The Pilbara Infrastructure Pty Ltd v Australian Competition Tribunal [2012] HCA 36

The Pilbara Infrastructure Pty Ltd v Australian Competition Tribunal [2012] HCA 36 - HCA 2012 case summary — Zoe

[47]

In this Court attention focused principally on criteria (b) and (f). What does criterion (b) mean when it speaks of it being "uneconomical for anyone to develop another facility to provide the service"? What matters can be taken into account under criterion (f) when it requires the decision maker to be satisfied that access to the service "would not be contrary to the public interest"? And attention was also directed to a further question: if a decision maker is satisfied of each of the six matters stated in the Act, is there nonetheless a discretion to be exercised? If so, what are the criteria that inform the exercise of that discretion?
The Act provides for a further step in the process for declaration of a service, beyond the making of a recommendation by the NCC and a decision by the Minister. If the Minister decides (or is deemed to decide**[8]) not to declare a service, the person who applied for the declaration recommendation may apply[9]** for review of the Minister's decision by the Australian Competition Tribunal ("the Tribunal"). And if the Minister declares a service, the provider of the service may apply**[10]** for review of the declaration by the Tribunal.
Decisions made by the Tribunal on a review of a ministerial decision to declare or not to declare a service are amenable to judicial review in the Federal Court of Australia on application under the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act") or s 39B of the Judiciary Act 1903 (Cth) or on application for declarations and orders (including orders by way of, or in the nature of, prohibition, certiorari or mandamus) under s 163A of the Act.
The present appeals to this Court and the associated applications for special leave to appeal by the NCC concern orders made by the Full Court of the Federal Court of Australia on applications of these kinds. Before identifying the issues that are raised by the appeals (and the NCC applications for special leave) a little more should be said about the history of the proceedings.

[48]

In 2004, FMG applied to the NCC for its recommendation that part of the Goldsworthy railway line and part of the Mt Newman railway line be declared. In 2007, a wholly owned subsidiary of FMG, The Pilbara Infrastructure Pty Ltd ("TPI"), applied to the NCC for its recommendation that the whole of the Goldsworthy railway line be declared. TPI made a similar application to the NCC in respect of the Hamersley railway line and two of its spur lines. In January 2008, TPI made a similar application to the NCC in respect of the Robe railway line. It is convenient to refer to FMG and TPI compendiously as "Fortescue", and to refer only to the railway lines which were the subject of the applications, although those applications extended to certain associated infrastructure.
In March 2006, the NCC recommended that the Mt Newman line be declared. In August 2008, it recommended that the Goldsworthy, Hamersley and Robe lines be declared.
The designated Minister**[11], the Treasurer of the Commonwealth, did not make any declaration about the Mt Newman line within the period fixed by Pt IIIA of the Act and was therefore deemed[12]** to have decided not to declare that service. The Minister declared each of the Goldsworthy, Hamersley and Robe railway lines for a period of 20 years.
Rio Tinto applied for review by the Tribunal of the declarations made in respect of the Hamersley and Robe lines; BHPB applied for review of the declaration made in respect of the Goldsworthy line; Fortescue applied for review of the refusal to declare the Mt Newman line.
The Tribunal set aside the decision to declare the Hamersley line and decided that the service provided by the Hamersley line should not be declared. The Tribunal varied the Minister's decision to declare the Robe line for a period of 20 years so that it would expire after 10 years. The Tribunal affirmed the decision to declare the Goldsworthy line for 20 years and the (deemed) decision not to declare the Mt Newman line.
Fortescue brought proceedings in the Federal Court of Australia challenging the Tribunal's decision to set aside the Minister's decision to declare the Hamersley line. Fortescue alleged (among other things) that the Tribunal had misconstrued and misapplied s 44H(4)(a) and (f) and that the Tribunal had acted in breach of the requirements of procedural fairness because it received and acted on material provided by Rio Tinto after the conclusion of the proceedings before the Tribunal.
By notice of contention, Rio Tinto alleged that the Tribunal had misconstrued and misapplied s 44H(4)(b) in its application to the Hamersley line but that, properly applied, s 44H(4)(b) required the Tribunal to refuse to declare the Hamersley line.
In a separate proceeding, Fortescue also challenged the Tribunal's decision to vary the period for which the Robe line was to be declared. Fortescue alleged that the Tribunal's decision was unreasonable in light of the findings that it had made in relation to the application of s 44H(4)(f).
By another separate proceeding, Rio Tinto challenged the decision of the Tribunal not to set aside the Minister's declaration of the Robe line. Rio Tinto advanced its argument on the basis of the same construction of s 44H(4)(b) that underpinned its notice of contention in Fortescue's proceeding about the Hamersley line.
All of the proceedings were heard by a Full Court of the Federal Court (Keane CJ, Mansfield and Middleton JJ). The Full Court concluded**[13]** that the Tribunal had misconstrued and misapplied s 44H(4)(b). The Court also concluded**[14]** that the Tribunal had not accorded Fortescue procedural fairness. But the Court held**[15]** that, on the construction of s 44H(4)(b) which it favoured, Fortescue was bound on the facts found by the Tribunal to fail in its application to the Tribunal in relation to the Hamersley line. The Court further held**[16]** that, because the Tribunal had misconstrued s 44H(4)(b), Rio Tinto's appeal in relation to the Robe line should be allowed and the Tribunal's decision set aside. The Court ordered that the Minister's decision to declare the Robe line should be set aside.

[72]

It is next necessary to consider whether the content of the criteria of which both the NCC and the Minister had to be satisfied before recommending declaration of a service and deciding to declare a service sheds any light on the tasks that the Act required the NCC, the Minister and the Tribunal to perform. Those criteria have been set out earlier in these reasons.
Criterion (f) was "that access (or increased access) to the service would not be contrary to the public interest". It is well established**[27]** that, when used in a statute, the expression "public interest" imports a discretionary value judgment to be made by reference to undefined factual matters. As Dixon J pointed out in Water Conservation and Irrigation Commission (NSW) v Browning[28], when a discretionary power of this kind is given, the power is "neither arbitrary nor completely unlimited" but is "unconfined except in so far as the subject matter and the scope and purpose of the statutory enactments may enable the Court to pronounce given reasons to be definitely extraneous to any objects the legislature could have had in view". It follows that the range of matters to which the NCC and, more particularly, the Minister may have regard when considering whether to be satisfied that access (or increased access) would not be contrary to the public interest is very wide indeed. And conferring the power to decide on the Minister (as distinct from giving to the NCC a power to recommend) is consistent with legislative recognition of the great breadth of matters that can be encompassed by an inquiry into what is or is not in the public interest and with legislative recognition that the inquiries are best suited to resolution by the holder of a political office.
Another criterion of which the NCC and the Minister must be satisfied (criterion (c)) may also direct attention to matters of broad judgment of a generally political kind. It required the NCC and the Minister to be satisfied that the facility in question is of national significance having regard to its size, or the importance of the facility to constitutional trade or commerce, or the importance of the facility to the national economy.
The other criteria that were to be considered (like criterion (a) about competition and criterion (b) about development of another facility) were of a more technical kind. The legislative scheme is consistent with it being expected that the conclusions reached, and reasoning adopted, by the NCC in relation to these more technical issues would likely be influential on the Minister.

[75]

Section 44K(4) is the central provision defining the Tribunal's task. The text of s 44K is set out earlier in these reasons and it will be recalled that it provided that "[t]he review by the Tribunal is a re-consideration of the matter". The requirement that the Tribunal review the Minister's decision neither permits nor requires a quasi-curial trial between the access seeker and the facility provider as adversarial parties, on new and different material, to determine whether a service should be declared. That would not be a "review" of the Minister's decision which was "a re-consideration of the matter". To explain why that is so, it is desirable to begin by noticing some aspects of relevant legislative history.
As originally enacted, the Act gave two kinds of task to the Tribunal (then known as the Trade Practices Tribunal): first, the Tribunal was given power to conduct a review under Pt IX (ss 101-110) of a determination by what was then the Trade Practices Commission (now the Australian Competition and Consumer Commission) made in relation to an application for, or the revocation of, certain authorisations under Pt VII (ss 88-95) in respect of restrictive trade practices; and second, the Tribunal was given power, on reference by the Minister, to inquire and report into any matter relevant to the exercise of certain powers by the Governor-General under Pt X (ss 111-146) in relation to overseas cargo shipping**[32]**.
The first kind of task was described by s 101(2) as "[a] review by the Tribunal" of the determination by the Commission and as "a re-hearing of the matter". Given that the Commission, in determining an application for authorisation, was bound**[33]** to "take into account any submissions in relation to the application made to it by the applicant or any other person" and was given**[34]** power, "where it considers it appropriate to do so, [to] hold a public hearing in relation to the application", the reference to the review by the Tribunal being "a re-hearing" was evidently apt.
Division 2 of Pt IX (ss 103-110) made more particular provision for the procedure of and evidence before the Tribunal in reviews by the Tribunal of determinations of the Commission. Section 103 made general provision for the procedure of the Tribunal including a provision**[35]** that the Tribunal was not bound by the rules of evidence. Section 105(1) gave the Tribunal power to take evidence on oath or affirmation and for that purpose permitted a member of the Tribunal to administer an oath or affirmation. Both by their location as a division of Pt IX, and in their terms, the provisions of Div 2 of Pt IX regulating the procedure of and evidence before the Tribunal were apt to apply only to the particular kind of proceeding for which Div 1 of Pt IX provided - an application under s 101(1) for a review of a determination by the Commission regarding authorisation.
The second kind of task which, as originally enacted, the Act gave to the Tribunal was initiated by the Minister referring**[36]** to the Tribunal "for inquiry and report any matter relevant to the exercise of the power of the Governor-General" to make certain orders under Pt X (a part of the Act dealing with overseas cargo shipping). A Tribunal inquiry of that kind was regulated by Div 5 of Pt X (ss 132-143). Those provisions regulating an inquiry by the Tribunal were evidently intended to operate separately from the provisions of Div 2 of Pt IX. That is why s 132(2)(b) of the Act provided, as it did, that s 43 (concerning composition of the Tribunal) applied "as if ... the inquiry ... were the hearing and determination of proceedings" (emphasis added). The provisions of Div 2 of Pt IX (regulating proceedings before the Tribunal on a review of a determination of the Commission as a re-hearing) did not apply to the performance of this second kind of task.
The Trade Practices Amendment Act 1977 (Cth) made some amendments to Pt IX of the Act, including**[37]** repealing the existing s 102 and substituting a new s 102 to provide for the functions and powers of the Tribunal. The essential framework of the provisions of Pt IX was, however, unaltered. In particular, the provisions of Div 2 of Pt IX applied to reviews by the Tribunal of identified kinds of decision by the Commission and s 101(2) as substituted**[38]** continued to provide that a review by the Tribunal "is a re-hearing of the matter".
In 2006 further substantial amendments were made to the Act. The Trade Practices Legislation Amendment Act (No 1) 2006 (Cth) ("the 2006 Amendment Act") added**[39]** a new division to Pt VII of the Act (Div 3) dealing with merger clearances and authorisations. Subdivision B of the new Div 3 of Pt VII provided for the Commission to give merger clearances and subdiv C provided for the Tribunal to give merger authorisations. A new division was added**[40]** to Pt IX (Div 3) to provide for the review by the Tribunal of the Commission's determination on merger clearances.
Of greatest significance for present purposes, the 2006 Amendment Act inserted**[41]** a new s 102A in Div 1 of Pt IX. The new section defined "proceedings" and provided:

[79]

Two points of present relevance are to be made. First, there was and is no textual link between s 44K and its specification of the functions of the Tribunal on review of a declaration or decision not to make a declaration and the provisions of Div 2 of Pt IX dealing with the procedure of and evidence before the Tribunal in "proceedings" as that term is defined in s 102A. BHPB submitted that "proceedings" should be understood in s 102A as embracing any and every "formal process by which a matter is determined by the Tribunal" and as thus including reviews undertaken pursuant to s 44K. Rio Tinto and the NCC made submissions to the same general effect. Reference was made to other provisions of the Act (notably ss 37, 41 and 42(1) and (2)) which it was said contemplated the Tribunal conducting a proceeding in the general sense identified. But if "proceedings" is used in the all-embracing sense put forward by BHPB, it was unnecessary to specify two identified kinds of applications as included in the word. That construction of the Act should not be adopted. There is then no textual link between s 44K and Div 2 of Pt IX. Second, there is an evident contrast to be drawn between the provision made in Div 1 of Pt IX (by s 101(2)) - that the Tribunal's review of decisions of the kind with which that Division deals "is a re-hearing" - and the provision made by s 44K(4) that "[t]he review by the Tribunal is a re-consideration of the matter".
Contrary to the submissions of Rio Tinto and BHPB, that contrast is not sufficiently explained by noticing that the Tribunal's review of decisions of the kind with which Div 1 of Pt IX deals is a review of a decision made after a hearing, whereas a review of the kind now under consideration is a review of a decision by the designated Minister that ordinarily, even invariably, would be made without any hearing. Rather, as BHPB correctly pointed out by reference to several decisions of this Court**[43], the nature of the review must be determined by reference to the terms of the statute. And a review that "is a re-hearing of the matter"[44]** must be understood as being different from a review that "is a re-consideration of the matter"[45]. If, as Rio Tinto and BHPB submit, it is important to notice that decisions which are reviewed as a rehearing are decisions made only after a hearing, and decisions of the kind now in question will ordinarily be made without a hearing, the observation serves only to reinforce the conclusion that would otherwise follow from the different language used in the relevant provisions that the Act provides for different kinds of review of the two kinds of decisions.
To observe, as Rio Tinto did, that the procedures which have been followed in these matters have taken a very long time does not shed any light on that question of construction. The matters have taken a very long time because of the assumptions that were made about the Tribunal's task. That conditions in the iron ore industry may have changed over that time in ways that could be relevant to whether the particular services should be declared does not affect the proper construction of the relevant provisions. In particular, in construing the relevant provisions, it is not useful to ask whether the Tribunal, on remitter, could or should now seek under s 44K(6) some further information or assistance from the NCC, or to ask whether obligations of procedural fairness would permit or require the Tribunal to allow either the applicant for a declaration or the incumbent service provider to say how the industry has or has not changed since the Minister made the decision under review. Both of those inquiries that have been identified arise only because of the prolonged course which these particular matters have taken. Neither inquiry would arise had the matters taken the more timely course that should have been followed. Neither inquiry bears at all upon what s 44K(4) means.
There have been many judicial decisions about the meaning to be given to the word "rehearing" when used in connection with appeals. In Builders Licensing Board v Sperway Constructions (Syd) Pty Ltd, Mason J rightly described**[46]** the expression "the appeal is by way of rehearing" as a "Delphic utterance" which did not greatly illuminate the determination in that case of the nature of the task given to a court in reviewing by way of "appeal" a decision by an administrative body. And it has long been recognised**[47]** that different meanings can be given to the word "rehearing" even when used in connection with an appeal from one court to another.
When s 101(2) of the Act used "re-hearing" to describe the task of the Tribunal reviewing a determination of the Commission, it was using "re-hearing" in a context wholly divorced from the exercise of judicial power. And when s 44K(4) referred to "re-consideration", it too used that word in a context divorced from the exercise of judicial power. Nonetheless, some different meaning must presumably be intended by the use of the different words in identifying the review to be undertaken by the Tribunal. The contrast is best understood as being between a "re-hearing" which requires deciding an issue afresh on whatever material is placed before the new decision maker and a "re-consideration" which requires reviewing what the original decision maker decided and doing that by reference to the material that was placed before the original decision maker (supplemented, in this kind of case, only by whatever material the NCC provides in answer to requests made by the Tribunal pursuant to s 44K(6)).
Contrary to the submissions of the respondents, the amendments that were made to s 44K in 2010 by the Trade Practices Amendment (Infrastructure Access) Act 2010 (Cth)[48] ("the 2010 Act") shed no light on the proper construction of that section as it stood before those amendments were made. It may be accepted that, as was submitted, the amendments proceeded on the assumption that, when conducting a review under s 44K, the Tribunal would otherwise proceed in the manner in which it did in these matters. But that assumption was based upon what the Tribunal had done in the past. It was not based upon any authoritative consideration of the question of construction that now arises.
Both Rio Tinto and BHPB drew attention to the power in s 44ZZP to make regulations "in relation to the functions of the Tribunal under [Pt IIIA]". In particular, s 44ZZP(e) provides for the making of regulations about "procedure and evidence". It by no means follows, however, that the particular function which the Tribunal is given by s 44K is one which is to be performed by the taking of evidence. Part IIIA does give functions of that kind to the Tribunal. For example, s 44ZP provides for the review of certain determinations as "a re-arbitration of the access dispute" and that is a function that would require the taking of evidence. The engagement of s 44ZZP depends upon first identifying the relevant function of the Tribunal. And in this case that depends upon construing s 44K. Neither the power given by s 44ZZP, nor any of the regulations made under it, sheds any light on the construction of s 44K.
Rio Tinto and the NCC also drew attention to s 44K(5), which provides that "[f]or the purposes of the review, the Tribunal has the same powers as the designated Minister". It was said that the Minister, in deciding whether to declare a service, has "incidental" or "implied" power to request additional information beyond the NCC's recommendation. And, the argument continued, it followed by reason of s 44K(5) that the Tribunal also had extensive incidental or implied power to obtain information. Whether, or to what extent, the Minister has an incidental or implied power to obtain additional information need not be decided. Any such power that is given to the Tribunal by s 44K(5) must be "[f]or the purposes of the review". The scope of any such incidental or implied power depends upon first identifying the nature of the Tribunal's review, which in turn depends upon construing s 44K.
Fortescue submitted that its construction of the relevant provisions was supported by constitutional considerations. Fortescue argued that if the Tribunal was required to consider afresh, on new material, what was in the public interest, the task given to the Tribunal was one which could not be given to a Ch III judge acting as President of the Tribunal persona designata. Because the relevant provisions should be construed in the manner described for the reasons that have already been given, it is not necessary to consider the constitutional point raised by Fortescue.

[85]

Extensive reference was made in the course of argument to the very large body of extrinsic material associated with the introduction of, and consideration of subsequent amendments to, the provisions of Pt IIIA. Reference was made to the report of the National Competition Policy Review ("the Hilmer Report")[52] and in particular to Ch 11 of that report entitled "Access to 'Essential Facilities'". Reference was made to the draft legislative package prepared for the Council of Australian Governments**[53]** which incorporated draft provisions not materially different from those provisions of Pt IIIA of immediate relevance to these appeals. Reference was also made to the Second Reading Speech**[54]** and Explanatory Memoranda for the Competition Policy Reform Bill 1995 by which Pt IIIA was introduced into the Act. And reference was also made to the terms of the Competition Principles Agreement originally made on 11 April 1995 between the Commonwealth, the States and the Territories to record the agreement of the Council of Australian Governments to the principles of competition policy articulated in the Hilmer Report. Particular reference was made to cl 6 of the Competition Principles Agreement as that agreement stood at 13 April 2007.
In 2001, the Productivity Commission published a report entitled Review of the National Access Regime[55]. In that report, the Productivity Commission proposed what it described**[56]** as "a range of modifications to the architecture of Part IIIA to ensure that access regulation is better targeted and more workable". Reference was made in argument to what was said in that report and what was said in a written response by the Federal Government to the recommendations made in the report**[57]. Following the Productivity Commission report and the Government response, the Trade Practices Amendment (National Access Regime) Bill 2005 was introduced into the Federal Parliament to make a number of amendments to the provisions of Pt IIIA. Reference was made in argument to the Second Reading Speech[58]** and the Explanatory Memoranda for that Bill.
The Court was also provided with the Explanatory Memorandum for the Trade Practices Amendment (Infrastructure Access) Bill 2009. Enacted as the 2010 Act, a number of amendments were made to the administrative processes associated with the application of the National Access Regime. The alterations made to Pt IIIA did not apply**[59]** to any of the steps taken with respect to the applications by Fortescue for access to any of the four railway lines mentioned at the outset of these reasons. And the provisions of the 2010 Act will not apply to the reviews of the declaration recommendations the subject of the proceedings in the Federal Court of Australia when they are remitted to the Tribunal for further consideration. It may be noted, however, that one important element of the amendments made by the 2010 Act was to limit**[60]** expressly the material to which the Tribunal could have regard in conducting a review of the declaration of a service or the Minister's decision not to declare a service. Subject to some qualifications whose detail need not be noticed, the Tribunal is to be limited**[61]** in reviewing such a matter to the material that was before the Minister.
With this volume of extrinsic material available, it is unsurprising that those advocating competing constructions of the disputed provisions emphasised different parts of the extrinsic material and suggested that the use of particular expressions or phrases found in the material supported the particular construction being urged. Subject to one possible qualification concerning the relevance of the assumptions that underpinned the 2006 amendments, little is to be gained by trawling through the extrinsic material with a fine gauge net. The resolution of the contested question of construction of criterion (b) is not to be found by noticing no more than that the Hilmer Report referred more than once to "essential facilities" and "natural monopoly". Neither is a phrase that appears anywhere in the text of Pt IIIA. Nor can the contested question of construction be resolved by selecting particular quotations from the Hilmer Report and then attempting to construe the different and particular words of criterion (b) on the assumption that they give effect to those isolated passages. It is necessary to give meaning to the relevant statutory text and demonstrate why that meaning is to be adopted.
It was suggested by the NCC that the extrinsic material shows that the 2006 amendments were enacted on an assumption that criterion (b) was to be understood as requiring the application of a net social benefit test. As was pointed out in argument, the Productivity Commission noted**[62]** in its report that such consideration as had by then been given by the Tribunal to criterion (b) favoured reading it as requiring the application of a net social benefit test. But the report went on to say**[63]** that the Productivity Commission was "not as sanguine as some participants [in the Commission's inquiry] that judicial interpretation of the declaration criteria is fully settled". Accordingly, the Productivity Commission said**[64]** that "[g]iven that case law in this area is still in the developmental phase, the Commission considers that it would be prudent to monitor developments regarding declaration/coverage/revocation activities". In these circumstances, contrary to the submissions of the NCC, it cannot be concluded that the 2006 amendments were enacted against a background of an accepted or settled understanding of the meaning or operation to be given to criterion (b).

[86]

At least three questions are presented by the text of criterion (b): "that it would be uneconomical for anyone to develop another facility to provide the service". First, what is meant by "uneconomical"? Does it use the word as an economist would use it, to refer to an "inefficient" use of society's resources? Or does it mean "unprofitable"? Second, when it is said that "it would be uneconomical for anyone to develop another facility" does the criterion require the postulation of a hypothetical circumstance (if someone - anyone - were to develop another facility) and the determination of whether that hypothesised circumstance "would be uneconomical"? Or does the phrase "it would be uneconomical for anyone" direct attention to whether it is demonstrated to the decision maker's satisfaction that no one will develop another facility because there is not "anyone" for whom it would be "economical" (profitable) to do so? And third, how is the reference to "anyone" to be understood? Is it to be understood as anyone other than (say) the incumbent supplier of the service? Is it, as Fortescue submitted, used to make the relevant inquiry wholly general or "anonymous"?
The better view of criterion (b) is that it uses the word "uneconomical" to mean "unprofitable". It does not use that word in some specialist sense that would be used by an economist. Further, criterion (b) is to be read as requiring the decision maker to be satisfied that there is not anyone for whom it would be profitable to develop another facility. It is not to be read as requiring the testing of an abstract hypothesis: if someone, anyone, were to develop another facility. When used in criterion (b) "anyone" should be read as a wholly general reference that requires the decision maker to be satisfied that there is no one, whether in the market or able to enter the market for supplying the relevant service, who would find it economical (in the sense of profitable) to develop another facility to provide that service.
It is convenient to explain and justify these conclusions by beginning with consideration of the three different constructions that have been proffered for criterion (b).

[87]

Two constructions of criterion (b) give the word "uneconomical" a meaning drawn from the study of economics. Although distinct, the two meanings are closely related. The first of these "economic" constructions of criterion (b) directs attention to whether the facility in question can provide society's reasonably foreseeable demand for the relevant service at a lower total cost than if it were to be met by providing two or more facilities**[65]. This construction directs attention to the costs of producing the service. The Tribunal adopted this test in these cases and described[66]** it as a "natural monopoly approach".
A second, and different, understanding of criterion (b) drawing from the study of economics would adopt what was described**[67]** as a "net social benefit approach". That test, adopted**[68]** in earlier Tribunal decisions, would seek to decide what is "uneconomical" by taking account not only of productive costs and benefits but also considerations of allocative efficiency and dynamic efficiency. Allocative efficiency was described in the Hilmer Report**[69]** as being "where resources used to produce a set of goods or services are allocated to their highest valued uses (ie, those that provide the greatest benefit relative to costs)". Dynamic efficiency was described**[70]** as reflecting "the need for industries to make timely changes to technology and products in response to changes in consumer tastes and in productive opportunities". The central question, if a net social benefit approach were to be adopted, was described by the Tribunal in Re Duke Eastern Gas Pipeline Pty Ltd[71] as being "whether for a likely range of reasonably foreseeable demand for the services provided by means of the [facility], it would be more efficient, in terms of costs and benefits to the community as a whole, for one [facility] to provide those services rather than more than one".
The third and preferable construction that has been proffered for criterion (b) (described**[72]** by the Tribunal in the present matters as a "privately profitable test") directs attention to whether any person (including the incumbent operator of the facility to which access is sought) would find it profitable to establish a second or competing facility.
The first two constructions of criterion (b) treat the words "for anyone to develop another facility" as identifying an abstract hypothesis. That is, the first two constructions read criterion (b) as requiring the application of the standard embodied in the word "uneconomical" to a hypothetical case: if someone (who need not be identified - "anyone") were to develop another facility to provide the service. The standard to be applied then requires assessment of the resulting costs and benefits (either the productive costs and benefits, or the productive, allocative and dynamic costs and benefits) of that hypothesis. If the balance of costs and benefits is negative, the hypothesised development is classed as "uneconomical" and criterion (b) would be met; if the balance is positive, the criterion would not be met. So understood, criterion (b) requires no prediction of likely market behaviour. In particular, on neither of these readings of criterion (b) is it relevant to ask whether there is "anyone" - existing market participant or new entrant - who would likely "develop another facility to provide the service" under consideration. The expression "for anyone to develop another facility" is thereby stripped of much, if not all, of its natural meaning. The sole focus of inquiry is upon the circumstance of development of another facility to the exclusion of consideration of the agent who brings about that circumstance.
By contrast, the "privately profitable test" (or to adopt a phrase used**[73]** by the Full Court, the "economically feasible" test) focuses only upon whether it is shown to be likely that anyone could profitably, and therefore would be likely to, develop another facility to provide the service. That is, the central assumption informing and underpinning this construction of criterion (b) is that no one will develop an alternative service unless there is sufficient prospect of a sufficient return on funds employed to warrant the investment. And criterion (b) is read as directing attention to whether there is "anyone" for whom it would be economical (in the sense of profitable, or economically feasible) to develop another facility to provide the service.

[99]

In its reasons**[96], the Tribunal examined whether the privately profitable test "ignores efficiency considerations, in particular, the allocative efficiency associated with the use of a natural monopoly facility"[97]. The examples given[98]** by the Tribunal considered only productive costs of the kind with which it dealt later in its reasons when considering the "natural monopoly" test. Those examples shed no light on the allocative or dynamic costs or benefits of establishing another and profitable facility to provide the service. And the examples that were given by the Tribunal assumed rather than demonstrated that the productive costs of meeting existing and future demand for the service through the existing facility, together with a second profitable facility, would be greater than the costs of meeting that demand through sharing the existing facility. Necessarily underpinning that analysis were unstated assumptions about how the profitability of the new facility was to be assessed. In particular, the analysis appears not to have taken into account how or why it would be that the new facility would be expected to generate an appropriate return on funds employed if the same demand could be met from the use of an existing facility. The existing facility must itself already be generating a sufficient return on funds employed to justify its continued operation. A new facility would be profitable only if it too would generate an appropriate return. Why is the deployment of capital in building and operating a new facility inefficient if it, like the existing facility_,_ provides a reasonable return on investment?
The reasons given by the Tribunal in this matter drew attention to the essential difficulties that follow from adopting an economist's understanding of "uneconomical". No reason is shown for doubting the correctness of the Tribunal's conclusion**[99]** that dynamic and allocative costs cannot be measured satisfactorily if a net social benefit test is applied. Nor is any reason shown to doubt the correctness of the observation made**[100]** in Duke Eastern that dynamic and allocative costs are best minimised, and dynamic and allocative benefits are best enhanced, by competition. And it would follow that development of another facility to provide the service (if competing with the existing facility) would best minimise those costs and enhance those benefits.
Although the Tribunal concluded that criterion (b) should be read as requiring a natural monopoly test, it expressly acknowledged**[101]** that "[t]esting for a natural monopoly is notoriously difficult ... because of the difficulty in obtaining relevant cost information". Yet the Tribunal said that the test should be applied because, in the words of an expert witness adopted**[102]** by the Tribunal, the test "tries to answer the right question" (emphasis added). Why the Act should be construed as requiring the application of a test that is "notoriously difficult" to apply and why the question posed by the natural monopoly test was "the right question" was not elucidated by reference to any consideration beyond the frequency of reference in the Hilmer Report to "natural monopoly". And as the Tribunal rightly pointed out**[103], the legislation and the Competition Principles Agreement that followed the Hilmer Report "adopted a more elaborate series of criteria for declaring access than those which were originally recommended". Further, as the Tribunal also recognised[104]**, a facility may be a natural monopoly at the time of declaration but it may not be one tomorrow. Why the Act should be construed as requiring the application of a test that now can be applied only with difficulty, and cannot be applied at all in respect of the long period for which a service may be declared, was not explained.

[100]

As has already been pointed out, the extrinsic material to which reference may be made in connection with the construction of Pt IIIA (what the Tribunal referred**[105]** to as the "enacting history") is very large. As has also already been observed, the Hilmer Report in particular referred more than once to the notion of a "natural monopoly". But the statutory expression of the criteria is much more elaborate than the discussion of the issues in the Hilmer Report. And those criteria do not include any that use the expression "natural monopoly".
Despite the frequency with which reference may be found in the extrinsic material to "natural monopoly" and the absence of any reference to a "privately profitable" test by that name, no conclusion can safely be drawn about the proper construction of the relevant provisions of Pt IIIA from those observations alone. Attention must focus upon the language of the relevant provisions. Nor can the relevant question of construction be answered by attaching more or less pejorative epithets to one of the competing views. That is, the question of construction is not to be resolved by describing**[106]** a privately profitable test as a "narrow accounting view"; it is not to be resolved by using the word "profitable" as a term of disapproval.
Textual considerations point away from the construction adopted by the Tribunal and point towards adopting a privately profitable construction of criterion (b). First, the Full Court was right to conclude, as it did**[107], that criterion (b) is framed in a way that directs attention, "not to whether the NCC or the Minister or the Tribunal judged that it would be 'economically efficient' from the perspective of society as a whole for another facility to be developed to provide the service, but [to] whether 'it would be uneconomical for anyone' to do so". Second, as the Full Court[108]** and the Tribunal**[109]** both noted, s 44H(5) requires the Minister, when deciding whether a State or Territory access regime is an effective access regime, to apply the principles set out in the Competition Principles Agreement and, so far as presently relevant, those principles direct**[110]** attention to whether it is "economically feasible to duplicate the facility". And as the Full Court decided**[111]**, correctly, that expression points away from reading criterion (b) as requiring an evaluation of efficiency from the perspective of society as a whole rather than an evaluation of what would be feasible or practical for an actual or potential participant in the market place.
In considering how criterion (b) should be construed, due weight must be given, as this Court has previously emphasised**[112], to "the attainment of the large national and economic objectives of Pt IIIA, as revealed in the legislative text enacted by the Parliament, the report that preceded its enactment, and the Minister's Second Reading Speech". More particularly, it may be accepted that the Tribunal was right to emphasise[113]** that criterion (b), like all other provisions of Pt IIIA, is to be construed in the light of the objects of the Part as they have been stated, since 2006, by s 44AA.
The extrinsic material (especially the Hilmer Report) and the stated objects of Pt IIIA show that the Part is intended to operate in a way that will contribute to national economic efficiency. Duplication of a "natural monopoly" may be one form of economic inefficiency. That is, if the entire output of a relevant market can be supplied by a single firm at lower cost than by any combination of two or more firms, it would be inefficient to have more than one firm supplying the relevant market. And in such a case the incumbent firm, or the industry, can be described as a "natural monopoly". But several further points must be made about these propositions.
First, duplication of a facility provided by a firm of the kind described would be "inefficient" or "wasteful" only if the duplication is not necessary and the duplication leads to increased cost. That is, the attribution of terms like "inefficient" and "wasteful" depends upon the accuracy of the conclusion that the entire output of the market not only could be supplied by the incumbent but also could be supplied at lower cost than by two or more firms. Asking about an incumbent's ability to meet demand at a lower overall cost than supply by two or more firms focuses upon existing conditions. As the Tribunal rightly observed**[114]** in the present matters, it is difficult to predict future demand and changes in technology cannot be predicted. The inquiries required by Pt IIIA necessarily look to an extended period into the future. Deciding that there is now a "natural monopoly" considers only a snapshot of economic efficiency. Yet the decision to declare a service under Pt IIIA must hold good for the whole of the period of the declaration. Although the Minister can decide to revoke a declaration upon receiving a revocation recommendation from the NCC, the existence of this power does not justify the adoption of an inappropriate test for making a declaration in the first place.
Second, and no less importantly, it must be recognised that efficiency of the kind considered by reference to "natural monopoly" is not the only relevant economic consequence. A single supplier may be able to exploit users of the supplier's service by using its market power to raise prices, at least if not restrained by regulation or the threat of competitive entry into the market. And if the single supplier does face a credible threat of new entry, it is probable that the natural monopoly is not sustainable. But more importantly, the existence of a credible threat of entry will contribute to the efficiency of the relevant market by inducing the monopolist to produce and price its services efficiently. To say this is simply to restate basal competition principles which underpin the whole of the Act.
These considerations of competition principles, together with the considerations of national economic efficiency that have been already noted, do not point away from adopting a privately profitable test. In order to show why that is so, it is useful to consider what different outcomes would follow from applying a private profitability test and from applying a natural monopoly test, if the facility being considered for declaration under Pt IIIA is or is not in fact a natural monopoly and the only criterion that remains for consideration before declaring the service is criterion (b).
If criterion (b) is read as a privately profitable test, there may be cases where there would be a duplication of a natural monopoly. But duplication would occur only if it were profitable for another to develop an alternative facility to provide the service (despite the fact that total market output could be supplied at lowest cost by one facility). It would be profitable for another to develop an alternative facility if the new facility is more efficient than the existing facility, for example, because of some form of cost or technological advantage. And if the new facility is not more efficient than the existing facility, it is to be doubted that development of the new facility in competition with a natural monopoly would be profitable. Especially would that be so where, as here, the capital costs of establishing the new facility would necessarily be very large.
By contrast, if criterion (b) is read as a natural monopoly test, a facility that is not a natural monopoly cannot be declared even if there is no (profit) incentive to duplicate it. In that case, the sole supplier would be left in control of the field with the attendant risks of abuse of market power and, no less importantly, with no incentive to price and produce efficiently. An outcome of that kind does not sit easily with the requirement that criterion (b) be understood in a way that will "promote the economically efficient operation of, use of and investment in the infrastructure by which services are provided, thereby promoting effective competition in upstream and downstream markets"[115]. The Tribunal was wrong to conclude, as it did**[116]**, that adoption of a privately profitable test of the kind being considered by the Tribunal would not adequately meet those objectives. A privately profitable test serves those objectives better than a natural monopoly test.

[101]

It would not be economical, in the sense of profitable, for someone to develop another facility to provide the service in respect of which the making of a declaration is being considered unless that person could reasonably expect to obtain a sufficient return on the capital that would be employed in developing that facility. Deciding the level of that expected return will require close consideration of the market under examination. What is a sufficient rate of return will necessarily vary according to the nature of the facility and the industry concerned. And if there is a person who could develop the alternative facility as part of a larger project it would be necessary to consider the whole project in deciding whether the development of the alternative facility, as part of that larger project, would provide a sufficient rate of return. But the inquiry required by criterion (b) should be whether there is anyone who could profitably develop an alternative facility.
The Full Court said**[117]** that the reference in criterion (b) to "anyone" should be read as not including the incumbent owner of the facility to which access is sought. The Full Court relied, in this respect, on what was said by the Tribunal in Sydney Airports[118] in the course of its rejection of a privately profitable test. The Tribunal concluded**[119]** in that case that if uneconomical was interpreted "in a private sense then the practical effect would often be to frustrate the underlying intent of the Act". But that conclusion, said**[120]** to be "closely connected to the question of whether 'anyone' should include the owner of the facility providing the service to which access is sought", was a conclusion that proceeded from the premise that the net social benefit test was consistent with the "underlying intent of the Act". That is, the conclusion proceeded from an incorrect construction of criterion (b). No reason is shown to read "anyone" in criterion (b) as limited in its application. In criterion (b), "anyone" includes existing and possible future market participants.
Contrary to Fortescue's submissions asking whether it would be uneconomical in the sense of unprofitable for anyone to develop an alternative facility does not ask a question to which no answer can be given with any sufficient certainty. Of course it is a question that would require the making of forecasts and the application of judgment. But the converse question - whether it would be economically feasible to develop an alternative facility - is a question that bankers and investors must ask and answer in relation to any investment in infrastructure. Indeed, it may properly be described as the question that lies at the heart of every decision to invest in infrastructure, whether that decision is to be made by the entrepreneur or a financier of the venture.
If the Minister is satisfied that it would be uneconomical (in the sense of not profitable) for anyone to develop an alternative facility, criterion (b) is met.

[106]

The conclusion reached by the Tribunal and by the Full Court about criterion (f) depended upon the assumption that the Tribunal was bound to make its own assessment, on the new body of evidence and material placed before it, of whether access or increased access would be contrary to the public interest. But, as has been explained, that was not the Tribunal's task. Its task was to reconsider what the Minister had decided. And performance of that task directed attention immediately to the bases on which the Minister was satisfied that access would not be contrary to the public interest.
Because so many different kinds of consideration may be relevant to an assessment of what is "contrary to the public interest", many if not all of those matters which can be described as "social costs" could be relevant to that assessment. And the significance to be attached to such social costs would, no doubt, be affected by the existence of any countervailing social benefits. But it is important to keep at the forefront of consideration that, when the Tribunal is required to review a ministerial decision to make a declaration, the Minister has been satisfied that access or increased access would not be contrary to public interest. And when the Tribunal is required to review a ministerial refusal to make a declaration the Minister will have said, in any reasons for decision required by s 44HA(1), whether or not he or she was satisfied of criterion (f).
In neither case is it to be expected that the Tribunal, reconsidering the Minister's decision, would lightly depart from a ministerial conclusion about whether access or increased access would not be in the public interest. In particular, if the Minister has not found that access would not be in the public interest, the Tribunal should ordinarily be slow to find to the contrary. And it is to be doubted that such a finding would be made, except in the clearest of cases, by reference to some overall balancing of costs and benefits.
No question arises in these matters about the Tribunal's decision to affirm the Minister's deemed decision to refuse to declare the Mt Newman line. The Minister's deemed decision will not be the subject of further consideration by the Tribunal. It is therefore neither necessary nor appropriate to examine the difficulties that may be presented by the circumstance that the Tribunal's re-consideration of a deemed decision to refuse to declare a service cannot begin from any statement of the Minister's reasons.
There remains for consideration whether there is some residual discretion.

[113]

HEYDON J. The appeals concern Pt IIIA of the Trade Practices Act 1974 (Cth) ("the Act"). Part IIIA created a process by which persons could gain access to infrastructure owned by others. In connection with this process, Pt IIIA imposed a duty on the National Competition Council ("the Council"). That duty was to recommend either that a particular "service" be "declared" by the "designated Minister", or that it not be declared. Whether the Council would recommend that a particular "service" be "declared" depended on whether it was satisfied that the criteria described in s 44G(2) were met. The Minister's decision to make the declaration depended on satisfaction of the same criteria, which were set out again in s 44H(4).
The appellants are The Pilbara Infrastructure Pty Ltd and Fortescue Metals Group Ltd. They enjoyed success before the Council. They enjoyed less success before the Minister. That success was reduced even further on review of the Minister's decision by the Australian Competition Tribunal ("the Tribunal"). And it was reduced further still after an appeal to the Full Court of the Federal Court of Australia ("the Full Court"). This procedural history and other material background circumstances are set out in the plurality reasons**[133]**. Below, the expression "respondents" will be used to refer to the active respondents as well as the Council, an intervener. The active respondents are certain companies in the BHP Billiton Group and certain companies in the Rio Tinto Group. The Council advanced submissions generally supporting the active respondents on the first two questions in these appeals.
After oral argument concluded, there were three main questions in these appeals. The first question was: did the appellants' tardiness in raising the question whether the Tribunal correctly conceived its task under s 44K(4) preclude this Court from considering it? The second question was: did the Tribunal correctly conceive its task under s 44K(4)? And the third question was: did the Full Court adopt the correct interpretation of s 44H(4) of the Act? The answer to each question is "No".

[128]

Inter partes proceedings? Thirdly, there were no "parties" in a s 44K review. This is another factor that points against the respondent's construction of s 44K(4). It was not necessary that the person seeking access to services apply to the Council for a declaration recommendation. Under s 44F(1), the application could be made by the "designated Minister, or any other person". Section 44GB conferred power on the Council to invite submissions from the public. But the Act made no more specific provision for an access-seeker or a service provider to make submissions to the Council. And neither the access-seeker nor the service provider enjoyed a more privileged role before the Minister in any substantive respect. The Council submitted that the proceedings before the Tribunal were inter partes proceedings. The "proceedings" before the Minister were not. The Tribunal had the same powers as the Minister pursuant to s 44K(5). The Council did not explain how review of a decision that was not inter partes by a Tribunal having the same powers as the decision-maker became inter partes. Nor did the Council explain how the inter partes character of the review gave those participating a right to adduce evidence in an unconstrained way. If the respondents' interpretation of s 44K(4) were correct, both the access-seeker and the service provider would have the capacity to tender fresh material and raise new issues before the Tribunal. That capacity would stand in sharp contrast with their inability, other than as members of the public, to widen the material that the Council considered. It would also stand in sharp contrast with their inability to expand the material that the Minister considered.
To widen the roles of the access-seeker and the service provider in the Tribunal beyond their roles in relation to the recommendations of the Council and the decisions of the Minister would have called for statutory language to support that expanded role. The legislation did widen their roles a little, but not enough to support the respondents' construction. Section 44K(1) provided for a disappointed service provider to apply to the Tribunal for review. And s 44K(2) empowered the person who applied unsuccessfully for the declaration recommendation to apply to the Tribunal for review. Regulation 22B(1) of the Trade Practices Regulations 1974 (Cth) ("the Regulations") provided for the original applicant to "participate in the review" triggered under s 44K(1). Regulation 22B(2) provided for the service provider to "participate in the review" triggered under s 44K(2). But these references to participation did not suggest a right of participation so extensive as to permit the Tribunal to enlarge the field of material that the Minister considered.
Connection between the declaration recommendation and the declaration decision. The fourth point against the respondents' interpretation of s 44K(4) concerns the connection between the declaration recommendation and the declaration decision. The Council had power to invite public submissions, and it was obliged to have regard to them in deciding what recommendations to make. The Act contained no express grant of power to the Minister to seek submissions from interested persons, the public or anyone else. It is true that there was no express prohibition on the Minister adopting this course. However, the Act contemplated that it was to be primarily the Council, a body composed of experts, which engaged in expert analysis of the issues an application raised. And the Act contemplated that the Minister, who would not necessarily possess the same expertise, but who would be experienced in resolving broader political questions, would decide in the light of that experience whether to follow the expert recommendation. Like the Council, the Minister was not cast in the role of an inter partes decision-maker. And like the Council, the Minister was cast more in the role of a guardian of the public interest. Section 44H(1) imposed on the Minister a duty either to declare or not declare the service. Section 44HA(1) imposed on the Minister a duty to publish "his or her decision on a declaration recommendation and his or her reasons for the decision." It was implicit in these duties that the Minister had a duty to consider the Council's declaration recommendation.
There was plainly a close connection between the Council's declaration recommendation and the Minister's declaration decision. The respondents denied this close connection. Their argument compelled this denial. If they had not denied it, the foundation for their contention that the Tribunal could act entirely independently of events before the Council and the Minister would vanish. The respondents' argument did not accommodate the language of s 44H(9). Section 44H(9) spoke of the Minister making a "decision on the declaration recommendation". Its words did not admit of that decision being based on some new issue unconnected with the recommendation. Further, the respondents' argument did not accommodate the importance of the declaration recommendation in the case of a deemed refusal. In that case, there are no reasons from the Minister. The Council's reasons only are published. The respondents' argument set at naught the considered process the Act created. Under that process, the Council, which was both expert and independent, consulted the public and then gave a reasoned recommendation to an elected official. Whether a declaration was made or refused, that official was responsible to the legislature for the course taken. And the respondents' argument ignored s 44K(7). That section gave the Tribunal powers to "affirm, vary or set aside the declaration". This language concentrated the Tribunal's attention on whether the Minister's "decision on the declaration recommendation" was correct, rather than on what decision it should make of its own volition, after a fresh inquiry unconnected with the past. The Council's recommendation and the Minister's decision to declare or not to declare a service are not mere formal steps to be accomplished before the Tribunal may commence "re-consideration". They are integrally connected with that "re-consideration".
The generality of criteria (a)-(f). Fifthly, criteria (a)-(f) in ss 44G(2) and 44H(4) were all somewhat general**[137]**. The most general were criterion (a) ("material increase in competition"), criterion (b) ("uneconomical"), criterion (c) ("national significance") and criterion (f) ("public interest"). Some of the criteria depended on questions of economic expertise - for example, criterion (a) and criterion (e) ("effective access regime"). Others depended on different types of expertise - for example, criterion (d) ("health or safety"). Taken together, the criteria raised issues apt for consideration by an official responsible to the legislature acting with the benefit of an expert recommendation from the Council. Introducing further issues and fresh material after the Minister had reached a decision on such a recommendation was not consistent with the statutory scheme. That is particularly so if the Tribunal hearing became excessively forensic. The process that led to the Minister's decision lacked both publicity and forensic formality. It is true that under s 44GC the Council's recommendation had to be made public on or soon after the day the Minister's decision was published. And, so long as the decision was not a deemed refusal, under s 44HA(1), publication of the Minister's reasons for decision was also obligatory. However, the Act imposed no obligations on the Council to conduct hearings or to respond to submissions. It did not impose those obligations on the Minister either. That fact is hardly congruent with the Tribunal undertaking a process that considerably widened the approach taken by the Minister.
The improbability of wide review. Sixthly, in our system of responsible government, legislation is generally initiated by the Ministers of State who superintend other executive officers - the Cabinet. Legislation is generally enacted because the initiating Ministers come from, or are supported by, parties having majorities in the houses of the legislature. It was notorious in 1995, when s 44K was introduced, that commercial litigation was becoming cumbersome, bloated and therefore slow. It was notorious that these trends could be observed in some Trade Practices Tribunal hearings which permitted the reception of material that had not been before the original decision-maker. It was also notorious in 1995 that while administrative decisions were often subject to judicial review, and some were subject to merits appeal, the personal decisions of Ministers were not commonly subject to merits appeal to non-judicial tribunals on issues and using materials wider than those that had been before the Minister. The meaning which "re-consideration" in s 44K(4) would have had to contemporaries aware of these states of affairs is highly unlikely to have been a wide one. It was "re-consideration" of a decision which had to be made within a 60 day non-extendable period by the Minister with no duty to elicit materials beyond the Council's recommendation and the reasons for it. That recommendation was usually made within four months. Neither the Council nor the Minister was under any duty to permit any forensic process. It is improbable that contemporary observers would have construed "re-consideration" as permitting an examination of wider issues in the light of ampler materials than those looked at in the original "consideration". It is improbable that contemporary observers would have seen "re-consideration" as permitting anything akin to contemporary commercial litigation. It is improbable that contemporary observers would have read s 44K(4) as permitting personal decisions of the Minister under s 44H, unlike those of most other Ministers, to be subjected to so intense and lengthy a scrutiny on the merits as happened before the Tribunal in this case.

[130]

It is necessary now to deal with eight arguments put by the respondents against the construction advocated by the appellants and accepted above.
The irrelevance of ss 103-110. First, some attention was paid in argument to what could be drawn from the contrast between "a re-consideration of the matter", as used in s 44K(4), and a "re-hearing", as used in s 101(2) in Pt IX. The word "re-hearing" was used to describe reviews by the Tribunal of certain determinations of the body formerly known as the Trade Practices Commission and now known as the Australian Competition and Consumer Commission ("the Commission"). Those determinations involved the grant or refusal by the Commission of authorisations under Pt VII Div 1. In considering applications for authorisations, s 90(2) obliged the Commission to take into account submissions by the applicant, the Commonwealth, a State, or any other person. Section 90A obliged the Commission to prepare draft determinations in relation to authorisation applications (other than applications under s 88(9)) and to invite interested persons to an oral conference. In these two senses, there had been a hearing before the Commission. It was therefore appropriate for the Act to provide that the review of the Commission's determination be undertaken as a "re-hearing" in s 101(2). The Minister's decision under s 44H, on the other hand, did not involve a hearing which was in any sense like those the Commission conducted under Pt VII Div 1.
That is not of fundamental significance. What is of fundamental significance is that nothing in the provisions in Pt IX Div 2 (ss 102A-110) suggested that they applied to s 44K reviews. Those provisions referred to various matters of evidence and procedure in "proceedings" before the Tribunal. Part IX concerned, as its heading said, "[r]eview by [the] Tribunal of [d]eterminations of Commission". Section 44K, on the other hand, concerned reviews by the Tribunal of determinations of the Minister. Nothing in Pt IX extended the provisions it contained beyond review of Commission determinations to s 44K reviews. The respondents argued that Pt IX did apply to s 44K reviews. They argued that ss 103-110 in Pt IX Div 2 dealt with the Tribunal's powers in "proceedings" before it. They submitted that s 44K fell within the definition of "proceedings" in s 102A. That definition provided that in Pt IX:

[133]

If the respondents' argument were sound, it would not have been necessary to include pars (a) and (b) in the definition of "proceedings" in s 102A. The respondents attributed their inclusion to an abundance of caution. However, their argument is at odds with the statutory context. It cannot be reconciled with the heading to Pt IX (Review by Tribunal of Determinations of Commission). It cannot be reconciled with the terms of ss 101 (review of Commission determinations), 101A (review of exclusive dealing and collective bargaining notices given by the Commission), and 102 (review of Commission authorisation determinations). It cannot be reconciled with the terms of pars (a) and (b) of the s 102A definition (which dealt with the Tribunal's role in relation to mergers, not with Pt IIIA). And it cannot be reconciled with ss 111-119 (review of Commission's determinations on merger clearances). Section 109(1) dealt with review of Commission determinations about authorisations only. Section 109(1A) dealt with review of exclusive dealing and collective bargaining notices given by the Commission only. It is true that ss 103-108 and 110 were cast in quite general terms. But there was simply no statutory link between s 44K and the regime provided for by Pt IX Div 2 (particularly ss 103-108 and 110). And the context in which ss 103-108 and 110 appeared strongly suggested that they were limited to the topics specifically referred to in Pt IX; namely, various forms of Tribunal review of Commission determinations, and applications to the Tribunal about mergers under Pt VII Div 3 subdiv C. Hence the respondents' lengthy submissions about the powers ss 103-110 conferred did not demonstrate that the appellants' construction of s 44K(4) was inconsistent with Pt IX.
The respondents relied on Tribunal determinations supportive of their general approach. But for the most part those determinations rested on assumptions**[138]** or concessions**[139]. One did not. In Re Fortescue Metals Group Ltd, the Tribunal decided the point after argument[140]**. With respect, for the reasons just given, the determination is not correct in that respect.
The rules of procedural fairness. Secondly, the respondents contended that the rules of procedural fairness compelled the Tribunal to afford persons likely to be adversely affected by its decision the right to bring forward evidence. Therefore, they submitted, their construction of s 44K should be preferred. Even if the rules of procedural fairness confer that right, they may be abrogated or qualified by statute. For the reasons stated above**[141]**, s 44K did qualify them. And claims for a fair hearing at the Tribunal stage can be met by a request from the Tribunal to the Council under s 44K(6). To some extent the Tribunal's reasoning in this case rested on that argument by the respondents. So far as it did, the Tribunal's reasoning must be rejected. The Tribunal observed that one consequence of the rules of procedural fairness was that it was required:

[136]

An analogy with the Administrative Appeals Tribunal. Thirdly, the respondents submitted that the Tribunal was in the same position as the Administrative Appeals Tribunal under the Administrative Appeals Tribunal Act 1975 (Cth). They submitted that it was thus able to take into account evidence that had not been before the primary decision-maker. This submission does not support the respondents' construction of s 44K(4). Section 40(1) of that Act gives the Administrative Appeals Tribunal express powers to receive evidence. Section 40(1A) of that Act gives it express powers to make orders in the nature of subpoenas. Section 44K did not give the Tribunal these powers. Each of the two statutes must be considered in its own terms. They cannot be treated as identical or as generating relevant analogies.
The assumptions behind the 2010 amendments. Fourthly, the respondents relied on amendments relating to s 44K made in 2010, and on statements in Explanatory Memoranda about those amendments. They submitted that the amendments rest on a legislative assumption that the respondents' construction of the unamended s 44K - the provision at issue in these appeals - is correct. It is true that the function of the 2010 amendments was to overturn assumptions made by the Tribunal about its powers in certain earlier determinations. The impetus for the 2010 amendments came from a Competition and Infrastructure Reform Agreement reached by the Council of Australian Governments on 10 February 2006. That was less than two months after the Tribunal made two of those determinations.
However, subject to one exception noted above**[144], no argument was advanced to the Tribunal challenging or analysing the correctness of those assumptions[145]. Hitherto, no judicial decision has analysed the correctness of those assumptions. On analysis, the assumptions are incorrect. In amending s 44K, the legislature may have been mistaken as to what the meaning of the unamended s 44K was. In Cape Brandy Syndicate v Inland Revenue Commissioners, Lord Sterndale MR said[146]: "subsequent legislation, if it proceed upon an erroneous construction of previous legislation, cannot alter that previous legislation". In Ormond Investment Co Ltd v Betts, Lord Buckmaster quoted that statement with approval[147]. So did Dixon, Evatt and McTiernan JJ in Deputy Federal Commissioner of Taxes (SA) v Elder's Trustee and Executor Co Ltd[148]**.
Implications from other parts of the Act. Fifthly, the respondents relied on implications to be drawn from other parts of the Act. One proposed implication concerned s 44ZQ. That section gave the Tribunal power to review final determinations by the Commission of access disputes. Section 44ZQ specifically provided that ss 103-110 did not apply to reviews undertaken pursuant to it. This, the respondents submitted, raised a strong implication that ss 103-110 were intended to apply to reviews under s 44K. The same point was made about ss 10.82B and 10.82C in Pt X of the Act. This submission must fail. Sections 44ZQ, 10.82B and 10.82C concern review by the Tribunal of a decision made by the Commission, not by the Minister. It was therefore not inappropriate for a specific exclusion of ss 103-110 to be made. The respondents' argument rests on an express exclusion of ss 103-110 in provisions to which they would otherwise apply - provisions enabling review of Commission decisions by the Tribunal. The respondents sought to draw from that exclusion an implication that ss 103-110 apply to a review by the Tribunal of a decision not made by the Commission. The reasoning does not follow.
The respondents also relied on a note to s 10.82E, and on s 10.82G of Pt X. These provisions concern review by the Tribunal of certain decisions of the Minister relating to overseas cargo shipping under s 10.82D. The note to s 10.82E is to the effect that Pt IX Div 2 applies to proceedings before the Tribunal pursuant to that section. Section 10.82G provides that Pt IX Div 1 does not apply to a review by the Tribunal of a decision of a Minister under s 10.82D. These straws are too slender to support an argument that Pt IX Div 2 applies to s 44K. Part X of the Act is in many ways sui generis. It is a separate and self-contained code. It has its own distinctive numbering. Its special goals lie outside and to some degree contradict the goals of the rest of the Act. Review by the Tribunal of a s 10.82D decision by the Minister is not said to be a "re-consideration" of the matter. And at the time relevant to these proceedings s 13(3) of the Acts Interpretation Act 1901 (Cth) provided that the note to s 10.82E was not even part of the Act.
The Regulations. Sixthly, some respondents submitted that ss 44ZZP(1) and 172 of the Act supported the respondents' construction of s 44K. Section 44ZZP(1)(e) granted power to make regulations relating to procedure and evidence. Section 172 granted power to make regulations relating to procedure in the Tribunal. It is debatable whether these powers permitted the making of regulations inconsistent with s 44K. In any event, neither power has been exercised to make a regulation concerning procedure or evidence before the Tribunal in relation to s 44K. Further, it may be that the regulation-making power in s 44ZZP(1) related only to s 44ZP (re-arbitration of access disputes).
It was also submitted that reg 22 supported the respondents' construction. That regulation conferred power on the Tribunal to give directions about preliminary statements of facts and contentions; the production of documents; and evidence. This power was said to demonstrate that the Tribunal could have regard to documents and other evidence which had not been before the Minister. However, reg 28Q(2) provided that reg 22 did not apply to a review. Further, reg 22 applied to "proceedings before the Tribunal". Regulation 22 was probably made under s 104, not s 44ZZP(1). This is because s 104 applies to regulations "with respect to evidence in proceedings before the Tribunal". For the reasons given above**[149]**, the definition of "proceedings" in s 102A does not refer to s 44K reviews.
Practical disadvantages? Seventhly, some respondents claimed that the appellants' construction of s 44K would prevent the Tribunal from having regard to current information concerning the criteria raised by s 44H(4), particularly those requiring consideration of future circumstances. To this there are two answers. First, on the appellants' construction, the Tribunal's task was a confined one, capable of being accomplished quite soon after the Minister's decision was made. Secondly, any information which the Tribunal considered it needed in order to update the information that was before the Minister could be obtained from the Council under s 44K(6).
Transmission of the "record". Finally, some respondents submitted that if the Tribunal could consider only the material that had been before the Minister, one would expect s 44K to contain provisions "providing for the transmission of the record considered by the Minister to the Tribunal". They submitted that there are no such provisions. They also submitted that it might be difficult for the Tribunal to ensure that it was confining itself to the material before the Minister. This reveals the danger of over-curialising the Tribunal. In practice, it would be easy for the Tribunal to ascertain what had been and what had not been before the Minister. If the Minister made a decision under s 44HA(1) and (2), that decision, together with the reasons for it, had to be given to the applicant and the service provider. If there was a deemed refusal because the Minister's decision on the declaration recommendation was not published within 60 days, the Council recommendation and the reasons for it would reveal the issues. That recommendation had to be published and given to the applicant under s 44F and to the service provider under s 44GC(1) and (4). If the Tribunal remained in doubt about whether it was confining itself to the material that had been before the Minister, it could make a s 44K(6) request for the Council's assistance.
Conclusion. The Tribunal exceeded the powers s 44K(4) conferred on it in its review of the Minister's decisions. It did not analyse either the Council's recommendation on which the Minister's decision was based, or the reasons for the Minister's decision. The Tribunal went a long way outside the issues and material referred to in those documents. It misapprehended its jurisdiction as being to deal with a fresh application, rather than being to reconsider the Minister's decision in a confined way. It said that s 44K(4)-(5) meant that it "must reconsider each application afresh. This allows the parties to put before the tribunal for its consideration any material that may be relevant to the issues raised, whether or not that material was before the minister."[150] That was a significant error in approach.
Thus the first two questions must be answered "No". One remedy contemplated by the parties was remitter to the Tribunal. That possibility enlivens the third question, concerning the construction of s 44H(4). Section 44H(4)(a)-(f) set out six criteria. The Minister needed to be satisfied that these criteria were met before declaring a service**[151]**. These appeals raised three discrete questions of construction in relation to them. First, when would it be "uneconomical for anyone to develop another facility" within the meaning of criterion (b)? Secondly, what matters might the Minister have taken into account in deciding whether access would be "contrary to the public interest" under criterion (f)? And, thirdly, did the Minister have a residual discretion to refuse to declare a service even if satisfied that the criteria in s 44H(4)(a)-(f) were met?

[137]

Criterion (b) was: "it would be uneconomical for anyone to develop another facility to provide the service."
The appellants submitted that "uneconomical" did not mean "unprofitable". Rather, they submitted that "uneconomical" meant "wasteful of society's resources". They submitted that it is "uneconomical" for society's resources to be wasted by duplicating an existing facility if the existing facility could meet reasonably foreseeable demand for the service it provided at a lower total cost than if the service was provided by two or more facilities.
The Tribunal accepted the appellants' construction of criterion (b). On that approach, it found that if the existing Hamersley railway line was used by third parties and not duplicated, there would be capital savings of up to $2.75 billion. It also found that if the existing Robe railway line were used by third parties and not duplicated, there would be capital savings of $455-651 million if the service provided by the Hamersley railway line were not declared and large capital savings if it were. Those findings demonstrate that economic waste would occur if the appellants did not gain access to the facilities. Capacity in excess of what was needed would be created, and the money used to create and operate that excess capacity would therefore be wasted. The result is an inefficient one.
The Full Court, on the other hand, considered that "uneconomical" meant "unprofitable". The appellants' construction of criterion (b) should be accepted for the following reasons.
The appellants' construction accepted. The first reason concerns some facts that were widely known when Pt IIIA was enacted. They involved infrastructure capable of delivering pay television services. One intended supplier of pay television services had equipment capable of transmitting its own signals and those of its rival. The former would not grant the latter access to its equipment. The latter then set about building its own equipment. This cost billions of dollars. It damaged the visual environment. It disturbed ordinary life across the whole of Australia during the processes of construction. Criterion (b) must be read as informed readers would have read it at the time of its enactment. Informed readers knowing those notorious and deplorable background facts would have read criterion (b) in the manner the appellants advocated.
Secondly, the appellants' construction is more consistent with s 44AA(a), which stated the first object of Pt IIIA**[152]. The construction of a duplicate facility, where the existing facility was capable of meeting reasonably foreseeable demand for the services it provided, necessarily results in those services being provided at greater cost than they could have been if the existing facility alone were employed. This does not promote the "economically efficient operation of, use of, and investment in the infrastructure by which services are provided". And it probably fails to "[promote] effective competition in upstream and downstream markets". As the Tribunal said[153]**:

[139]

Thirdly, the word "unprofitable" directs attention to the particular position of a particular trader. It involves subtracting that trader's costs from that trader's gross revenue. "Uneconomical" is a less than apt description of that idea. "Uneconomical" is more apt to refer to other matters. One lay meaning of "economical" is avoiding waste; "uneconomical" in that sense means not avoiding waste. Another lay meaning of "economical" is harmony with the principles of economics. In that sense, "uneconomical" means antithetical to the principles of economics - the study of the production, consumption, transfer and distribution of wealth. One principle of economics is the idea that social welfare is increased when resources are allocated so as to diminish excess capacity. Another is the idea that if there is excess capacity, resources have been misallocated. And another is the idea that productive efficiency is enhanced when goods and services are produced at the lowest possible cost. Thus in ordinary usage it is "uneconomical for anyone to develop another facility" if it would be wasteful to do so or would increase excess capacity or would result in an inefficient use of scarce resources.
These are appropriate meanings to attribute to a key provision of a statutory scheme the object of which is to promote the economically efficient operation of, use of, and investment in infrastructure. Further, the word "economically" in the statement of the first object of Pt IIIA in s 44AA(a) does not refer to questions of private profitability. There is no reason why "uneconomical" in s 44H(4)(b) should do so either, since s 44H(4)(b) is to be construed conformably with s 44AA(a) and with a view to effectuating the purpose that latter provision states.
The appellants' submission finds support in Re Duke Eastern Gas Pipeline Pty Ltd[154]. That determination was decided by a panel of the Australian Competition Tribunal presided over by Hely J. Speaking of legislation in similar form to s 44H(4)(b), Hely J said that the "test is whether for a likely range of reasonably foreseeable demand for the services provided by means of the [facility], it would be more efficient, in terms of costs and benefits to the community as a whole, for one [facility] to provide those services rather than more than one"[155]. Hely J saw efficiency as involving productive, allocative and dynamic efficiency. Hely J used these expressions in the following senses: "Productive efficiency is production at least cost. Allocative efficiency occurs when services are provided to those who value them most highly. Dynamic efficiency involves preserving incentives for innovation and investment."[156] Hely J added: "if a single [facility] can meet market demand at less cost (after taking into account productive allocative and dynamic effects) than two or more [facilities], it would be 'uneconomic', in terms of criterion (b), to develop another [facility] to provide the same services."[157]
This construction is intrinsically meritorious. But it has a further significance. In 2006, Pt IIIA was extensively amended. The amendments followed a report of the Productivity Commission on 28 September 2001. The report analysed the Tribunal's approach to criterion (b) in Re Duke Eastern Gas Pipeline Pty Ltd. The report concluded**[158]**:

[153]

There is a common law rule of statutory interpretation that only clear words will suffice to remove property rights or to extinguish valuable rights relating to their exercise**[167]. That common law rule reflects the "philosophy" of which the Full Court spoke. Whether any further manifestation of the "philosophy" can be found in the Act itself depends on its terms. The terms of s 44H(4) certainly created significant hurdles to be jumped before a declaration could be made. However, it is not correct to treat the appellants' construction of the criteria in s 44H(4), and in particular their construction of criterion (b), as justifying the making of a declaration merely because of "an evaluation by a regulator that economic efficiency from the point of view of society as a whole would be served by a declaration of access." Criteria (a)-(f) were, as already noted, to some degree general[168]. But they were not open-ended. And the Minister had no capacity to take into consideration any other matter thought to be relevant[169]**. Section 44H did not justify an open-ended inquiry into every possible aspect of social welfare.
Obviously, the access regime created by Pt IIIA was capable of having an impact on the exercise of private proprietary rights. The language of the Act did not suggest that interference with those rights would be lightly done, but it did not treat it as "distinctly exceptional". Indeed, the concerns of the "philosophy" were vindicated in later provisions of Pt IIIA. Those provisions provided safeguards for the service provider against whom access was granted.
One safeguard lay in the fact that a successful applicant for a declaration did not achieve access immediately. The making of a declaration gave only a right to negotiate for access, and, if negotiation failed, a right to submit to arbitration about access. If contractual agreement was achieved, the contract could be enforced by contractual remedies under the general law. If it was registered under s 44ZW of the Act, s 44ZY provided that it could be enforced instead by way of s 44ZZD relief. If contractual agreement was not achieved, access could be obtained only once the Commission had settled the terms and conditions of access after a process of arbitration under s 44V. Those terms and conditions might have been onerous to the service provider. Section 44V(2)(d) and (da) provided that the Commission could require the service provider to extend the facility or to permit interconnection to the facility by the access-seeker. But s 44W(1) forbade the making of a determination which would have any of the following effects:

[186]

Criterion (f) was: "access (or increased access) to the service would not be contrary to the public interest." The appellants submitted that criterion (f) authorised a narrow inquiry only. They submitted that it was directed only to whether there could be concrete harm to an identified aspect of the public interest which was not otherwise caught by criteria (a)-(e). They pointed out that the earlier criteria largely relate to competition, efficiency and safety. And the appellants gave examples of the residual matters criterion (f) might capture - matters of national security, national sovereignty and environmental harm. The appellants correctly submitted that the Tribunal had engaged in a detailed factual and counterfactual analysis of the likely net balance of all the social costs and benefits of access. This analysis was based on assumptions about what the extent and conditions of access would be, when and if it was eventually granted. The appellants noted that the Full Court approved the Tribunal's analysis.
The Tribunal seemed to slide from correct statements to erroneous ones. For example, it correctly stated that criterion (f) should not be used to call into question the results obtained by application of criteria (a)-(e). But it wrongly stated that assumptions about the terms of access needed to be considered under criterion (f). It wrongly stated that not only cross-benefit issues, but "broader issues concerning social welfare and equity, and the interests of consumers"[181], fell for consideration under criterion (f). It also wrongly stated that the benefits found under criteria (a) and (b), "and other benefits not considered under earlier criteria, as well as the costs of access", had to be taken into account under criterion (f)[182]. The appellants were correct in contending that this approach was erroneous. The appellants' construction of criterion (f) should be accepted for three reasons.
First, the Tribunal's approach to criterion (f) is so wide in scope that criterion (f) must inevitably overlap with criteria (a)-(e). It thus tends either to make them redundant or to generate double-counting. These results are to be avoided, if an alternative construction is available.
Secondly, the Tribunal's construction asks whether declaration of the service would be better for the public than non-declaration. The Tribunal's construction assumes that to declare a service was ipso facto to grant access to it. But that is not so. A declaration gave an access-seeker an opportunity to negotiate with the service provider, and, if negotiation failed, to obtain an access determination after Commission arbitration. The access-seeker may never have achieved agreement. And the Commission may not have made a favourable access determination.
Thirdly, criterion (f) posed the question whether any access is contrary to the public interest. It did not call for an assessment of what type of access was likely to be granted either by contract or by an access determination. If that assessment had been called for, the Minister would have needed to predict the future within the relatively short period of time allowed for decision. The Minister would necessarily have been operating on inadequate information in making that prediction. The Tribunal's analysis, on the wide approach it adopted, was conducted after a very long hearing at which massive quantities of evidence had been received. Its analysis was extraordinarily sophisticated and lengthy**[183]**. The provisions of Pt IIIA called for significant expedition in the disposition of applications for declarations. The approach the Tribunal and the Full Court favoured is inconsistent with those provisions.

At a glance

Court

Decision date

Before

Source

Judgment (334 paragraphs)

The Pilbara Infrastructure Pty Ltd v Australian Competition Tribunal [2012] HCA 36 (14 September 2012)

Parties

Legislation Cited (2)

Cases Cited (26)