Victorian Numbered Acts Victorian Numbered ActsAfter Division 2 of Part 3 of the Port Management Act 1995 insert —
(1) The Commission must, not later than 6 months after a review period, conduct and complete an inquiry under the Essential Services Commission Act 2001 and report to the ESC Minister—
(a) as to whether a provider of prescribed services to whom a Pricing Order applies has complied with the Order during the review period; and
(b) if there was non-compliance with the Pricing Order, whether that non-compliance was, in the Commission's view, non-compliance in a significant and sustained manner.
(2) Subject to this Division, an inquiry under this section must be conducted in accordance with Part 5 of the Essential Services Commission Act 2001 but sections 40 and 46 of that Act do not apply in respect of that inquiry.
(3) As part of an inquiry under this section the Commission may take into account—
(a) any findings it has made in reports on previous inquiries under this section; and
(b) the nature and details of any instance of non-compliance with a Pricing Order by a provider of prescribed services that is the subject of a report on a previous inquiry under this section.
(4) Without limiting Part 5 of the Essential Services Commission Act 2001 , a final report on an inquiry under this section must include—
(a) the Commission's findings as to whether there has been non-compliance with a Pricing Order by a provider of prescribed services that is non-compliance in a significant and sustained manner; and
(b) the Commission's reasons for those findings.
(5) In this section—
"review period" means—
(a) the period commencing on the day on which the first Pricing Order made under section 49A takes effect and ending 5 years after that day; and
(b) every subsequent period of 5 years commencing on the day after the day on which the previous period ends.
The Commission must—
(a) provide a draft of a report on an inquiry under section 49I to the provider of prescribed services who is the subject of the inquiry; and
(b) give the provider an opportunity to make a written submission to the Commission on that draft report before the Commission prepares its final report on the inquiry.
(1) If the ESC Minister, having regard to an adverse compliance report and after consultation with the Minister, considers that the provider of prescribed services who is the subject of the report has not complied with a Pricing Order in a significant and sustained manner, the ESC Minister may give the provider a written notice (a show cause notice ).
(2) A show cause notice must—
(a) state that the ESC Minister considers that the provider of prescribed services has not complied with the Pricing Order in a significant and sustained manner and that the ESC Minister is considering making a re-regulation recommendation; and
(b) set out the nature and details of non-compliance with the Pricing Order that the ESC Minister considers constitute non-compliance in a significant and sustained manner; and
(c) specify any actions that the ESC Minister considers the provider may take to remedy that non-compliance or to prevent non-compliance, including the giving of an undertaking under section 49M; and
(d) state that the provider may make written submissions to the ESC Minister, in the time specified in the show cause notice, as to why, in the provider's view, the ESC Minister should not make a re-regulation recommendation.
(3) The time specified in a show cause notice for the purposes of subsection (2)(d) must not be less than 60 days after the notice is given to the provider.
(4) After receiving a written submission in response to a show cause notice, the ESC Minister, by written notice, may request further information from the provider of prescribed services within the period specified in that notice.
(5) The ESC Minister must not give a show cause notice until any appeal under section 55 of the Essential Services Commission Act 2001 relating to the adverse compliance report is finally heard and determined by the appeal panel under section 56 of that Act.
(6) The ESC Minister must cause to be published a show cause notice and a notice under subsection (4) on the Department's Internet site.
(1) Subject to this section, after the giving of a show cause notice to a provider of prescribed services, the ESC Minister must decide whether to make a re-regulation recommendation.
(2) Before making a decision under subsection (1), the ESC Minister must consult with the Minister.
(3) In deciding whether to make a re-regulation recommendation, the ESC Minister must have regard to—
(a) any written submission of the provider of prescribed services in response to the show cause notice that the Minister receives within the time specified in the notice, including any undertakings the provider proposes to give under section 49M; and
(b) any further information the provider gives to the Minister on a request under section 49K(4); and
(c) whether the provider has breached any undertaking given under section 49N; and
(d) whether it is in the public interest that Division 3 apply in relation to the provision of prescribed services.
(4) In having regard to the matter in subsection (3)(d), the ESC Minister must have regard to the objectives of this Part.
(5) The ESC Minister must decide whether to make a re-regulation recommendation within 90 days after the later of—
(a) the date specified in the show cause notice as the date by which the provider of prescribed services must make a submission; or
(b) the date on which the provider must provide the information requested under section 49K(4) to the ESC Minister.
(1) The ESC Minister may accept a written undertaking given by a provider of prescribed services who is the subject of an adverse compliance report in relation to the provider's non-compliance with a Pricing Order if the ESC Minister is satisfied that—
(a) the terms of the undertaking offered by the provider are appropriate to adequately address the provider's non-compliance with a Pricing Order; and
(b) the provider is reasonably likely to comply with the terms of the undertaking.
(2) Before accepting an undertaking under subsection (1), the ESC Minister must consult with the Minister.
(3) The provider of prescribed services may withdraw or vary the undertaking at any time, but only with the consent of the ESC Minister.
(4) The ESC Minister must cause to be published a copy of an undertaking accepted under subsection (1) on the Department's Internet site.
(1) This section applies if the ESC Minister considers that a provider of prescribed services whose undertaking has been accepted under section 49M has breached any of its terms.
(2) The ESC Minister may apply to the Supreme Court for an order under subsection (4).
(3) Before making an application under subsection (2), the ESC Minister must consult with the Minister.
(4) If, on an application under subsection (2), the Supreme Court is satisfied that the provider of prescribed services has breached a term of the undertaking, the Court may make all or any of the following orders—
(a) an order directing the provider to comply with that term of the undertaking;
(b) an order directing the provider to pay to the State an amount up to the amount of any financial benefit that the provider has obtained directly or indirectly and that is reasonably attributable to the breach;
(c) any order that the Court considers appropriate directing the provider to compensate any other person who has suffered loss or damage as a result of the breach;
(d) any other order that the Court considers appropriate.
(1) This Division applies during the Pricing Order transition period.
(2) This Division does not limit Division 2A.
If the Supreme Court is satisfied, on the application of the ESC Minister, that a provider of prescribed services has engaged, is engaging, or is proposing to engage in conduct that constitutes a contravention of an enforceable provision, the Court may make all or any of the following orders—
(a) an order granting an injunction on such terms as the Court thinks appropriate—
(i) restraining the provider from engaging in the conduct; or
(ii) if the conduct involves refusing or failing to do something, requiring the provider to do that thing;
(b) an order directing the provider to pay to the State an amount up to the amount of any financial benefit that the provider has obtained directly or indirectly and that is reasonably attributable to the contravention;
(c) an order directing the provider to compensate any other person who has suffered loss or damage as a result of the contravention;
(d) any other order that the Court thinks appropriate.
(1) This section applies if a person who is provided prescribed services considers that the provider of those services has not, in providing the services, complied with the Pricing Order which applies to those services.
(2) The person may complain to the Commission about the non-compliance with the Pricing Order.
(3) On receiving a complaint under subsection (2), the Commission may investigate the complaint.
(4) In investigating the complaint, the Commission may have regard to any matter raised or considered in—
(a) the Commission's most recent final published report; and
(b) any application to the Supreme Court under section 49P.
Note
The Commission must also have regard to the objectives of this Part and the objectives under section 8 of the Essential Services Commission Act 2001 when investigating a complaint—see section 48A.
(5) The Commission must inform the person of the outcome of its investigation of the person's complaint.
(6) If the Commission considers that the issues raised in the complaint have not been considered or dealt with under a Pricing Order or Division 2A or 2B, the Commission may refer the complaint to the ESC Minister.
In this Division—
"accrual building block methodology"—see section 49S;
"competitively neutral price", for a relevant service, means the price, determined through the application of the competitively neutral pricing principles, that is the lower of—
(a) the price which is likely to enable the recovery of the efficient costs attributable to any State cost contribution and any private cost contribution in providing the relevant service; and
(b) the price at which the port of Melbourne operator provides a service that is economically substitutable for the relevant service, having regard to any material differences between the quality or scope of the relevant service and the quality or scope of the economically substitutable service;
"competitively neutral pricing principles" means the principles specified in an Order under section 49ZC;
"handling", in relation to a container, includes loading, unloading, transporting or storing;
"private cost contribution" means the amount of any capital invested by a private sector entity in, or expenses incurred by a private sector entity in operating, a State sponsored port;
"private sector entity" has the same meaning as in the Delivering Victorian Infrastructure (Port of Melbourne Lease Transaction) Act 2016 ;
"relevant service" means any of the following services provided at a State sponsored port for the purpose of enabling the handling, at that port, of containers that are being transported from, or are to be transported to, a destination outside of Australia—
(a) the provision of channels used by vessels to access the State sponsored port;
(b) the provision of berths, buoys or dolphins in connection with the berthing of vessels carrying container cargoes in the State sponsored port;
(c) the provision of short term storage or cargo marshalling facilities in connection with the loading or unloading of vessels carrying container cargoes at berths, buoys or dolphins in the State sponsored port;
(d) a service that is prescribed;
"State cost contribution" means an amount reflecting the net competitive advantage conferred on or given to a State sponsored port operator and includes—
(a) an exemption from a requirement to pay a State tax or charge; and
(b) an exemption under a law of the State; and
(c) an explicit or implicit guarantee of debt executed or otherwise given by the State or by a Minister on behalf of the State; and
(d) a concessional interest rate on a loan given by a public sector entity; and
(e) an exemption from a requirement to account for depreciation expenses; and
(f) an exemption from a requirement to earn a commercial rate of return on assets; and
(g) a matter or thing referred to in section 49T(2);
"State sponsored port"—see section 49T;
"State sponsored port operator" means an operator of a State sponsored port.
49S Meaning of accrual building block methodology
(1) An accrual building block methodology is a methodology that—
(a) provides for an allowance to recover—
(i) a return on assets used by a State sponsored port operator to provide relevant services (the capital base of a State sponsored port operator ); and
(ii) a return of the capital base of a State sponsored port operator through depreciation; and
(iii) the forecast efficient operating expenditure that would be incurred by a State sponsored port operator acting prudently in the provision of relevant services; and
(b) requires that—
(i) an initial capital base of a State sponsored port operator be established utilising the depreciated optimised replacement cost approach; and
(ii) the value of that capital base be updated on an annual basis by applying a roll forward principle that takes the opening value at the start of a financial year, adds in capital expenditure when incurred or to be incurred and deducts an amount for the return of capital; and
(iii) the value of any assets transferred from a public sector entity to a private sector entity that form part of a private cost contribution for a State sponsored port be included in the capital base of a State sponsored port operator of that port at a value calculated using the depreciated optimised replacement cost approach; and
(c) requires costs incurred by a State sponsored port operator be allocated between different types of relevant services, and other services (if any), on the basis that—
(i) costs that are directly attributable to a service are to be allocated to that service; and
(ii) costs that are not directly attributable to a service are to be allocated on the basis of the expected revenue share of that service to expected total services revenue; and
(d) provides for the establishment of an aggregate revenue requirement that provides a State sponsored port operator with a reasonable opportunity to recover the allowances referred to in subsection (1)(a); and
(e) requires the aggregate revenue requirement to be used to establish the prices for relevant services that, if paid, would provide a State sponsored port operator a reasonable opportunity to recover its aggregate revenue requirement.
(2) For the purposes of subsection (1)(a)(i), an accrual building block methodology must provide for the recovery of a return on assets to be determined—
(a) by reference to that which would be required by a benchmark efficient entity providing services with a similar degree of risk and
(b) using an appropriate method that distinguishes between the cost of equity and debt so that a weighted average cost of capital can be derived.
(3) An accrual building block methodology must not, for the purposes of subsection (1)(c), allow for the inclusion, in the capital base of a State sponsored port operator, of any value attributable to rail, road or other landside infrastructure at a place that is outside a State sponsored port operated by that operator.
(1) A State sponsored port is a port located in Port Phillip Bay (other than the port of Melbourne) or in Western Port Bay—
(a) the main purpose of which is to handle international containers and at which containers may be handled; and
(b) to which a matter or thing set out in subsection (2) applies.
(2) The following are matters or things which apply for the purposes of subsection (1)—
(a) the port has been partially or fully constructed or is being operated by—
(i) a public sector entity; or
(ii) a private sector entity using financial support in the form of a grant from a public sector entity;
(b) any equity funding for construction of the port has been or is provided by or on behalf of a public sector entity on materially better terms than would be available to the operator of that port from a private sector entity;
(c) any debt funding for the construction of the port has been or is provided by or on behalf of a public sector entity on materially better terms than would be available to the operator of that port from a private sector entity;
(d) a public sector entity provides financial support or a financial concession in respect of the port that has the effect of materially reducing the cost of capital for or operating costs of the port (including the operating costs of users of the port) and that support or concession or a similar support or concession is not available to the port of Melbourne operator;
(e) a public sector entity provides financial support or a financial concession in respect of the costs of the transport of containers to or from the port that has the effect of materially reducing the operating costs of the transport of containers to or from the port and that support or concession, or a similar support or concession, is not available in respect of the transport of containers to or from the port of Melbourne;
(f) a public sector entity provides financial support or a financial concession to users of or tenants at or prospective users of or tenants at the port such that their cost of being or becoming a user or tenant of the port is materially reduced and that support or concession, or a similar support or concession, is not available to users of or tenants at or prospective users of or tenants at the port of Melbourne.
(1) This Division applies on and after the day on which the first lease of land comprising port assets is granted to a private sector entity under section 11 of the Delivering Victorian Infrastructure (Port of Melbourne Lease Transaction) Act 2016 .
(2) This Division ceases to apply on the day on which the lease referred to in subsection (1) ends.
Note
The Pricing Order made under Division 2, the ongoing monitoring regime under Division 2A and the transitional enforcement regime under Division 2B apply to the port of Melbourne operator.
(1) A State sponsored port operator must not provide a relevant service at a price that is lower than the competitively neutral price for the relevant service.
(2) For the purposes of complying with subsection (1), a State sponsored port operator must apply the competitively neutral pricing principles.
A State sponsored port operator must on or before 31 May every year (the "publication date")—
(a) publish all prices for every relevant service it will provide in the financial year after the publication date; and
(b) give a copy of those prices to the Commission.
(1) A State sponsored port operator must keep records (including financial and business records) relating to the prices for relevant services the operator provides in accordance with guidelines prepared under subsection (3).
(2) A State sponsored port operator must keep records (including financial and business records) relating to the prices for relevant services the operator provides in a manner that is consistent with guidelines prepared under subsection (3).
(3) The Commission must prepare guidelines for the purposes of subsection (1) and (2).
(1) This section applies if the ESC Minister or the port of Melbourne operator is of the view that a State sponsored port operator is providing, or is likely to provide, a relevant service at a price lower than the competitively neutral price for that service.
(2) The ESC Minister or the port of Melbourne operator may request the Commission to conduct an inquiry into the price for the relevant service.
(3) Before making a request, the ESC Minister must consult with the Minister.
(4) A request must—
(a) be in writing; and
(b) set out the grounds on which the ESC Minister or port of Melbourne operator requests the Commission to investigate the price for the relevant service; and
(c) include any relevant information or evidence in support of the grounds.
(1) The Commission must, no later than 3 months after receiving a request under section 49Y—
(a) conduct and complete an inquiry into the subject matter of the request; and
(b) prepare a final report on the inquiry.
(2) In the case of a request under section 49Y from the port of Melbourne operator, the Commission may refuse to act under subsection (1) if the Commission is of the view that the request—
(a) is frivolous; or
(b) is vexatious; or
(c) is without substance; or
(d) has been made in bad faith.
(3) Part 4, and sections 42 to 46, of the Essential Services Commission Act 2001 apply in respect of an inquiry under this section.
(4) A final report on an inquiry under this section must include—
(a) the Commission's findings as to whether the State sponsored port operator has been providing, or is likely to provide, a relevant service at a price lower than the competitively neutral price for that service; and
(b) the Commission's reasons for those findings.
(1) This section applies if the Commission in a final report on an inquiry under section 49Z finds that the State sponsored port operator has been providing, or is likely to provide, a relevant service at a price lower than the competitively neutral price for that service.
(2) The Commission may make a determination that specifies the minimum competitively neutral price for the provision of the relevant service.
(3) In addition, a determination must specify a period (not exceeding 5 years from the date the determination takes effect) during which the minimum competitively neutral price will apply to the provision of the relevant service.
(4) Section 35(1) to (3) and (5) of the Essential Services Commission Act 2001 applies to a determination of the Commission under this section as if the determination under this section were a determination under section 35 of that Act.
If the Supreme Court is satisfied, on the application of the ESC Minister or the port of Melbourne operator, that a State sponsored port operator has engaged, is engaging, or is proposing to engage in conduct that constitutes a contravention of a determination under section 49ZA, the Court may make all or any of the following orders—
(a) if the applicant is the ESC Minister—
(i) an order granting an injunction on such terms as the Court thinks appropriate—
(A) restraining the State sponsored port operator from engaging in the conduct; or
(B) if the conduct involves refusing or failing to do something, requiring the provider to do that thing;
(ii) an order directing the State sponsored port operator to pay to the State an amount up to the amount of any financial benefit that the operator has obtained directly or indirectly and that is reasonably attributable to the contravention;
(iii) an order directing the provider to compensate any other person who has suffered loss or damage as a result of the contravention;
(b) if the applicant is the port of Melbourne operator, an order granting an injunction on such terms as the Court thinks appropriate—
(i) restraining the State sponsored port operator from engaging in the conduct; or
(ii) if the conduct involves refusing or failing to do something, requiring the provider to do that thing;
(c) in all cases, any other order that the Court thinks appropriate.
(1) The Governor in Council, by Order published in the Government Gazette, may specify principles for the purposes of this Division.
(2) An Order under this section—
(a) must set out principles that provide for the determination of a competitively neutral price for the provision of a relevant service through the application of an accrual building block methodology; and
(b) may specify other principles (which may include methodologies or procedures), that are not inconsistent with paragraph (a), for the determination of a competitively neutral price for the provision of a relevant service; and
(c) may include any other matter or thing ancillary to, or not inconsistent with, a matter or thing referred to in paragraph (a) or (b).
An Order under section 49ZC may—
(a) confer functions and powers on, or leave any matter to be decided by, the Commission; and
(b) be of general or limited application; and
(c) differ according to differences in time, place or circumstances.
An Order under section 49ZC takes effect—
(a) on the day the Order is published in the Government Gazette; or
(b) if a later day is specified in the Order, on that day.
An Order under section 49ZC cannot be amended or revoked except in accordance with this Subdivision.
Subject to section 49ZH, an Order under section 49ZC may only be amended with the agreement of the port of Melbourne operator.
A Order under section 49ZC may be wholly revoked by an Order made under that section—
(a) if the port of Melbourne operator agrees to the revocation; or
(b) after the first lease of land comprising port assets granted to a private sector entity under section 11 of the Delivering Victorian Infrastructure (Port of Melbourne Lease Transaction) Act 2016 ends.