Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Hansard source

I welcome the opportunity to speak on this very important legislation in the House tonight because telecommunications is the very linchpin of doing business in regional and rural areas. Without world-class telecommunication systems you cannot operate businesses in a regional area. Many businesses in my electorate depend on telecommunications as their lifeline. Many consulting engineers, architects and other professionals email their designs and developments to clients they may not have met, clients who are perhaps on the other side of the world. Such is life in rural and regional areas these days. It is very much about the provision of services as well as the provision of goods, and quality telecommunications is the key to ensuring that regional businesses can compete with metropolitan businesses and businesses around the world. So I certainly welcome the opportunity to speak on this legislation, as it has the potential to impact on virtually every person that I represent in this place.

The Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 amends a number of acts and has three major parts. The first part deals with the structural separation of Telstra. The second part deals with access and anticompetitive conduct regimes under part XI of the Trade Practices Act. The third part of the legislation deals with consumer safeguards such as the universal service obligation, the customer service guarantee and priority assistance.

The first section of the legislation deals with the vertical and horizontal integration of Telstra. In effect, this legislation gives Telstra two options. The company can voluntarily structurally separate its retail and network arms. If, however, it chooses not to do this, the government will enforce the functional separation of Telstra and make it impossible for the company to access specified bands of spectrum which could be used for advanced wireless services. This approach is puzzling, as the government has not previously raised structural separation as an option. In fact, as recently as May 2009, Minister Conroy told a Senate estimates hearing that he had never advocated the structural separation of Telstra. Telstra has some 1.4 million shareholders, many of whom are small-time investors, self-funded retirees or holders of self-managed super funds. These people had no idea in 2007 that the Labor Party intended to use these bullying tactics to the detriment of their investment. The government has no mandate to do this. It may be that Kevin Rudd and the Labor Party have no idea what they are doing in heading down this path. In 2007, Labor’s policy was to scrap the Howard government’s OPEL program, which was providing high-speed broadband services in rural and regional areas—a program that would have been completed by now. But what do we have in its place? We have a scheme that is still in its very early stages, a scheme which depends on the carving up of the major telecommunications carrier, a scheme which has been ill thought out and a scheme whose viable future we are yet to see.

The government merely destroyed OPEL and then proposed to build a $4.7 billion fibre-to-the-node network using taxpayers’ money. After realising that their grand fibre plan would not attract private investment, the government went back to the hollow men’s whiteboard and came up with a much grander scheme—the $43 billion National Broadband Network. It is quite incredible, really. The government could not get a sufficient number of businesses to invest with the government in their original fibre-to-the-node plan, so their response was to build a much grander plan, a $43 billion plan. It begs the question: how can this much larger plan be viable when the more limited plan was not? How can a much larger plan, funded by the taxpayer, be viable when there was little interest from the commercial sector in the commercial tender processes, resulting in the government being unable to fly its fibre-to-the-node plan? Is this a prudent investment of $43 billion of taxpayers’ money? Has there been proper consideration of the opportunity cost of capital? Has there been proper analysis? I will dwell on this a little later.

The primary purpose of this bill is to ensure that there are no major competitors to the government’s National Broadband Network plan. Ultimately, the structural separation of Telstra would pave the way for the renationalisation of Telstra’s fixed-line network, as it would be gradually absorbed into the NBN. Even the CEO of the Competitive Carriers Coalition confirmed this in Senate estimates hearings when he said:

If you suggested to me that the NBN was likely to succeed in the absence of this legislation I would suggest that’s a pretty big bet.

It would be a pretty big bet this project would actually fly without this legislation. There is no doubt that the primary purpose of this move by the government is to set up a telecommunications industry for the development of the NBN.

The second part of the legislation amends access and anticompetitive conduct regimes in parts XIB and XIC of the Trade Practices Act. Part XIC of the Trade Practices Act provides that, if parties cannot agree on the terms of access to a declared service, either party can notify the ACCC of the dispute. The ACCC must then arbitrate the dispute. The terms and conditions of access are then set by the ACCC in an arbitration determination for those parties only. This legislation amends the TPA to allow the regulator to set upfront prices and access conditions for declared services. The government claims that this will create a benchmark which access seekers can fall back on while still allowing parties to negotiate, although there is concern about this change within the industry.

Part XIB of the Trade Practices Act allows for the ACCC to issue a part A competition notice to a carrier in the event that the ACCC believes that the carrier has been involved in anticompetitive conduct. Currently, the ACCC must give notice to the carrier that it intends to issue a part A competition notice and allow the carrier to respond to this notice within a given time frame. The legislation before the House would remove the requirement of the ACCC to give notice before issuing a part A competition notice. According to the explanatory memorandum, the bill also explicitly provides that the ACCC is not required to observe any requirements of procedural fairness in relation to the issue of a part A competition notice. The government claims that this is to prevent the delay of enforcement proceedings due to extended consultation and litigation on procedural grounds. But any removal of procedural fairness must surely be cause for concern and give unprecedented power to the ACCC.

The third part of this legislation deals with the USO, CSG and priority assistance. These issues are of particular importance in my electorate as many properties and homes are in hard-to-reach places and would not have reasonable services if it were not for the universal service obligation and customer service guarantee. The bill amends the Consumer Protection Act to allow the minister to determine what standard of services must be provided under the USO. According to the explanatory memorandum, it is intended that the performance standards mandated by the USO will include maximum periods of time for new connections and fault repairs.

The legislation also allows the minister to determine USO arrangements as they apply to the supply, installation, maintenance and location of payphones. The customer service guarantee requires telephone companies to meet minimum performance standards or provide customers with financial compensation when these standards are not met. ACMA reporting seems to indicate that industry performance is declining when compared to the customer service guarantee requirements, which suggests that the current arrangements are not providing enough incentive for the industry to maintain or improve service quality. There is a concern that the USO and the CSG may be determined by the minister and not the parliament.

The burning issue is: what assurance can I have that the interests of my constituents in regional Australia will be protected? In this bill there is a strong focus on the outdated technology of payphones, yet there is neglect in relation to obligations with regard to leading-edge technologies and emerging technologies. If regional Australia is going to compete, we have to have a guarantee of service that relates to the very latest technologies, not overarching concern merely with outdated technologies such as payphones.

The bill strengthens priority assistance provisions. They are very important provisions indeed. Priority assistance provisions are available to people with a life-threatening illness who need access to a phone at all times. Priority assistance customers are entitled to faster connection and fault repair services. The bill would force all home carriers to either offer a priority assistance service or notify customers of providers from whom they can purchase a priority assistance service if necessary. This may have the effect of encouraging more carriers to develop a priority assistance program. That is certainly a welcome improvement.

Despite the fact that I have reservations about elements of this bill, as the shadow minister for competition policy and consumer affairs I support the idea of introducing more competition into the telecommunications market. After all, it was the coalition that sold Telstra and allowed competition into the market. We can see the benefits of this move. The options and possibilities available to the consumer are now much greater than 20 years ago. Competition has driven the introduction of new technology and has forced carriers to reduce prices and produce innovative products.

The big question is whether government forced separation of Telstra is the best way to promote competition in this industry. While structural separation remains an option, vertically integrated telecommunications companies are not unusual. If the government were genuinely interested in improving competition in the industry, it would surely give serious consideration to improving the regulatory regime governing access to Telstra’s legacy networks as an alternative to forcing the structural separation of the company. Telstra’s competitors are understandably supportive of this bill as they see it as an opportunity to gain greater access to Telstra’s network. The Australian Telecommunications Users Group has also indicated its strong support for the bill, as has the Competitive Carriers Coalition—an association comprised of several major telecommunications companies.

Overall, my main concern is ensuring that my constituents have access to quality telecommunications services at a reasonable price. I am also mindful that many of my constituents are Telstra shareholders and that their investment should not be damaged by this government decision. The way in which the government has gone about implementing these changes leaves a lot to be desired. For some reason, the minister is determined to ram through this legislation before the parliament before the end of the year, despite not knowing how the National Broadband Network is going to be implemented. The government is currently carrying out a national broadband network implementation study, which is due for completion in February. Without knowing exactly how the National Broadband Network will work, it seems premature to mandate wholesale changes to the telecommunications industry. It is quite bizarre that the minister would not wait until the completion of this study.

The minister’s time frame is also puzzling in light of the fact that Telstra is currently locked in negotiations with the government about the best way to deliver the National Broadband Network. The CEO of Telstra, David Thodey, has indicated to me that Telstra is negotiating with the government and NBN Co. to come up with a commercial arrangement about Telstra’s involvement in the National Broadband Network. Mr Thodey has advised that Telstra is working towards achieving a satisfactory outcome by the end of the year. Why is there such a rush? With this in mind, it seems premature for the government to force through these changes.

As an absolute minimum, it seems prudent to wait until Telstra has concluded its negotiations with the government and until the implementation study is finalised before concluding debate on this legislation. The minister’s haste to implement this legislation, regardless of the outcome of his discussions with Telstra, can only mean that he is not actually negotiating with Telstra in good faith—quite clearly so—in which case he is showing a gross lack of respect and honesty, or he is using this legislation as a threat to encourage Telstra to accept his terms in relation to the National Broadband Network. If this is the case, he is showing blatant disregard for the purpose and role of the parliament.

Michael Pascoe summed up the problem perfectly in his article in Communications Day on 16 September, when he said:

That Conroy is taking a cricket bat to the heads of Telstra shareholders when he’s yet to work out just how his National Broadband Network thingy might really function is simply thuggish. Conroy has talents—

well, we can debate that—

but calm and reasoned administration tends not to be mentioned as one of them.

Delaying the bill until February will have no impact on consumer measures in this bill because they are not listed to commence until July 2010. Delaying the legislation may actually be of benefit because the explanatory memorandum suggests that the USO measures may have to be altered once the implementation study is completed.

One very specific concern I have with the structural separation aspect of the bill is the impact it is likely to have on Telstra shareholders, in particular the Telstra shareholders I represent. As I mentioned previously, there are 1.4 million shareholders, most of whom are small investors or retirees. In addition to these direct shareholders there are millions of investors who hold shares in Telstra through superannuation funds. The minister has indicated that he believes that structural separation can be achieved without harming Telstra shareholders. However, the Australian Shareholders Association chief executive, Stuart Wilson, was scathing in his assessment of the plan. He said:

I think it’s a giant kick in the teeth for Telstra shareholders; it severely damages the earnings potential of the company and there’s really not one good thing for shareholders to come out of the proposed legislation.

It is hard to see how this massive change to the operation of Telstra will not have a significant impact on the value of its shares, and this is an issue which must be addressed by the minister.

Another issue of significant concern is the government’s willingness to meddle with a public company in this way. Passing this legislation could have the effect of significantly diminishing Australia’s standing as an attractive place to invest. If the government is successful in forcing Telstra to separate, investors will rightly ask whether the government has plans to meddle with other companies—a very good point. At present Australia is seen as an attractive place in which to invest. We have a strong banking system, a valuable relationship with our trading partners, a strong resources sector and, until now, investment friendly governments. This legislation may harm that reputation and may harm our economy if it is passed in its current form.

The government has a poor record when it comes to communications. The centrepiece of Labor’s 2007 election policies was a $4.7 billion national broadband network which was to reach 98 per cent of Australia’s population. That plan was then scrapped. Instead, we now have the National Broadband Network, which is going to cost $43 billion and reach 90 per cent of the population—and, I might say, it will be regional customers, such as the people I represent, and such as the people the member for Mallee, who is in the chamber, represents, who will miss out. The Prime Minister made it clear that the National Broadband Network would not be extended to towns with a population of fewer than 1,000 people. The ABS identifies 25 communities in my electorate that have fewer than 1,000 people, such as Moonee Beach, Corindi Beach, Smithtown, Gladstone, Frederickton, Scotts Head and Gulmarrad. They will all miss out, yet their taxes will be used to build the National Broadband Network. There are also countless smaller communities and farms that will be bypassed by the National Broadband Network—but, as I said, their taxpayers’ dollars will be used to build a network they will have no access to.

I recognise the need for additional compensation to the telecommunications industry in regard to the loss of value in Telstra. What is going to happen? Will there be a claim for damages against the government in relation to this? Who is going to pay for the diminished value to Telstra shareholders that will result from this ill-conceived legislation? We have very much a market orientated communications system in this country, with the private sector working efficiently and effectively to deliver telecommunications services. Under this legislation we have the development of the 21st century version of the Postmaster General, where we have government control of a National Broadband Network. It will probably be very much a backward step insofar as delivery of services goes. Governments have a history of being unable to deliver services as efficiently and as effectively as the private sector, yet this government seems hell-bent on pushing the private sector out of the way and replacing it with a government owned and controlled monopoly. I certainly have some serious concerns about this legislation.

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