Commonwealth Numbered Regulations - Explanatory Statements

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TRADE PRACTICES REGULATIONS (AMENDMENT) 1997 NO. 86

EXPLANATORY STATEMENT

Statutory Rules 1997 No. 86

Issued by the Authority of the Assistant Treasurer

Trade Practices Act 1974

Trade Practices Regulations (Amendment)

Subsection 172(1) of the Trade Practices Act 1974 (the Principal Act) provides that the Governor-General may make regulations for the purposes of the Principal Act.

Part IIIA of the Principal Act includes provisions whereby third parties can seek access to services provided by essential infrastructure facilities of national significance. These provisions are an important feature of Australia's national competition policy reforms. They promote competitive markets in order to improve efficiency and service delivery.

In the electricity industry, reforms are being implemented by way of a code of conduct developed by industry participants and governments setting out market rules, including rules about access by third parties (such as electricity distributors) to network infrastructure. The code will be provided to the Australian Competition and Consumer Commission (the Commission) for acceptance under Part IIIA. In order to implement the access provisions of the code, it is envisaged that network service providers will offer access undertakings to the Commission under Part IIIA setting out obligations in relation to network access.

Under subsection 44ZZAA(1) of the Principal Act, a code can only be submitted to the Commission by an 'industry body'. Subsection 44ZZAA(8) of the Principal Act defines an 'industry body' as 'a body or association prescribed by the regulations for the purposes of this section'. For the electricity industry, the National Electricity Code Administrator Limited (NECA) will be the 'industry body'.

The regulations prescribe NECA as an 'industry body' for the purposes of subsection 44ZZAA(8) of the Principal Act.

In addition, the Amending Regulations have included in the Principal Regulations certain public interest requirements found in the intergovernmental Competition Principles Agreement (the Agreement) which the Commission is required to take into account when considering access matters.

The Agreement is an inter-governmental agreement setting out principles and processes for micro-economic reform. The Commonwealth, the Australian Capital Territory, the Northern Territory and all of the States are signatories to the Agreement. The principles are concerned with improving transparency and establishing a rigorous cost-benefit analysis in respect of government decisions about legislation. Public interest considerations underpin these decisions. In particular, clause 1(3) of the Agreement provides that governments must consider a non-exhaustive list of public interest requirements where these are relevant to their public interest decisions on particular competition policy issues.

The inclusion of these public interest requirements in the Principal Regulations reflects the Governments view that competition policy is not about maximising competition per se, but about using competition to improve the community's living standards.

Paragraph 44ZZAA(3)(e) of the Principal Act provides that, in deciding whether to accept an access code, the Commission must have regard to "any matters specified in regulations made for the purposes of this subsection".

The list of public interest requirements in clause 1(3) of the Agreement have been included in the Principal Regulations pursuant to subsection 172(1) of the Principal Act for the purposes of paragraph 44ZZAA(3)(e). The Commission is required to consider each these requirements where it is relevant to the acceptance of a particular access code. The following public interest requirements have been included in the Principal Regulations:

(a)        government legislation and policies relating to ecologically sustainable development;

(b)        social welfare and equity considerations, including community service obligations;

(c)       government legislation and policies relating to such matters such as occupational health and safety, industrial relations and access and equity;

(d)        economic and regional development including employment and investment growth;

(e)       the interests of consumers generally or of a class of consumers;

(f)       the competitiveness of Australian businesses; and

(g)       the efficient allocation of resources.

The regulations commenced on the date of Gazettal.


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