Section 4: Purchaser/provider and cost recovery arrangements
Purchaser/provider arrangements
The Australian Competition and Consumer Commission (ACCC) does not have any purchaser/provider arrangements.
Cost recovery arrangements
The ACCC has undertaken a review of its cost recovery arrangements in accordance with the Australian Government’s five year review schedule for existing arrangements.
Current Cost Recovery Arrangements
The ACCC currently levies a variety of fees and charges under the Trade Practices Act 1974 (TPA). Revenue from these fees and charges is identified in Table 1.3 — Receipts from Independent Sources.
It should be noted that with the exception of those revenues generated from discretionary services, where it has been agreed that these revenues can be retained by the ACCC in recognition of the costs associated with the provision of these services, all other revenues generated by the ACCC are refunded back to government via the Consolidated Revenue fund.
Details of compliance with the cost recovery policy
The ACCC has undertaken a review of its cost recovery arrangements. This review has been conducted in accordance with the Commonwealth Cost Recovery Guidelines for Information and Regulatory Agencies (the Guidelines) prepared by the Department of Finance and Administration.
As specified in the Guidelines the ACCC has worked through a two stage process involving: 1) a Policy Review; and 2) Design and Implementation process.
Overall the ACCC considers that the public interest is best served by the fees and charges for ACCC regulatory activities remaining around their current levels. This is mainly because the ACCC’s functions have a strong public benefit dimension and any significant fee increase runs the risk of undermining the effectiveness of the TPA by creating increased barriers to the ACCC’s services.
The overarching objective of the ACCC is to enhance social and economic welfare of the Australian community. It does this through promoting effective competition and informed markets, encouraging fair trading and consumer protection, and regulating national infrastructure service markets and other markets where competition is restricted.
The total amount of revenue generated from the recovery of costs in 2002-03 was $0.4 million as administered revenue and $0.4 million as departmental revenue. Similar amounts of revenue are expected for 2003-04. In addition, the fees are only appropriate for a small proportion of the ACCC’s activities and cover only a small proportion of its total costs — a total budget in the order of $70.0 million. As such, any changes to its fees are unlikely to have material consequences for its budgetary requirements.
Notwithstanding the above, this review does conclude that there may be a case for introducing charges for:
- the assessment of access undertakings and industry codes in certain circumstances (under Part IIIA and Part XIC of the TPA);
- applications for exemption from standard access obligations (Part XIC of the TPA); and
- the assessment of merger proposals against the test specified under section 50 of the TPA.
The level of fees recommended for these services would possibly be based on the ACCC’s fees for authorisation.
The intent of levying a fee would not be to achieve full cost recovery but to manage demand for these services; consistent with other fees currently levied. In effect, partial cost recovery is proposed in instances where there are identifiable beneficiaries of ACCC services (for example those receiving an adjudication function: authorisation, notification, etc) because to charge full cost recovery would run counter to the ACCC achieving its policy objectives. Existing fee levels are considered an adequate and effective balance between managing demand while still ensuring that those parties receiving some private benefit from ACCC services pay a notional amount towards the costs incurred. In this way the fees are also considered efficient.
An important qualification to the above recommendation is that fees for access undertakings should only be introduced if fees are introduced for declaration applications to the National Competition Council; and either:
- fees are introduced for access arrangements lodged under the National Gas Code; or
- Part IIIA of the TPA is amended such that firms cannot lodge access undertakings where the service is subject to a certified access regime.
Note that legislation may need to be enacted by each participating jurisdiction in order for a fee to be levied in respect to gas access arrangements.
The ACCC also considers that an industry levy should continue to apply to recover the costs of its specific regulatory responsibilities in the telecommunications industry, and that a levy should also apply for its specific regulatory role in the postal industry.
In relation to the regulation of the gas and electricity industries, the ACCC supports the introduction of industry levies to recover its costs, but notes that there are significant legal impediments to the Australian Government imposing such levies.
Other ACCC services generally fall into the categories of information products: copying of documents, publication of reports and provision of speakers. The basic product set is established in budget discussions and additional and incremental products are cost recovered in a manner consistent with the cost recovery policy.
Consultation
The ACCC has not undertaken any public consultation with the development of the Cost Recovery Impact Statement.
Review
A general review of the ACCC’s cost recovery arrangements will be undertaken to coincide with a review of ACCC funding arrangements for the 2008-09 Budget process. In addition, cost recovery issues associated with the ACCC’s energy regulatory functions (to move to the Australian Energy Regulator) are being examined by governments.