The move to open competition in the water and wastewater sector came with the 1993 release of the Hilmer Report.[27] This argued for greater competition among government-owned entities, the removal of trade barriers, the elimination of cross-subsidies in the provision and delivery of water and the abolition of monopoly practices.
Following the Report and the Competition Principles Agreement, amendments were made to Commonwealth legislation, including the Trade Practices Act 1974 (Cth). State-based legislative changes followed more slowly and were often tied to Commonwealth incentive payments to the States, which were made in three tranches from 1997 to 2005 to induce State compliance with National Competition Council (NCC) goals (NCC, Principles for Reform).[28]
The TPA was amended to include Part IIIA, which relates to ‘Access for Services’. Under that Part, third-party access to nationally significant infrastructure may be sought. This may occur by virtue of a ‘declaration’ of the service by the designated Minister (TPA, Part IIIA Divison 2) or by virtue of service-provider access undertakings or industry access codes approved by the Australian Competition and Consumer Commission (ACCC, TPA, Part IIIA Division 6). Whilst the designated Minister will normally be the Commonwealth Minister, it is the responsible State or Territory Minister if the service provider is a State or Territory body, such as a public water utility. A service may not be declared, and an access undertaking or industry access code may not be approved, if there is in place an ‘effective access regime’ established by the State or Territory.[29]
Where the infrastructure concerned is not nationally significant (and, therefore, beyond the jurisdiction of the Commonwealth), state-based access regimes consistent with sub-clauses 6(3) and 6(4) of the Competition Principles Agreement are to be used to gain access.[30]
The TPA’s generic scheme for declaration of a service involves a two-stage process. First, the third-party access seeker applies to the National Competition Council for a recommendation that the designated Minister declares that the infrastructure is ‘covered’ by Part IIIA. The NCC may not recommend, and the Minister may not declare, that the infrastructure is covered unless satisfied that all six assessment criteria are met.[31] The criteria comprise: the promotion of increased competition in at least one market; the economic infeasibility of anyone else developing another facility for the service; the national significance of the facility; that access would not cause undue human health or safety risk; that access was not already part of an effective access regime; and that access would not be contrary to public interest.
The second stage of the process is the determination of the terms of access to the declared service (TPA, Division 3). An access seeker (it does not have to be the entity that obtained a declaration of the service) will endeavour to negotiate the terms of access with the service provider. If the parties fail to reach agreement, either of them may give notice to the ACCC to arbitrate the dispute. The ACCC may determine the access dispute consistent with statutory restrictions that seek to protect existing user rights in the service, including by provision for compensation by the third-party entrant to an existing user who suffers deprivation of a pre-notification right (TPA s 44 W).
One additional point to note here is the TPA definition of ‘service’ that may be the subject of an access declaration.[32] It is defined to mean:
‘a service provided by means of a facility and includes:
the use of an infrastructure facility such as a road or railway line;
handling or transporting things such as goods or people;
a communications service or similar service;
but does not include:
the supply of goods; or
the use of intellectual property; or
the use of a production process;
except to the extent that it is an integral but subsidiary part of the service.’
It is suggested that this definition, particularly paragraph (d), means that a Part IIIA declaration may apply to compel access to the sewerage transportation infrastructure of a service provider, but may not apply to compel the service provider to provide ‘access to the goods’; that is, the raw sewage resource.[33] Thus, Part IIIA could be used to compel access for a competing sewerage-service provider or a sewer miner to the sewerage infrastructure but it could not be used by a sewer miner to compel access to the sewage resource itself.
So far, there has only been one successful wastewater access application made under this Part IIIA regime, and that is Services Sydney’s application. This contrasts significantly with the position of third-party access in the gas and electricity sectors (which can also use the TPA generic scheme) where, by 2005, 60 arrangements had been registered with State and Federal agencies (Marsden Jacobs 2005: 86). In part, the difference is accounted for by the resistance to the dismantling of the vertically integrated, monopolistic public water utilities, owned by State and Local Government agencies. As well, there are difficulties associated with transporting water, which makes the market structure for water more complex than gas and electricity.