Commonwealth National Competition Policy Annual Report 1998-99 © Commonwealth of Australia 2000 ISBN 0 642 74036 4 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth available from AusInfo. Requests and inquiries concerning reproduction and rights should be addressed to the Manager, Legislative Services, AusInfo, GPO Box 1920, Canberra ACT 2601. A copy of this document appears on the Treasury Website: http://www.treasury.gov.au Printed by CanPrint Communications Pty Ltd Contents ,QWURGXFWLRQ   7KH 6LJQLILFDQFH RI &RPSHWLWLRQ 3ROLF\ IRU $XVWUDOLD   1DWLRQDO &RPSHWLWLRQ 3ROLF\ )UDPHZRUN   3XEOLF ,QWHUHVW 7HVW   7KH 1HHG IRU 6DIHJXDUGV   7KH &RPPRQZHDOWK¶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² 5HIRUP QRW )LQDOLVHG E\  -XQH   5HYLHZV &RPSOHWHG DQG 5HIRUP 2XWFRPHV $QQRXQFHG   5HYLHZV &RPSOHWHG 5HFRPPHQGDWLRQV XQGHU &RQVLGHUDWLRQ    5HYLHZV &RPPHQFHG EXW QRW &RPSOHWHG  5HYLHZV QRW &RPPHQFHG   /HJLVODWLRQ 6FKHGXOHG IRU 5HYLHZ LQ   ² 5HIRUP QRW )LQDOLVHG E\  -XQH    5HYLHZV &RPSOHWHG DQG 5HIRUP 2XWFRPHV $QQRXQFHG  iii  5HYLHZV &RPSOHWHG 5HFRPPHQGDWLRQV 8QGHU &RQVLGHUDWLRQ   5HYLHZV &RPPHQFHG EXW QRW &RPSOHWHG   5HYLHZV QRW &RPPHQFHG      /HJLVODWLRQ 6FKHGXOHG IRU 5HYLHZ LQ  ²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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iv /DQGV $FTXLVLWLRQ $FW  DQG 5HJXODWLRQV   /DQGV $FTXLVLWLRQ $FW    0RWRU 9HKLFOH 6WDQGDUGV $FW    0XWXDO 5HFRJQLWLRQ $JUHHPHQW /HJLVODWLRQ   1DWLRQDO 5HVLGXH 6XUYH\ $GPLQLVWUDWLRQ $FW    1DYLJDWLRQ $FW    3KDUPDF\ 5HJXODWLRQ   /HJLVODWLRQ WR EH UHYLHZHG   3XEOLF %HQHILW 7HVW   3LJ ,QGXVWU\ $FW    3RROHG 'HYHORSPHQW )XQGV   3ULPDU\ ,QGXVWULHV /HYLHV $FWV DQG UHODWHG &ROOHFWLRQ $FWV   5DGLRFRPPXQLFDWLRQV $FW    7RUUHV 6WUDLW )LVKHULHV $FW    7UDGH 3UDFWLFHV $FW   3DUW ; 6KLSSLQJ /LQHV   7UDGH 3UDFWLFHV $FW   6XEVHFWLRQV   DQG    7UDGHVPHQ¶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v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vi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 3ULFHV 2YHUVLJKW    7KH 3XUSRVH RI 3ULFHV 2YHUVLJKW &RPPRQZHDOWK 3ULFHV 2YHUVLJKW   0DWWHUV 5HIHUUHG WR WKH $&&&   &RQGXFW &RGH $JUHHPHQW    &RPSHWLWLYH &RQGXFW 5XOHV &RPPRQZHDOWK H[FHSWLRQV XQGHU V  RI WKH 7UDGH 3UDFWLFHV $FW    ([LVWLQJ /HJLVODWLRQ 5HOLDQW RQ V    1HZ /HJLVODWLRQ ([FHSWLRQV PDGH LQ    &2$* 5HODWHG 5HIRUPV (OHFWULFLW\ *DV :DWHU 5RDG 7UDQVSRUW    (OHFWULFLW\ *DV   ,PSOHPHQWDWLRQ RI WKH *DV $FFHVV &RGH  :DWHU   3URJUHVV ,PSOHPHQWLQJ WKH :DWHU 5HIRUP )UDPHZRUN vii  5RDG 7UDQVSRUW   &RPPRQZHDOWK /HJLVODWLRQ 5HYLHZ 6FKHGXOH DV DW  -XQH  ² E\ VFKHGXOHG FRPPHQFHPHQW GDWH   &RPPRQZHDOWK %XVLQHVV $FWLYLWLHV 6XEMHFW WR &1 DV DW  -XQH   SURJUHVV LPSOHPHQWLQJ FRPSHWLWLYH QHXWUDOLW\   /LVW RI 7DEOHV 7DEOH  1DWLRQDO &RPSHWLWLRQ 3ROLF\ 5HYLHZ RI $JULFXOWXUDO DQG 9HWHULQDU\ &KHPLFDOV /HJLVODWLRQ 5HYLHZ 5HFRPPHQGDWLRQV   3RWHQWLDOO\ $QWL&RPSHWLWLYH &RPPRQZHDOWK /HJLVODWLRQ (QDFWHG EHWZHHQ  -DQXDU\  DQG  -XQH    &RPPRQZHDOWK /HJLVODWLRQ 5HYLHZ 6FKHGXOH  *RYHUQPHQW %XVLQHVV (QWHUSULVHV  &RPPRQZHDOWK %XVLQHVV 8QLWV   &RPPHUFLDO %XVLQHVV $FWLYLWLHV   7DEOH  7DEOH $ 7DEOH % 7DEOH % 7DEOH % viii ,QWURGXFWLRQ 7KH6LJQLILFDQFHRI&RPSHWLWLRQ3ROLF\ IRU$XVWUDOLD Continuing improvement in the living standards of Australians is dependent on the productivity performance of the economy. Increasing national productivity will, over the long term, boost economic growth, employment opportunities, export competitiveness and real household income. This, in turn, will influence our capacity as a society to provide essential services to the community. The Productivity Commission (PC) has recently concluded that Australia’s productivity performance has improved markedly in the 1990s. Multifactor productivity (that is, combined labour and capital productivity) grew 2.4 per cent per annum from 1993-94 to 1997-98, compared to an average growth of 1.2 per cent per annum from 1964-65 to 1993-94.1 The main sources of productivity gains are the development and adoption of new technology and innovations, better organisation of production within firms, more efficient allocation of resources across industries and improvement of international competitiveness. The freeing up of resources as a result of productivity improvements provides scope for their investment in more efficient uses, creating employment opportunities. To ensure continued increases in the level of productivity growth, an ongoing commitment to reducing structural rigidities and developing and maintaining competitive markets is required. The PC has indicated that a significant contributory factor has been the sustained microeconomic reform over the last two decades. 1 Productivity Commission 1999, Microeconomic Reforms and Australian Productivity: Exploring the Links, Commission Research Paper, p 23. 1 Ultimately, a competitive economy provides both the flexibility and incentives to adjust in a more rapid and less costly manner to changes in the domestic and international environment. This includes any structural changes. Structural change refers to changes in the size and composition of an economy in terms of the distribution of activities and resources among firms, industries and regions. This may be the result of technological advances, changes in domestic and international consumption patterns and trade or changes in the provision of infrastructure or labour market services. These factors will have different impacts on different sectors of the community and regions, and over time. It is important that the economy can effectively adjust to these changes. This requires flexible economic structures capable of taking advantage of emerging opportunities by facilitating the movement of resources (product, labour and capital) between and within industries. Competition reforms assist this process. Effective competition in markets for goods and services provides the main impetus for firms to seek productivity improvements, and ensures that a greater proportion of these gains are distributed in the form of lower product prices rather than retained by firms as higher profits. This reduces operating costs and prices to business and consumers. It also encourages a wider range and improved quality of goods and services. In seeking productivity gains, competition also provides a spur to innovation in product design, production processes and management practices. The manner in which resources are managed within the workplace, the rate of adoption of innovation and the development of associated skills play an important role in productivity growth. Competition policy is a critical component of the broader structural reform agenda. It involves continuing efforts to reduce barriers to market entry and exit, reform of anti-competitive regulations and expose government owned businesses to competitive market forces in a competitively neutral manner. Competition reforms also offer a further means to reduce market transaction costs  principally through a comprehensive program of 2 regulatory reform  and increase the information available to consumers to make informed choices. 1DWLRQDO&RPSHWLWLRQ3ROLF\)UDPHZRUN A series of microeconomic reforms have been undertaken over the past several decades. In April 1995, the Commonwealth, States and Territories entered into three Inter-Governmental Agreements. These agreements are the Conduct Code Agreement; the Competition Principles Agreement; and the Agreement to Implement the National Competition Policy and Related Reforms. These Agreements aim to provide a timely, co-ordinated and comprehensive approach across all levels of government. The commitments embodied in these agreements effectively underpin National Competition Policy (NCP) in Australia2. These reforms perform a mutually reinforcing role with other competition policy initiatives, such as the limitations on anti-competitive conduct established by the Trade Practices Act 1974 and Prices Surveillance Act 1983. The NCP framework targets particular opportunities for governments to encourage competitive outcomes. These include: S The review and, if necessary, reform of legislation that is anti-competitive, with the requirement that where such legislation is to be retained or introduced it must be demonstrably in the community interest (Chapter 1). The implementation of competitive neutrality for all government business activities operating in a contestable market, which requires that such businesses not benefit commercially simply by virtue of their public ownership. For example, they should be liable for the same taxes and charges, rate of return and dividend requirements as their private sector competitors (Chapter 2). S 2 The 1995 Agreements also resulted in the establishment of the National Competition Council (NCC), an inter-jurisdictional body funded by the Commonwealth. The NCC has statutory responsibilities under the Commonwealth Trade Practices Act 1974 and Prices Surveillance Act 1983, as well as specified roles under the Agreements aimed at ensuring the effective introduction of NCP. 3 S The structural reform of public monopolies, where their markets are to be opened to competition or they are to be privatised, to ensure they have no residual advantages over potential competitors (Chapter 3). The provision of access arrangements to services provided by significant infrastructure facilities (such as electricity grids, airports, and communications networks) that would be uneconomic to duplicate, to encourage competition in upstream and downstream markets and reduced prices for related products (Chapter 4). Independent oversight by State and Territory governments of the pricing policies of government business enterprises, to ensure that price rises are not excessive. (The Commonwealth already has prices oversight provisions) (Chapter 5). The application of the Competition Laws across all jurisdictions, (including the scope for exceptions in certain circumstances), centrally administered by the Australian Competition and Consumer Commission (Chapter 6). Ensuring commitment to related reforms in the key infrastructure areas of electricity, gas, water and road transport with a view to improving efficiency, implementing nationwide markets and standards, and protecting the environment (Chapter 7). S S S S Governments have made significant progress in implementing reform in the four years since the commencement of NCP. The benefits to the community from this process are now becoming evident, particularly in terms of lower prices to consumers. NCP reforms have contributed to reductions in costs and prices across most infrastructure services that have been subject to reform. These include electricity, gas, rail, ports and telecommunications. The PC has estimated that in the period 1991-92 to 1996-97 there has been a 25 per cent reduction in subscriber trunk dialling (STD) calls, a 9 per cent reduction in the real price of posting a standard letter and between 1991-92 and 1997-98 a 16 per cent reduction in the real average 4 price of electricity for all customers (that is, residential and commercial/industrial users).3 However, it is important to recognise that this is a long term process. Ongoing commitment by all levels of government to effective reform will be necessary to realise significant returns. %R[:KDWLVWKH1DWLRQDO&RPSHWLWLRQ3ROLF\" National Competition Policy (NCP) is part of a broader structural reform program aimed at increasing living standards, productivity, and employment. It involves reducing business costs (including red tape), providing lower prices and greater choice for consumers and more efficient delivery of public services. The NCP framework enables competition reform to be undertaken in a structured, transparent and comprehensive manner  seeking to ensure all the costs and benefits to the community and the distributional impacts of a particular course of action are identified and made available to decision makers for consideration. While seeking to encourage more efficient use of resources, particularly in the public sector, the NCP does not: S S S S S Mandate the privatisation of government business; Force contracting out of government services; Require the end of cooperative marketing by farmers; Ignore social, regional or environmental considerations; or Prohibit consideration of transitional adjustment assistance programs. 3 Productivity Commission 1999, Impact of Competition Policy Reforms on Rural and Regional Australia, Report no. 8, pp. XXXII-XXXIII. 5 3XEOLF,QWHUHVW7HVW NCP, microeconomic reform and globalisation have been claimed to result in adverse social outcomes.4 NCP is not concerned with reform or competition for its own sake. Rather, the focus is on competition reform that is in the ‘public interest’. To this end, the Competition Principles Agreement (CPA) provides a mechanism  the public interest test  to examine the relationship between the overall interests of the community, competition and desirable economic and social outcomes. It further sets out those factors to be taken into account in analysing the costs and benefits of various reforms. These factors are broader than the economic benefits and costs of a proposed reform. 5 These include: S S S government legislation and policies relating to ecologically sustainable development; social welfare and equity considerations, including community service obligations; government legislation and policies relating to matters such as occupational health and safety, industrial relations and access and equity; economic and regional development, including employment and investment growth; the interests of consumers generally or of a class of consumers; the competitiveness of Australian businesses; and the efficient allocation of resources. S S S S 4 5 Senate Select Committee on The Socio-Economic Consequences of the National Competition Policy, Riding the Waves of Change, February 2000, p xiii. The matters listed in clause 1(3) of the CPA are relevant when undertaking reviews of anti-competitive regulation, introducing competitive neutrality and reforming government businesses. 6 7KH1HHGIRU6DIHJXDUGV Competition policy is not about the pursuit of competition for its own sake, but creating an environment that encourages effective competition in the interest of efficient resource use and maximum community benefit  a major factor being lower prices and better choice and quality for consumers. However, situations may occur where competition does not achieve this outcome (due to market failure) or conflicts with other social objectives. In many instances, reforms will be complemented by a regulatory framework that provides a safety net against market structures failing to deliver adequate competitive outcomes, addresses markets that are in transition towards competitive structures, or enables the delivery of community service obligations. Furthermore, reforms will often result in short-term adjustment costs  potentially concentrated on specific sectors or geographical regions. While greater than the costs, the benefits usually accrue over the longer term and are more widely spread across the community. In addition, the gains from competition reform will only be fully realised where resources can effectively move to more efficient uses. As a consequence, in certain circumstances, consideration needs to be given to the assistance necessary to facilitate the adjustment to reforms. In most cases, generally available assistance measures are the most appropriate form of assistance. General assistance measures have a number of advantages, including treating all people adversely affected by changed circumstances equally, addressing the net effects of reforms, concentrating on those in genuine need, supporting individuals and families rather than a particular industry, and being generally widely understood and already in place. The advantages of a universal and general approach to meeting the needs of people adversely affected by change constitute a clear in-principle case for continued reliance upon the ‘safety net’. 7 Where general assistance measures are not considered effective, targeted assistance may be necessary to facilitate change. This should be designed to assist individuals make the transition to the new environment, smoothing the path for the adoption and integration of the reforms, not to maintain the status quo or to hinder or distort the desired outcome. In general, specific assistance should be temporary, for special cases, transparent and inexpensive to administer. 7KH&RPPRQZHDOWK¶V5HSRUWLQJ5HTXLUHPHQW Under the Competition Principles Agreement, the Commonwealth is required to publish an annual report outlining its progress toward: S achieving the review and, where appropriate, reform of all existing legislation that restricts competition by the year 2000 (as outlined in the Commonwealth Legislation Review Schedule); and implementing competitive neutrality allegations of non-compliance). principles (including S However, to fully recognise the range of Commonwealth commitments established by the NCP Agreements, all areas of Commonwealth involvement have been reported.6 This report formally covers the period 1 July 1998 to 30 June 1999, although, where available, more recent information is provided in certain cases. 1DWLRQDO&RPSHWLWLRQ3ROLF\3D\PHQWV Under the Agreement to Implement the National Competition Policy and Related Reforms (Implementation Agreement), the Commonwealth agreed to make NCP payments to those States and Territories assessed 6 The commitments contained within the NCP Agreements apply to both Commonwealth and State and Territory Governments. This report discusses these commitments from the Commonwealth perspective. 8 as making satisfactory progress toward implementation of specified competition and related reforms. These payments represent the States and Territories’ share of the additional revenue raised by the Commonwealth as a result of effective competition reform, and are worth approximately $5 billion (up to the year 2005-06). The competition payments originally comprised three tranches of Competition Payments and the real per capita component of the annual Financial Assistance Grants. However, the grants component will cease from 1 July 2000, as agreed to by all States and Territories, with the signing of the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations. S The first tranche of the Competition Payments commenced in 1997-98, and involved a maximum annual payment of $200 million (in 1994-95 prices). The second tranche of the Competition Payments commences in 1999-2000, and involves a maximum annual payment of $400 million (in 1994-95 prices). The third tranche of the Competition Payments commences in 2001-02, and involves a maximum annual payment of $600 million (in 1994-95 prices). S S The Implementation Agreement specifies the commitments States and Territories must meet in order to receive the maximum NCP payment. The National Competition Council (NCC) assesses each jurisdiction’s performance in implementing the required reforms prior to the commencement of the three Competition Payments tranche periods  1 July 1997, 1 July 1999 and 1 July 2001. This assessment forms the basis for determining State and Territory eligibility for payment. In response to the NCC’s 1998 supplementary first tranche assessment, the Commonwealth made NCP payments to the States and Territories, for the period 1998-99, amounting to $422.6 million. This assessment determined whether the States and Territories addressed first tranche NCP commitments identified as outstanding in the NCC’s initial assessment in June 1997. 9 Payments amounting to $396.2 million had been made in 1997-98. These payments reflect the total possible payments States and Territories could receive. The NCC’s second tranche assessment was provided in July 1999. It recommended that all States and Territories, with the exception of Queensland, receive their full NCP payments for the first instalment (1999-2000) of the second tranche period. The Commonwealth accepted the Council’s recommendation, and suspended $14.83 million from Queensland’s total possible 1999-2000 NCP payments of $118.67 million, pending a supplementary assessment by the Council to be conducted by 31 December 1999. The Council will assess the extent to which Queensland is able to demonstrate that robust, independent appraisals are conducted to determine economic viability and ecological sustainability prior to investment in rural water schemes and/or implementation of the recommendations of such appraisals. The 1999-2000 NCP payments are currently estimated at a maximum of $640.6 million. 7UHDVXU\,QWHUQHW6LWH Various Commonwealth publications relating to NCP matters are available from the Commonwealth Treasury website  http://www.treasury.gov.au. Other relevant sites include the NCC (http://www.ncc.gov.au), the Productivity Commission (http://www.pc.gov.au) and the Australian Competition and Consumer Commission (http://www.accc.gov.au). 10   /HJLVODWLRQ5HYLHZ :K\LV/HJLVODWLRQ5HYLHZ1HFHVVDU\" Restrictions imposed on markets by government regulation, for example, through the creation of legislated monopolies or the imposition of particular pricing practices, can be a major impediment to competitive outcomes. Compliance with these regulations can also impose significant costs on business. In recognition of this, the Competition Principles Agreement (CPA) states that legislation (including Acts, enactments, ordinances or regulations) should not restrict competition unless it can be demonstrated that: S S the benefits of the restriction to the community as a whole outweigh the costs; and the objectives of the legislation can only be achieved by restricting competition. This is generally referred to as the ‘public interest test’ (see also Box 5). The CPA further states that all existing anti-competitive legislation (enacted prior to 1996) should be reviewed against these criteria and modified or repealed where there is no net community benefit to its retention. The requirement to demonstrate net community benefit also applies to the introduction of new or amended legislation that restricts competition. To satisfy this commitment the Commonwealth introduced its regulation impact assessment process (see Section 1.4). Importantly, this process also provides that legislation that restricts competition may be retained or introduced where it is demonstrably in the public interest. However, recognising the continually changing economic environment and social objectives, legislation subjected to the public interest test must 11 be reviewed at least every ten years after its initial review or introduction. This requirement also applies to anti-competitive legislation reliant on a section 51(1) exemption under the Trade Practices Act 1974 (see Chapter 6). %R[:KHQLV/HJLVODWLRQ$QWLFRPSHWLWLYH" While almost no regulatory activity is completely neutral in its implications for competition, legislation may be regarded as affecting competition where it directly or indirectly: S S S S S S S governs the entry and exit of firms or individuals into or out of markets; controls price or production levels; restricts the quality, level or location of goods and services available; restricts advertising and promotional activities; restricts price or type of inputs used in the production process; confers significant costs on business; or provides advantages to some firms over others by, for example, sheltering some activities from the pressures of competition.7 The objective of the CPA legislation reform program is to remove restrictions on competition that are demonstrated not to be in the interest of the community as a whole. However, following the Prime Minister’s policy statement More Time for Business (1997), the Commonwealth legislation review requirement was expanded to include the assessment of legislation that imposes costs or confers benefits on business. The aim is to reduce compliance costs and paperwork burden for business. 7 Hilmer, F., Rayner, M., and G. Taperell (The Independent Committee of Inquiry into a National Competition Policy) (1993), National Competition Policy, Australian Government Publishing Services, Canberra, p 191. 12 s A critical component of legislative reform is the validity of the review process. To ensure all relevant costs and benefits are recognised, the CPA sets out a range of issues that should be considered in examining any particular piece of legislation. These issues are set out in Box 5, and include social, regional and environmental factors. In many cases, it may be difficult to quantify all the costs and/or benefits of specific regulation to the community as a whole. The requirement to identify non-quantifiable effects to a particular course of action means that these can be explicitly considered in the decision making process, rather than excluded due to the lack of an agreed ‘dollar value’. A clear identification of the costs, benefits and distributional impacts resulting from the removal of a regulation on wider public interest grounds will also assist governments to introduce targeted adjustment mechanisms. Such assistance may be considered necessary to mitigate the impact of transitional costs of reform on particular sectors of the community. 13 %R[$VVHVVLQJWKH3XEOLF,QWHUHVW Without limiting the matters to be taken into account, in assessing the costs and benefits, the following matters should be taken into account: S S S government legislation and policies relating to ecologically sustainable development; social welfare and equity considerations, including community service obligations; government legislation and policies relating to matters such as occupational health and safety, industrial relations, access and equity; economic and regional development, including employment and investment growth; the interests of consumers generally or of a class of consumers; the competitiveness of Australian businesses; and the efficient allocation of resources. S S S S Source: Competition Principles Agreement (1995), sub-clause 1(3) Commonwealth compliance with its 1998-99 legislation review requirements is independently assessed by the Productivity Commission and reported in Regulation and its Review 1998-99 and by the National Competition Council (NCC). A detailed examination of Commonwealth progress during 1998-99 in the review and reform of existing anti-competitive legislation is contained in Sections 1.2 and 1.3. A summary of compliance with regulation impact assessment requirements for legislation introduced or amended after 1995 is in Section 1.4. Where Commonwealth legislation is complemented or matched by State or Territory regulation, a co-ordinated ‘national review’ may be 8 This function is undertaken by the Office of Regulation Review, an independent office located within the Productivity Commission. 14 s undertaken. Commonwealth participation in national reviews for the period 1998-99 is examined in Section 1.3.  &RPPRQZHDOWK/HJLVODWLRQ 5HYLHZ6FKHGXOH The Commonwealth Legislation Review Schedule (CLRS) details the Commonwealth’s timetable for the review and, where appropriate, reform of all existing legislation that restricts competition or imposes costs on business by the year 2000.9 The original Schedule, prepared in June 1996, listed a total of 98 separate Legislation Reviews. However, changing circumstances have resulted in some reviews being added, rescheduled or deleted.10 Legislation may be deleted from the Schedule if it is not considered cost effective to review  where the competition effects are small relative to the cost of implementing new arrangements  or it is repealed as a consequence of changes to Government policy. Any change to the Schedule requires the approval of the Prime Minister, Treasurer and the responsible Portfolio Minister(s). With the reallocation of responsibility for National Competition Policy matters within the Treasury portfolio, the Treasurer’s role is now performed by the Minister for Financial Services and Regulation. The CLRS as at 30 June 1999 is at Appendix A. 5HSRUWLQJ5HTXLUHPHQWVIRU/HJLVODWLRQ5HYLHZV The following sections provide information on Commonwealth progress during 1998-99 in meeting its scheduled legislation review commitments. 10 This includes extension of the CLRS to incorporate reviews scheduled on the basis of direct or significant indirect impacts on business. 15 The reviews have been organised to reflect both the scheduled commencement date, and the degree of progress made to date. For each individual review, information is provided on the following: &RPSOH[LW\RIWKH5HYLHZDQG'HWDLOVRIWKH5HYLHZ3DQHO The priority and importance of the legislation being reviewed varies. Accordingly, the method of review for the legislation takes into account its significance and the extent of expected benefits from reform. More significant pieces of legislation are reviewed by an independent committee of inquiry or the Productivity Commission. Where such review costs are not considered warranted, reviews are generally undertaken by a committee of officials. The ministerial portfolio with current responsibility for the legislation,11 and the commencement date of the review, is also identified. 7HUPVRI5HIHUHQFH The scope and structure of each review is outlined in its terms of reference. Without limiting the terms of reference for each review, the CPA establishes that scheduled reviews should: S S S S S clarify the objectives of the legislation; identify the nature of the restriction on competition; analyse the likely effect of the restriction on competition and on the economy in general; assess and balance the costs and benefits of the restriction; and consider alternative means of achieving the same result including non-legislative approaches. The Office of Regulation Review (ORR)12 is required to approve the terms of reference for any scheduled Commonwealth review. To assist this process, and to ensure a consistent approach and focus to reviews, 11 12 In some cases, ministerial responsibility for particular legislation may have changed during the reporting period. Similarly, Department titles referred to in connection with various reviews may differ over time. See footnote 8 and Section 1.4 for further information on the responsibilities of the ORR. 16 s the ORR has developed a template terms of reference to be tailored to suit each piece of legislation to be reviewed.13 A copy of each review’s terms of reference is included in an attachment to this chapter. ([WHQWRI3XEOLF&RQVXOWDWLRQ Public consultation is a required part of all Commonwealth legislation reviews. This obligation was stipulated by the Commonwealth in the release of the CLRS. The NCC has recommended that, to meet this obligation, all reviews should be conducted in an independent, open and transparent way, against clear terms of reference, and in a manner that allows interested parties to participate. The review terms of reference will set out the minimum public consultation to be undertaken. In the interest of transparent decision making and ensuring the broadest range of views on the matter under consideration are received, this generally involves advertising the review and seeking written submissions on a national basis. There may also be more targeted consultations with specific stakeholders. 5HYLHZ3URJUHVVRU5HFRPPHQGDWLRQVDQG *RYHUQPHQW5HVSRQVH Further information is reported depending on the extent of progress in the review. Where the review has been completed, if possible, a summary of the main review recommendations is provided. The final report of each review is to be made publicly available, although for particularly sensitive reviews this may not occur immediately. A summary of the Government’s response recommendations is included, where applicable. to the review 17  /HJLVODWLRQ6FKHGXOHGIRU5HYLHZLQ This section outlines progress in those Legislation Reviews scheduled to commence in 1998-99. The reviews are grouped according to the extent of progress made.14  5HYLHZ&RPSOHWHGDQG5HIRUP2XWFRPHV$QQRXQFHG 7UDGH 3UDFWLFHV $FW  ² 3DUW ; VKLSSLQJ OLQHV 'HSDUWPHQW RI 7UDQVSRUW DQG 5HJLRQDO 6HUYLFHV Part X of the Trade Practices Act 1974 (TPA) regulates the conditions under which international liner shipping companies are permitted to collaborate as conferences in Australia in order to provide joint liner services (joint scheduled shipping services). The Part provides limited and conditional exemptions from Part IV (anti-competitive conduct provisions) of the TPA, which, in relation to outwards liner shipping services, involve various obligations toward Australian exporters. The review commenced in March 1999. It was conducted by the Productivity Commission (PC). Dr Neil Bryon was the Presiding Commissioner and Dr Robin Stewardson the Associate Commissioner. 3XEOLF &RQVXOWDWLRQ The PC advertised for submissions in national and specialist industry press in March 1999. An issues paper was released, and a round of visits to industry participants and other interested parties was undertaken. Twenty five submissions were received. An interim Position Paper was released on 29 June 1999, resulting in a further fifteen submissions. Public hearings were conducted in Sydney and Melbourne in July. 5HYLHZ 5HFRPPHQGDWLRQV The Productivity Commission submitted its final report, International Liner Cargo Shipping: Part X of the Trade Practices Act 1974, to the 14 Information on progress has been provided by the responsible portfolio department or agency. 18 s Government in September 1999. The report was released on 23 December 1999. It recommended that Part X should be retained and re-examined in 2005. This was based on the findings that Part X: S S involves minimal  but adequate  regulation and promotes commercial relationships and commercial dispute resolution; is neutral with respect to market arrangements and has not hindered efficient market outcomes or hindered competitive forces in liner shipping markets; has supported the negotiating position of Australian shippers (that is, exporters) and assisted in providing them with predictable service outcomes; is compatible with international regulatory regimes; and is low cost. S S S There were a number of further specific recommendations. S Clarification that the exemption relating to rate setting extends to land-based charges that normally form part of the ‘terminal-to-terminal’ shipping contract (that is, one that includes not only the ‘blue water’ component but also the sorting and stacking of containers within a container terminal). The Commission favours widening the definition of terminal from the present ‘within the limits of a wharf as under the Customs Act 1901’ to include terminals located within the metropolitan area of port cities. (Recommendation 8.1A) Confirmation of the existing practice of allowing members of shipping conferences to negotiate collectively with stevedores. (Recommendation 8.1B) Deletion of sections 10.14.2 and 10.22.2, which allow the fixing of door-to-door freight rates by conferences for outward and inward liner shipping respectively. Deleting these sections will require the insertion of a clause in sections 10.14.1 and 10.14.2 permitting conferences to set terminal-to-terminal rates. (Recommendation 8.2) S S 19 S Repeal of section 10.05, which prohibits price discrimination in certain circumstances. The Commission considers that the price discrimination provisions of Part X serve no useful purpose and indeed are potentially harmful if they discourage efficient price discrimination. In addition they would be extremely difficult to implement. (Recommendation 8.3) Addition of a national interest test, similar to that in section 10.67 of Part X, to apply to any determination by the Minister in relation to sections 10.45(a)(v) and 10.53. This amendment would ensure that shippers’ interests were taken into account explicitly in a Ministerial determination as to whether a conference or non-conference carrier with substantial market power was misusing market power in order to hinder an efficient Australian carrier. (Recommendation 8.4) Provision for more effective and flexible enforcement of undertakings. The provisions of section 87C of the TPA could serve as a useful model. (Recommendation 8.5) S S In addition to making recommendations, the report contains findings on several issues on which it decided not to recommend amendments to the current legislation. These were: S the method of dealing with Terminal Handling Charges (THCs) should be a matter for negotiation between shippers and carriers (Finding 8.1); while importers should not be precluded from forming a collective to negotiate THCs if a cost effective mechanism can be devised, imposing the arrangements applying to outward shipping conference agreements to inward conference agreements could pose significant jurisdictional problems for little benefit (Finding 8.2); Non-binding discussion agreements (which cover conference and non-conference carriers) should not be treated differently from other forms of cooperation among carriers (Finding 8.3); sufficient competitive pressures exist to negate any potential monopoly power of closed conferences (Finding 8.4); the current controls in Part X should be retained (Finding 8.5); S S S S 20 s S the processes for registering conference agreements provide important transparency benefits and should be retained (Finding 8.6); funding for the Australian Peak Shippers’ Association should come from beneficiaries of its activities, namely Australian shippers (Finding 8.7); and should be retained in the TPA rather than being transferred to a separate Act (Finding 8.8). S S *RYHUQPHQW 5HVSRQVH In December 1999, the Government announced that it had accepted the recommendations of the PC to retain Part X of the TPA. However, it will implement some further amendments to improve the application of competition policy principles to international liner shipping and to protect the interests of Australian shippers (exporters and importers). The government supports recommendation 8.1A. However, this will be clearly defined as contracts covering ocean transport as well as loading and discharge operations undertaken on behalf of a liner shipping company. These operations may take place at terminals on the waterfront or some inland depot type facility used for assembling export cargo for delivery to a port, or delivering cargo to importers. The government agrees with recommendation 8.1B, indicating that allowing carriers to negotiate a conference rate with stevedores promotes efficient outcomes, as it allows conference carriers in each trade to utilise countervailing market power in negotiations with stevedores in the duopoly stevedoring market prevailing in most Australian ports. It was also considered appropriate that this regulatory regime be periodically reviewed, given the dynamic nature of international liner cargo shipping. In addition to the Commission’s recommendations, the Government has decided that the Minister for Transport and Regional Services and the Australian Competition and Consumer Commission (ACCC) should have some increased powers to address concerns about unreasonable anti-competitive behaviour. 21 The Government has accepted Findings 8.1, 8.5, 8.6, 8.7 and 8.8. In respect of the other Findings the Government has made the following decisions: )LQGLQJ  The current practice of providing inward liner shipping lines with a blanket exemption to collaborate as conferences, without any of the obligations imposed on outward shipping conferences, exposes importers to possible abuse of market power by inward conferences. The Government has decided that, as far as practicable, the arrangements applying to outward conferences should also apply to inward conferences. It is recognised that care will need to be taken to avoid conflicts of jurisdiction that may arise where inward conferences are subject to competition laws in the country of export. Both the USA and the European Union have exercised jurisdiction over inward and outward conferences for some time. The OECD has established a set of principles concerning the regulation of international liner shipping, which include principles aimed at avoiding problems from overlapping jurisdictions. The Government will be guided by these principles. )LQGLQJ  The Government has noted the PC’s view that discussion agreements (that is, non-binding agreements covering conference and non-conference carriers) should not be treated differently from other forms of cooperation among carriers. However, the 1993 independent review of Part X, chaired by Mr Patrick Brazil, AO (Brazil Review), came to the conclusion that additional powers were needed to protect shipper interests in respect of agreements of that type. The Government has also noted that exporters that participated in the PC review considered that discussion agreements should be subject to greater scrutiny and controls. Discussion agreements, and similar types of arrangements among shipping lines, have the potential to cover a very large proportion of 22 s carriers in a particular trade and as such have the potential to significantly reduce the current levels of competition in liner trades. This in turn could lead to unreasonable increases in freight rates and/or unreasonable reductions in shipping services. Accordingly, the Government has decided that the Minister for Transport and Regional Services and the ACCC should have increased powers to deal with concerns that may arise from the operation of certain agreements that are likely not to result in a public benefit (for example, accords and discussion agreements). These concerns are only likely to arise in ‘exceptional circumstances’. Under these arrangements, the ACCC will be empowered to undertake an investigation on its own initiative into such agreements and make recommendations to the Minister. The Minister will have the power to suspend the operation of such agreements (in whole or in part) if, after consultations with affected parties (that is, conference lines and shippers), the conference lines do not give a court enforceable undertaking that would make suspension unnecessary. The Government recognises that shipping lines need to have confidence that the Part X exemptions will stand so long as they conduct their business in accordance with the objects of Part X, and do not engage in conduct that is, or is likely to be, against the public benefit. Guidelines will be issued covering the exercise of the increased powers granted to the Minister and the ACCC. This will include a preliminary assessment, by the ACCC, of the need for a public inquiry and the following criteria for assessing whether ‘exceptional circumstances’ exist: S S the agreement covers a substantial majority of shipping lines and capacity in a trade; the conduct of the parties to the agreement has led to, or is likely to lead to, an unreasonable increase in freight rates or an unreasonable reduction in services; and the public benefit flowing from the agreement is outweighed by the anti-competitive detriment. S 23 It is intended that the relevant industry parties be consulted in the preparation of the guidelines. Decisions made under the increased powers will be reviewable by the Australian Competition Tribunal in line with arrangements applying to authorisations and notifications under Part VII of the TPA. )LQGLQJ  The Government accepts the PC’s finding that shipping lines should be allowed to continue to form ‘closed conferences’ (that is, those that require agreement by existing members before new members are admitted). However, where refusal to admit a new member to a conference is considered to be contrary to the interests of shippers, the Minister and the ACCC would be empowered to investigate the situation. If such an investigation reveals that refusal to admit the new member is unreasonable, the Minister will be empowered to exercise the powers mentioned under Finding 8.3 above, with such a power being reviewable by the Australian Competition Tribunal.  5HYLHZV&RPPHQFHGEXWQRW&RPSOHWHG %URDGFDVWLQJ 6HUYLFHV $FW  %URDGFDVWLQJ 6HUYLFHV 7UDQVLWLRQDO 3URYLVLRQV DQG &RQVHTXHQWLDO $PHQGPHQWV $FW  5DGLR /LFHQFH )HHV $FW  7HOHYLVLRQ /LFHQFH )HHV $FW  'HSDUWPHQW RI &RPPXQLFDWLRQV ,QIRUPDWLRQ 7HFKQRORJ\ DQG WKH $UWV The Broadcasting Services Act 1992 and the Broadcasting Services (Transitional Provisions and Consequential Amendments) Act 1992 govern a diverse range of radio and television services for entertainment, education and information purposes. The Acts seek to provide a regulatory environment that varies according to the degree of influence of certain services on society, and that facilitates the development of an efficient and competitive market that is responsive to audience needs and technological developments. 24 s These Acts also seek to protect certain social and cultural values, including promoting a sense of Australian identity, character and cultural diversity; encouraging plurality of opinion and fair and accurate coverage of matters of national and local significance; respecting community standards concerning program material; and, protecting children from program material that may be harmful to them. The Radio Licence Fees Act 1964 and the Television Licence Fees Act 1964 seek to recover some of the value inherent in commercial broadcasting licences from commercial broadcasters and provide a return to the public for their use of scarce radio frequency spectrum. Fees are based on the advertising revenues of commercial broadcasters. The review commenced in March 1999. It is being undertaken by the PC, under the direction of Professor Richard Snape, President Commissioner and Mr Stuart Simson, Assistant Commissioner. 3XEOLF &RQVXOWDWLRQ The PC placed a notice in the national press inviting public participation in the inquiry and released an issues paper to assist the preparation of submissions by the public. One hundred and seventy-seven submissions were received prior to the release of the draft report. Informal discussions were also held with key stakeholders. Public hearings were held in Melbourne, Sydney and Brisbane, with video conferences to Perth, Adelaide and Hobart, during May and June 1999. These were attended by 67 individuals and organisations. The PC released a draft report, Broadcasting, in October 1999. A further invitation for written submissions and attendance at public hearings was made. 5HYLHZ 3URJUHVV The Commission is required to present its final report to the Government by 5 March 2000. 25 'DLU\ ,QGXVWU\ /HJLVODWLRQ 'HSDUWPHQW RI $JULFXOWXUH )LVKHULHV DQG )RUHVWU\ The Dairy Produce Act 1986 underpins the Government’s arrangements relating to the manufacturing milk sector (milk used in the manufacture of dairy products such as butter, cheese and milk powders). It specifies the objectives, functions and administrative arrangements of the Australian Dairy Corporation (ADC) and provides for the operation of the Commonwealth’s Domestic Market Support (DMS) scheme. The review formally commenced in December 1998, with the approval of the terms of reference. It is to be conducted by the PC. In 1999, a working group comprising representatives from all sectors of the dairy industry initiated a review focussed on how the dairy industry will operate in a deregulated environment. An important aspect of the review is the assessment of what industry based structures and activities will be required in the future, including an evaluation of the services currently provided by the ADC to determine which services will be required after deregulation. The PC review has been delayed until 1999-2000, to provide sufficient time to address industry uncertainty regarding the future operating environment for the deregulated dairy industry; in anticipation of the outcomes of the current industry review; and, in reflection of the Commission’s current resource constraints. )LVKHULHV /HJLVODWLRQ 'HSDUWPHQW RI $JULFXOWXUH )LVKHULHV DQG )RUHVWU\ The review encompasses a number of Commonwealth Acts that govern fisheries management in Australian waters. The most significant being the Fisheries Management Act 1991 and the Fisheries Administration Act 1991, which set out the objectives of the Commonwealth's involvement in fisheries management and the methods by which these objectives may be pursued. These objectives include the pursuit of efficient and costeffective practices, the need to preserve the long-term sustainability of the marine environment and accountability to the fishing industry and the broader Australian community. Apart from the management of Australia's fisheries, other issues regulated under the Acts, which are the 26 s subject of the review, include the imposition of levies and the issue of foreign fishing licences. The review commenced in October 1998. It is being conducted by a committee of officials, chaired by Mr Fred Woodhouse, and composed of representatives of RECFISH, Environment Australia, the Australian Fisheries Management Authority, Australian Seafood Industry Council, Commonwealth Scientific and Industrial Research Organisation and Commonwealth Department of Agriculture, Fisheries and Forestry. 3XEOLF &RQVXOWDWLRQ An issues paper was released in April 1999, and submissions called for by 8 June 1999. A total of 12 submissions were received. 5HYLHZ 3URJUHVV The draft report is expected to be provided by the end of March 2000. ,QWHOOHFWXDO 3URSHUW\ 3URWHFWLRQ /HJLVODWLRQ 'HVLJQV $FW  3DWHQWV $FW  7UDGH 0DUNV $FW  &RS\ULJKW $FW  DQG &LUFXLW /D\RXWV $FW  'HSDUWPHQW RI ,QGXVWU\ 6FLHQFH DQG 5HVRXUFHV $WWRUQH\*HQHUDO¶V 'HSDUWPHQW The general objective of intellectual property law is to maximise the difference between the social value of intellectual property created and used, and the social cost of its creation (including the cost of administering the system). Thus the law endeavours to provide an appropriate incentive and reward for innovation by balancing the interests of innovators and the general public. The review of the intellectual property protection legislation (Designs Act 1906, Patents Act 1990, Trade Marks Act 1995, Copyright Act 1968 and Circuit Layouts Act 1989) commenced in June 1999. It is being undertaken by an independent committee of review chaired by Mr Henry Ergas, Managing-Director of the independent economic consultancy, The Network Economics Consultancy Group. Mr Ergas has a strong background in Australian and international industry policy, competition policy, and regulation. 27 The committee also includes Professor Jill McKeough, Head of School, Faculty of Law, University of New South Wales, and Mr John Stonier, former BHP Director of Development and Investments. Mr Andrew Bain, former Director General of IP Australia is assisting the committee as special adviser. 3XEOLF &RQVXOWDWLRQ An issues paper was released for public comment on 17 September 1999, with comments to be provided to the Review Committee by 15 November 1999. The Review Committee has undertaken further consultations throughout Australia. 5HYLHZ 3URJUHVV A draft report is expected to be released in April 2000. /DQG $FTXLVLWLRQ $FWV D /DQG $FTXLVLWLRQ $FW  DQG UHJXODWLRQV E /DQG $FTXLVLWLRQV 'HIHQFH $FW  F /DQG $FTXLVLWLRQ 1RUWKHUQ 7HUULWRU\ 3DVWRUDO /HDVHV $FW  'HSDUWPHQW RI )LQDQFH DQG $GPLQLVWUDWLRQ The Land Acquisition Act 1989 provides the legislative framework for the Commonwealth to acquire and dispose of property. In particular it provides for the compulsory acquisition of interests in land and the determination of compensation payable. The Land Acquisition (Defence) Act 1968 has the singular purpose of acquiring some particular land in NSW which could not be acquired at the time by the Lands Acquisition Act 1955. The Land Acquisition (Northern Territory Pastoral Leases) Act 1981 acquires some particular leases in the Northern Territory. It was enacted as a protective measure in case the acquisition effected by the Land Acquisition Act was found to be invalid. The review of the Land Acquisition Acts commenced in May 1999. It is being undertaken by a intra-departmental committee consisting of a General Manager (Chair), and three other senior officers. Additionally, a consultant in administration provided comments on the draft recommendation. 28 s 3XEOLF &RQVXOWDWLRQ Advertisements were placed in the national press announcing the review, and calling for public submissions. 5HYLHZ 3URJUHVV It is expected that the final review report will be publicly released shortly.  5HYLHZVQRW&RPPHQFHG $QWLGXPSLQJ $XWKRULW\ $FW  &XVWRPV $FW  3DUW ;9% DQG &XVWRPV 7DULII $QWLGXPSLQJ $FW  $WWRUQH\*HQHUDO¶V 'HSDUWPHQW The review of the Anti-dumping Authority Act 1988, Customs Act 1901 Part XVB and the Customs Tariff (Anti-dumping) Act 1975 was rescheduled to commence in 1999, to allow implementation of the Government’s commitments to reduce the time taken for individual inquiries into possible dumping of imports. The details as to the timing and terms of reference for the inquiry are yet to be finalised. Reference to the Anti-dumping Authority Act 1988 has been deleted, as this act was repealed in December 1998. $XVWUDOLD 1HZ =HDODQG )RRG $XWKRULW\ $FW  )RRG 6WDQGDUGV &RGH 'HSDUWPHQW RI +HDOWK DQG $JHG &DUH This review had not commenced by 30 June 1999. &XVWRPV $FW  ² &XVWRPV 3URKLELWHG ([SRUWV 5HJXODWLRQV  1XFOHDU 0DWHULDOV 5HJXODWLRQ  H[SRUW FRQWUROV $WWRUQH\*HQHUDO¶V 'HSDUWPHQW This review had not commenced by 30 June 1999. It was subsequently deleted from the schedule. 29 'HIHQFH )RUFH +RPH /RDQV $VVLVWDQFH $FW  'HSDUWPHQW RI 'HIHQFH The Department of Defence has conducted an internal review of this legislation. Confirmation regarding its consistency with Commonwealth Legislation Review requirements is being assessed. ([SRUW )LQDQFH ,QVXUDQFH &RUSRUDWLRQ $FW  ([SRUW )LQDQFH ,QVXUDQFH &RUSRUDWLRQ 7UDQVLWLRQDO 3URYLVLRQV DQG &RQVHTXHQWLDO $PHQGPHQWV $FW  'HSDUWPHQW RI )RUHLJQ $IIDLUV DQG 7UDGH This review had not commenced within the reporting period. It was subsequently deferred pending the outcome of a separate review process required by Government, and expected to address the same issues. )LQDQFLDO 7UDQVDFWLRQ 5HSRUWV $FW  DQG 5HJXODWLRQV $WWRUQH\*HQHUDO¶V 'HSDUWPHQW The objective of the Financial Transaction Reports Act 1998 is to facilitate the administration and enforcement of taxation laws, and laws of the Commonwealth and Territories other than taxation laws, and to make information collected for these purposes available to State authorities to facilitate the administration and enforcement of State laws. Draft terms of reference have been provided to the Office of Regulation Review for approval. +HDOWK ,QVXUDQFH $FW  3DUW ,,$ 'HSDUWPHQW RI +HDOWK DQG $JHG &DUH The review of Part IIA of the Health Insurance Act 1973 as it relates to the Pathology Licensed Collection Centre Scheme had not commenced by 30 June 1999. This delay largely reflected the impact of negotiations with the pathology profession on the second Pathology Agreement in the lead up to the 1999-2000 Budget. The Agreement contains a number of major initiatives including a cap on annual growth in Medicare outlays on 30 s pathology, the replacement of the Licensed Collection Centre Scheme from 1 July 2000 with a new set of arrangements for specimen collection centres, and a broader review of the legislation relating to pathology. The review is expected to commence in early 2000. 1DYLJDWLRQ $FW  'HSDUWPHQW RI 7UDQVSRUW DQG 5HJLRQDO 6HUYLFHV The Navigation Act 1912 provides a legislative basis for many of the Commonwealth’s responsibilities for maritime matters including ship safety, coasting trade, employment of seafarers and shipboard aspects of the protection of the maritime environment. It also regulates wreck and salvage operations, passengers, tonnage measurement of ships and a range of administrative measures relating to ships and seafarers. The review of the coastal trade provisions of Part VI of the Act was scheduled for review in 1998-99. In 1997, the Shipping Reform Group considered these provisions in its report. Accordingly, a comprehensive review of the other parts of the Act was substituted for Part VI review. The review is being conducted by officials of the Department of Transport and Regional Services and the Australian Maritime Safety Authority. The review team is operating with the guidance of an independent steering group comprised of the chairman Mr Rae Taylor, AO; Mr Lachlan Payne, Chief Executive Officer, Australian Shipping Federation; Mr Barry Vellnagel, Deputy Director, Minerals Council of Australia; Mr Clive Davidson, Chief Executive, Australian Maritime Safety Authority and Ms Joanne Blackburn, Department of Transport and Regional Services. 3XEOLF &RQVXOWDWLRQ An issues paper was distributed to over 200 stakeholders. In August 1999 the review team wrote to interested parties, which included shipping lines and shipping organisations, maritime unions, shipper organisations, marine pilots, shipbuilder associations, international, Commonwealth and State government agencies, seafarer welfare organisations and conservation groups, sending them a copy of the issues paper and inviting submissions. The review was also advertised 31 in major newspapers and in the specialist shipping papers Lloyds DCN and Lloyds International. Submissions were received from 44 individuals and organisations. Workshops were held in Melbourne, Sydney and Perth during September 1999 to brief industry on the review and to identify the main issues of concern to the shipping, bulk shipper and offshore petroleum industry support sectors. The National Marine Safety Committee Industry Advisory Panel was briefed about the review on 31 August 1999 in Brisbane. The review has endeavoured to ensure close consultation with parallel reviews being conducted by the Department of Industry, Science and Resources of the Petroleum (Submerged Lands) Act 1967 and the associated safety case regime for offshore petroleum installations. 5HYLHZ 3URJUHVV A progress report was provided to the Minister for Transport and Regional Services in December 1999, outlining the principal issues and proposed policy direction of the review. The Minister endorsed the proposed directions as a basis for further consultations with stakeholders. The final report is due by July 2000. 9HWHUDQV¶ (QWLWOHPHQW $FW  ² 7UHDWPHQW 3ULQFLSOHV VHFWLRQ  DQG 5HSDWULDWLRQ 3ULYDWH 3DWLHQW 3ULQFLSOHV VHFWLRQ $ 'HSDUWPHQW RI 9HWHUDQV¶ $IIDLUV The review had not commenced by 30 June 1999.  /HJLVODWLRQ6FKHGXOHGIRU5HYLHZLQ² 5HIRUPQRW)LQDOLVHGE\-XQH The 1997-98 Commonwealth Legislation Review Annual Report outlined the progress of those legislation reviews scheduled to commence within that year (or earlier). Many had not reached the reform implementation stage by the end of the reporting period. 32 s This section updates the progress of these reviews and any reforms that have consequently been implemented. 5HYLHZV&RPSOHWHGDQG5HIRUP2XWFRPHV$QQRXQFHG ,QWHUQDWLRQDO $LU 6HUYLFHV $JUHHPHQWV ,QWHUQDWLRQDO $LU 6HUYLFHV &RPPLVVLRQ $FW  'HSDUWPHQW RI 7UDQVSRUW DQG 5HJLRQDO 6HUYLFHV Australia’s international air services are conducted within a framework of bilateral air services agreements and arrangements between pairs of countries. There are currently over 3000 such arrangements worldwide, 55 involving Australia. An International Air Services Agreement (ASA) specifies the terms and conditions under which airlines of the two countries involved can fly to, from, between and beyond each country. The International Air Services Commission (IASC) is a statutory body responsible for allocating capacity negotiated under Australia’s ASAs to existing and potential Australian international carriers. Australia’s ASAs and the International Air Services Commission Act 1992 were separately scheduled for review, with the ASAs review to be conducted in 1996-97. The two reviews were subsequently combined and referred to the (then) Industry Commission for inquiry in December 1997. 3XEOLF &RQVXOWDWLRQ The Industry Commission commenced the consultation process with informal discussions and a request for input from concerned stakeholders. This was followed up with an initial set of hearings in March 1998. In June, the PC (formerly the Industry Commission) released a draft report embodying a series of draft recommendations for comment. A round of public hearings was held in July 1998. 5HYLHZ 5HFRPPHQGDWLRQV The PC submitted its final report in September 1998. The report’s main recommendations were: 33 S That Australia should seek to negotiate reciprocal ‘open skies’ agreements on a bilateral basis which would remove restrictions on: − − − − − − S capacity and frequency to, from, between and beyond Australia and its bilateral aviation partner; codesharing on each other’s airlines; routes, including points of access to the Australian and the bilateral partner’s markets, intermediate and beyond points; multiple designation of airlines by Australia and the bilateral partner; ownership as a basis for airline designation; and prices. Such reciprocal arrangements should also contain restrictions on government subsidies, where these are significant. Australia should also be prepared to negotiate, on a case by case basis, removal of restrictions on cabotage and the development of ‘stand alone’ services between the bilateral partners and third countries (so called seventh freedom services). The Australian Government should promote discussion with the World Trade Organisation (WTO) membership to determine a process for including all air services in General Agreement on Trade in Services (GATS). As a step toward the further liberalisation of international air services, the Commission recommends reforms to ASAs to benefit regional Australia, encompassing both bilateral and unilateral elements. Bilaterally, Australia should offer unlimited capacity to fly to all airports other than Sydney, provided that Australian carriers are offered the same routes on a reciprocal basis by their bilateral partners. The Australian Government should take up the British offer of similar opportunities. Unilaterally, Australia should offer within negotiated capacity: S S S S 34 s − removal of restrictions on the number points to be served and designation of all cities in Australia other than Sydney, Melbourne, Brisbane and Perth; unrestricted rights for foreign airlines to codeshare to all points in Australia on Australian domestic airlines; and unrestricted rights for foreign airlines to carry their own stop-over traffic. − − S Contested capacity should continue to be allocated by the IASC using a public benefit test. *RYHUQPHQW 5HVSRQVH On 3 June 1999, the Government issued a joint statement by the Treasurer and the Minister for Transport and Regional Services on international aviation policy. ,QWHUQDWLRQDO $LU 6HUYLFH $JUHHPHQWV The Government decided that Australia would, in future, seek to negotiate ‘open skies’ arrangements with like-minded countries where this is in the national interest. In other cases, the Government will seek to negotiate the most liberal bilateral arrangements possible, including unrestricted access for dedicated freight aircraft and a regional package offering international airlines unrestricted access to all of our international airports except Sydney, Melbourne, Brisbane and Perth. The current consultation arrangements for advice to the Minister for Transport and Regional Services on the negotiating position for air services negotiations will be extended and formalised. The decision on what constitutes the national interest remains with the Minister. The Government disagreed with the recommendation that foreign international airlines be able to carry domestic traffic within Australia as a right traded under a bilateral air services agreement. The conclusion of the review was that it would be of only marginal economic benefit. It also decided to reform the foreign ownership rules for Australian airlines. Foreign persons (including foreign airlines) will be allowed to 35 acquire up to 49 per cent of the equity of an Australian international airline (other than Qantas), and up to 100 per cent of the equity in an Australian domestic airline, unless this is contrary to the national interest. The existing ownership restrictions on Qantas will be retained. These limit foreign ownership of Qantas to 49 per cent, ownership by foreign airlines in aggregate to 35 per cent, and ownership by an individual (including a foreign carrier) to 25 per cent. The Government will also seek to liberalise international aviation on a multilateral basis through regional initiatives such as APEC and through the GATS round beginning in 2000. ,QWHUQDWLRQDO $LU 6HUYLFHV &RPPLVVLRQ The Government will reform the roles and responsibilities of the IASC to simplify processes for allocating capacity to airlines. The Government disagreed with the recommendation that the start up provisions be removed from the Minister’s policy statement. It considers that where capacity is constrained under an ASA, start up criteria provide a ‘one-off’ chance to introduce Australian competition on the route through allocating a new entrant a level of capacity appropriate to the development of efficient, economically sustainable services. It also disagreed with the recommendation that capacity allocations should be made in perpetuity and the IASC should be rigorous in enforcing the ‘use-it-or-lose-it’ provisions. The Government considers the existing review process of determinations is based on the proper assumption that these scarce rights are not ‘owned’ by the carriers. This process provides the necessary transparency for all parties concerned as well as the opportunity for capacity to be re-allocated should market and/or policy conditions change. 36 s  5HYLHZV&RPSOHWHG5HFRPPHQGDWLRQV XQGHU&RQVLGHUDWLRQ $XVWUDOLD 1HZ =HDODQG )RRG $XWKRULW\ $FW  'HSDUWPHQW RI +HDOWK DQG $JHG &DUH The review was originally scheduled for 1998-99 but was brought forward to coincide with the broader Food Regulation Review, undertaken by the Food Regulation Review Committee (see page 103). 3XEOLF &RQVXOWDWLRQ See page 104. 5HYLHZ 5HFRPPHQGDWLRQV The final report of the Food Regulation Review Committee, Food: A Growth Industry, was tabled in Parliament in August 1998, and is publicly available. The report made four recommendations relevant to the Australia New Zealand Food Authority Act 1991. These include a number of amendments to the Act to remove potentially anti-competitive provisions and improve the efficiency of the food standards setting processes. In particular, the report recommends: S the inclusion of an objective into the Act; amendment to the current section 10 objectives used for developing standards and updating of Australia New Zealand Food Authority’s (ANZFA) legislated functions; and the inclusion of a new section that provides that in carrying out is regulatory functions, the Authority must consider whether the benefits to the community as a whole will outweigh the costs and whether there are no alternatives which are more cost-effective in achieving such benefits. S *RYHUQPHQW 5HVSRQVH These recommendations were incorporated into amendments tabled in the Senate in March 1999. This bill was referred to a Senate Committee, which reported in August 1999. 37 %DQNUXSWF\ $FW  DQG %DQNUXSWF\ 5XOHV ² 7UXVWHH 5HJLVWUDWLRQ 3URYLVLRQV $WWRUQH\*HQHUDO¶V 'HSDUWPHQW The trustee registration provisions establish the qualifications and experience required by persons to be registered as bankruptcy trustees. The review of the provisions of the Bankruptcy Act 1966, the Bankruptcy Regulations and the Bankruptcy (Registration Charges) Act 1997 relating to the registration of private sector bankruptcy trustees commenced in June 1998. It was conducted by John Hawkless Consultants Pty Ltd, a consultant appointed by the Insolvency and Trustee Service Australia (a division of the Commonwealth Attorney-General’s Department). 3XEOLF &RQVXOWDWLRQ The review process principally involved consultation with key stakeholders such as registered trustees and credit providers and, through peak bodies, other insolvency practitioners and financial counsellors. Submissions from the public were invited. 5HSRUW 5HFRPPHQGDWLRQV The review report was finalised on 9 December 1998. It recommended that Insolvency and Trustee Service Australia (ITSA) continue to register bankruptcy trustees and that a handover of the trustee registration function to the private sector be considered if and when that sector has an appropriate and adequate infrastructure in place. *RYHUQPHQW 5HVSRQVH There is no Government response to the review report. The Minister for Justice and Customs approved the recommendations in late January 1999, subject to the comments of the Minister for Financial Services and Regulation, the Hon Joe Hockey, MP. On 24 June 1999, Mr Hockey advised that he had no comments on the matter. As a pre-requisite to consideration of any possible handover of the trustee registration function to the private sector, ITSA is considering a possible implementation strategy in consultation with the 38 s Commonwealth Treasury (which is considering a review of the regulation of corporate insolvency practitioners). &XVWRPV $FW  6HFWLRQV / &XVWRPV 9DOXDWLRQ /HJLVODWLRQ $WWRUQH\*HQHUDO¶V 'HSDUWPHQW The legislation provides the basis for determining the customs value of goods imported into Australia. This is used to determine the duty payable on imported goods, to compile import statistics and also contributes to the collection of sales tax where this is payable at the time of importation. Customs value will also contribute to the calculation of Goods and Services Tax (GST) on imported goods after 1 July 2000. The legislation enacts Australia’s obligations under the World Trade Organisation (WTO) Customs Valuation Agreement (Implementation of Article VII of the General Agreement on Tariffs and Trade). The review of sections 154 to 161L of the Customs Act 1901 commenced in June 1998. It was conducted by a taskforce of officials from the Department of Industry, Science and Resources, the Department of Foreign Affairs and Trade and the Australian Customs Service. Officers from the Australian Tax Office, Australian Bureau of Statistics and Commonwealth Treasury acted as observers in the review process. 3XEOLF &RQVXOWDWLRQ Advertisements were placed in the national press announcing the review, and calling for public submissions. Public hearings were also held. A draft report was released in January 1999. Thirty two parties participated in this process. 5HYLHZ 5HSRUW The review report was completed in April 1999 and made public on 16 June 1999. It recommended: S sections 154-161L of the Customs Act 1901 should be repealed and redrafted in a clear, straightforward and logically organised ‘plain English’ format that incorporates the language and terminology of the WTO Agreement on Customs Valuation as far as possible and is consistent with the Agreement; 39 S the redrafted legislation should contain clear statements of its purpose and objectives, including the primary purpose of specifying the methods for determining the value of all imported goods; the proposed new legislation should make clear the statutory basis on which importers are required to self-assess the value of imported goods; the legislation or its supporting material should clearly explain the principles which underpin Australia’s import valuation procedures and the intent behind each of the provisions in the legislation; the Australian Customs Service (ACS) should examine the feasibility of adopting a system of public valuation rulings; and the ACS should introduce, at the same time as the new legislation comes into effect, a program to provide public information about the requirements for valuation of imports under the proposed new legislation. S S S S *RYHUQPHQW 5HVSRQVH The ACS has consulted widely with other government agencies and there is general support for the recommendations. The support of relevant Ministers is currently being sought, at which time the Minister for Justice and Customs will write to the Prime Minister seeking approval to give effect to the recommendations. A government response is expected shortly. ([SRUW &RQWURO $FW  VXFK DV ILVK JUDLQV GDLU\ DQG SURFHVVHG IRRGV 'HSDUWPHQW RI $JULFXOWXUH )LVKHULHV DQG )RUHVWU\ The Export Control Act 1982 provides a comprehensive legislative base for the export inspection and control responsibilities for certain goods. The review (in relation to goods such as fish, grains, dairy processed foods etc) commenced in February 1998. It is being conducted by a review committee, chaired by Mr Peter Frawley, Chairman, Livecorp. Other members include Mr Raoul Nieper, an independent consultant and Chairman of the Australian Animal Health Council, 40 s Mr Lyndsay Makin, independent consultant, and Ms Barbara Wilson, National Manager (Technical Services) with the Australian Quarantine and Inspection Service (AQIS). 3XEOLF &RQVXOWDWLRQ Key stakeholders were contacted in February 1999 to assist in defining the major issues for the review. Advertisements were placed in the national press in March, inviting submissions on the operation of the Act. Invitations to make a submission were also sent to over three hundred stakeholders, including industry, commonwealth and state government bodies and governments of countries with significant agricultural imports from Australia. Over sixty written and verbal submissions were received. Other contemporary reviews were also drawn upon, including the Food Regulation ‘Blair’ Review and the Quarantine and Exports Advisory Council (QEAC) reviews of Dairy, Grains, Horticulture and Fish. Three hundred and twenty copies of the draft report were circulated to all major stakeholders, all of whom made a submission, and on request. A face-to-face consultation process has continued, involving over 30 stakeholders. A draft report was prepared in September 1999. Research was conducted into the costs and benefits of the Act, with the Australian Bureau of Agricultural and Resource Economics providing aspects of economic analysis. 5HYLHZ 3URJUHVV The final report was released in February 2000. Copies have been sent to stakeholders. Copies are available from the Shop front, Department of Agriculture, Fisheries and Forestry (AFFA). The recommendations of the review report are as follows: 41 5HFRPPHQGDWLRQ  The Review Committee recommends that: S S The Export Control Act be retained in its current form and with its current general structure. The title of the Act to be changed to the ‘Export Assistance Act’. 5HFRPPHQGDWLRQ  The Review Committee recommends that: S the Act be amended to include a statement of specific objectives. 5HFRPPHQGDWLRQ  The Review Committee recommends that programs established under the Act be administered under the following three tier model comprising: S S S Australian Standards (Tier 1); Standards set by overseas governments for access to their markets (Tier 2); and Market specific requirements (Tier 3). 5HFRPPHQGDWLRQ  The Review Committee recommends that: S Domestic and export standards for the production of food and agricultural products in Australia be harmonised and that they be consistent with relevant international standards. 5HFRPPHQGDWLRQ  The Review Committee recommends that: S Certification of Australian export products continue to be administered by a single government based agency. 5HFRPPHQGDWLRQ  The Review Committee recommends that: S Monitoring and inspection arrangements be made fully contestable under all programs as soon as third party arrangements are acceptable to overseas governments. 42 s 5HFRPPHQGDWLRQ  The Review Committee recommends that: S The focus of the Act extend through the entire food chain and not rely primarily on the product preparation stages immediately prior to export, as occurs at present. 5HFRPPHQGDWLRQ  The Review Committee recommends that: S Specific criteria for the application of the Act be prepared in consultation with industry. 5HFRPPHQGDWLRQ  The Review Committee recommends that: S Only prescribed goods be certified under the Act. 5HFRPPHQGDWLRQ  The Review Committee recommends that QEAC establish a program of periodic monitoring of the operation, particularly in economic terms, ensuring that: S S the activity under the Act and its administration are measurable against its objectives; and the Act be periodically monitored in relation to the net benefit it confers. 5HFRPPHQGDWLRQ  The Review Committee recommends that: S The current review of subordinate legislation should be accelerated and conducted with reference to the principles expressed in the Report, in particular, reflecting the partnership between government and industry, and the assumption of greater industry responsibility. 43 5HFRPPHQGDWLRQ  The Review Committee recommends that: S S S a Development Committee be established for each program; membership of the Committees comprises representatives of AQIS and industry; the Committees operate independently and be charged with the specific responsibility to determine strategies, establish priorities and approve plans for their implementation; and QEAC review the performance of these committees biennially and report to the Minister against the adopted plans. S 5HFRPPHQGDWLRQ  The Review Committee recommends that AQIS moves quickly to align the administration of the regulation with current Government policy on electronic commerce, recognising in particular: S advantages in establishing more easily accessible information bases and information services for stakeholders on such issues as importing requirements and microbiological testing; and the benefits of placing a greater emphasis on electronic commerce, particularly given government policy on this issue. S 5HFRPPHQGDWLRQ  The Review Committee recommends that the outcome of this Review and its recommendations be included as part of the Council of Australian Governments (COAG) policy on the reform of food regulation and further that: S AFFA/AQIS progress the recommendations in this context by developing an implementation plan with milestones for achievement over the next five years. The plan must show substantial changes occurring within 18 months. The Minister establishes a reporting framework for progress on implementation of recommendations taking into account the role of other government bodies, apart from AQIS. Implementation of the Committee's vision depends on securing commitment from Commonwealth bodies such as Australia New Zealand Food Authority (ANZFA) and all State and Territory Governments. S 44 s S Agriculture and Resource Management Council of Australia and New Zealand (ARMCANZ) oversights implementation of the Three-Tier model and facilitates harmonisation of State/Commonwealth standards for each industry or program area encompassed by the Act. +LJKHU (GXFDWLRQ )XQGLQJ $FW  9RFDWLRQDO (GXFDWLRQ 7UDLQLQJ )XQGLQJ $FW  DQG DQ\ RWKHU UHJXODWLRQ ZLWK VLPLODU HIIHFW WR WKH +LJKHU (GXFDWLRQ )XQGLQJ $FW  'HSDUWPHQW RI (GXFDWLRQ 7UDLQLQJ DQG