The National Competition Policy is made up of three formal inter-govermental agreements, signed by myself and other Heads of Government at the 11 April 1995 Council of Australian Governments meeting, and the extension of existing Commonwealth legislation.

One element of the Policy is the establishment of regimes that permit third party access to essential infrastructure.

The Competition Policy Reform Act 1995 (Cwth) creates a new regime by which third parties can seek to use government infrastructure to deliver goods or services as part of their own business undertaking. The government agency would charge a fee for the ongoing use of the facility. This arrangement is known as Access.

the Commonwealth regime is expected to commence in October 1995. It will extend to State infrastructure where it has national significance or where interstate trade or commerce is involved.

The National Competition Policy provides for, and the NSW Government is prepared to establish, State-based access regimes to deal with access for infrastructure of less than national significance, but considered important to the NSW economy.

Preparation of State-basedAccess Regimes

All Ministers are requested to examine the administration of their agencies to determine whether an access regime is required for any facility or services.

They are required to submit proposals and draft protocols for any regimes to me by 31 October 1995. This will be followed by the submission of detailed protocols by Ministers to the Cabinet Standing Committee on Micro-economic and GTE Reform for approval.

Such regimes would be operated by the relevant agencies themselves. The protocols should strictly comply with all the principles (except 6(p)) included in Clause 6 of the Competition Principles Agreement agreed at the April 1995 COAG (attached). Failure to comply with the principles could result in the Commonwealth assuming responsibility for providing mechanisms to permit access. In this circumstance, the National Competition Council (soon to be created under the National Competition Policy) could simply substitute a State-based regime by a declaration for Commonwealth control of access.

The Government would prefer that, as often as possible, the settlement of requests by third parties for access be resolved by negotiations between the access seeker and the agency owning, or managing, the infrastructure, according to the protocols to be prepared by Ministers. However, Ministers are to note that in preparing their regimes in each case the Government Pricing Tribunal is to be responsible for dispute resolution and providing advice, where necessary, in respect of pricing and related access issues. This has been decided so as to ensure consistency in the application of access principles across the various State-based regimes.

State-based regimes will cover public sector activities, including those of local government. However, unlike the Commonwealth's regime, the State-based regimes are not to cover private sector infrastructure or facilities.

Further Details

A summary of the Commonwealth access regime is attached, along with a copy of Clause 6 of the Competition Principles Agreement.

Other relevant issues include:

(1) Nature of the infrastructure

According to the Competition Principles Agreement a State-based access regime is to apply only to services provided by means of significant infrastructure facilities where it would not be economically feasible to duplicate the facility.

While the infrastructure involved needs to be significant, it need not be large. In fact, it may not be the infrastructure itself, but that part of it used to deliver a service which economically cannot reasonably be duplicated. Hence, the Commonwealth legislation refers to a 'service' or a 'facility'. This may mean a telecommunications switching service, for example, or part only of a port facility.

(2) Facility

Access to a facility will not be permitted if it is considered unsafe. There must, however, be a reasoned assessment of the capacity of the access seeker to deliver the service, with the decision preferably being made by a regulator separate from the owner's delivery of the service.

Ministers considering the establishment of an access regime that applies to any of their agencies should read the requirements of the Commonwealth legislation and the Competition Principles Agreement's extensive guidelines contained in Clause 6.

They should then carefully assess their agencies' activities to determine whether any infrastructure, or subset of that infrastructure, should be the subject of a State-based access regime.

Where a Minister determines (in consultation with The Cabinet Office) that compliance with the Competition Principles Agreement would lead the State to adopt a State based access regime for agencies in their portfolio, the Minister should determine a suitable structure for dealing with access claims consistent with the Competition Principles Agreement and prepare a draft protocol.

As noted above, the protocol should also provide for resolution of disputes by, or under the authority of, the Government Pricing Tribunal.

Where the subject matter of access may fall within the Commonwealth's ambit~ provision should also be included for 'accreditation' of an access agreement in respect of a particular facility or service, consistent with ss.44M-440, Competition Policy Reform Act (Cwth).

A copy of the draft protocol and any accompanying analysis should be submitted to the Inter-Governmental Relations Unit, The Cabinet Office, for consideration prior to being forwarded to the Cabinet Committee on Micro-economic and GTE Reform for approval.

Contact officers should be identified in the covering correspondence to speed processing and further discussion, where necessary.

All submissions are required no later than 31 October 1995.

Issued by: Inter-Governmental Relations Unit, The Cabinet Office

Contact person: Peter Hendy
Telephone: 228.4324
Date: 31 August, 1995