Annual Report 2019-20

Promoting consumers interests through effective regulation and oversight.

We monitor Port of Melbourne wharfage services charges, undertake inquiries into access to land and rents at the Port of Melbourne, advise government on accident towing prices, and determine fares for unbooked taxi trips in metropolitan Melbourne and large regional zones.

2020 also marked the end of our decade-long reporting on the performance of Victoria’s domestic building insurance scheme.

Our year in review

We set the taxi non-cash payment surcharge

In March 2020 we reduced the maximum surcharge that can be imposed for using common credit cards or other cashless means.

It means customers will pay a four per cent surcharge (down from five per cent) for paying using debit, charge or credit cards.

Inquiry into Port of Melbourne’s power in setting land rental rates

We commenced the first-ever inquiry into the processes, means and methods by which the Port of Melbourne sets rents and provides access to the land it controls.

We used our compulsory information gathering powers to compel commercial-inconfidence information and tested claims against third party provided data and intelligence, including from port tenants. Our confidential and public findings was provided to the Assistant Treasurer.

Updated feed-in tariff rates

In February 2020, the minimum feed-in tariff was updated, with retailers to commence paying customers from 1 July either a fixed rate of 10.2 cents per kilowatt hour or a tariff that varies with the time of day. The tariffs were set by taking account of financial markets’ expectations for a fall in Victoria’s wholesale electricity prices across 2020– 21.

Progress report, 2019–20

Objective: Publish information on the Port of Melbourne's 2019 tariff compliance

Published relevant information and considered views in our annual commentary on the Port of Melbourne’s 2019 tariff compliance statement and in our annual monitoring report for domestic building insurance.

Outputs

• Clarification of charging regime Persuaded Port of Melbourne to publish improved, simplified charging model.
• Delivered final ever insurance monitoring report to government, handing over functions to Department of Treasury.

Outcomes

• More clarity on charges.
• Users better understand how regulatory regime operates and when and how port charges relate to them.
• Domestic building financial insurance management is sound and can meet expected claims. Government has confidence that consumers are protected from builder insolvency.

Objective: Review Port of Melbourne rent process

Undertook inaugural review of the process by which the Port of Melbourne sets rents, to assess whether it has misused power in setting or reviewing rents payable by tenants under lease agreements.

Outputs

• Published consultation paper, and interim report on early findings. Provisional findings outlined to the Port of Melbourne to ensure issues understood and had all reasonable opportunities to be heard.

Outcomes

• Users understand how rents are set. Port of Melbourne looked at its rent setting behaviour through new lens.

Objective: Enhance stakeholder relationships

Enhanced effective and constructive stakeholder relationships.

Outputs

• Held first ever online forums, adhering to coronavirus social distancing commitments.

Outcomes

• Industry is heard. Customers have a voice and can freely express views. Many port tenants engaged with commission for the first time.

Environmental factors

Environmental factors affecting our work included:

• Amendments to the Port of Melbourne Pricing Order, which incorporated changes that permit the port operator to recoup the costs of further rail investments via a new wharfage charge on imported containers. This now forms part of our compliance assessment for annual tariffs associated with moving goods through the port.
• Since early 2020 we no longer undertake assessment of domestic building insurance premiums. This is on account of the Government ceasing the applicable terms of reference following a decade of reports from us into the financial performance of the Victorian Managed Insurance Authority, government’s insurer, and risk adviser, which supplies domestic builders’ insurance.

Cost of our transport activities

In 2019–20, the total cost of the transport team was $2.36 million. The cost includes the direct costs incurred by the team plus an allocation for overhead costs.

Measuring our success in 2020–21

Strategy objective	Objective	What outputs do we intend to produce?	What outcomes do we intend to achieve?
Objective 3	Taxi fares review	Final decision September 2020	Set efficient maximum unbooked taxi fares in metro, urban and Ballarat, Bendigo and Geelong regions.
Objective 1	Port market rent review	Final Report August 2020	To assess if port’s approach to setting rents is in consumers’ long term interests, including whether the port has power in setting rents and has exercised power in a way that causes material detriment to consumers. Make recommendations to government that support a more robust and efficient rent setting process. Port tenants can have confidence in process for reviewing market rents.
Objective 1	Port annual compliance statement	December 2020	Undertake an evaluation of the port’s tariff compliance statement, including assessment of its building block components such as cost of capital, depreciation, capital expenditure and indexation of the asset base.