Act 1929 provid es the registration of su rveyors. The Act restricts the use of the title 'registered su rveyor' and provid es that only registered su rveyors can carry ou t bou nd ary d efinition su rveys in N SW. Bou nd ary d efinition su rveys. The Issu es Paper for the review estimated that this represents abou t 20 - 40% of su rveyors' w ork in m u ltid isciplinary firm s. In the case of sole 189 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 practising su rveyors, this percentage is likely to be in the vicinity of 70-90%. 21.1.35 The Surveyors (General) Regulation 1999 establishes the qu alification requ irements for registration. These inclu d e: a registration fee of $360 p.a; a minim u m age of 21 years; being of good fam e and character; hold ing a recognised u niversity d egree in su rveying; passing a prescribed exam ination set by the Board of Su rveyors and an oral test. The prescribed exam ination inclu d es either fou r major projects of a "Professional Training Agreem ent"; and at least tw o years experience u nder the su pervision of a registered su rveyor or throu gh a stru ctu red professional training agreem ent. 21.1.36 There are no restrictions on w ho can establish a firm of partnership of su rveyors, other than the requ irement that a register ed su rveyor m u st sign all bou nd ary su rvey w ork. The review is being u nd ertaken by an ind epend ent consu ltant u nd er the d irection of a Steering Com m ittee chaired by the Departm ent of Inform ation Technology and Managem ent and w ith representation from The Cabinet Office. An Expert Ad visory Grou p, com prising ind u stry representatives, is assisting the review . The Steering Com m ittee released an issu es paper for pu blic com m ent in December 2000. It can be accessed via w w w .d itm .nsw .gov.au . 21.1.37 V aluers 21.1.38 The V aluers Registration A ct 1975 provid es the registration of valu ers. The Act creates barriers to entry throu gh registration proced u res, w hich requ ire applicants to have certain qualifications, sufficient experience and to be of good character. Police checks are carried ou t on all applicants for registration to establish w hether they have had any crim inal convictions w hich w ou ld prevent them carrying ou t the d u ties of a real estate valu er. The Act w as review ed by a Steering Com m ittee chaired by the Departm ent of Fair Trad ing and com prised representatives from The Cabinet Office, N SW Treasu ry and the valuation ind u stry. An Issues Paper w as released in May 1997 and pu blic and ind u stry representatives w ere consu lted extensively. 21.1.39 21.1.40 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 190 21.1.41 The Steering Comm ittee‟s Final Report, pu blicly released in May 2000, recom m end ed that the cu rrent professional licensing scheme be replaced by a “negative” licensing system . Und er the proposed system , it w ou ld no longer be necessary for a valu er to be registered by the Department of Fair Trad ing. Instead it w ou ld be an offence for a person to w ork as a valuer unless he or she m eets certain prescribed requ irem ents eg, com petency standard s. Strong penalties w ou ld apply for any breaches. The N SW Governm ent has accepted the recom m end ations of the Review . Legislation is cu rrently being prepared in consu ltation w ith stakehold ers to repeal the Act and to m od ify the system for the regu lation of valuers. 21.1.42 21.1.43 Electrical, Plumbing, Draining and Gas Fitting W ork 21.1.44 N SW has recently initiated a com prehensive review of plu m bing and d rainage regu lation. Building Licensing A rrangements 21.1.45 The Home Building A ct 1989 regu lates the entry of trad espersons into the resid ential bu ild ing sector and stipu lates the range of activities for w hich a licence m u st be obtained . In Septem ber 1996 the Governm ent released a Green Paper ou tlining variou s options for licensing of the bu ild ing indu stry. A Governm ent Working Grou p chaired by the Departm ent of Fair Trad ing w as set up to review and consu lt relevant ind u stry and com m u nity stakehold ers. The Final Report of this review w as finalised in March 1998. It recom m end ed a nu m ber of reform s to rem ove unnecessary com ponents of the licensing system , su bject to an assessm ent of the expected im pact on the hom e w arranty insu rance schem e. This report consid ered that mu ch of the need for licensing w ou ld be elim inated d u e to the im pact of the hom e w arranty insu rance schem e. H ow ever, d u ring consu ltation, approved insu rers ad vised that som e licensing requ irem ents are need ed to u nd erpin the insu rance system . In response to the Report, the N SW Governm ent annou nced a com prehensive package of reform s in N ovem ber 2000 for the hom e bu ild ing ind ustry covering licensing, hom e w arranty insu rance, d ispu te resolu tion, and bu ild ing contracts. An Issu es Paper and d raft exposu re Bill w ere released in February 2001 for public comm ent by the end of March 2001. 191 21.1.46 21.1.47 21.1.48 21.1.49 21.1.50 21.1.51 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 21.1.52 The d raft Bill proposes retaining the bu ild ers licensing system , as the hom e w arranty insu rance scheme is not yet able to keep out u nscru pu lou s bu ild ers. The d raft Bill proposes to tighten existing licensing arrangements and speed u p the d isciplinary process. Stakehold er com ments are cu rrently being consid ered . 21.1.53 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 192 ANNEXURES Annexure 1: Annexure 2: N SW Tem plate Term s of Reference for N CP Review s N SW Legislation For Which N CP Review And Reform Activity Was Previou sly Reported To The N CC As Incom plete Status as at December 2001 N SW Legislation For Which N CP Review And Reform Activity Was Previou sly Reported To The N CC As Being Com plete Status as at 31 Decem ber 2000 State Review s Of Regu latory Restrictions On Com petition Planning, Land Use And N atu ral Resou rce Approvals System s State Forests‟ of N SW Log Allocation and Pricing Annexure 3: Annexure 4: Annexure 5: N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 193 Annexure 1 NSW Template Terms of Reference for NCP Reviews. 1 The review of the (insert name of A ct) shall be cond u cted in accordance w ith the principles for legislation review s set ou t in the Com petition Principles Agreem ent. The gu id ing principle of the review is that legislation should not restrict com petition unless it can be d em onstrated that: (a) the benefits of the restriction to the com m u nity as a w hole ou tw eigh the costs, and (b) the objectives of the legislation can only be achieved by restricting com petition. Withou t lim iting the scope of the review , the review is to: (a) clarify the objectives of the legislation, and their continu ing appropriateness (b) id entify the natu re of the restrictive effects on com petition (c) analyse the likely effect of any id entified restriction on com petition on the econom y generally (d ) assess and balance the costs and benefits of the restrictions id entified , and (e) consid er alternative means for achieving the sam e resu lt, inclu d ing non-legislative approaches. When consid ering the matters in (2), the review shou ld also: (a) id entify any issu es of market failu re w hich need to be, or are being ad d ressed by the legislation, and (b) consid er w hether the effects of the legislation contravene the com petitive cond uct ru les in Part IV of the Trade Practices A ct 1974 (Cth) and the N SW Com petition Cod e. The review shall consid er and take accou nt of releva nt regu latory schem es in other Au stralian ju risd ictions, and any recent reform s or reform proposals, inclu d ing those relating to com petition policy in those ju risd ictions. The review shall consu lt w ith and take subm issions from (describe stakeholders) and other interested parties. 2 3 4 5 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 194 Annexure 2 NSW Legislation for Which NCP Review And Reform Activity Was Previously Reported To The NCC As Incomplete - Status as at December, 2001 Agriculture Act MIA Wine Grap es Marketing Board Potential Restrictions Constitu tes the MIA Wine Grap es Marketing Board - a statu tory m arketing au thority resp onsible for the m arketing of MIA w ine grap es and to rep resent the interests of grow ers. The m ain restrictions w ere vesting and p rice setting p ow ers. There have been tw o review s carried ou t. The „First Rou nd ‟ Review w as com p leted in N ovem ber 1996 and the „Second Rou nd ‟ Review is nearing com p letion. The „First Rou nd ‟ Review fou nd that som e of the Board ‟s activities u nnecessarily restricted com p etition. These activities inclu d ed vesting and p rice setting p ow ers. H ow ever, som e activities, su ch as research, d evelop m ent and m arket p rom otion, w ere d eem ed to have the p otential to correct m arket failu re and thu s p rovid e a p u blic benefit, su ch as overcom ing u nd er investm ent in these activities. The „Second Rou nd ‟ Review has not been com p leted . Rice Marketing Board The N SW Rice Marketing Board m arkets, or arranges to m arket, the annu al rice crop in its role as the sole statu tory m arketing bod y for rice. This vesting p ow er is the m ain com p etition restriction. Status Complete. Review p rocess External review . Chaired by N SW Agricu ltu re and com p rising rep resentatives of the Wine Grap es Marketing Board , the MIA Winem akers‟ Association, The Cabinet Office, N SW Treasu ry and N SW Agricu ltu re. Recom m end ations The „First Rou nd ‟ Review recom m end ed that the Board ‟s vesting p ow er not be continu ed beyond 30 N ovem ber 1996 and that the Board becom e an ind u stry service organisation, u sing existing p ow ers u nd er the Marketing of Prim ary Prod u cts Act 1983. The „Second Rou nd ‟ Review has not been finalised . Policy resp onse The Governm ent agreed to extend the Board ‟s vesting p ow er to 31 Ju ly 2000, su bject to a nu m ber of constraints. To effect the changes, the Marke ting of Prim ary Prod u cts Am end m ent (Wine Grap es Marketing Board ) Act 1997 w as p assed . In March 2000 the Board su bm itted a d etailed p rop osal to the N SW Governm ent in relation to its p ow ers and fu nctions after Ju ly 2000. Assessm ent of w hether these w ou ld com p ly w ith the p rincip les of N CP is the su bject of the Second Rou nd Review . Complete. See chap ter 11 for d etails. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 195 Act Mu rray Valley Citru s Marketing Act 1989 (com p lem entary to M urray V alley Citrus M arketing A ct (V ic)) Potential Restrictions Makes p rovision for a joint N SW-Victorian schem e for m arketing citru s fru it. The Mu rray Valley Citru s Marketing Board im p oses a com p u lsory charge on citru s p rod u cers in the Mu rray Valley and has (u nu sed ) p ow ers w hich enable it to set m inim u m qu ality stand ard s and m inim u m p rices. Status Underw ay. Review Process Joint review betw een N SW and Victoria u nd ertaken by consu ltants, Centre for International Econom ics, u nd er the Victorian gu id elines for N CP review s. The review rep ort w as su bm itted to both governm ents in Au gu st 1999 and w as also p u blicly released in Au gu st on the basis that it w as not an end orsed governm ent p osition. Extensive p u blic consu ltation is being u nd ertaken in d evelop ing a joint governm ent resp onse. Recom m end ations Legislation shou ld continu e to u nd erp in the op erations of the Board Core fu nctions w hich p rovid e benefits of a 'p u blic good ' continu e to be fu nd ed by a com p u lsory levy w here grow ers vote this to be beneficial Any fu tu re legislation shou ld clearly reflect the p u rp ose of the Board in facilitating m arketing and enhancing technological innovation. Policy Resp onse Cu rrently u nd er Governm ent consid eration. Dairy Ind u stry Act 1979 The Act em p ow ered the N SW Dairy Corp oration to regu late the p rod u ction, qu ality, su p p ly and d istribu tion of m ilk and the p rod u ction, qu ality and storage of d airy p rod u cts. The fu nd am ental restriction on com p etition w as the Corp oration‟s vesting p ow er, w hich facilitated the Corp oration‟s p ricing and su p p ly m anagem ent arrangem ents. Constitu tes the Pou ltry Meat Ind u stry Com m ittee and d efines its fu nctions and regu lates and controls the p ou ltry grow ing ind u stry. The m ain restriction is the requ irem ent for contracts and grow er fees to be ap p roved by the Com m ittee. Complete. See chap ter 11 for d etails. Pou ltry Meat Ind u stry Act 1986 Underw ay. See chap ter 11 for d etails. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 196 Act H orticu ltu ral Stock and N u rseries Act 1969 Potential Restrictions Restrictions inclu d e requ irem ents for: nu rseryfolk and resellers of horticu ltu ral stock to be registered ; ap p roval of sou rces of p rop agating m aterial; certification of schem es to control and regu late the grow ing of a class of p roclaim ed horticu ltu ral stock sp ecified in the schem e; labelling requ irem ents; and record keep ing. Status Complete. Review Process External Review : u nd ertaken by an inter -d ep artm ental review grou p chaired by N SW Agricu ltu re and w ith rep resentation from ind u stry (a nu rseryp erson, reseller, and an orchard ist), and The Cabinet Office. Consu ltation inclu d ed release of an Issu es Pap er and call for p u blic su bm ission and several p u blic m eetings on the Issu es Pap er. Recom m end ations The review recom m end ed that the Act be rep ealed and p rovisions of the Act that relate to d isease control be incorp orated into the Plant Diseases A ct 1924 and that an ind u stry service com m ittee be established u nd er the A gricultural Industry Services A ct 1998. Policy Resp onse The Governm ent agreed to im p lem ent all the Review recom m end ations. The Act w as rep ealed in Decem ber 2000 and the Governm ent is w orking w ith the ind u stry to establish an ind u stry service com m ittee. Ru ral Land s Protection Act 1988 Establishes Ru ral Land s Protection Districts and associated board s that levy and collect rates, p rovid e anim al health services and control of noxiou s w eed s and anim als. The Review Grou p is yet to id entify p otential restrictions on com p etition. . Underw ay. Review Process External Review . Joint Ind u stry and Governm ent com m ittee com p rising rep resentatives of the State Cou ncil of Ru ral Land s Protection Board s, a Ru ral Land s Protection Board m inim u m ratep ayer, N SW Farm ers Association, N SW Treasu ry and The Cabinet Office. Recom m end ations The Review Grou p is yet to rep ort. Underw ay. Review Process External review , inclu d ing release of an Issu es Pap er and p u blic su bm issions. Review chaired by N SW Agricu ltu re and com p rising rep resentatives of the N SW Farm ers‟ Association, Ru ral Land s Protection Board s, N SW Agricu ltu re, The Cabinet Office and N SW Treasu ry. Recom m end ations Rep ort yet to be com p leted . Ap iaries Act 1985 The Act requ ires beekeep ers to register, w ith fees; p rohibits the sale of d isp osal of d iseased bees or ap p liances, or im p orting of bees likely to sp read d iseases. Bees m u st be kep t in id entified hives; beekeep ing on p rem ises can be p rohibited or restricted ; and insp ectors can enter and insp ect p rem ises. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 197 Act Cattle Com p ensation Act 1951 Potential Restrictions The Act p rovid es for the levy of a rate by Ru ral Land s Protection Board s w ith the p roceed s of the levy being p ayable to the Cattle Com p ensation Fu nd and p rovid es for p aym ent of com p ensation to ow ners of cattle and carcasses of cattle d estroyed becau se of d isease. The Act requ ires com p u lsory rep orting of d isease ou tbreaks; p rohibits or restricts the m ovem ent of anim als, anim al p rod u cts and vehicles; p rovid es com p ensation for anim als d estroyed for d isease-control; bans introd u ction into the State of certain anim als; and allow s for d estru ction ord ers; em p ow ers insp ectors to enter and search and p rem ises, and test and d isinfect anim als. Status Review Unnecessary. The Governm ent introd u ced legislation to rep eal the Act in Febru ary 2001. Exotic Diseases of Anim als Act 1991 Underw ay. Review Process Part of a generic review of all d isease legislation. External review , inclu d ing release of an Issu es Pap er and p u blic su bm issions. Chaired by N SW Agricu ltu re and com p rising rep resentatives of the N SW Farm ers‟ Association, Ru ral Land s Protection Board s, N SW Agricu ltu re, The Cabinet Office and N SW Treasu ry. Recom m end ations Rep ort yet to be com p leted . Complete. Review Process External review . Chaired by N SW Agricu ltu re and com p rised rep resentatives of the Banana Ind u stry Com m ittee (BIC), N SW Agricu ltu re, The Cabinet Office and N SW Treasu ry. Recom m end ations The Review recom m end ed the rem oval of the BIC‟s p ow er to regu late the m arketing and transp ort of bananas. Policy Resp onse The Governm ent enacted the Banana Ind u str y Am end m ent Act 2000 w hich: allow ed the retention of the BIC‟s p ow er to p rovid e ind u stry service fu nctions and im p ose com p u lsory charges on banana grow ers to fu nd these service fu nctions; rem oved som e obsolete and u nexercised p ow ers of the BIC, and rem oved the BIC‟s transp ort d irection p ow er. Banana Ind u stry Act 1987 The Act em p ow ered the Banana Ind u stry Com m ittee (BIC) to regu late the qu ality of bananas p rod u ced in N SW and their su bsequ ent transp ort to m ajor intrastate m arkets. The BIC w as also able to im p ose com p u lsory charges on grow ers to fu nd ind u stry service fu nctions. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 198 Act Plant Diseases Act 1924 Potential Restrictions The Act p erm its d eclaration of qu arantine areas; establishm ent of qu arantine stations for p lants; and allow s control of the storage and m ovem ent of som e item s. Insp ectors have p ow ers to enter and search p rem ises, and seize and d estroy p lants. Status Underw ay. Review Process Part of a generic review of all d isease legislation. External review , inclu d ing release of an Issu es Pap er and p u blic su bm issions. Chaired by N SW Agricu ltu re and com p rising rep resentatives of the N SW Farm ers‟ Association, Ru ral Land s Protection Board s, N SW Agricu ltu re, The Cabinet Office and N SW Treasu ry. Recom m end ations Rep ort yet to be com p leted . Stock Diseases Act 1982 The Act p rovid es for d eclaring d iseases to be su bject to the Act; restricting or p rohibiting im p orts of stock or other item s from a d isease affected area. The Act allow s d eclaration of qu arantine areas; testing and treatm ent of stock; closing of road s and bu ild ing of fences and gates; d eclaring qu arantine lines and setting cond itions for crossing su ch lines; and ord ering d estru ction of stock. Underw ay. Review Process Part of a generic review of all d isease legislation. External review , inclu d ing release of an Issu es Pap er and p u blic su bm issions. Chaired by N SW Agricu ltu re and com p rising rep resentatives of the N SW Farm ers‟ Association, Ru ral Land s Protection Board s, N SW Agricu ltu re, The Cabinet Office and N SW Treasu ry. Recom m end ations Rep ort yet to be com p leted . Underw ay. Review Process Part of a generic review of all d isease legislation. External review , inclu d ing release of an Issu es Pap er and p u blic su bm issions. Chaired by N SW Agricu ltu re and com p rising rep resentatives of the N SW Farm ers‟ Association, Ru ral Land s Protection Board s, N SW Agricu ltu re, The Cabinet Office and N SW Treasu ry. Recom m end ations Rep ort yet to be com p leted . Sw ine Com p ensation Act 1928 The Act p rovid es for a Sw ine Com p ensation Fu nd , and p rovid es for p aym ent from the fu nd of com p ensation, exp enses and exp end itu re for ap p roved research on p ig d iseases and to reim bu rse Ru ral Land s Protection Board s for certain exp end itu re. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 199 Act Stock Food s Act 1940 Potential Restrictions The Act, regu lates labelling of m anu factu red stock food ; and com p osition stand ard s for stock food (lim its on foreign ingred ients). Status Underw ay. Review Process External Review . A joint ind u stry and Governm ent com m ittee com p rising rep resentatives of the N SW Farm ers Association, the N ational Meat Association (N SW Division), N SW H ealth, the Environm ent Protection Au thority, N SW Agricu ltu re and The Cabinet Office. This w as a concu rrent review of all chem ical resid u e related legislation inclu d ing: the Fertilisers Act 1985, Stock Food s Act 1940, Stock Med icines Act 1989, Stock (Chem ical Resid u es) Act 1975 and Part 7 of the Pesticid es Act 1978. The Review Grou p com p leted its rep ort in Decem ber 1999. Recom m end ations Cu rrently u nd er Governm ent consid eration. Stock (Chem ical Resid u es) Act 1975 The Act im p oses restrictions on stock d etected , or su sp ected of being chem ically affected . Underw ay. Review Process External Review . A joint ind u stry and Governm ent com m ittee com p rising rep resentatives of the N SW Farm ers‟ Association, the N ational Meat Association (N SW Division), N SW H ealth, the Environm ent Protection Au thority, N SW Agricu ltu re and The Cabinet Office. This w as a concu rrent review of all chem ical resid u e related legislation inclu d ing: the Fertilisers Act 1985, Stock Food s Act 1940, Stock Med icines Act 1989, Stock (Chem ical Resid u es) Act 1975 and Part 7 of the Pesticid es Act 19678. The Review Grou p com p leted its rep ort in Decem ber 1999. Recom m end ations Cu rrently u nd er Governm ent consid eration. Stock Med icines Act 1989 The Act p rohibits p ossession of certain stock m ed icines; controls the u se of registered and u nregistered stock m ed icines; controls the p rescrip tion or su p p ly by veterinary su rgeons; requ ires notification of u nexp ired w ithhold ing p eriod s; requ ires d isclosu re of inform ation on stock food treated w ith a stock m ed icine; and restricts ad vertising. Underw ay. Review Process External Review . A joint ind u stry and Governm ent com m ittee com p rising rep resentatives of the N SW Farm ers‟ Association, the N ational Meat Association (N SW Division), N SW H ealth, the Environm ent Protection Au thority, N SW Agricu ltu re and The Cabinet Office. This w as a concu rrent review of all chem ical resid u e related legislation inclu d ing: the Fertilisers Act 1985, Stock Food s Act 1940, Stock Med icines Act 1989, Stock (Chem ical Resid u es) Act 1975 and Part 7 of the Pesticid es Act 19678. The Review Grou p com p leted its rep ort in Decem ber 1999. Recom m end ations Cu rrently u nd er Governm ent consid eration. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 200 Act N oxiou s Weed s Act 1993 Potential Restrictions The Act requ ires control of d eclared noxiou s w eed s; restricts the sale of d eclared noxiou s w eed s; restricts m ovem ent of m aterial containing notifiable noxiou s w eed s; requ ires cleaning and insp ection of agricu ltu ral m achinery at the Qu eensland bord er; and regu lates the su p p ly of m aterials, equ ip m ent and services by local control au thorities. Status Underw ay. Review Process External review , inclu d ing release of Issu es Pap er and p u blic su bm issions. Chaired by N SW Agricu ltu re and com p rising rep resentatives of the N SW Farm ers‟ Association, the N atu re Conservation Cou ncil, the Ru ral Land s Protection Board s, Total Catchm ent Managem ent, the N ational Tru st, the Dep artm ent of Land and Water Conservation, Local Governm ent and Shires Association and N SW Agricu ltu re. The review rep ort w as com p leted in October 1998. Recom m end ations Cu rrently u nd er Governm ent consid eration. Seed s Act 1982 The Act im p oses labelling requ irem ents on seed p arcel sales and sets stand ard s and cond itions w hich lim its p articip ation in seed varietal verification schem es. Underw ay. Review Process Internal review , bu t w ith consu ltation w ith other States on sim ilar legislation. Recom m end ations Rep ort yet to be com p leted . Prevention of Cru elty to Anim als Act 1979 The p rovisions of the Act and its su bord inate regu lations im p act u p on a range of activities concerned w ith anim al breed ing, anim al hu sband ry, entertainm ent, veterinar y services, anim al d erived p rod u ction and p rocessing and transp ortation. These m ay restrict com p etition in three w ays: either by controlling or p rohibiting certain activities; by im p osing com p liance costs; or, by au thorising a range of d irect intervention s by regu latory officials and cou rts. Underw ay. Review Process Internal Review . The Review Grou p consists of m em bers of N SW Agricu ltu re. An issu es p ap er inviting su bm issions, w as sent to relevant organisations in March 2001. The Review Grou p is requ ired to give consid eration to the relationship betw een this Act and related legislation. Five Acts w ere id entified as being relevant: A nimal Research A ct 1985, Exhibited A nimals Protection A ct 1986, V eterinary Surgeons A ct 1986, Companion A nimals A ct 1998 and N ational Parks and W ildlife A ct 1974. Recom m end ations The Review Grou p is yet to rep ort. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 201 Act Agricu ltu ral Tenancies Act 1990 Potential Restrictions The Act regu lates the rights of agricu ltu ral land ow ners, tenants and sharefarm ers and other tenant related issu es, w here the farm ers have not m ad e their ow n agreem ents; and p rovid es for d eterm ination of d isp u tes by com p u lsory arbitration. Status Complete. Review Process Internal review , inclu d ing release of an Issu es Pap er. The review w as com p leted in N ovem ber 1999. Recom m end ations That the objectives of the Act be rew ritten so that they: are environm ent p rotection, achieving certainty in tenancy agreem ents, and d isp u te resolu tion; p rovid e for referral of the p arties to m ed iation p rior to an arbitration com m encing; and p rovid e for referral of d isp u tes to cou rts of com p etent ju risd iction and for ap p eals to the Ad m inistrative Decisions Tribu nal. Policy Resp onse A Bill to im p lem ent these changes w as introd u ced to Parliam ent in March 2001. The Bill p assed Parliam ent in Ap ril 2001. Farm Debt Med iation Act 1994 The Act requ ires cred itors to u nd ertake m ed iation if a farm er chooses to exercise this statu tory right; and requ ires that the m ed iator m u st be accred ited . Underw ay. Review Process External review , inclu d ing release of Issu es Pa p er and p u blic su bm issions. Chaired by N SW Agricu ltu re and com p rising rep resentatives of the N SW Farm ers‟ Association, the Au stralian Bankers Association, the N ew England Ru ral Cou nselling Service, the N SW Ru ral Assistance Au thority, N SW Agricu ltu re and The Cabinet Office. The review w as com p leted in Decem ber 2000. Recom m end ations Cu rrently u nd er Governm ent consid eration. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 202 Act Agricu ltu re and Veterinary Chem icals Act 1994 Potential Restrictions Ap p lies certain law s of the Com m onw ealth relating to agricu ltu ral and veterinary chem ical p rod u cts as law s of N SW. Com p lem entary to Com m onw ealth legislation. Potential restrictions on com p etition in the A gricultural and V eterinary Chemicals A ct 1994 inclu d e: the licensing and registration requ irem ents w hich restrict entry to the agvet chem ical m anu factu ring m arket and in som e situ ations p rovid e a com p etitive ad vantage to existing m anu factu rers; the requ irem ent for agvet chem ical sp ray contractors to hold variou s form s of bu siness licenses or accred itations; exem p tions for veterinary su rgeons from p rovisions relating to su p p ly and u se, w hich are d iscrim inatory; a legislative m onop oly w here the N ational Registration Au thority is the single p rovid er of registration d ecisions; the regu lation of p rod u ct stand ard s; and the associated com p liance obligations w hich m ay im p ose su bstantial costs and restrict new entrants to the m arket. Status Underw ay. See Chap ter 11 for d etails. Grain Marketing Act 1991 The p ow er to vest d eclared com m od ities is consid ered to be the p rim ary restriction on com p etition in the Act. Complete. See Chap ter 11 for d etails. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 203 Act Exhibited Anim als Protection Act 1986 Potential Restrictions The Act restricts com p etition throu gh requ irem ents for licences and p erm its, w ith fees; restricts breed ing and trad ing of som e anim als; im p oses best p ractice w elfare stand ard s; and im p oses requ irem ents for ed u cational com p onents. Status Underw ay. Review Process External review , inclu d ing release of Issu es Pap er and p u blic su bm issions. Chaired by N SW Agricu ltu re and com p rising rep resentatives from the N ational Parks and Wild life Service, Zoos and Wild life Parks, H erp etologists, the N on -Ind igenou s Anim als Ad visory Com m ittee, the Exhibited Anim als Ad visory Com m ittee and N SW Agricu ltu re. The Act w as review ed concu rrently w ith the N on-Indigenous A nimals A ct 1987 as a com bined “Review of the legislation controlling the keeping and movement of exotic animals and the keeping of animals for public display”. Recom m end ations Rep ort yet to be com p leted . N on Ind igenou s Anim als Act 1987 The Act restricts com p etition by licences and p erm its, w ith p aym ent of fees, restrictions on trad ing of higher -risk exotic anim als and secu rity stand ard s. Underw ay. Review Process External review , inclu d ing release of Issu es Pap er and p u blic su bm issions. Chaired by N SW Agricu ltu re and com p rising r ep resentatives from the N ational Parks and Wild life Service, Zoos and Wild life Parks, H erp etologists, the N on -Ind igenou s Anim als Ad visory Com m ittee, the Exhibited Anim als Ad visory Com m ittee and N SW Agricu ltu re. The Act w as review ed concu rrently w ith the Exhibited A nimals Protection A ct 1986 as a com bined “Review of the legislation controlling the keeping and movement of exotic animals and the keeping of animals for public display”. Recom m end ations Rep ort yet to be com p leted . Anim al Research Act 1985 The Act regu lates the carrying ou t of anim al research and the su p p ly of anim als for research. The Act requ ires that au thorisations m ay only be granted for recognised research p u rp oses involving research, teaching, testing and the p rod u ction of biological p r od u cts. Underw ay. Review Process External review , inclu d ing release of Issu es Pap er and p u blic su bm issions. Chaired by N SW Agricu ltu re and com p rising rep resentatives from the Au stralian Pharm aceu tical Manu factu rers' Association, the N SW Vice Chancellors ' Conference, the H u m ane Society International, the Anim al Societies Fed eration, the RSPCA, the Anim al Research Review Panel, N SW Agricu ltu re, The Cabinet Office and N SW H ealth. Recom m end ations Rep ort yet to be com p leted N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 204 Act Ru ral Assistance Act 1989 Potential Restrictions Constitu tes the N SW Ru ral Assistance Au thority. The Review Grou p consid ered the Protection Ord ers p rovision to be a p otentially significant com p etition restriction. Status Complete. Review Process External review . Chaired by N SW Agricu ltu re w ith rep resentatives of N SW Ru ral Assistance Au thority, N SW Treasu ry, N SW Agricu ltu re, The Cabinet Office, Dep artm ent of Land and Water Conservation, N SW Farm ers Association and Ru ral Financial Cou nsellors. The review rep ort w as com p leted in Febru ary 1999. Recom m end ations Pu blic benefit p rovisions shou ld be inclu d ed in the Act to ap p ly to existing and new p rogram s. Program s to inclu d e objectives that clearly target d efined m arket failu re(s). Provisions relating to the Protection Ord ers be rep ealed . Policy Resp onse Consistent w ith the Review 's recom m end ations, the cu rrent arrangem ents w ere retained w ith m inor am end m ents to the Act inclu d ing the rep eal of Protection Ord ers. These changes w ere effected by the Ru ral Assistance Am end m ent Act 2000, w hich com m enced Janu ary 2001. The fu nctions and op erations of the N SW Ru ral Assistance Au thority rem ain u nchanged . Veterinary Su rgeons Act 1986 (1) Stock (Artificial Breed ing) Act 1985 (2) (1) Regu lates veterinary su rgeons and p rem ises; d efines acts to be p erform ed by vets; establishes th e Veterinary Su rgeons Board and d iscip linary p roced u res; controls d elegation of d u ties; regu lates ad vertising and u se of the title „Veterinary Su rgeon‟. (2) The Act requ ires that only veterinary su rgeons or p ersons w ith the p rescribed qu alifications, m ay carry ou t or su p ervise an artificial breed ing p roced u re; it requ ires licensing of artificial breed ing p rem ises; and im p oses m and atory stand ard s on licensed p rem ises. Underw ay. Review Process Concu rrent review of both Acts. External Review com p rising rep resenta tives of the N SW Veterinary Su rgeons Board , consu m ers of veterinary services, anim al w elfare interests, N SW Treasu ry, N SW Agricu ltu re and The Cabinet Office. The review rep ort w as com p leted in Decem ber 1998. Recom m end ations Cu rrently u nd er Governm ent consid eration. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 205 Attorney-General Act Pu blic Tru stee Act 1913 Potential Restrictions Establishes the Pu blic Tru stee as a corp oration em p ow ered to cond u ct p ersonal tru st w ork. Status Complete. Recom m end ations Corp oratisation of the Pu blic Tru stee Policy Resp onse Legislation w as rejected by Parliam ent. Other m easu res to im p lem ent review recom m end ations are u nd er consid eration. Tru stee Com p anies Act 1964 Consolid ates and am end s the law relating to the restrictions, liabilities, p rivileges and p ow ers of tru stee com p anies. Regu lates the ad m ission and p ractice of barristers and solicitors and rep eals the Legal Practitioners A ct 1898. Constitu tes the Barristers Ad m ission Board and Legal Practitioners Ad m ission Board . Underw ay . Review Process N ational Review by SCAG. Underw ay. Review Process Review Com m ittee chaired by Attorney-General‟s Dep artm ent. Issu es Pap er released for p u blic com m ent Rep ort tabled in Parliam ent in N ovem ber 1998 Recom m end ations Policy Resp onse See Chap ter 15. Im p lem entation is u nd erw ay. So far: ru le requ iring solicitors to have m ajority control of m u ltid iscip linary p ractices abolished . Act to allow solicitors to incorp orate to com m ence in 2001. Legal Profession Act 1987 Partnership s Act 1892 To d eclare and am end the law of p artnership . Underw ay. Review Process By Attorney Generals‟ Dep artm ent. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 206 Act Cou ncil of Law Rep orting Act 1969 Potential Restrictions Constitu tes a Cou ncil of Law Rep orting to N ew Sou th Wales and d efines its p ow ers, au thorities, d u ties and fu nctions. Status Complete. Review Process Internal review by Attorney General‟s Dep artm ent. Recom m end ations Act to be retained , bu t ad m inistrative changes to introd u ce com p etitive tend ering for licence to p u blish rep orts. Pu blication of on -line rep orts op en to any one for a fee. Policy Resp onse Recom m end ations im p lem ented Professional Stand ard s Act 1994 Provid e for the lim itation of liability of m em bers of occu p ational associations in certain circu m stances and to facilitate the im p rovem ent of the stand ard s of services p rovid ed by those m em bers. Underw ay. Review Process This review com m enced in Febru ary 2000. It is being u nd ertaken by a steering com m ittee chaired by the Attorney General‟s Dep artm ent and com p rising rep resentatives from The Cabinet Office and the Dep artm ent of Fair Trad ing. An Issu es Pap er w ill be released in Ju ne 2001 calling for p u blic su bm issions. Targeted consu ltation w ith key stakehold ers w ill follow . The review w ill also satisfy the requ irem ent u nd er s.55 of the Act for a statu tory review to be com p leted and a rep ort tabled in both H ou ses of Parliam ent by Decem ber 2001. Recom m end ations Issu es Pap er in p rep aration. Theatres and Pu blic H alls Act 1908 Provid es for the licensing and regu lation of theatres and p u blic h alls and of p laces u sed for p u blic entertainm ent or p u blic m eetings, and the licensing and regu lation of the hold ing of p u blic entertainm ent and p u blic m eetings in tem p orary stru ctu res. N ot commenced. Policy Resp onse Likely rep eal in 2001. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 207 Energy Act Pip elines Act 1967 Electricity Safety Act 1945 Potential Restrictions Relates to the constru ction, op eration and m aintenance of p ip elines. Provid es for the d evelop m ent of electricity su p p ly; Confers certain p ow ers, au thorities, d u ties and fu nctions on the Energy Corp oration of N SW; Establishes an au thorisation and insp ection regim e for electrical p rod u cts; and Regu lates the sale and hiring of electrical ap p aratu s; and Am end s certain Acts. Regu lates the su p p ly of electricity in the w holesale and retail m arkets; sets ou t the fu nctions of p ersons engaged in the conveyance and su p p ly of electricity. Status Complete. See Chap ter 5 for d etails (p aragrap hs 5.1.12-5.1.13). Underw ay. Refer below to Fair Trad ing in Annexu re 2. Electricity Su p p ly Act 1995 N ot commenced. Becau se of the m ajor am end m ents to the Electricity Supply A ct w hich have, and are, taking p lace, it is not intend ed that a review of the Act w ill be u nd ertaken u nd er the au sp ices of the N CP Agreem ent. Environment Act Pesticid es Act 1978 Potential Restrictions Part 7 of the Pesticides A ct p lace restrictions on the m ovem ent and / or sale of certain food stu ffs. Status Complete. Review Process Dealt w ith u nd er the Licence Red u ction Program . H ow ever, Part 7 of the Act is cu rrently su bject to fu rther review in the context of a generic review of several Acts d ealing w ith chem ical resid u es (see Agricu ltu re section). The review rep ort is com p lete and aw aits Governm ent consid eration Complete. Review Process Initially d ealt w ith u nd er the Licence Red u ction Program . H ow ever a national review of rad iation control legislation m ay ha ve im p lications for this Act. The national review is being co-ord inated by the Au stralian Rad iation Protection and N u clear Safety Agency. A d raft rep ort has been p rep ared . Rad iation Control Act 1990 Makes p rovision for the regu lation and control of the sale, u se, keep ing and d isp osal of rad ioactive su bstances and rad iation ap p aratu s. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 208 Act Waste Minim isation and Managem ent Act 1995 and the w aste p rovisions of the Protection of the Environm ent Op erations Act 1997 Potential Restrictions The Act relates to the m anagem ent, regu lation and red u ction of w aste. Potential restrictions on com p etition inclu d e: the p ow ers of regional w aste board s to d irect cou ncils' charging p olicies; requ irem ents for ind u stry w aste red u ction p lans; licensees that are not p u blic au thorities cannot hold licences for facilities that receive p u trescible w aste, u nless a sep arate su p ervisory licence is granted to a p u blic au thority; environm ental p rotection licensing; and the w aste levy. Status Underw ay. Review Process The review is being cond u cted by a w orking grou p com p rising rep resentatives from the Environm ent Protection Au thority (chair), The Cabinet Office and Treasu ry. The Working Grou p has released an Issu es Pap er in Ju ne 2000 and is cu rrently finalising its rep ort to the Minister. Fair Trading Act Trad e Measu rem ent Act 1989 Potential Restrictions Regu lates trad e m easu rem ent in the m arketp lace, and inclu d es p rovisions requ iring verification of trad e m easu ring instru m ents, certification of instru m ents and insp ections throu ghou t Au stralia. Regu lated the resid ential bu ild ing ind u stry and certain sp ecialist w ork, and p rovid ed for the establishm ent of the Bu ild ing Services Corp oration (BSC) to oversee the ind u stry. Status Underw ay Refer priority reviews in Chapter 17, Fair Trading Legislation and Consumer Legislation. Bu ild ing Services Corp oration Act 1989 Su p erced ed by the H om e Bu ild ing Act (below ) Underw ay Review Process An Issu es Pap er w as released for com m ent in Sep tem ber 1996, and p u blic m eetings w ere su bsequ ently held across the State. Recom m end ations That the cu rrent licensing system be enhanced to p rovid e a greater level of p rotection for consu m ers and a sim p ler system for bu ild ers. Policy Resp onse Variou s bu ild ing ind u stry reform s w ere annou nced in N ovem ber 2000. Legislative changes arising from the review have inclu d ed abolition of the BSC, as w ell as the p rivatisation of com p u lsory insu rance. Ad d itional reform s to occu p ational licensing are u nd er consid e ration. Stakehold er com m ents on an exp osu re d raft Bill are cu rrently being consid ered (see further comment under the Home Building A ct - below). N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 209 Act H om e Bu ild ing Act 1989 Bu ild ers‟ Licensing Act (su p erced ed by the H om e Bu ild ing Act 1989) Potential Restrictions Regu lates the entry of trad esp ersons into the resid ential bu ild ing sector and stip u lates the range of activities for w hich a licence m u st be obtained . Status Underw ay Review Process In Sep tem ber 1996 the Governm ent released a Green Pap er ou tlining variou s op tions for licensing of the bu ild ing ind u stry. A Governm ent Working Grou p chaired by the Dep artm ent of Fair Trad ing w as set u p to review and consu lt relevant ind u stry and com m u nity stakehold ers. The Final Rep ort of this review w as finalised in March 1998. Recom m end ations The 1998 Rep ort recom m end ed a nu m ber of reform s to rem ove u nnecessary com p onents of the licensing system , su bject to an assessm ent of the exp ected im p act on the hom e w arranty insu rance schem e. This rep ort consid ered that m u ch of the need for licensing w ou ld be elim inated d u e to the im p act of the hom e w arranty insu rance schem e. H ow ever, d u ring consu ltation, ap p roved insu rers ad vised that som e licensing requ irem ents are need ed to u nd erp in the insu rance system . Policy Resp onse In N ovem ber 2000, the N SW Governm ent annou nced a com p rehensive p ackage of reform s for the hom e bu ild ing ind u stry covering licensing, hom e w arranty insu rance, d isp u te resolu tion, and bu ild ing contracts. An Issu es Pap er and d raft exp osu re Bill w ere released in Febru ary 2001 for p u blic com m ent by the end of March 2001. The d raft Bill p rop oses retaining the bu ild ers licensing system , as the hom e w arranty insu rance schem e is not yet able to keep ou t u nscru p u lou s bu ild ers. The d raft Bill p rop oses to tighten existing licensing arrangem ents and sp eed u p the d iscip linary p rocess. Stakehold er com m ents on the d raft exp osu re Bill are cu rrently being consid ered . Door to Door Sales Act 1967 Regu lates and controls certain agreem ents relating to the sale or bailm ent of good s and the p rovision of services on cred it. Underw ay This Act is being review ed in conju nction w ith the Fair Trading A ct 1987. Refer priority reviews in Chapter 17, Fair Trading Legislation and Consumer Legislation. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 210 Act Em p loym ent Agents Act 1996 Potential Restrictions Makes p rovision for the occu p ational licensing of em p loym ent agents in N SW. Status Underw ay Review p rocess The review is being cond u cted by a Steering Com m ittee chaired by the Dep artm ent of Fair Trad ing w ith rep resentatives from relevant Governm ent agencies. A Reference Grou p com p rising ind u stry rep resentatives and other interested grou p s has been established to p rovid e ad vice to the Steering Com m ittee. An Issu es Pap er w as released in early 2000 to seek p u blic com m ent. A d raft rep ort w as com p leted Decem ber 2000; Final Rep ort is in p rep aration. Recom m end ations Final Rep ort is in p rep aration. Motor Dealers Act 1974 N o 52 (1) Motor Vehicles Rep air Act 1980 (2) (1) Regu lates the granting of licences to m otor d ealers, w reckers, w holesalers, m otor vehicle p arts reconstru ctors, car m arket op erators, m otor vehicle consu ltants and p rescribed bu sinesses, and requ ires the keep ing of certain record s. (2) Constitu tes the Motor Vehicle Rep air Ind u stry Cou ncil (MVRIC) and confers on it licensing fu nctions concerning rep air bu sinesses and trad esm an and loss assessors. Underw ay Review Process A Working Party su p ervised the initial stages of this review . Chaired by the form er Director General of the Dep artm ent of Fair Trad ing, it inclu d ed rep resentatives from the Office of the Minister for Fair Trad ing, The Cabinet Office, and the Chair of the Motor Vehicle Rep air Ind u stry Cou ncil. The consu ltancy firm ACIL Econom ics and Policy Pty Ltd (ACIL) w as engaged to assist the Working Party in u nd ertaking the review . The resu lts of the review w ere consid ered by the N SW Governm ent in Ap ril 2000. The Minister for Fair Trad ing released an exp osu re d raft Bill in Febru ary 2001 containing a nu m ber of key p rop osals arising from the review for p u blic com m ent by 30 March 2001. Recom m end ations The review m ad e the follow ing key recom m end ations, w hich have been incorp orated into the d raft exp osu re legislation: Motor D ealers Act: Licensees u nd er the Dealers Act m ay op erate from m ore than one p lace of bu siness. Registers of stock and p rescribed p arts w ill only need to be ke p t at one p lace of bu siness w here m u ltip le locations are op erated by one licensee. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 211 Act Potential Restrictions Status Motor Vehicle Repairs Act Licensees m ay op erate from m ore than one p lace of bu siness, rather than having a sep arate licence for each p rem ise. Revision of rep air w ork categories to take into accou nt national training d evelop m ents. Prescribed qu alifications requ ired as a p rerequ isite to the grant of a trad esp erson‟s certificate w ill be p laced in a Regu lation. Asp ects of the licensing schem e for m otor vehicle rep airers w ill be m ad e consistent w ith the licensing schem e for m otor d ealers. Policy Resp onse Stakehold er com m ents on the d raft exp osu re Bill are cu rrently being consid ered . Bu siness N am es Act 1962 Regu lates and controls the registration and u se of bu siness nam es. There are restrictions on nam es that are able to be registered , as w ell as restrictions relating to certain w ord s or p hrases. Underw ay Review Process External Review . The review is being su p ervised by a Steering Com m ittee chaired by the Dep artm ent of Fair Trad ing, and com p rises rep resentatives from The Cabinet Office, N SW Treasu ry, Dep artm ent of Inform ation Technology & Managem ent, and ind u stry grou p s. An Issu es Pap er w as released in Ju ly 1998 and relevant stakehold ers w ere consu lted . The Steering Com m ittee is cu rrently finalising its rep ort. Recom m end ations Final Rep ort is in p rep aration. Progress has been d elayed by the p rop osed establishm ent of the Au stralian Bu siness Register as an elem ent of the N ew Tax System arrangem ents. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 212 Act Resid ential Tenancies Act 1987 (1) Land lord and Tenant (Rental Bond s) Act 1977 (2) Potential Restrictions (1) Regu lates the resp ective rights and obligations of land lord s and tenants u nd er resid ential tenancy agreem ents. The Act contains sp ecific p rovisions concerning excessive rents and rent increases, and confers certain fu nctions on the N SW Resid ential Tenancies Tribu nal in relation to land lord s and tenants. (2) Regu lates the resp ective rights and obligations of land lord s and tenants in relation to rental bond s. The Act establishes the Rental Bon d Board ; confers certain p ow ers, au thorities, d u ties and fu nctions on the Board ; requ ires lessors of resid ential p rem ises to d ep osit rental bond s w ith the Board ; p rovid es for the p aying ou t of rental bond s and enabled the investm ent of rental bond s and the investm ent and exp end itu re of rental bond s. Status Underw ay Review Process External Review . The review is being cond u cted by a Steering Com m ittee chaired by the Dep artm ent of Fair Trad ing, and com p rises rep resentatives from The Cabinet Office, N SW Treasu ry, Dep artm ent of Urban Affairs and Planning, as w ell as tenancy and land lord rep resentatives. Consu ltants from the University of Syd ney and Robyn Kenned y & Co Pty Ltd are assisting the Steering Com m ittee. An Issu es Pap er w as released in Ap ril 1998, and p u blic m eetings w ere held in variou s m etrop olitan and regional centres. Targeted m eetings w ere also held w ith key stakehold ers inclu d ing the Resid ential Tenancies Consu ltative Com m ittee. The Steering Com m ittee com p leted a d raft Final Rep ort in March 2000. Recom m end ations Final Rep ort is in p rep aration. Funeral Fu nd s Act 1979 Controls and regu lates contribu tory and p re-arranged fu neral fu nd s. Underw ay Review Process The review is being cond u cted by a Steering Com m ittee chaired by the Dep artm ent of Fair Trad ing and com p rises rep resentatives from The Cabinet Office, N SW Treasu ry, Dep artm ent of Ageing and Disability and Attorney General‟s Dep artm ent. An Issu es Pap er w as released in early 2000 and relevant interest grou p s have been consu lted . Recom m end ations Final Rep ort is in p rep aration. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 213 Act Prop erty, Stock and Bu siness Agents Act 1941 Potential Restrictions Regu lates real estate, stock and station, bu siness and m anaging agents in N SW. The Act p rescribes w ho m ay p ractice as agents, salesp ersons and trainee m anagers throu gh licensing requ irem ents for agents and certificate requ irem ents for em p loyees, as w ell as the w ay in w hich agents m u st cond u ct their bu sinesses. It also p rovid es for a Com p ensation Fu nd to p rotect consu m ers in the event of tru st accou nt frau d . Status Underw ay Review Process External Review . The review is being su p ervised by a Steering Com m ittee chaired by the Dep artm ent of Fair Trad ing and com p rises rep resentatives from The Cabinet Office, N SW Treasu ry, ind u stry and consu m er rep resentatives. The Steering Com m ittee has been assisted by the Centre for International Econom ics and AT Cocks Consu lting. An Issu es Pap er w as released in Sep tem ber 1997 and there has been extensive consu ltation w ith stakehold ers, inclu d ing p u blic m eetings in both m etrop olitan and regional centres. Recom m end ations Final Rep ort w as com p leted m id 2000. Policy Resp onse The review p rocess is not com p lete. The Final Rep ort is yet to be p u blicly released – the rep ort and related legislative p rop osals are aw aiting Cabinet consid eration. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 214 Act Valu ers Registration Act 1975 Potential Restrictions Regu lates registration p roced u res, w hich requ ire real estate valu ers to have certain qu alifications, su fficient exp erience and to be of good character. Status Underw ay Review Process External Review . The review w as u nd ertaken by a Steering Com m ittee chaired by the Dep artm ent of Fair Trad ing and com p rises rep resentatives from The Cabinet Office, N SW Treasu ry and the valu ation ind u stry. An Issu es Pap er w as released in May 1997 and p u blic and ind u stry rep resentatives w ere consu lted extensively. The Steering Com m ittee‟s Final Rep ort w as p u blicly released in May 2000. Recom m end ations The m ain recom m end ation is that the p rofessional licensing schem e for valu ers be rep laced by a system of „negative licensing‟. Und er the p rop osed system , it w ou ld no longer be necessary for a valu er to be registered by the Dep artm ent of Fair Trad ing. Instead it w ou ld be an offence for a p erson to w ork as a valu er u nless he or she m eets certain p rescribed requ irem ents eg, com p etency stand ard s. Stron g p enalties w ou ld ap p ly for any breaches. Policy Resp onse The N SW Governm ent has accep ted the recom m end ations of the Review . Legislation is cu rrently being p rep ared in consu ltation w ith stakehold ers to rep eal the Act and to m od ify the system for the regu lation of valu ers. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 215 Act Travel Agents Act 1986 Potential Restrictions Regu lates the licensing of travel agents and the regu lation of their op erations. The Act creates sp ecific requ irem ents relating to: licensing (inclu d ing qu alification and exp erience requ irem ents and „fit and p rop er p erson‟ tests); com p u lsory m em bership of the Travel Com p ensation Fu nd (TCF) (w ith joining costs and annu al fees); and p articip ation in the TCF (com p liance costs associated w ith au d iting and cap ital requ irem ents). Status Underw ay Review Process N SW is p articip ating in a national review coord inated by the Ministry of Fair Trad ing in Western Au stralia. The Centre for International Econom ics w as ap p ointed to cond u ct the review . An Issu es Pap er w as released in Ju ne 1999 for extensive ind u stry and com m u nity consu ltation. In Ju ly 2000, the Ministerial Cou ncil on Consu m er Affairs agreed to release the consu ltant‟s d raft Final Rep ort for fu rther consu ltation in late 2000. Recom m end ations The consu ltant‟s d raft Final Rep ort p rop oses a nu m ber of changes to tra vel agent legislation. The key recom m end ations are that: a com p etitive insu rance schem e be im p lem ented w hich w ou ld op en u p com p etition to the Travel Com p ensation Fu nd ; som e of the licensing requ irem ents for agents be rem oved (su ch as qu alification and exp erience requ irem ents); and in the long term , d eregu lation of travel agents shou ld be consid ered . Policy resp onse The N SW Governm ent‟s resp onse has not been com p leted . Ad vice still need s to be sou ght from the COAG Com m ittee on Regu latory Reform (CRR) before the N SW Governm ent‟s p osition can be finalised . N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 216 Act Coop eratives Act 1992 (1) Coop eration Act 1923 (2) Potential Restrictions (1) Provid es for the establishm ent of coop eratives and the regu lation of their op erations. (2) Am end s the law relating to coop eration and p rovid es for the for m ation, registration and m anagem ent of coop erative societies. The review has been limited to an examination of Section 43 of the Cooperatives A ct relating to exclusive dealing. Section 42 of the Act, au thorising coop eratives to op erate as p harm acies w ill be review ed after finalisation of the national p harm acy review . The rem aind er of the Act has been su bject to review u nd er the national core consistent p rovisions reform p rocess and is N CP com p liant. Both Acts im p ose lim itations to p rom ote fair d ealing in the m arketp lace. Sp ecifically: (1) Regu lates the su p p ly, ad vertising and d istribu tion of good s and services and , in certain resp ects, the d isp osal of interests in land . (2) Controls and regu lates certain agreem ents relating to the sale or bailm ent of good s and the p rovision of services on cred it. Status Underw ay Review Process External Review . The review w as u nd ertaken by a Steering Com m ittee chaired by the Dep artm ent of Fair Trad ing and com p rises rep resentatives from The Cabinet Office, N SW Treasu ry, Coop eratives Fed eration of N SW Ltd , Coop eratives Cou ncil of Au stralia and the Coop eratives Cou ncil constitu ted u nd er the Coop eratives Act 1992. A Discu ssion Pap er w as released in May 1997, and m eetings w ere held w ith interested stakehold ers, inclu d ing ind u stry rep resentatives. Recom m end ations The Final Rep ort w as com p leted in N ovem ber 2000. Policy resp onse Final Rep ort not yet p u blicly released and related legislative p rop osals aw ait Cabinet consid eration. Underw ay Refer priority reviews in Chapter 17, Fair Trading Legislation and Consumer Legislation. Fair Trad ing Act 1987 (1) Door to Door Sales Act 1967 (2) N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 217 Act Conveyancers Licensing Act 1995 Potential Restrictions Creates requ irem ents governing the occu p ational licensing of conveyancers in N SW. The legislation regu lates both th e right to p ractice as a conveyancer and the m ethod by w hich su ch p ersons cond u ct their bu siness. It contains p rovisions for the licensing p rocess, the cond u ct of conveyancing bu siness, com p liance and d iscip line. Pro-com p etitive changes to conveyancing regu lation over the p ast 10 years (cu lm inating in the 1995 Act) have generated significant benefits to the w id er com m u nity. This review is also being u nd ertaken to fu lfil the requ irem ent u nd er section 95 of the Act for a w id er statu tory review . Status Underw ay Review Process The review is being cond u cted by a Steering Com m ittee chaired by the Dep artm ent of Fair Trad ing, and com p rises rep resentatives from Attorney General‟s Dep artm ent, The Cabinet Office and N SW Treasu ry. A Reference Grou p com p rising consu m er and ind u stry rep resentatives has also been form ed to p rovid e inp u t throu ghou t the review . An Issu es Pap er w as released in March 2000 and a series of m eetings w ere held w ith ind u stry and consu m er rep resentatives. The closing d ate for w ritten su bm issions w as in May 2000. Recom m end ations Final Rep ort is in p rep aration. Consu m er Cred it (N SW) Act 1995 Regu lates the p rovision of consu m er cred it. The Cod e im p oses variou s requ irem ents relating to: d isclosu re (su ch as requ iring contracts to inclu d e certain in form ation, requ iring statem ents to be issu ed etc); p rod u ct innovation restrictions (su ch as requ iring cred it to be p rovid ed in cash or m oney‟s w orth, lim iting the secu rities over w hich a m ortgage m ay be created etc); and com p liance (su ch as requ iring w ritten notices to be given, civil p enalties etc). Underw ay Refer priority reviews in Chapter 17, Fair Trading Legislation and Consumer Legislation. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 218 Act Cred it (Finance Brokers) Act 1984 Potential Restrictions Relates to the cond u ct of bu siness of finance brokers. The Act regu lates the cond u ct of finance brokers by: requ iring the ad vertising of the licence nam e and ad d ress; requ iring the keep ing of record s; and controlling w hen and how m u ch com m ission is charged . Status Underw ay Review Process External Review . The review is being con d u cted by a Steering Com m ittee, chaired by the Dep artm ent of Fair Trad ing and com p rises rep resentatives from The Cabinet Office and N SW Treasu ry Corp oration. A Reference Grou p com p rising consu m er and ind u stry rep resentatives has also been form ed to p rovid e inp u t throu ghou t the review . An Issu es Pap er w as released in Ap ril 2000 and a series of m eetings w ere held w ith ind u stry and consu m er rep resentatives. Recom m end ations Final Rep ort is in p rep aration. Em p loym ent Agents Act 1996 The Act regu lates those p ersons w ho carry on the bu siness of a p rivate em p loym ent agent. The Act p rovid es som e restriction to com p etition in that it requ ires all agents to be licensed . H ow ever, the criteria for being granted a licence are not p articu larly d em and ing; the p erson m u st be fit and p rop er to hold a licence, be at least 18 years of age, and have reasonably su itable p rem ises for the bu siness. Underw ay Review Process External Review . The review is being u nd ertaken by a Steering Com m ittee chaired by the Dep artm ent of Fair Trad ing and com p rises rep resentatives from The Cabinet Office, Dep artm ent of Ind u strial Relations and the Dep artm ent of Wom en. A Reference Grou p com p rising consu m er and ind u stry rep resentatives has also been form ed to p rovid e inp u t throu ghou t th e review . An Issu es Pap er w as released in early 2000 and a series of m eetings w ere held w ith ind u stry and consu m er rep resentatives. Recom m end ations Final Rep ort is in p rep aration. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 219 Act Electricity Safety Act 1945 Potential Restrictions Establishes an au thorisation and insp ection regim e for electrical p rod u cts, and regu lates the sale and hiring of electrical ap p aratu s. Status Underw ay Review Process Term s of reference w ere su bm itted to the Prem ier for ap p roval in Febru ary 2001. The Minister for Fair Trad ing exp ects that the Dep ar tm ent of Fair Trad ing w ill chair the review w ith rep resentation by the Ministry of Energy and Utilities. The review is also exp ected to inclu d e rep resentatives from The Cabinet Office, Treasu ry, the Utility Consu m ers Ad vocacy Program , the Au stralian Consu m ers Association, the Electricity Association of N SW, the Au stralian Electrical and Electronics Manu factu ring Association, and the Consu m er Electronics Su p p liers Association. Recom m end ations The review p rocess is not com p lete. Paw nbrokers and Second H and Dealers Act 1996 Regu lates the licensing of p aw nbrokers and d ealers in certain classes of second hand good s. Rep eals and am end s certain Acts. A p re-cond ition of licensing is that the ap p licant has attained the age of 18 years of age, is not an u nd ischarged bankru p t and has no convictions for offences involving d ishonesty. Licensees are requ ired to keep record s of transaction d etails, inclu d ing the nam e and id entification d etails of cu stom ers and a d escrip tion of the good s trad ed . Underw ay Review Process External Review . The review is being cond u cted by a Steering Com m ittee, chaired by the Dep artm ent of Fair Trad ing and com p rises rep resentatives from the Attorney General‟s Dep artm ent, The Cabinet Office, and the N SW Police Dep artm ent. A Reference Grou p com p rising ind u stry and consu m er rep resentatives w as also form ed to p rovid e ad vice to the Steering Com m ittee. An Issu es Pap er w as released in Ap ril 2000, and a series of m eetings w ere held w ith ind u stry and consu m er rep resentatives. Written su bm issions closed in May 2000. Recom m end ations Final Rep ort is in p rep aration. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 220 Act Strata Titles Act 1973 Strata Titles (Leasehold Develop m ent) Act 1986 Potential Restrictions Acts rep laced by Strata Schemes M anagement A ct 1996 w hich p rovid es for the m anagem ent of strata schem es and the resolu tion of d isp u tes in connection w ith strata schem es. Status Underw ay Review Process External Review . The review is being cond u cted by a Working Party chaired by the Dep artm ent of Fair Trad ing, and com p rises rep resentatives from The Cabinet Office, N SW Treasu ry and the Dep artm ent of Fair Trad ing. The Working Party w as set u p in 2000. A Reference Grou p com p rising ind u stry and consu m er rep resentatives w as also form ed to p rovid e ad vice to the w orking p arty. An Issu es Pap er w as released in Au gu st 2000, and a nu m ber of m eetings w ith interested consu m er and ind u stry stakehold ers w ere held in regional and m etrop olitan centres. Written su bm issions closed in Sep tem ber 2000. Recommendations Final Rep ort is in p rep aration. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 221 Fisheries Act Fisheries Managem ent Act 1994 Potential Restrictions The Act p rovid es the legal fram ew ork for the m anagem ent and ad m inistration of fisheries in N SW. The legislation aim s to conserve, d evelop and share the fishery resou rce by: licensing fishers and fish receivers; establishing fishery and season closu res; im p osing inp u t controls on boats, gear, crew levels and fishing m ethod s; and im p osing ou tp u t controls in the form of total allow able catches, share hold ings in share m anaged fisheries, bag and size lim its and p rohibitions on fishing certain sp ecies. Status Underw ay. See Chap ter 12 for d etails. Gaming and Racing Act Registered Clu bs Act 1976 (1) Liqu or Act 1982 (2) Potential Restrictions (1) Makes p rovisions w ith resp ect to the registration of clu bs and their ru les and m anagem ent. (2) Regu lates the sale and su p p ly of liqu or and regu lates the u se of p rem ises at w hich liqu or is sold . Consolid ates legislation relating to gam es, w agers and betting hou ses, the restriction of race m eetings and the licensing of race cou rses. In October 1997, Cabinet d ecid ed to rep eal and rem ake the Act in three sep arate Acts: (1) Gam bling (Tw o Up ) Act 1998; (2) Unlaw fu l Gam bling Act 1998; and (3) Racing Ad m inistration Act 1998. Status Underw ay. Refer to Supplementary Report to the N CC. Gam ing and Betting Act 1912 Completed /Underw ay. Refer to Supplementary Report to the N CC. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 222 Act Racing Ad m inistration Act 1998 Greyhou nd Racing Control Board Act 1985 H arness Racing Act 1977 Bookm akers Taxation Act 1917 Thorou ghbred Racing Board Act 1996 Innkeep ers Act 1968 Potential Restrictions Together, these Act regu late the racing and betting ind u stry in N SW. Status Refer to Supplementary Report to the N CC. Make p rovisions w ith resp ect to certain rights and liabilities of innkeep ers and p ersons having d ealings w ith innkeep ers. The Act m akes a d istinction betw een “inns” and other accom m od ation p rovid ers. It gives innkeep ers lim ited liability w ith resp ect to gu ests p rop erty, w hereas other accom m od ation p rovid ers are su bject to u nlim ited liability u nd er com m on law . Complete. Review Process Inter-Dep artm ental Review . This review com m enced in 1998 and is being cond u cted by a steering com m ittee w ith rep resentatives from the Dep artm ent of gam ing and Racing and The Cabinet Office. In 1999, the Dep artm ent of Gam ing and Racing p rod u ced a Backgrou nd Pap er and called for p u blic su bm issions. The Dep artm ent also engaged in targeted consu ltation w ith stakehold ers. The Final Rep ort w as com p leted in Decem ber 2000. Recom m end ations The review recom m end s that the cu rrent Act shou ld be retained , as it is p ro com p etitive. H ow ever, if there w ere to be a new Act, it shou ld be w ritten in conju nction w ith other Au stralian ju risd ictions. There w ou ld also need to be consid eration of international d evelop m ents in this ind u stry. Policy Resp onse Referred to Tou rism Ministers' Cou ncil to consid er national issu es N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 223 Act Lotteries and Art Unions Act 1901 (1) Charitable Fund raising Act 1991 (2) Potential Restrictions (1) Regu lates the op eration of m inor gam ing and com m on form s of com m u nity gam ing su ch as raffles and bingo. Overall, the Act im p oses general restrictions that lim it the op p ortu nity to p rofit from the cond u ct of com m u nity gam ing to charities and other non-p rofit organisations. (2) Regu lates w ho m ay cond u ct or p articip ate in charitable fu nd raising activities and in w hat m anner su ch fu nd raising activities are carried ou t. Establishes the Casino Control Au thority and sets ou t p robity requ irem ents for the issu ing of a licence to a casino op erator. The Act also: lim its entry to the casino m arket to a single licence backed by an exclu sivity p eriod ; lim its the nu m ber of gam ing tables in the licensed casino; and requ ires that all casino em p loyees be sp ecifically licensed . Status Underw ay. Refer to Supplementary Report to the N CC. Casino Control Act 1992 Complet ed. Refer to Supplementary Report to the N CC. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 224 Health Act Poisons and Therap eu tic Good s Act 1966 Potential Restrictions Regu lates, controls and p rohibits the sale and u se of p oisons, restricted su bstances, d ru gs of ad d iction and certain d angerou s d ru gs and establishes a Poisons Ad visory Com m ittee. Status Underw ay. Review Process N ational review cond u cted by an ind ep end ent chair, Ms Rhond a Galbally, aid ed by a Steering Com m ittee com p rising rep resentatives of the Com m onw ealth and all States and Territories. The review consu lted w id ely w ith a range of stakehold ers in all ju risd ictions. Recom m end ations The Final Rep ort has recently been d elivered to governm ents, bu t has not yet been p u blicly released . Policy Resp onse The p rep aration of a resp onse to the rep ort by the Au stralian H ealth Ministers' Conference w ill be coord inated initially by a sm all w orking grou p , w hose secretariat is located in the Therap eu tic Good s Ad m inistration in Canberra. Dentists Act 1989 The Act contains restrictions on the u se of titles, the p ractice of d entistry and the ow nership of d ental enterp rises. Regu lates the p ractice of p od iatry; m akes p rovisions for the registration of p od iatrists and regu lates the qu alifications for and the effect of su ch registration; constitu tes the Pod iatrists Registration Board and sp ecifies its fu nctions. Relates to the d onation of tissu e by liv ing p ersons, the rem oval of tissu e from d eceased p ersons and the cond u ct of p ostm ortem exam inations of d eceased p ersons. The m ain com p etition restriction being ad d ressed by the review is the requ irem ent for p ersons carrying on the bu siness of su p p lying blood and blood p rod u cts to be au thorised by the Dep artm ent H ealth. The Act contains restrictions on the u se of titles, the p ractice of op tom etry and the ow nership of op tom etry enterp rises. Underw ay. See chap ter 14 for d etails. Underw ay. See chap ter 14 for d etails. Pod iatrists Act 1989 H u m an Tissu e Act 1983 Underw ay. Review Process See chap ter 14 for generic d etails. The review is being u nd ertaken in three p arts. Only the p art d ealing w ith blood d onation and the su p p ly of blood and blood p ro d u cts has com p etition im p lications. The review rep ort for this p art is u nd er p rep aration. Op tom etrists Act 1930 Complete. See chap ter 14 for d etails. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 225 Act Psychologists Act 1989 Potential Restrictions Makes p rovision for the registration of p sychologists; regu lates the qu alifications for the effect of su ch registration and constitu tes the Psychologists Registration Board and sp ecifies its fu nctions. Regu lates the p ractice of nu rsing. Status Complete. See chap ter 14 for d etails. N u rses Act 1991 Underw ay. See chap ter 14 for d etails. Physiotherap ists Registration Act 1945 Makes p rovision for the registration of p hysiotherap ists; regu lates the qu alifications and effect of su ch registration; p rovid es for the constitu tion of a Physiotherap ists Registration Board and d efines the p ow ers and fu nctions of that Board . Regu lates the fu neral ind u stry, skin p enetration, m icrobial control and other m atters. Provid es for the licensing and control of nu rsing hom es. Underw ay. See chap ter 14 for d etails. Pu blic H ealth Act 1991 Underw ay. Review Process See chap ter 14 for generic d etails. The Final Rep ort is u nd er p rep aration. Underw ay. Review Process See chap ter 14 for generic d etails. An interim rep ort w ill be released in the first half of 2001. Complete. See chap ter 14 for d etails. Underw ay. See chap ter 14 for d etails. N u rsing H om es Act 1988 Chirop ractors and Osteop aths Act 1991 Pharm acy Act 1964 Regu lates the p ractice of chirop ractic and osteop athy and rep eals the Chiropractic A ct 1987. Regu lates the carrying on of the bu siness of a p harm acist; au thorises friend ly societies and trad ing and ru ral societies established u nd er the Co-operation, Community Settlement and Credit A ct 1923 to carry on the bu siness of a p harm acist in certain circu m stances. Am end s relevant Acts. Provid es for the licensing and control of d ay p roced u re centres. Private H osp itals and Day Proced u res Centres Act 1988 Underw ay. Review Process See chap ter 14 for generic d etails. An Issu es Pap er has been released and su bm issions are d u e end of March 2001. 226 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 Act Food Act 1989 Potential Restrictions Status See Chap ter 11 for d etails. Industrial Relations/WorkCover Act Potential Restrictions Occu p ational H ealth and To secu re the health, safety and w elfare of Safety Act 1983 p ersons at w ork and to am end certain other Acts. Status Underw ay. Review Process Review u nd ertaken as p art of regu latory im p act statem ent. Recom m end ations N ew OH &S Reg to take accou nt of com p etition issu es. Policy Resp onse Draft new consolid ated OH &S Regu lation being im p lem ented in 2001 Ru ral Workers Accom m od ation Act 1969 Provid es for the accom m od ation of ru ral w orkers and constitu tes the Ru ral Workers Accom m od ation Ad visory Cou ncil. Creates certificate of com p liance for accom m od ation. Underw ay. Review Process To be review ed after the new OH &S regu lation is in p lace. Som e ind u strial issu es involved . N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 227 Act Factories, Shop s and Ind u stries Act 1962 Potential Restrictions Makes p rovisions w ith resp ect to the su p ervision and regu lation of factories, shop s and certain other ind u stries and to the health, safety and w elfare of em p loyees; restricts trad ing hou rs; controls ad vertising and d escrip tion of good s; regu lates ou td oor w ork in clothing trad e; restricts hou rs of trad e and labou r; controls ad vertising; creates licensing regim e for haird ressers and p rescrip tive requ irem ents for haird ressing p rem ises. Status Part 3: Underw ay. Review Process Linked to cu rrent review s of the Occupational Health and Safety A ct. Part 4: Complete. Review Process Internal review by Dep artm ent of Ind u strial Relations and TCO. Recom m end ations N o legislation p rop osals. Policy Resp onse Trad ing hou rs in N SW largely d eregu lated . Com p rehensive p u blic benefit test in p lace for assessm ent of any rem aining restrictions. Part 6: Underw ay. Review Process Review by Dep artm ent of Ind u strial Relations w ith an external reference grou p . Recom m end ations Rep ort being p rep ared Policy Resp onse Relates to haird ressers. Issu es Pap er released in Ju ne 2000. N ot commenced. Review Process Linked to Occupational Health and Safety A ct review . Policy Resp onse Creates several certificates of com p etency. Som e have alread y been review ed and rem oved u nd er the Licence Red u ction Program . Constru ction Safety Act 1912 Provid es for the regu lation and insp ection of constru ction w ork and consolid ates the Acts controlling scaffold ing and lifts. Dangerou s Good s Act 1975 Consolid ates and am end s the law relating to exp losives and other d angerou s su bstances. Underw ay. See Chap ter 7 for d etails. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 228 Act Entertainm ent Ind u stry Act 1989 Potential Restrictions Relates to the regu lation of the entertainm ent ind u stry and am end s and rep eals certain legislation. Status Underw ay. Review Process Review by Dep artm ent of Ind u strial Relations w ith an external reference grou p . Policy Resp onse Issu es Pap er being d rafted . Information Technology Act Su rveyors Act 1929 Potential Restrictions Provid es for the registration of su rveyors of land , regu lates the m aking of su rveys. The m ain restrictions on com p etition are that only registered su rveyors are p erm itted to carry ou t bou nd ary d efinition su rveys or u se the title 'registered su rveyor'. Status Underw ay. See Chap ter 22 for d etails. Local Government Act Local Governm ent Act 1993 Potential Restrictions To p rovid e for Local Governm ent in N ew Sou th Wales. Cou ncils‟ bu siness ap p rovals p ow ers in relation to u nd ertakers, m ortu aries and car p arks are the only d irect restrictions on com p etition im p osed by the Act. H ow ever, the review is also exam ining com p etitive neu trality issu es involved in cou ncils‟ p rovision of services. Status Underw ay. See chap ter 21 for d etails. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 229 Mineral Resources (Rod Morrison to provide an update) Act Potential Restrictions Petroleu m (Su bm erged Relates to the exp lor ation for, and Land s) Act 1982 exp loitation of, p etroleu m resou rces and certain other resou rces ad jacent to the coast of N SW. Potential restrictions are ou tlined in Acil Consu lting's rep ort entitled : 'N ational Com p etition Policy Review of the Petroleu m (Su bm erged Land s) Legislation. The rep ort w as p u blicly released in Ap ril 2000. Mines Insp ection Act 1901 Makes better p rovision for the regu lation and insp ection of m ines, other than coal and shale m ines, and regu lates the treatm ent of the p rod u cts of su ch m ines. Potential com p etition restrictions relate to costs associated w ith com p lying w ith safety regu lation. Regu lates coal m ines (and oil shale and kerosene shale m ines) and certain related p laces. Potential com p etition restrictions relate to costs associated w ith com p lying w ith safety regu lation. Status Underw ay. See chap ter 13 for d etails. Underw ay. See chap ter 13 for d etails. Coal Mines Regu lation Act 1982 Underw ay. See chap ter 13 for d etails. Police Act Wool, H id es and Skins Dealers Act 1935 Potential Restrictions Regu lates the bu ying and selling of w ool, hid es and skins. Status Underw ay. Review Process This review w as cond u cted by the Ministry for Police in consu ltation w ith The Cabinet Office and the Dep artm ent of Fair Trad ing in 1995/ 96 u nd er the au sp ices of the Licence Red u ction Program . Recom m end ations The review recom m end ed that the Act shou ld be rep ealed . Policy Resp onse N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 230 Act Potential Restrictions Status Aw aiting Cabinet consid eration. To be consid ered by Cabinet concu rrently w ith the find ings of the Pastoral and Agricu ltu ral Crim e Working Party Rep ort, com p leted late 2000. Underw ay. Review Process N CP review w as com p leted in 1994 by the Dep artm ent of Fair Trad ing. Recom m end ations The review recom m end ed that the Act shou ld be rep ealed and rep laced by new legislation. There w ou ld be significant reform to the licensing system inclu d ing a m ove from occu p ational licensing to bu siness licensing and rem oval of licensing requ irem ents for rep ossession agents and p rocess servers. Policy Resp onse The licences for com m ercial agents and com m ercial su bagents issu ed u nd er the Act w ere id entified for rep eal in the Regu latory Red u ction A ct 1997. H ow ever, p roclam ation w as d eferred p end ing the ou tcom es of the Royal Com m ission and Ind u strial Relations Com m ission Inqu iry, the Peterson Rep ort on the secu rity ind u stry and m ore recently revisions to the Security Industry A ct 1997. These revisions are not yet available. Com m ercial Agents and Private Inqu iry Agents Act 1963 Provid es for the licensing and control of com m ercial agents, p rivate inqu iry agents and their su bagents. Ports and Waterw ays Act Marine Safety Act 1998 This Act rep ealed , consolid ated and stream lined m arine safety legislation, inclu d ing the: Com m ercial Vessels Act 1979 Maritim e Services Act 1935 Marine Pilotage Licensing Act 1971 N avigation Act 1901 Potential Restrictions Regu lates the u se of certain vessels and of certain m otors for p rop elling vessels; and p rovid es for m arking of load lines and the carriage of certain equ ip m ent by vessels. Provid es for the constitu tion of the Maritim e Services Board of N SW and its p ow ers. Provid es for the licensing of p ilots. Consolid ates the legislation relating to navigation. Status Underw ay. See Chap ter 10 for d etails. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 231 Ports Corp oratisation and Waterw ays Managem ent Act 1995 Establishes statu tory state-ow ned corp orations to m anage the State‟s p ort facilities on m ajor p orts (ie, Port Kem bla, N ew castle and Syd ney). Transfers w aterw ays m anagem ent and other m arine safety fu nctions to the Minister. Establishes the Waterw ays Au thority to ad m inister the Marine Safety Act 1998. Provid es for p ort charges, p ilotage and other m arine m atters. Underw ay. See Chap ter 10 for d etails. Public Works and Services Act Architects Act 1921 Potential Restrictions Potential restrictions in clu d e: lim itation on the u se of title 'architect' (and its d erivatives e.g. architectu ral) to registered architects; registration requ irem ents for architects; and requ irem ent for one-third ow nership by architects of bu sinesses w ishing to u se the title architect and its d erivatives (althou gh su ch bu sinesses are not requ ired to be registered ). Status Underw ay. See chap ter 22 for d etails. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 232 Pu blic Sector Managem ent (Good s and Services) Regu lation 1995 The Regu lation establishes the State Contracts Control Board , w hich arranges for the su p p ly of good s and services and d isp osal of good s for the Pu blic Service. The restriction on com p etition is that certain governm ent agencies are p revented from ind ep end ently negotiating contracts for the su p p ly of good s or services other than throu gh the Board . Underw ay. Review Process The regu lation w as su bject to a joint N CP and Subordinate Legislation A ct 1989 review by the Dep artm ent of Pu blic Works and Services. A RIS w as released for p u blic consu ltation in Ap ril 2000. Recom m end ations The review fou nd that the benefits to the State from centralised p rocu rem ent ou tw eigh any costs associated w ith restrictions on choices available to governm ent agencies. It therefore recom m end ed that the regu lation be re -m ad e w ith existing coverage and ap p lication. Policy Resp onse In 2000 the Governm ent re-m ad e the regu lation as recom m end ed by the review . Roads Act Driving Instru ctors Act 1992 Potential Restrictions Provid es for the licensing of d riving instru ctors and rep eals the Motor Vehicle Driving Instru ctors Act 1961. Status Underw ay. Review Process External Review . This review is being coord inated by a steering com m ittee chaired by the Road s and Traffic Au thority and com p rising rep resentatives from The Cabinet Office, the d riving instru ction ind u stry and the road freight ind u stry. An Issu es Pap er w as released for p u blic com m ent in Sep tem ber 1998. Cop ies of the Issu es Pap er w ere d istribu ted to ind u stry and governm ent grou p s, as w ell as consu m er organisations. Sem inars on integrity issu es have been held for sp ecific stakehold er grou p s. The consu ltation p eriod closed in N ovem ber 1998. The steering com m ittee‟s Final Rep ort is being p rep ared follow ing consid eration of w ritten su bm issions and fu rther consu ltation w ith som e stakeho ld ers on fu tu re regu latory op tions. Recom m end ations Final Rep ort is in p rep aration. Road s Act 1993 Makes p rovision w ith resp ect to the road s of N SW. Rep eals certain Acts. Underw ay. Review Process The Governm ent gave p u blic notice of this review and a statu tory review of the Act (u nd er s.268) in early 1999 by w ay of p ress ad vertisem ent and invited su bm issions from interested p arties. The statu tory review w as u nd ertaken by the Road s and Traffic Au thority. A rep ort N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 233 on the ou tcom es of the statu tory review w as tabled in both H ou ses of Parliam ent in Ju ne 1999. The N CP review is cu rrently in p rogress. The Road s and Traffic Au thority has com m issioned an ind ep end ent legal firm to carry ou t the review . Recom m end ations The statu tory review conclu d ed that the p olicy objectives of the Act are ap p rop riate. Final Rep ort of the N CP review is in p rep aration. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 234 Sport and Recreation Act Motor Vehicle Sp orts (Pu blic Safety) Act 1985 Potential Restrictions Makes p rovision for the control and regu lation of m eetings for m otor vehicle racing. The p rincip al restriction on com p etition is the requ irem ent for m otor vehicle racing grou nd s to be licensed to ensu re ad equ ate safety m easu res are in p lace. The Act regu lates the cond u ct of p rofessional boxing; constitu tes the Boxing Au thority of N SW and d efines its fu nctions; regu lates the cond u ct of w restling and am ateu r boxing contests. Ind u stry p articip ants are requ ired to be registered . Status Underw ay. Review Process A review grou p chaired by the Dep artm ent of Sp ort and Recreation and w ith rep resentation from central and other governm ent agencies and ind u stry stakehold ers is cond u cting the review . An Issu es Pap er w as p rep ared by consu ltants Price Waterhou se Coop ers and w as released for p u blic com m ent in Ju ne 2000. Underw ay. Review Process The review is being cond u cted by a review grou p chaired by the Dep artm ent of Sp ort and Recreation, and com p rising rep resentatives from N SW Treasu ry and The Cabinet Office. An Issu es Pap er is cu rrently being finalised . Boxing and Wrestling Control Act 1986 State D evelopment Act Cou ntry Ind u stries (Payroll Tax Rebates) Act 1977 Potential Restrictions Allow s rebates of p ayroll tax in resp ect of certain cou ntry m anu factu ring or p rocessing ind u stries. Status Underw ay. Review Process Internal review by Dep artm ent of State and Regional Develop m ent, TCO, Prem ier‟s Dep artm ent and Treasu ry. Policy Resp onse Joint review in conju nction w ith State Development and Industries A ssistance A ct 1966 and Small Business Loans Guarantee A ct 1977 (below ). Underw ay. Joint review (see above). State Develop m ent and Ind u stries Assistance Act 1966 Sm all Bu siness Loans Gu arantee Act 1977 Retail Leases Act 1994 Constitu tes the Minister ad m inistering the Act as a corp oration sole and confers certain p ow ers on that sole relating to the establishm ent, exp ansion and d evelop m ent of certain ind u stries and to the acqu isition of land . Au thorises the execu tion of gu arantees for the rep aym ent of loans m ad e to certain sm all bu sinesses. Makes p rovision w ith resp ect to the leasing of certain retail shop s and the rights and obligations of lessors and lessees of those shop s. Underw ay. Joint review (see above). Underw ay. Review Process Internal review by Dep artm ent of State and Regional Develop m ent. A sep arate technical reference grou p , involving ind u stry, w ill be established to assist the review . An issu es p ap er is cu rrently being p rep ared . 235 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 Transport Act Tow Truck Act 1998 Potential Restrictions Provid es for a licensing and certification sch em e for tow truck d rivers and operators; regulates other m atters; and constitutes the Tow Truck Ind ustry Council. Interstate tow truck d rivers are prohibited from retrieving vehicles in N SW unless they are licensed in N SW. Approves and gives effect to an agreem ent betw een N SW, the Com m onw ealth and other States relating to the N ational Rail Corporation (N RC) Ltd . The N RC w as established prim arily to operate interstate containerised rail freight services. The prohibition on N RC from carrying intrastate freight w as repealed in August 2000. Status N ot commenced. See Chapter 7 for d etails. N ational Rail Corporation (Agreem ent) Act 1991 N ot commenced. See Chapter 8 for d etails. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 236 Act Passenger Transport Act 1990 Potential Restrictions Regulates public transport services – buses, taxis and hire cars, and ferries. Status Completed / Underw ay / N ot commenced. Review Process Buses: The review w as cond ucted by the Ind epend ent Pricing and Regulatory Tribunal (IPART) in 1996/ 97. Taxis and Hire Cars: The review w as cond ucted by IPART. Final Repor t com pleted in N ovem ber 1999. Ferries: The review has not com m enced . Recom m end ations Buses: IPART recom m end ed that the Act be am end ed to require bus operators to m eet a Perform ance Assessm ent Regim e (PAR) in ord er to have their contract renew ed . Taxis and Hire Cars: See Chapter 9 for d etails on taxi services. IPART recom m end ed d eregulation of the hire car ind ustry. Policy Response Buses: The Act w as am end ed in 1997. The Departm ent of Transport released a Discussion Paper on the im plem entation of PAR in 1998. A second Discussion Paper outlining a revised approach w as released in October 2000. The subm ission period is now closed . A num ber of concerns w ere raised by operators in relation to the cost of im plem enting som e of the PAR initiatives. These issues are currently under review . [On 5 June 2001, the Passenger Transport A mendment (Transitways) Bill w as introd uced into the Legislative Assem bly. The Bill provid es for the operation of bus services on the proposed transitw ays netw ork. A d esignated transitw ay is a road w hich w ill only be available for bus services, police and em ergency vehicles. The Bill provid es that contracts to provid e bus services on a transitw ay w ill includ e perform ance stand ard s. Perform ance stand ard s w ill be enforceable by civil penalty or by other m eans set out in the contract. The Governm ent‟s intention is to procure transitw ay services by public tend er.] Taxis and Hire Cars: See Chapter 9 for d etails on taxi services. A d ecision on the hire car recom m end ation h as been d eferred pend ing further ind ustry consultation. A Final Report is currently being consid ered by Governm ent. N ot commenced. See Chapter 8 for d etails. Rail Safety Act 1993 Prom otes the safe construction, operation and m aintenance of railw ays. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 237 Treasury Act Pu blic Finance and Au d it Act 1983 (1) Pu blic Au thorities (Financial Arrangem ents) Regu lations 1997 (2) Potential Restrictions (1) Makes p rovision w ith resp ect to the ad m inistration and au d it of p u blic finances. (2) Makes p rovisions w ith resp ect to certain financial arrangem ents and investm ents of p u blic au thorities; constitu tes the N SW Cap ital Works Financing Corp oration. Status On hold. Review Process Potential com p etitive restrictions w ere id entified as p art of a consu ltation p rogram cond u cted in 1998 concerning a p rop osal to m erge five Acts (of w hich these w ere tw o) into a new single statu te. The review of the restrictions revealed that there w ere net p u blic benefits su p p orting their retention. The earlier intention to d raft a single new statu te and rep eal the cu rrent Acts is cu rrently u nd er review . N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 238 Annexure 3 NSW Legislation For Which NCP Review And Reform Activity Was Previously Reported To The NCC As Being Complete - Status as at 31 December 2000 Agriculture Act Meat Ind u stry Act 1987 D escription of Act Constitu tes the N SW Meat Ind u stry Au thority and p rovid es for the regu lation and control of the N SW m eat ind u stry. Status Complete. Act w as am end ed and the form er MIA‟s regu latory p ow ers w ere transferred to Safe Food Prod u ction N SW (a new statu tory bod y) on 4 Au gu st 2000 w hen Sched u le 3 of the Food Production (Safety) A ct 1998 com m enced . Food safety regu lation of the N SW m eat ind u stry is now p rovid ed throu gh that Act and the Food Production (M eat Food Safety Scheme) Regulation 2000. Complete. The Governm ent d ecid ed that the Com m ittee shou ld continu e its role of p rovid ing variou s services to grow ers. As a resu lt of the review som e lim itation w as p laced on the Com m ittee‟s role in rep resenting the ind u stry. In March 1998 a grow er p oll su p p orted the p rop osed arrangem ents and the Com m ittee w as reestablished for a fu rther fou r-year term . MIA Citru s Fru it Prom otion Marketing Com m ittee The Act im p oses a com p u lsory charge on p rod u cers of citru s in the MIA. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 239 Act Fertilisers Act 1985 D escription of Act The Act requ ires registration of brand nam es for soil im p roving agents; conform ation w ith registered p articu lars and com p osition stand ard s; and labelling requ irem ents. Status Complete. Part of a generic review of all chem ical resid u e legislation. Review Rep ort recom m end ations w ere im p lem ented via the Fertilisers A mendment A ct 1999. The Review ou tcom es w ere: rem oval of requ irem ents for the brand nam es to be registered ; rem oval of m inim u m content requ irem ents; and retention and strengthening of p rovisions relating to food safety, overseas m arket access requ irem ents and environm ent p rotection. Exam p les inclu d e m axim u m com p osition stand ard s for heavy m etals and labelling requ irem ents. Prickly Pear Act 1987 Provid es for the control and d estru ction of Prickly Pear. The restrictions involved the requ irem ent to m eet m inim u m stand ard s in the slau ghtering and p rocessing of p ou ltry. Complete. Act rep ealed . Provisions now listed u nd er the N oxious W eeds A ct 1993. Complete. Consid ered w ith the M eat Industry A ct 1987. Rep ealed 1 Ju ly 1999 w hen the M eat Industry A mendment A ct 1998 com m enced . Food safety regu lation of the N SW p ou ltry ind u stry is now p rovid ed throu gh the Food Production (Safety) A ct 1998 and the Food Production (M eat Food Safety Scheme) Regulation 2000. Complete. Act rep ealed . Review unnecessary. Act rep ealed . Complete. Act rep ealed . Complete. Act rep ealed . Pou ltry Processing Act 1969 H om ing Pigeons Protection Act 1909 Syd ney Market Au thority Act 1968 Provid es for the p rotection of hom ing p igeons d u ring their flights. Constitu tes the Syd ney Market Au thority and to d efine its p ow ers, au th orities, d u ties and fu nctions and to vest certain p rop erty in the Au thority. Makes p rovisions for the registration and regu lation of farm p rod u ce m erchants and farm p rod u ce agents. Makes p rovisions w ith resp ect to the stabilisation of the tobacco leaf ind u stry. Farm Prod u ce Act 1983 Tobacco Leaf Stabilisation Act 1976 N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 240 Act Wheat Marketing Act 1989 D escription of Act Relates to the m arketing of w heat and other grains. Com p lem entary to Com m onw ealth legislation. Makes p rovision for the regu lation of the d ried fru its ind u stry and reconstitu tes the N SW Dried Fru its Board . Status Review unnecessary. Legislation to be rep ealed u nd er the Statu te Law Revision Program . Review unnecessary. On 1 Ju ly 1997, the Board resolved to ad vise the Minister for Agricu ltu re that its affairs shou ld be w ou nd u p . By 1 Ju ly 2000, w hen the last rem aining sections of the Dried Fru its Act w ere rep ealed , all m atters relating to the form er Board had been com p leted . Review unnecessary. Act to be rep ealed w ith savings p rovisions for rem aining three au thorities. Dried Fru its Act 1939 Marketing of Prim ary Prod u cts Act 1983 Relates to the m arketing of certain p rim ary p rod u cts and to p rovid e for the establishm ent of m arketing board s in relation to certain of those p rod u cts, and to enable the m aking of m arketing ord ers. Constitu ted u nd er the M arketing of Primary Products A ct 1983. Mu rray Valley Wines Grap es Ind u stry Develop m ent Com m ittee Complete. Joint review w ith Victoria. Th e review rep ort w as su bm itted to both governm ents in early 1999. As a consequ ence of the review rep ort (w hich received the su p p ort of the N SW ind u stry) the Mu rray Valley Wine Grap es Ind u stry N egotiation Com m ittee, w hose term of office exp ired in N ovem ber 1998, w as not renew ed . The Mu rray Valley Wine Grap es Ind u stry Develop m ent Com m ittee w as re-constitu ted as an Ind u stry Service Com m ittee u nd er the A gricultural Industry Services A ct 1998. Complete. Joint review w ith Victoria. The review rep ort w as su bm itted to both governm ents in early 1999. As a consequ ence of the review rep ort (w hich received the su p p ort of the N SW ind u stry) the Mu r ray Valley Wine Grap es Ind u stry N egotiation Com m ittee, w hose term of office exp ired in N ovem ber 1998, w as not renew ed . The Mu rray Valley Wine Grap es Ind u stry Develop m ent Com m ittee w as re-constitu ted as an Ind u stry Service Com m ittee u nd er the A gricultural Industry Services A ct 1998. Mu rray Valley Wines Grap es Ind u stry N egotiating Com m ittee Constitu ted u nd er the M arketing of Primary Products A ct 1983. Arts N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 241 Act Library Act 1939 (Library Regu lation 1995) D escription of Act Makes fu rther p rovisions for the establishm ent, m aintenance and m anagem ent of libraries, library services and inform ation services and creates certification schem e for librarians. Status Complete. Certification schem e abolished . Attorney-General Act Pu blic N otaries Act 1985 Monop olies Act 1923 Restraints of Trad e Act 1976 D escription of Act Provid es for ap p ointm ent, enrolm ent and d iscip linary p roced u res for Pu blic N otaries Am end s the law in relation to m onop olies and restraint of trad e. Provid es for Su p rem e Cou rt action based on ap p lications against activities w hich create restraints of trad e. Status Complete. N ew Act in p lace. Complete. Rep ealed . Complete. Review com p lete. Act strengthens p u blic interest test fou nd in the com m on law . Act to be retained w ith am end m ent to ind icate that it is su bject to Trade Practices A ct and Competition Policy Reform (N SW ) A ct 1995. Complete. N SW alread y has a com p etitive m arket for com p u lsory Third Party Insu rance. Som e am end m ents in M otor A ccidents Compensation A ct 1999. Motor Accid ents Act 1988 (1) Motor Vehicles (Third Party Insu rance) Act 1942 (2) (1) Relates to the recovery of d am ages and com p u lsory insu rance against liability for the d eath or inju ry of p ersons as a consequ ence of m otor accid ents. (2) Requ ires that ow ners & d rivers of m otor vehicles are insu red against liability in resp ect of d eath or bod ily inju ry, am end s the Transport A ct 1930 & the Compensation to Relatives A ct 1987. Relates to stand ard tim e and d aylight saving in N SW. Provid es for a classification schem e for p u blications, film s and com p u ter gam es. Com p lem entary to Com m onw ealth legislation. Stand ard Tim e Act 1987 Classification (Pu blications Film s and Com p u ter Gam es) Enforcem ent Act 1995 Review unnecessary. Withd raw n as no anti- com p etitive issu es in Act. Review unnecessary. This is a national schem e. A revised censorship regim e w ith the su p p ort of all Au stralian ju risd ictions cam e into op eration on 1 Janu ary 1996. Energy Act D escription of Act Status N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 242 Act Energy Ad m inistration Act 1987 D escription of Act Constitu tes the Energy Corp oration of N SW and d efines its fu nctions. Status Complete. Licence and ap p roval requ irem ents rep ealed w ith p roclam ation of Electricity Supply A ct 1995. Other p rovisions d ealt w ith as p art of stru ctu ral reform of gas ind u stry. Complete. Rep ealed by the Gas Supply A ct 1996. Review unnecessary. In May 2000, the Governm ent annou nced the establishm ent of a new state-ow ned corp oration from Pacific Pow er‟s generation bu siness. The new corp oration, Eraring Energy, com m enced op erations in Au gu st 2000. N o legislative change w as requ ired . It is envisaged that after a transitional p hase the Act w ill becom e red u nd ant and w ill eventu ally be rep ealed . Review unnecessary Act rep ealed by s.5 of the Energy Services Corporations A mendment (TransGrid Corporatisation) A ct 1998 on 14 Decem ber 1998. Review unnecessary Act rep laced w ith Gas Supply A ct 1996 w hich corp oratised AGL. Status Review unnecessary. Vehicle registrations can no longer be m ad e u nd er this Act, as the relevant regu lation exp ired in 1999 and w ill not be re-m ad e. Managem ent of recreational vehicles w ill in fu tu re rely on existing N CP-com p liant p ow ers located w ithin road transp ort legislation. Complete. Dealt w ith u nd er the Licence Red u ction Program . Liqu efied Petroleu m Gas Act 1961 Liqu efied Petroleu m Gas (Grants) Act 1980 Electricity (Pacific Pow er) Act 1950 Regu lates the su p p ly of gas. Provid es for the constitu tion of Pacific Pow er and to d efine its p rincip al objectives, p ow ers, au thorities, d u ties and fu nctions. Am end s and rep eals certain other Acts. Electricity Transm ission Au thority Act 1994 Gas Ind u stry Restru ctu ring Act 1986 Establishes the N SW Electricity Transm ission Au thority and d efines its fu nctions. Makes p rovision w ith resp ect to the stru ctu re of AGL. Environment Act Recreation Vehicles Act 1983 D escription of Act Regu lates the off-road u se of m otor vehicles. N ational Parks and Wild life Act 1974 Consolid ates and am end s the law relating to the establishm ent, p reservation and m anagem ent of national p arks, historic sites and certain other areas and the p rotection of certain fau na, native p lants and aboriginal relics. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 243 Act Ozone Protection Act 1989 D escription of Act Em p ow ers the regu lation and p rohibition of the m anu factu re, sale, d istribu tion, u se, em ission, recycle, storing and d isp osal of stratosp heric ozone d ep leting su bstances and articles w hich contain those su bstances. Provid es for the control of the effect on the environm ent of chem icals and chem ical w aste. Constitu tes the H azard ou s Chem icals Ad visory Com m ittee. Provid es for the constitu tion of a corp oration to be called the „Metrop olitan Waste Disp osal Au thority‟; confers and im p oses on the corp oration resp onsibilities, p ow ers, au thorities, d u ties and fu nctions w ith resp ect to the transp ort, collection, recep tion, treatm ent, storage and d isp osal of w aste w ithin the Metrop olitan Waste Disp osal Region. Provid es for the d eclaration of certain land as u nhealthy bu ild ing land and for the effect of su ch a d eclaration. Status Complete. Dealt w ith u nd er the Licence Red u ction Program . Environm entally H azard ou s Chem icals Act 1985 Complete. Dealt w ith u nd er the Licence Red u ction Program . Partially rep laced by the Contaminated Land M anagement A ct 1997. Review Unnecessary The Act w as rep ealed and rep laced by the W aste M inimisation and M anagement A ct 1995. Waste Disp osal Act 1970 Unhealthy Bu ild ing Act 1990 Complete. Dealt w ith u nd er the Licence Red u ction Program . N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 244 Fair Trading Act Bu siness Licences Act 1990 D escription of Act Relates to bu siness licences. Status Complete Act to be rep ealed by the Business Licences Repeal and M iscellaneous A mendments A ct 2001. Passed by Parliam ent on the 28 March 2001; assented to 4/ 4/ 01 bu t not com m enced as at beginning Ju ne 2001. H aw kers Act 1974 Prices Regu lation Act 1948 Provid es for the licensing and control of haw kers. Makes p rovision for the regu lation of p rices and rates of certain good s and services. Complete Act rep ealed . Complet e The Prices Com m ission w as abolished and p rices regu lation p ow ers w ere transferred to the Ind ep end ent Pricing and Regu latory Tribu nal: Statute Law (M iscellaneous Provisions) A ct 2000 N o 53 (com m enced 29.6.2000). Complete. Retirem ent Villages Act 1999 assented 3/ 12/ 99 Retirem ent Villages Act 1989 Relates to the term ination of occu p ation rights of resid ents in retirem ent villages and confers ju risd iction over certain m atters relating to retirem ent villages, on the Resid ential Tenancies Tribu nal. Gaming and Racing Objective Au stralian Jockey Clu b Act 1873 (1) Syd ney Tu rf Clu b Act 1943 (2) D escription of Act (1) Extend s the p eriod for w hich the tru stees of the Rand w ick Racecou rse are enabled to grant leases and to enable m em bers of the Au stralian Jockey Clu b to su e and be su ed in the nam e of the Chairm an. (2) Constitu tes and incorp orates the Syd ney Tu rf Clu b and d eclares its objects, fu nctions and p ow ers and p rovid es for associated m atters. Completed. (1) Cu rrent arrangem ents fou nd to be in the p u blic interest and w ere retained . (2) The review fou nd that the Act d oes not restrict com p etition. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 245 Objective Lotto Act 1979 N SW Lotteries Act 1990 Soccer Football Pools Act 1975 Totalizator Act 1916 D escription of Act Review unnecessary. The Acts w ere rep ealed and rep laced by the N SW Lotteries Corporatisation A ct 1996 and the Public Lotteries A ct 1996. Am end s and consolid ates the law as it relates to the cond u ct of totalizators and the regu lation of totalizator betting. Complet e. Act rep ealed by Totalizator A ct 1997 w hich p rivatised the TAB. Clau se 5(5) CPA analysis su bm itted to N CC. N CC rep orted analysis ad equ ate in “Fram ew ork for the N CP Second Tranche Assessm ent: Ju ne 1999” (p .16). Complete. Act rep ealed by Totalizator A ct 1997 w hich p rivatised the TAB. Clau se 5(5) CPA analysis su bm itted to N CC. N CC rep orted analysis ad equ ate in “Fram ew ork for the N CP Second Tranche Assessm ent: Ju ne 1999” (p .16). Totalizator (Off-Cou rse Betting) Act 1964 Makes p rovision w ith resp ect to off-cou rse betting by m eans of the totalizator system ; p rovid es for the cond u ct of sw eep stakes in resp ect of certain events; establishes a Totalizator Agency Board and d efines its p ow ers, au thorities, d u ties and fu nctions. Health Act Therap eu tic Good s and Cosm etics 1972 D escription of Act Regu lates the m anu factu re, d istribu tion and ad vertising of certain therap eu tic good s and im p oses stand ard s in relation to certain therap eu tic good s and cosm etics. Status Complete. Act rep ealed . Provisions relating to cosm etics not re-enacted . Licences for w holesalers of therap eu tic good s elim inated . Rem aining p rovisions incorp orated into the Poisons A ct 1966 and the Therapeutic Goods A ct 1972. Complete. Legislation p assed d u ring the Bu d get Session 2000 to rem ove qu asi p ractice restrictions and introd u ce a system of p erform ance assessm ents for m ed ical p ractitioners. Complete. Act rep ealed . Ad vertising restrictions w ere rationalised and incorp orated into the Public Health A ct 1991. Med ical Practice Act 1992 Provid es for the registration of m ed ical p ractitioners and m ed ical stu d ents, the m aking of com p laints and d iscip linary action. Tobacco Ad vertising Prohibition Act 1991 Prohibits the ad vertising of tobacco and tobacco p rod u cts, trad e m arks, brand nam es and logos. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 246 Act Friend ly Societies Disp ensaries Enabling Act 1945 D escription of Act Enables Friend ly Societies to op erate p harm acies. Status Complete. Act rep ealed . Relevant p rovisions w ere incorp orated into the Pharmacy A ct, w hich is cu rrently su bject to a national review . Review unnecessary. Consid ered u nd ertaken by a Com m onw ea lth-State review of p artially regu lated occu p ations. Op tical Disp ensers Act 1963 Makes p rovision for the licensing of op tical d isp ensers; regu lates the qu alifications and the effect of su ch licensing; p rovid es for the constitu tion of an Op tical Disp ensers Licensing Board and d efines the p ow ers and fu nctions of that Board . Constitu tes the Dental Technicians Registration Board & d efines its p ow ers, au thorities, d u ties and fu nctions; m akes p rovisions for the registration of d ental technicians; regu lates the qu alifications for, and the effect of, registration. Provid es for the accred itation of Pathology Laboratories. Dental Technician Registration Act 1975 Review unnecessary. Consid ered u nd ertaken by a Com m onw ealth -State review of p artially regu lated occu p ations. Pathology Laboratories Accred itation Act 1981 Complete. Act rep ealed in 1999. Industrial Relations/WorkCover Act Bread Act 1969 D escription of Act Makes p rovisions in resp ect of tim es for the baking and d elivery of bread , licensing of bread m anu factu rers, certification of op erative bakers, stand ard bread size; constitu tes a Bread Ind u stry Ad visory Cou ncil and am end s other Acts. Prohibits the u se of w hite p hosp horu s in the m anu factu re of m atches and p rohibits the sale of m atches m ad e w ith w hite p hosp horou s. Restates and reform s the law concerning ind u strial relations. Status Complete. Rep ealed . White Phosp horou s Matches Prohibition Act 1915 Ind u strial Relations Act 1991 Complete. Rep ealed . Industrial Relations (IR) A ct 1991 rep ealed & rep laced w ith IR A ct 1996. Regu lation of em p loym ent agents w as sep arated from IR Act into Employment A gents A ct 1996. The Employment A gents A ct is u nd er review (refer to Fair Trad ing). Complete. Act rep ealed . Funeral Services Ind u stry (Days of Op eration) Act 1990 Regu lates the d ays of op eration of bu sinesses p rovid ing fu neral, bu rial or crem ation services. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 247 Local Government Act Local Governm ent (Theatre and Pu blic H alls) Am end m ent Act 1989 D escription of Act Am end s the Local Government A ct to m ake p rovision for ap p roval and regu lation of p laces of p u blic entertainm ent and certain stru ctu res. Status Complete. Dealt w ith u nd er the Licence Red u ction Program . Licence retained . Issu es of p u blic safety ou tw eigh costs. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 248 Mineral Resources Act Petroleu m (Onshore) Act 1991 Mining Act 1992 Coal Ow nership (Restitu tion) Act 1990 (1) D escription of Act Regu lates the search for, and m ining of, p etroleu m . Makes p rovisions w ith resp ect to p rosp ecting for and m ining m inerals. (1) Provid es for the restitu tion of certain coal acqu ired by the crow n as a resu lt of the Coal Acqu isition Act 1981. (2) Vests all coal in the Crow n. Status Complete. Dealt w ith u nd er the Licence Red u ction Program . Complete. Dealt w ith u nd er the Licence Red u ction Program . Review Unnecessary The acts d o not restrict com p etition. In any case, the acts w ill be rep ealed w hen the Coal Com p ensation Board is abolished . Coal Acqu isition Act 1981 (2) Police Act Secu rity (Protection) Ind u stry Act 1985 D escription of Act Provid es for the licensing and r egu lation of p ersons carrying on, or em p loyed in, the bu siness of p rovid ing secu rity and p rotection for p ersons or p rop erty. Status Complete. Act has been rep ealed and rep laced by the Security Industry A ct 1997. Roads Act Traffic Act 1909 D escription of Act Provid es for the regu lation of vehicles and of vehicu lar and p ed estrian traffic. Status Complete. Act rep ealed . N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 249 Transport Act Air Transp ort Act 1964 D escription of Act Prohibits, in certain circu m stances, the carriage by aircraft of p assengers or good s from one p lace to another w ithin N SW excep t if a licence is granted by the Minister. Am end s certain Acts. Status Completed Follow ing the review , the Governm ent agreed to d eregu late intrastate aviation. The Governm ent's initial ap p roach w as to d o this via a rep eal Bill (introd u ced to Parliam ent in 1998). H ow ever, the Up p er H ou se d id not p ass the Bill becau se of concerns abou t the im p act on regional air services. Su bsequ ently, the Governm ent annou nced in Au gu st 1999 that it w ou ld p u rsu e d eregu lation via ad m inistrative m eans. Restrictions on the nu m ber of airlines that op erate on rou tes to and from Syd ney Airp ort, w ith annu al air p atronage exceed ing 20,000, w ere rem oved , effective 26 March 2000. These 17 rou tes accou nt for 86% of all intrastate p assen ger jou rneys. Parking Sp ace Levy Act 1992 To d iscou rage car u se in bu siness d istricts by im p osing a levy on off-street p arking and u sing the revenu e to d evelop infrastru ctu re and encou rage the u se of p u blic transp ort. Complete. Act retained on the basis that com p etition restrictions w ere notional only. Treasury Act Bu siness Franchise Licence (Petroleu m Prod u cts) Act 1987 Bu siness Franchise Licence (Tobacco) Act 1987 Friend ly Societies Act 1989 D escription of Act Provid es for the licensing of p eop le carrying on the bu siness of selling certain p etroleu m p rod u cts. Provid es for the licensing of p eop le carrying on the bu siness of selling tobacco. Provid es for the form ation, registration, m anagem ent and regu lation of friend ly societies and to consequ ently ap p eal and am end certain other legislation. Status Complete. Legislation w as rep ealed in Decem ber 1997. Complete. Legislation w as rep ealed in Decem ber 1997. Review unnecessary. In 1999 N SW reached agreem ent w ith the Com m onw ealth regard ing the transfer of p ru d ential regu latory resp onsibilities for cred it u nions, bu ild ing societies and friend ly societies to the Com m onw ealth, to take effect from 1/ 7/ 99. The Friendly Societies Reform (N SW ) A ct 1999 w as p assed to give effect to this transfer and the Friendly Societies A ct 1989 w as rep ealed accord ingly. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 250 Payroll Tax Act 1971 Im p oses a tax u p on em p loyers in resp ect of certain w ages and p rovid es for the assessm ent and collection of the tax. The Act im p lem ents a Com m onw ealth schem e that p rovid es for the su bsid isation of fu el transp ort costs in ru ral areas. Complete. Dealt w ith u nd er the Licence Red u ction Program Review unnecessary. The Act only enables N SW to p rovid e an ad m inistrative arrangem ent for the p aym ent of Com m onw ealth su bsid ies to d istribu tors of p etroleu m . It d oes not involve the im p osition of any com p etition restrictions by the N SW Governm ent. Complete. The review , com p leted in Janu ary 2000, fou nd that there w as p otential for the im p lem entation of the Act to contravene com p etitive neu trality p rincip les. The Treasu rer issu ed a Circu lar in Sep tem ber 2000 requ iring Ministers to inclu d e analysis of w id er p u blic interest issu es in ap p lications for governm ent gu arantees u nd er any Act au thorising their issu e. Complete. Legislation for corp oratisation of the Su p erannu ation Ad m inistration Au thority w as introd u ced into Parliam ent in May 1999. The legislation p rovid ed for fixed su p er ad m inistration contracts to be p u t in p lace for 3-5 years, follow ing w hich com p etitive tend ering w ill ap p ly. N o resid u al anti-com p etitive p rovisions w ill rem ain follow ing the exp iry of these transitional contracts. Petroleu m Prod u cts Su bsid y Act 1965 Governm ent Gu arantees Act 1934 Valid ates certain gu arantees given to certain banks by the Treasu rer or p u rsu ant to Minu tes of the Governor and Execu tive Cou ncil; au thorises the Treasu rer to execu te certain gu arantees in certain cases; m akes certain contingent ap p rop riations ou t of the Consolid ated Revenu e Fund and to am end certain Acts. Provid es for tru stees for State p u blic sector su p erannu ation schem es and the p rovision of investm ent and ad m inistration services for su ch schem es. Constitu tes the Su p erannu ation Ad m inistration Au thority of N SW. Su p erannu ation Ad m inistration Act 1996 Urban Affairs and Planning Act Land Develop m ent Contribu tion Act 1970 D escription of Act Levies a contribu tion in relation to certain land w ithin the Syd ney region. The Act w as introd u ced to collect contribu tions from d evelop ers w ho benefit from rezonings. The Act has not been u sed to collect contribu tions for several years, and the su bord inate legislation w hich p rovid ed the p ow er to collect contribu tions has been rep ealed . Status Review unnecessary. The Act w as introd u ced to collect contribu tions from d evelop ers w ho benefit from rezonings. The Act has not been u sed to collect contribu tions for several years, and the su bord inate legislation w hich p rovid ed the p ow er to collect contribu tions has been rep ealed . The Governm ent has agreed to rep eal the Act. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 251 Annexure 4 State Reviews Of Regulatory Restrictions On Competition - Planning, Land Use And Natural Resource Approvals Systems Project Develop m ent of p olicy op tions for integrated ap p rovals system . Review of referral and concu rrences in local p lanning p olicies. Status Complet e Integrated Develop m ent am end m ents com m enced 1 Ju ly 1998. Underw ay Cu rrent review of the Plan Making is seeking to rem ove the need for referrals and concu rrences in local p lans by ad op ting a m ore strategic ap p roach to local p lan m aking. It is p rop osed tha t local p lans w ill take into accou nt the requ irem ents of other agencies w ith regard to the p erm issibility and assessm ent of d evelop m ent. Complet e N ew concu rrence p rocesses in p lace since 1/ 7/ 98 red u ce tim efram es from 80 d ays to 60 d ays. 1. 2. 3. Extend Gu arantee of Prom p t Service to concu rrent ap p rovals u nd er the Environm ental Planning and Assessm ent Act. Review of m u ltip le controls on land clearing State Environm ental Planning Policy (SEPP) 46. Integration of total catchm ent m anagem ent objectives in p lanning instru m ents. 4. Complet e SEPP 46 w as rep laced by the N ative Vegetation Conservatio n Act 1997, w hich cam e into force on 1/ 1/ 98, follow ing a d etailed p u blic consu ltation and review p rocess. Underw ay A Governm ent White Pap er: Plan First - Review of Plan M aking released on 6 Febru ary 2001. The White Pap er p rop oses to integrate catchm ent m anagem ent objectives into new Regional Strategies: integrated , strategic p lanning instru m ents u nd er the EP&A Act, that w ill ap p ly to every region of the state. Underw ay A Governm ent White Pap er: Plan First - Review of Plan M aking released on 6 Febru ary 2001. A key them e of the White Pap er is the integration of all p olicies and p lans relevant to environm ental and land u se issu es into a single local p lanning instru m ent for each LGA, a single regional strategy for each region and a single state p lanning p olicy d ocu m ent. 5. 6. Exam ination of feasibility of incorp orating p lans for: river m anagem ent; land m anagem ent; habitat m anagem ent; environm ental p rotection; forestry reserves into p lanning instru m ents u nd er the Environm ental Planning and Assessm ent (EP&A) Act. Review and reform of regu lations affecting m ining. 7. Underw ay N SW Dep artm ent of Mineral Resou rces is cu rrently cond u cting review s of the M ines Inspection A ct 1901 and the Coal M ines Regulation A ct 1982. Underw ay N CP review of the Fisheries M anagement A ct 1994 has com m enced . An issu es p ap er w as released in N ovem ber 2000 and the final rep ort is in p rep aration. Underw ay See Chap ter 12 8. Review and reform of regu lations affecting m aricu ltu re. Review and reform of regu lations affecting forestry inclu d ing the corp oratisation of State Forests. Review of s90 EP&A Act „head s of consid eration‟ for d evelop m ent consent. 9. 10. Complet e Section 79C of the reform ed EP&A Act introd u ces generic head s of consid eration stream lining old p rocesses. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 252 11. Review p otential for increasing „as of right d evelop m ents‟. Consid er p otential for p rivate certification of bu ild ing, su bd ivision w ater and sew erage ap p rovals. Integrate bu ild ing and p lanning ap p rovals. Exam ine zoning p rohibitions for anti-com p etitive effects; consid er w id er ad op tion of p erform ance stand ard s. Complet e Com p leted w ith the introd u ction of State-w id e com p lying/ exem p t d evelop m ent in Ap ril 2000. 85 p ercent of cou ncils in N SW h ave som e form of com p lying/ exem p t d evelop m ent. Complet e Reform s to d evelop m ent assessm ent system introd u ced 1 Ju ly 1998 contains certification for bu ild ing and su bd ivision. Complet e Reform s to d evelop m ent assessm ent system com bined the d evelop m ent, bu ild ing and su bd ivision ap p roval p rocesses. Underw ay The White Pap er: Plan First - Review of Plan M aking p rop oses a locality p lanning ap p roach as op p osed to that of land u se zoning in local p lans. This ap p roach p laces em p hasis on d esired p lanning ou tcom es thereby m inim ising the need for p rescrip tive lists of p erm issible and p rohibited land u ses. A general aim of the Part 3 reform s is to red u ce the u nnecessary u se of p rohibitions in p lanning instru m ents. 12. 13. 14. 15. Review and reform d evelop m ent w ithou t consent (SEPP 4) for change of u se in ind u strial areas. Consid er com bining d evelop m ent and re-zoning ap p lications. Review heritage ap p rovals and consid er better integration w ith Develop m ent Ap p roval/ Bu ild ing Ap p roval (DA/ BA) p rocesses. Consid er p otential for stand ard ising consent cond itions, zoning classifications and d efinitions of p erform ance stand ard s. Complet e Und ertaken throu gh the establishm ent of the new categories of Exem p t and Com p lying Develop m ent u nd er the EP&A Act. Complet e EP&A Act am end ed to allow for this situ ation. Complet e H eritage ap p rovals now integrated u nd er the EP&A Act. H eritage Act am end m ents stream line the p rocess w here d evelop m ent is in accord ance w ith a Conservation Plan. Underw ay DUAP is w orking w ith cou ncils thou ght ad visory notes to im p rove consent cond itions. A set of stand ard cond itions or p rincip les of cond itions is being w orked on to get greater consistency. The White Pap er: Plan First - Review of Plan M aking p rop oses a locality p lanning ap p roach to local p lanning w hich w ou ld effectively rem ove the need for zoning classifications. DUAP is aw are of the w ork of the Develop m ent Assessm ent Foru m (DAF) seeking to d evelop national stand ard d efinitions and w ill m ake a su bm ission on the DAF d iscu ssion p ap er o n these issu es. 16. 17. 18. 19. Stage II review of p ollu tion control acts to stream line and rationalise licensing p roced u res. Complet e The Protection of the Environment Operations A ct 1997 (PoEO Act) and regu lations com m enced on 1 Ju ly 1999, rep lacing five core p ollu tion control statu tes and p rovid ing for stronger environm ent p rotection, w hile stream lining the licensing p rocess. Bu sinesses now requ ire only one environm ent p rotection licence that recognises the ongoing, long-term natu re of op erations. Underw ay See Chap ter 6 Underw ay DUAP has been w orking on Best Practice Gu id elines and ed u cation requ irem ents w ith agencies involved in Integrated Develop m ent as p art of the p u blication of Guiding Development: better outcomes. 20. 21. Review w ater legislation and licensing. Develop fram ew ork for Coord inated / Integrated Develop m ent Ap p roval Cond itions and other requ irem ents and ad vice on the u se of the fram ew ork. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 253 22. Develop Best Practice Gu id elines for a Coord inated / Integrated Develop m ent Ap p roval System for Minin g and Extractive Ind u stry. Develop Best Practice Gu id elines for Planning Focu s. Develop Best Practice Gu id elines for Com m u nity Consu ltation. Complet e Gu id elines w ere issu ed in Sep tem ber 1997. Relevant am end m ents to the EP&A Act cam e into effect in Ju ly 1998. 23. Complet e Gu id elines have been p rep ared . Underw ay In conju nction w ith the Plan Making review , a com p anion d ocu m ent to the Plan First White Pap er has been p laced on p u blic exhibition. The d ocu m ent, Ideas for Community Consultation: A discussion on principles and procedures for making consultation work w ill form the basis for a DUAP gu id eline d ocu m ent for best p ractice in com m u nity consu ltation. Complet e The Threatened Species Conservation A ct 1995 am end ed the N ational Parks and W ildlife A ct 1974 to integrate licences and d evelop m ent ap p lications/ consents w ith resp ect to harm ing, p icking threatened sp ecies p op u lations or ecological com m u nities. The relevant section of the N ational Parks and W ildlife A ct is Section 18A (3) (b). This am end m ent took effect on 1 Janu ary 1996. Complet e Perform ance-based 1996 Bu ild in g Cod e of Au stralia w as ad op ted in N SW. Complet e Provisions relating to fire stand ard s w ere rep ealed on 1 Ju ly 1999. These siting stand ard s are now controlled throu gh the p erform ance based Bu ild ing Cod e of Au stralia, and throu gh cou ncils‟ Local Environm ent Plans and Develop m ent Control Plans. Other siting requ irem ents are controlled u nd er LEPs and DCPs w here necessary. O ngoing The Governm ent is continu ing to im p rove the com p arative p erform ance inform ation it collects and p u blishes annu ally on local cou ncils. DUAP is w orking on a benchm arking p rogram to m easu re the effectiveness of the d evelop m ent assessm ent system in N SW. This p rogram w ill be su p p lem ented by an au d iting p rogram of cou ncil‟s p erform ance as p art of the m ovem ent to the d ecentralisation of d evelop m ent assessm ent fees. 24. 25. Review of end angered sp ecies legislation so as to integrate licences and DAs. 26. Ad op t reform ed Au stralian Bu ild ing Cod e (as p erform ance stand ard s) w ith m inim al variations. Convert siting ru les to p erform ance stand ard s. 27. 28. Extend and im p rove p erform ance benchm arking of local cou ncils. 29. Pu blic consu ltation to im p rove op eration of cu rrent ap p roval rights and d isp u te resolu tion system . Underw ay Prop osed changes to Plan Making w ill see increased op p ortu nities for com m u nity consu ltation before and d u ring the p lan m aking p rocess. As a resu lt of increased com m u nity 'ow nership ' of p lanning instru m ents, red u ced d isp u tes at the d evelop m ent assessm ent and ap p roval stage w ill eventu ate. Complet e The White Pap er: Plan First - Review of Plan M aking p rop oses the integration of the policies of state agencies relevant to land , w ater and other natu ral resou rce m anagem ent into a single State Planning Policies d ocu m ent. The consolid ation of statu tes w as not an op tion p resented in the White Pap er. 30. Exam ine the p otential for consolid ating land , w ater and related natu ral resou rce m anagem ent legislation into a single statu te. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 254 Annexure 5 State Forests’ of NSW Log Allocation and Pricing A d escription of allocation and pricing policies applied to State Forests‟ softw ood log prod u cts and hard w ood logs from coastal and tablelands forests and related hau lage and harvesting services follow s. These com prise the bu lk of State Forests‟ tim ber sales revenu es. Softw oods Sales Softw ood is mainly sold (via royalties) u nd er variou s long term agreem ents betw een State Forests and softw ood processors. A typical agreem ent may be for a ten-year term plu s a ten-year option w ith a price review each year. In the case of Visy Ind u stries proposed $450m plant at Tu mu t, a 30+30 year w ood su pply agreem ent w as agreed to by the Government to u nd erpin the significant capital investm ent involved . Softw ood contracts typically requ ire State Forests to su pply at a given rate and price and contain a „take or pay‟ clause bind ing the bu yer to a proportion of their com m itm ent in the event of market or prod u ction flu ctuations. Softw ood logs read y for harvesting bu t not need ed to m eet su pply com m itm ents m ay be pu t to open tend er or offered to know n potential cu stom ers at market prices. Softw ood is a com m od ity com petitively trad ed across the w orld w ith m inim al im port barriers. State Forests com petes against nu m erou s private pine plantation ow ners in N ew Sou th Wales, interstate and overseas and hence cannot d ictate the price that processors have to pay. State Forests‟ pricing policy is to seek to charge softw ood royalties at the international m arket price ad justed for regional variations in timber quality, produ ction costs and market ou tlook. This occu rs in the context of a volatile d om estic bu ild ing market. The international m arket price of softw ood is less volatile than for m any other base com m od ities trad ed internationally. Th is enables State Forests to calcu late a qu asi-international price, for inclusion in its pricing d eliberations. Agreem ent prices are ad ju sted u nd er contract cond itions, ie at six-m onthly or annual intervals. State Forests su bm its that its price setting system , being arrived at by reference to com petitive d om estic and w orld m arkets rather than its ow n costs or profit targets, is consistent w ith com petition policy principles. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 255 Hardw ood Allocation H ard w ood logs are typically sold (via royalties) u nd er annu al, m ed iu m and long term agreem ents betw een State Forests and the ow ners of processing facilities, generally saw m ills. Until 1996, m ost hard w ood cu stomers for high quality, large logs w ere su pplied u nd er an annual allocation arrangem ent, know n as the qu o ta system . In 1996/ 97, the Governm ent annou nced the conversion of a nu m ber of State forests to N ational Parks. It w as also annou nced that a nu m ber of other State forests w ou ld be u navailable for tim ber harvesting pend ing the com pletion of Comprehensive Regional Assessm ents, in accordance w ith the N ational Forest Policy Statem ent and the Governm ent‟s 1995 election policy on forestry. At the sam e tim e, annual qu ota allocations w ere red uced to som e 55 per cent of their 1995/ 96 levels and the Governm ent com m enced a phased increase in quota timber royalties of 30 per cent. It is N SW Governm ent policy to provid e resou rce secu rity to the native forests tim ber ind ustry by granting long term tim ber su pply agreem ents. The Governm ent initiated long term tim ber su p ply agreem ents w ith former annual qu ota recipients in 1997. These agreem ents w ere for an initial five year period and w ere renew able for a fu rther five years, su bject to resou rce availability and valu e-ad d ing perform ance by term agreem ent hold ers. Follow ing the com pletion of Com prehensive Regional Assessm ents, long term su stainable tim ber su pply levels have been d eterm ined . This resou rce secu rity has mad e it possible for the Governm ent to extend the term of the su pply agreem ents to 20 years. 20-year Term Agreem ents are contracts betw een the Minister for Forestry and the private hold er. The allocations und er the Agreements are d ivisible and trad eable betw een potential bu yers and sellers (subject to Ministerial approval of proposed trad es). Term Agreem ent hold ers m ust be com pensated by the Governm ent if fu ture changes in Governm ent policy affect their tim ber su pply. The Term Agreem ents retain a requ irem ent to meet value ad d ing criteria by 2003. Hardw ood Pricing Policy In 1997-98, State Forests im plem ented the H ardw ood Log Valu e Pricing System for d eterm ining the valu e of native hard w ood tim ber sold by State Forests. This pricing system provid es for an objective approach to pricing, that the timber indu stry d emand ed , by enabling a market valu e of tim b er to be d erived from the m arket price of end prod u cts rather than on State Forests‟ costs or profit targets. The residu al valu e of log timber (ie the royalty payable to State Forests) at a point in tim e is d erived by su rveying and analysing costs and mar gins at variou s points in the tim ber processing sequence. A matrix is then created N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 256 w hich d ifferentiates prices for 21 species grou ps of native hardw ood logs in three size classes and for each of 45 price zones across NSW. The end -m arket values are re-calcu lated annu ally. The Table below sets ou t an illu strative exam ple of the elem ents in the calcu lation method and how it may applied to one log class. Cost Elem ent Average Market Price Description Cost per m 3 Weighted Average Price per cubic $900 metre of nine timber classes w hen sold by saw miller. (less) Return on Sales for A 20% profit m argin is accepted as ($180) Saw Miller necessary for long-term ind ustry viability. (less) Saw n H aulage Costs Cost of d elivery from green m ill to ($22) d rying/ dressing plant (less) Cost of Processing The processing costs for d rying and ($228) Dry Tim ber d ressing saw n tim ber. (less) Green Mill Processing The saw m ill‟s processing costs for ($150) Cost m illing saw logs. (less) Recovery from Net A factor to reflect net usable tim ber ($220) Wood from saw logs. The ind ustry accepts that only 32% of the original saw log w ill be able to be converted into saw n tim ber, d ue to log d efects and other w astage factors (less) H arvesting and A value per cu. m per km is ($41) H aulage Cost d eterm ined for harvesting and haulage to saw m ills. Residual Log Value State Forests’ hardw ood royalty $59 Calcu lation of timber valu es w ithin each Price Zone u ses d ata that is Price Zone specific, such as harvesting and hau lage costs, d efect allow ances, and freight to m arket costs to arrive at residu al log valu es (royalty rate) specific to the Price Zone. Tim ber that becom es available that is su rplus to com m itted volu m es is offered on the open market by tend er or at a negotiated pr ice. It is su bm itted that State Forests‟ hard w ood pricing policy conform s w ith com petition policy principles becau se: its prices are d irectly m arket based or d erived from the H LVPS w hich objectively d eterm ines a qu asi- market price for logs at stu m page, throu gh a process w hich takes no accou nt of State Forests‟ m arket pow er, its costs or its profit target; State Forests is not exploiting its d om inant su pplier position becau se it bases its log valu es on an annual review of timber prices in accord ance w ith a formu la d eveloped in consu ltation w ith and agreed to as fair and N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 257 reasonable by m ost of its cu stom ers. There is som e negotiation w ith the ind u stry before the resu lts of the market su rvey are applied each year; State Forests m ust accept the price d eriv ed by the H LVPS, m u st ad just its cost stru ctu res to rem ain viable and m eet Governm ent d ivid end expectations, borrow ing requ irem ents and taxation liabilities and is not able to arbitrarily increase its prices to generate greater revenu es; and the N SW hard w ood tim ber ind ustry is com petitive w ithin itself and also is subject to external com petition from interstate, imports and from substitu tes for hard w ood timbers, su ch as steel, concrete and treated softw ood . The m arket su rvey that u nd erpins the price review has helped to fill a void in pricing inform ation. Forest m anagement Agencies in other States have seen the valu e of participating in the end m arket su rveys. H ow ever, there has been no consu ltation betw een State Forests and Agencies in other States on log pricing (tim ber royalties). Contract Harvesting and Haulage Charges In recent years, State Forests has u nd ertaken to d eliver specified tim ber d irectly to som e saw m ills (d elivered sales) and , in ord er to accom m od ate su ch cases, State Forests has arranged long-term harvesting and hau lage contracts w ith private enterprise service provid ers. This new system of d elivered sales is know n as Log Merchand ising. In regions w here Log Merchand ising has been introdu ced , the m ajority of saw m illers have chosen to pu rchase their saw logs from State Forests on a d elivered sales basis. Log Merchand ising has proven su ccessfu l in the tw o native forest regions and fou r softw ood regions w here it has been im plem ented . State Forests intend s to progressively extend the system into other regions. Benefits seen to d ate from introd u ction of Log Merchand ising inclu d e: a shift tow ard few er, larger harvesting and / or hau lage contractors w ith m ore highly trained em ployees; increased com petitiveness of d elivered w ood costs, w ith savings principally from harvesting and haulage efficiencies achieved throu gh greater coord ination of operations, higher prod u ctivity from m od ern equ ipm ent and the benefits of using w ell trained staff; greater opportu nity for State Forests to provid e m ills and other cu stom ers w ith the species m ix and grad es that w ill su pport their fu rther d evelopm ent and valu e ad d ing; and N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 258 significant increase in log sales and State Forests‟ revenu e (arou nd $5M pa in H u m e and Monaro regions alone) involving: new log sales; the realisation of price prem iu m s on som e lines; im proved u nit rates through better prod u ct segregation; and efficiency d ivid end on harvesting and d elivery operations. N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 259 Pricing Policy In Log Merchandising regions, a nu m ber of harvesting and hau lage contractors are selected from am ong tend erers by a com petitive process. Each selected tend erer is aw ard ed a long term contract (u p to 9 years, inclu d ing rollovers) based on satisfying the cond itions as set ou t in the tend er offer. The tend er selection process takes into accou nt: the past perform ance of contractors; equ ipm ent; regional employm ent; and the tend ered price of services. Contracted rates are review ed and renegotiated annu ally to ad just for increases in the major cost elem ents incu rred by a contra ctor. The tend ering and contractor selection process guarantees that State Forests is not involved in price exploitation in respect of the harvesting and hau lage charges passed onto custom ers. Com petitive tend ering for State Governm ent contracts historically com pels tend erers to elim inate excessive margins to rem ain com petitive. Each tend er is subject to an agreed probity plan w ith ind epend ent probity au d itors engaged at both evaluation and review stages. Ongoing rationalisation w ithin the tim ber ind ustry is fostering com petition. This process has been accelerated by N SW Governm ent forestry reforms that have red u ced tim ber volu m es and fostered valu e-ad d ing and the best u se of all available logs. Log Merchand ising provid es a fair m echanism for allocating scarce harvesting and hau lage w ork, w hile assisting the achievem ent of other elem ents of the Governm ent‟s forestry policy (w orker safety, environm ental com pliance and value ad d ing investm ent). N SW Annu al Rep ort on Ap p lication of N ational Com p etition Policy for year end ing Dec 2000 260