Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Sustainable Development and Cities) Share this | Link to this | Hansard source

I rise to speak on the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 and, in doing so, indicate that the coalition has some significant reservations about some of the components in this bill. In that light, I move:

That all words after “That” be omitted with a view to substituting the following words:‘given Labor’s rash, unjustified and irrational change of policy to force the break-up of Telstra in an arrogant attempt to prop-up its risky $43 billion National Broadband Network, further consideration of this bill should not proceed until after the NBN Implementation Study is presented to the Parliament’.

The reasons for that amendment I will make clear in my contribution but, essentially, that amendment highlights where the coalition has severe reservations about this bill. There are, within this bill, legislative amendments that go to some specific powers of the ACCC under the Trade Practices Act, some changes to the universal service obligation and to the consumer service guarantee. It is not in those areas where we have our major grievance. If Labor were sincere in wanting to bring about that regulatory renovation, they could certainly consider moving forward on those areas where the coalition has no contest on the government’s objectives. Regulatory renovation was a part of the telecommunications landscape during the previous Howard government and will continue to be during this federal Labor government and in governments to come. What the government has done is to fit up that regulatory renovation with the most extraordinary attack on private assets, private capital, funds of investors and on a private company that this nation has ever seen. For those telecommunications companies that are often competitors of Telstra, I understand their glee and delight at some of these provisions. In terms of comments attributed to my friend Ravi Bhatia and others about the regulatory renovation, my urging to them would be to encourage the government to fill out the regulatory renovation provisions while the far more contentious—some would say extraordinarily draconian—measures relating to Telstra are properly debated and analysed. That is my invitation to the telecommunications sector, to those access seekers that rely on Telstra’s infrastructure and to those who are looking for the regulatory renovation.

What is in contention is the new part 33 of the Telecommunications Act, which provides for Telstra to structurally separate. If Telstra does not—and I use the words of the bill—‘voluntarily’ submit an enforceable undertaking to structurally separate to the ACCC, this bill before the parliament requires functional separation of the company. We have often heard in times of conflict overseas that you never negotiate with a terrorist. If this is not an example of telecommunications terrorism by this federal Labor government, I do not know what is. For those people sitting on the sidelines cheering on this assault on Telstra, its value, its operational arrangements and its shareholder equity, I would ask them to think what if it were you. You might have a grievance with Telstra—many have, and I have had a number over many years—but just imagine what we are seeing here today. We are seeing a parliament assaulting a private company. It is a company where shares are directly held by 1.3 million Australians, and nearly all of us have some stake in the asset that is Telstra through superannuation investments and the like. What we are seeing is a government taking a meat axe to the company, or at least waving it and any other device of corporate assault over the head of Telstra, to bludgeon it into doing what the government says it should do.

This is an extraordinary day in corporate life in Australia. For anyone interested in sovereign risk, corporate governance and the interaction of private equity, private assets and private companies with the central government, this is a time they should be taking notice. If this passes without much of a whimper from the private sector, from those that are holding shares in the company, from those that are investing and from enterprises themselves simply because it is Telstra, it sets up an extraordinary precedent. What next? Which company will be next? Which sector will be next?

Peter Lindsay (Herbert, Liberal Party, Shadow Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

Woodside.

Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Sustainable Development and Cities) Share this | Link to this | Hansard source

My friend and colleague the member for ‘paradise’ mentions Woodside and other companies where there might be some disputes about access to rail lines, access to infrastructure and those sorts of things. What do you do? Do you just break up the company? Do you just march on in and bust up a corporation with the most spurious of explanations about why it is necessary and then dress it up under some sugar-coated term like a ‘national broadband network’ when really that is no more than a thought bubble by this federal Labor government, which has campaigned on it and seen the political virtue of trying to attach its brand to a concept like the National Broadband Network with no idea at all about how to actually go about implementing it?

This is at the heart of the opposition’s objection to those provisions in this bill. The bill seeks to prevent Telstra from acquiring specified bands of spectrum, which could be used for advanced wireless broadband services, unless it structurally separates and divests its hybrid fibre-coaxial cable network and its interest in Foxtel. So that is the deal: you cannot expand your wireless service offer or engage in what is in many people’s eyes the most dynamic and exciting area of telecommunications innovation reform in the wireless space unless you do certain things. Telstra will be nobbled from engaging in the telecommunications future because of this bill.

In addition to the prevention of access to spectrum in the absence of a structural separation undertaking accepted by the minister and the ACCC, the bill provides for functional separation of the company on terms defined by the minister. Have you ever seen a minister out of depth? We have had to save Minister Conroy from himself time and time again since he was appointed the Minister for Broadband, Communications and the Digital Economy. Even in Senate estimates yesterday he could not even explain a basic tenet of the government’s sound bite about broadband. He could not even make the maths add up in terms of technological reach and the like. Yet this bill seeks to give him the power to dissect and fillet out bits and pieces of a vertically integrated company like Telstra. If he cannot work out what percentage of customers will get wireless, copper or broadband—simple maths; my son could work that out and he’s 11; he’s pretty smart, but that is not hard maths to work out—how on earth is this minister going to start the difficult and complex of task of from Canberra dissecting parts of Telstra in a way that achieves a kind of separation that he had difficulty even defining?

The bill also contains, as I mentioned, amendments to increase the powers of the ACCC under the Trade Practices Act and changes to the universal service obligation and consumer service guarantee. Quite obviously, the amendments that hold a gun to the head of Telstra and seek to force the company into a structural separation undertaking are of greatest concern to the coalition and the millions of Australia who are shareholders, employees and customers of Telstra. It is quite clear that these amendments aimed at Telstra are about one thing and one thing only, and that is a blatant and naked attempt to make the government’s poorly conceived NBN viable.

This was confirmed during a recent public hearing when David Foreman, CEO of the Competitive Carriers Coalition, said:

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

There is a direct correlation between the provisions of this bill and the political motive of trying to make a poorly defined NBN thought bubble somehow morph into reality.

I will give the government credit for one thing. When I was shadow minister for broadband and communications, I made the point over and over again that there will be no such thing as a National Broadband Network. Ultimately, it will be a network of networks. For anyone listening to this broadcast or interested in this policy area, there is already abundant fibre based infrastructure that represents not only a down payment but substantial progress to the kind of coverage all Australians would hope for in terms of higher speed, more affordability and more available broadband. That infrastructure is there now. As I have argued over and over again, and today I again submit this to the government for them to consider, a network of networks is the only realistic, conceivable, cost-effective and affordable way for this ambition to be pursued. But in the pride that Senator Conroy brings to most things—for he must win the argument even if his proposition is wrong—he will not accept that and will not move in the collaborative way that the coalition has advocated for some time.

Watching the minister’s attempts to implement Labor’s 2007 campaign promise to build a National Broadband Network has been like watching a slow motion train wreck. For almost two years, the telco sector, consumers and taxpayers have had to endure a sorry sage of incompetence, uncertainty, delays, bungles, wasted millions, announcements, re-announcements, refined announcements and even an attempt to say, ‘Look, we’ve messed this up but we’re going to go bigger and better’—from $4.7 billion of shambles to a momentous $43 billion of undefined objectives around a broadband thought bubble. All of this has gone without the delivery of a single new broadband service under this federal Labor government.

All they have achieved in the fog and the confusion has been to freeze investment from other telecommunications providers. They have effectively cryogenically frozen broadband while they have tried to work their way through a model of their own making. While ‘cryogenic Conroy’ has frozen the communications sector, millions of Australians have missed out on service improvements that would have ordinarily been undertaken through the normal course of commercial investment and service innovation and improvement.

More worryingly, though, is the blatant disregard for rural and regional Australia, as evidenced by the cancellation of the OPEL program. That program, put in place and carefully worked through by the former government, would have been delivering services to underserviced communities in remote, regional and outer metropolitan Australia. Most of those services would have been well underway now and all of them would have been fully rolled out by the end of the year. Kids could have been studying using that technology now. They would have started perhaps in year 7 at a secondary school and been able to use broadband to support their education. Now, they will have left secondary school before much of anything happens in terms of improving broadband in their areas.

We saw cynical promises to voters prior to the election, when federal Labor went around suggesting that a vote for Kevin Rudd would turn the Flintstones age into the Jetsons age in terms of broadband. And it has been nothing more than a cartoon animation ever since. What we have now is very little activity. Not a single new broadband connection has been delivered under the failed NBN mark 1 or the NBN mark 2. The federal Labor government under Prime Minister Rudd and Minister Conroy have been anointed the net negative combo for our nation, freezing improvements in services.

This legislation stemmed from a discussion paper, The national broadband network: regulatory reform for 21st century broadband. The discussion paper was released in April when the government announced that it was abandoning its proposal to provide up to $4.7 billion towards a fibre-to-the-node broadband network upgrade in order to attempt to build and operate a $43 billion fibre-to-the-premise network. Until 15 September 2009, when this bill was introduced, structural separation had never been Labor policy—not when it was last in government, not during its many years in opposition, not in the lead-up to the last election and not since its election. It has not been coalition policy, either. Telstra had been corporatised under the previous Labor government, not structurally separated, even though it was entirely in the government’s hands. OTC and other assets were rolled into it to make that corporatised Telstra. When the Howard government privatised Telstra, it was not separated, either. It was recognised that there would be difficulties in achieving that goal at a time when there were abundant challenges in dealing with the privatisation. It was also recognised that that would have an impact on the value of the asset.

In the lead-up to the last election, Labor’s 2007 federal election policy stated:

Labor will ensure that Telstra’s wholesale and retail functions are clearly distinct within the company …

It was not that that would be in separate companies but ‘distinct within the company’, and that seemed to echo a lot of the operational separation arrangements that had been put in place by the previous government. Admittedly, not everyone was convinced that they were effective but unscrambling the egg was not on the table for either side of politics at that time, notwithstanding some views that it may have been a virtuous thing to do in the distant past.

Federal Labor did not indicate before the election that structural separation was on the table and shareholders, the company and consumers took them at their word. As recently as May, during Senate estimates, Senator Conroy was questioned on his current position regarding structural separation and he replied:

I am not advocating it. I have never advocated it.

In less than two years, Labor have gone from promising to contribute up to $4.7 billion to a $10 billion to $15 billion fibre-to-the-node upgrade of Telstra’s copper network, reaching 98 per cent of Australians, to creating a new government business enterprise to build, own and operate a fibre-to-the-premise, wholesale-only network to 90 per cent at around four times the cost.

We have even seen the description of what the government is trying to do in learned journals like CommsDay Australia, in articles written by the shires representative Luke Coleman, who has captured the essence of the confusion Senator Conroy injected into the debate yesterday. During Senate estimates Senator Conroy was asked what would happen to the fixed line connections under the NBN. In the bravado that he brings to most things he does, Senator Conroy said:

Everyone who receives a fixed line service, through a variety of policy mechanisms, will continue to receive one.

Those were his words; that is what Senator Conroy said. As the discussions evolved around the USO, Senator Conroy went on to speculate how that might be provided and who might provide fixed services to the last 10 per cent, saying that these are matters for Telstra. He said:

But I am sure all of these will be matters that Telstra will represent to us as part of our discussions.

He reaffirmed that copper would remain in place.

Now, if the NBN is expected to deliver fibre services to 90 per cent of the population, we ask: what is happening with the other 10 per cent? The throw away line is, ‘Well, they’ll get wireless or satellite services.’ That is what the government has been saying until this week when Senator Conroy provided the assurance that if you have a fixed-line service now you will continue to have one. How does he deal with the fact that the copper service is currently available to 97 to 98 per cent of the population, which suggests that there will be a need to provide copper and wireless, and possibly satellite, to seven to eight per cent of the population if the government’s stated intentions are to be fulfilled?

If that is happening—if the existing fixed lines need to be maintained alongside wireless broadband and the NBN—what does that mean for the promises as to the NBN itself? Are we going to see a government operated national broadband network running a service supposedly to 90 per cent of the population? Having stripped assets from Telstra and stripped out its most profitable areas of business, is the government going to have to set up an NNBN—a non-national broadband network, which is the copper—for the seven to eight per cent that does not factor into Senator Conroy’s figuring? And then are they going to put in an NNNBN, which is a ‘not here, nowhere near, national broadband network’ because they are talking about the satellite? You would end up with Ruddcom running, potentially, three wholesale carrier networks, all supposedly doing the kinds of things that Telstra does now, under this proposal that is so poorly conceived that the minister cannot even answer basic questions about service delivery.

You can see why people are confused. You can see why the market is not investing. You can see why consumers are terrified about what this might mean. You can see why experienced people, such as Paul Broad from AAPT, who have skin in the game—that is, their own money and businesses operating in this space—are characterising this federal Labor government plan as a phenomenal waste of money. They have gone on to talk about it as nothing more than a negotiating tactic. What an expensive posturing exercise by a federal Labor government! Right now they are spending $25 million of taxpayers’ money trying to translate the government’s and Senator Conroy’s NBN thought bubbles into an implementation plan. An implementation plan sounds like something concrete that works out how to operationalise it. If only it was that. It is actually a conceptualisation plan. It is a canvassing of possibilities—a fleshing out of the sound-bite of federal Labor on NBN and trying to map a pathway out of the confusion of Labor’s own making. We are spending $25 million to get some idea of how to do that.

While that work continues the government is dropping bills like this into this place. It is dropping these bills into this place to break up Telstra without any of that analytical framework that you would have thought such a big decision would have justified. You would have thought that if there were a strong, concrete, considered, evidence based conclusion from research and analysis—publicly available and able to be scrutinised and assessed—then there would be a pathway forward that may include something of this kind. You would think you would do that work first, wouldn’t you? No; not this crowd. They are known for not operating on an evidence based policy arrangement but on a policy based footing, which is that they know the outcome they want and they spend like hell—$25 million—to try and find someone who will give them some basis on which to arrive at the conclusion they have already made. That is what is going on here.

And a part of that fraud is this bill which pre-empts what may be required to bring about the NBN when Telstra has indicated a preparedness to negotiate commercially with the government, when there are other telco providers with assets—in the ground and aerially deployed—that could well complement a network of networks delivering the ambition for NBN that Labor talks about. But, no, the government is not doing that. It will hold a gun to their head, start the process of busting them up and then at some point down the track, in February, the implementation plan—the game plan; the ideas that might actually bring about action on the thought bubble—will appear. Why would you not do the analytical work first?

I have seen some of the commentators getting quite excited about that and my friend Graeme Samuel at the ACCC can barely contain his joy at seeing Telstra broken up. I know he has had his arm wrestles with Telstra and I know he was quite upbeat about the regime change at Telstra and the change of its posture and negotiating approach. The ACCC have not given that much of a chance to work, have they? They are already out there ready to bludgeon Telstra with a baseball bat even though a whole new team is on the pitch, even though Telstra said they are prepared to negotiate, even though Telstra and its people and its leadership know the nation, the parliament and many consumers are frustrated about their previous behaviour and are looking for a more collaborative approach.

The ACCC seems to recognise that a market intervention requires transparency. In today’s papers there is talk about Woolworths venturing into hardware. The ACCC has had a bit to say about all that and some anxieties have been captured and carried forward about the competition space around Woolworths plans to venture into hardware. The ACCC has outlined issues of concern. That is serious stuff in the eyes of the ACCC. It is stuff that basically says, ‘It makes it hard to move on this.’ Issues of concern are a red light to the industry. Down from that, the second level is those issues that may raise concerns and require further analysis. That is an amber light. Lastly there are issues that are unlikely to pose concerns. They are read as green lights.

That is what the ACCC does ordinarily, but where are the lights when it comes to this? Where is the competition perspective on having a government nationalise a key communications asset? Where is the open analysis that would accompany even a price determination? Right now there are discussions going on about what access prices and arrangements should be in place in the telco sector. They are advertised up hill and down dale so competitors can make a contribution and challenge some of the analysis that is being brought forward. They can put their point of view into the mix. They can make their case in a transparent way and that is right and proper because the impacts are felt in the share market, in the investments that people make and in the business viability of those governed by this competition framework. That is what happens with price determinations and a whole lot more happens with hardware.

When it comes to telcos, the ACCC can cheer all it likes, but where is the analysis? The ACCC are letting themselves down by being some sort of cheap-tart cheer squad over this decision to bust up Telstra whilst happily ignoring all of the disciplines that accompany any other ACCC engagement in market regulation. Where is the analysis? Why are they not demanding a transparent exposure of the material that gives rise to this decision? Where is the opportunity for other stakeholders and interest groups to have their say, to point to other possibilities, to look at the overall health of the telecommunications system? Where is the ACCC on that stuff? This is all being done behind closed doors and by stealth. It is deal-making Conroy writ large. He even ventured down to my electorate to try and stitch up preselection deals in the humble seat of Dunkley while all of this is going on during his watch. He has got no idea what is happening in the telco sector, but he can push people around when it comes to preselection in the ALP down on the Mornington Peninsula—quite extraordinary.

Where is the Productivity Commission analysis and all of the cost-benefit work that the coalition has argued for over and over again? Where is the cost-benefit analysis? Where is the transparent evaluation of policy options? Where is the canvassing and public challenging of assessments about policy alternatives? Where is all this stuff that goes to sensible governance of a crucial part of our communications sector? There is nothing. Whilst the ACCC might cheer the headlines of this piece of legislation, they damn themselves for doing so because of the lack of accompanying analysis and transparency. What a remarkable impact on a key shareholder-interest corporate enterprise sector of our economy, and all the ACCC can do is cheer about the headline of the bill. They let themselves down badly with that. They should be arguing for analysis and evidence based policy evaluation. Is that not what good governance and good regulatory and competition policy is really all about?

We have got a massive spend on the horizon and no cost-benefit analysis. We have got to wait till February before anyone has got any idea how the government hopes to translate its audio bite and thought bubble into some kind of sound public policy, yet we are busting up the major participant in the sector in advance without the justification and policy rationale to accompany it. What this legislation shows is that we are witnessing in this country an extreme form of legislative blackmail of a private enterprise business that is crucial to the wellbeing of so many Australians, and it is being done with barely a whimper. What is happening is that the veil of the NBN is being draped over this legislation to disguise the ugliness that is happening within it. The legislation proves that the government cannot build the NBN without Telstra, as the opposition has been saying all along, and that the government is desperately attempting to find a way to salvage something that it can dress up to be the NBN.

There are so many unanswered questions about the NBN. Each time we ask a question about how the rollout will occur and what price consumers can expect to pay for services, we are told the implementation study will provide all. Yet now we are being asked to pass a bill intrinsically connected to the NBN and in so doing give unprecedented powers to the ACCC and the minister before we know how the NBN rollout will occur, what the utility of this legislation is and why it is required to bring about that outcome. Labor does not have a mandate to renationalise telecommunications by establishing a government owned monopoly at a cost to the taxpayer of at least $43 billion, nor does it have a mandate to force structural separation on Telstra in order to pinch its fixed line customers and reduce its capacity to compete. If the government is having trouble with competition, it should deal with that. If you bust up the company, you go into a way new space.

This is primarily what Labor is seeking to do in forcing Telstra’s fixed line customers to prop up the NBN. This is the biggest hoovering up of customers and of revenue streams I think we have seen in this country, and it is being done by a government business. As I say to the business community: ‘Where are you, guys and gals? If it were your company, I reckon there would be a whole lot more being said about it.’ The minister confirmed as much when he outlined one of the somewhat dubious choices the company is being forced to make when he introduced this bill. He said:

… it may involve Telstra progressively migrating its fixed line traffic to the NBN over an agreed period of time and under set regulatory arrangements and for it to sell or cease to use its fixed line assets on an agreed basis.

The government of course cannot afford to have any genuine competition against the NBN because it is more than likely that the vast majority of consumers would choose cheaper fixed line options over the NBN. We hear about 100-megabit service but, as we have heard in Senate estimates, there is no guarantee that that is what will actually be delivered and be available for people.

The coalition have long argued and worked for and delivered faster, more affordable and reliable broadband. As technology has moved, so have policy and strategies to achieve that aim. We fully support the continued enhancement of broadband services, including the deployment of next generation networks and services, and that is why Labor’s spectrum threat is so disingenuous. I have argued that for taxpayer funding to address broadband black spots and bottlenecks it is reasonable to ask for a wholesale provider as an outcome of that taxpayer spend, but that would be a policy outcome you are purchasing, not one you are ripping off through this legislative assault on an Australian company. The coalition believe government funding for broadband should be specifically targeted at underserviced areas, and I touched on OPEL earlier. The OPEL approach provides a useful and practical model for how you go about delivering improved affordability, accessibility and performance of broadband services and achieve a wholesale service provider as part of the public policy outcomes you purchase with carefully targeted and thoughtfully arrived at taxpayer investment.

There is so much that can be said about the Senate inquiry and what commentators have had to say about this, but this is a very interesting day for the Australian parliament. People might take some comfort, even those in the telecommunications industry, that Telstra is getting roughed up and beaten up with a baseball bat and told that if they don’t like it there is more heavy artillery coming their way. You might get a thrill out of that—but just imagine if it were your company. (Time expired)

Kevin Andrews (Menzies, Liberal Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Don Randall (Canning, Liberal Party, Shadow Parliamentary Secretary for Energy and Resources) Share this | Link to this | Hansard source

I second the amendment.

Jim Turnour (Leichhardt, Australian Labor Party) Share this | Link to this | Hansard source

I rise today to support the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009. Today is a good day for the Australian people and a good day for the Australian economy. Today we are seeing the Rudd government introduce nation-building legislation, regulatory reform that is about building the National Broadband Network, about ensuring that we can build the nation into the future. Telecommunications are the railways and highways of the 21st century. In the same way that road and rail opened up the country and drove productivity over the last 200 years, we are going to see telecommunications continue to drive productivity over the next century.

Telecommunication links are particularly important to cities like Cairns and regions like Cape York and the Torres Strait in my electorate of Leichhardt. You do not build two roads or two railways to a city. Similarly, in a decentralised country like Australia you need one good quality telecommunications network at the wholesale level. You can then allow retail competition to work effectively. That is what this legislation is about: creating the right environment for the NBN to be rolled out and for people and businesses in the community to get the access to the telecommunications network that we all need. The NBN will provide the network we need, but the regulatory reforms create the right retail competition that is required.

This piece of legislation is a critical element of the Rudd government’s commitment to reform the Australian telecommunications environment. Our telecommunications industry is due for a shake-up. The industry has been calling for fundamental changes for many years and ultimately it will be the consumer—residents and businesses—that will benefit. The bill proposes a package of reforms to deliver a more efficient telecommunications market, with appropriate consumer safeguards, as the National Broadband Network rolls out. It represents the most significant reform of the telecommunications regime since open competition was introduced in 1997. When you consider that the OECD ranks Australia 16th in terms of broadband penetration per 100 inhabitants and as the fourth, fifth and ninth most expensive for low-speed, medium-speed and high-speed average monthly subscription broadband prices respectively, it is clear that we need to improve our existing telecommunications regulations. It is in the interests of Australia’s consumers and businesses.

I listened to the member for Dunkley’s contribution earlier as the spokesperson for the opposition. It highlighted the clear difference between the Rudd government and the opposition because, clearly, they are way out of touch on that side of this chamber. You do not have to get out into the community and talk to too many people before you understand how unhappy people are with telecommunications in this country, how they are annoyed about the lack of service and the cost of that service. They are tired of governments bleating about wanting to drive productivity and create a national broadband network, about supporting business out in a community by getting the telecommunications network its needs and about people getting the decent education and health services they need through improved telecommunications. They want a government to take action, and that is what the Rudd government is doing.

The member for Dunkley was talking about the minister and running a lot of spin terms, talking about cartoon characters and cryogenics and he suggested this is a spiritless issue. He even suggested the minister was down in his electorate seeking to get a candidate down there. Well, I hope he is, and I think he should send the member for Dunkley’s speech out into his electorate because I do not think there would be too many people in his electorate who would be very happy with his contribution. I saw the member for Herbert here earlier and I understand he is on the speakers list for this debate, so I am looking forward to his contribution. I can assure all the members opposite that I get out and doorknock and run mobile offices in my community, so I know that anybody who lives in rural and regional Australia—I see the member for Capricornia is here as well—understands how upset and unhappy people in those areas are about telecommunications in this country. They are cheering today when we are introducing this bill because they want to see regulatory reform.

The opposition, particularly the Liberal Party, are out of touch on this issue. I understand that the National Party is talking about supporting this legislation in the Senate, that Senator Joyce is talking about supporting this legislation. So when Liberal spokespeople talk about the coalition they are really talking about the Liberal Party’s position on this. I am looking forward to getting back to my electorate after the sittings this week and next week and talking about this legislation and the opposition’s position on it. I will be letting the community know the fact that they are opposing the introduction of legislation that is going to ensure we get regulatory reform, roll out a decent National Broadband Network and deliver good quality telecommunications services to places like Cairns.

The purpose of the reform package, of which this piece of legislation is a key part, is to improve competition, strengthen consumer safeguards and remove redundant red tape. I look forward to it having a positive impact on regional Australia. I represent an electorate in regional Queensland and know the consumers of telecommunications services in regional Australia are more exposed to any shortcomings in the effectiveness of consumer safeguards such as the universal service obligation and the consumer service guarantee than those in urban Australia. The proposed strengthening of the consumer protection framework will reduce the potential for rural consumers to experience falling service qualities. I had an example of this in the last week or so up in Cape York, when somebody had their phone down and it was going to take an extended period of time to get it fixed. This legislation will address these sorts of failures to meet universal service obligations, enabling them to be met and action to be taken within an appropriate time.

The four reforms also mean a step forward for the government’s delivery of the superfast National Broadband Network. The NBN will be the single largest infrastructure investment made by any Australian government. We are very proud to be a nation-building government. The opposition left a legacy of 18 failed broadband plans in 11½ years. Before the 2007 election the opposition were prepared to deliver high-speed broadband only to those living in the five mainland state capital cities, ensuring an ongoing digital divide and clearly not representing the needs and interests of regional Australia.

The OPEL plan was a second-class plan for rural and regional Australia. It was dreamt up by the former Prime Minister, Mr Howard, because he knew that our National Broadband Network plan was resonating in the community and that people wanted action. The reality is that wireless is being delivered out there by Telstra, Optus and others, and OPEL would not have been delivering anything additional. It would basically have been delivering a second-rate service to rural and regional Australia. I see that the Leader of the National Party is in the chamber. I am looking forward to his contribution on this bill, and I hope he is on the speakers list. The wireless broadband plan that was being put forward by the opposition would not have delivered decent services to rural and regional Australia.

The Rudd government is very serious about delivering a fibre-to-the premise network to places like Cairns. No time is being wasted in progressing the NBN. The government will do whatever needs to be done to ensure delivery. Minister Conroy’s announcement in September of industry reform is one of the important steps on the road to achieving this. These are major reforms but I am hopeful that the government and Telstra can reach a good outcome that will benefit the future of telecommunications in Australia. I have spoken to some Telstra shareholders. They saw the share price being eroded more under the previous CEO and leadership than it has been since this announcement. This is a great opportunity for Telstra to get involved in the NBN. This is a great opportunity for Telstra to seize this and become a partner with government and others in terms of delivering good quality broadband services in the future, and it is a great opportunity for shareholders to increase their wealth into the future.

This bill will address Telstra’s vertical and horizontal integration. Telstra remains one of the most integrated telecommunications company in the world. Telstra owns the only fixed-line copper network that connects almost every house, the largest cable network, half of the largest pay-TV provider and the largest mobile phone network. Telstra clearly has dominance in the market and a failure to address Telstra’s level of integration has not lent itself to an effective and competitive telecommunications regime. Australia is paying for this in terms of being behind the eight ball internationally when it comes to the cost, quality and so forth of telecommunications services.

Telstra, as a vertically integrated company, provides both wholesale and retail services. As a result, Telstra has both the incentive and the ability to favour its own retail businesses over those of its wholesale customers. The overwhelming message from the industry and the ACCC is that the current arrangements to address the issues arising from Telstra’s vertical integration are inadequate. We heard the opposition spokesman criticising Graeme Samuel and the ACCC. The ACCC have backed the government’s reforms and want to see the government take action and break the dominance of Telstra within the market. They are tired of the complaints and of the follow-ups that they have to make in relation to telecommunications in this country. The legislation that the Rudd government is putting forward will address Telstra’s vertical integration by allowing Telstra to voluntarily submit an enforceable undertaking to the Australian Competition and Consumer Commission to structurally separate. The government’s clear preference is for these structural issues to be addressed on a voluntary basis.

In addition to this vertical integration, Telstra is also horizontally integrated, as it owns and operates multiple different platforms—copper, cable and mobile. This is in contrast to most other developed countries, where there are restrictions on incumbents owning both cable and traditional fixed-line telephone networks. The Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 will address this anticompetitive environment by requiring Telstra to choose its future path. Telstra will be prevented from acquiring spectrum for advanced wireless broadband while it remains vertically integrated, owns a hybrid fibre-coaxial cable network and maintains its interest in Foxtel. Reforms to address Telstra’s high level of integration will mean greater competition, more choice and more affordable prices for people living in regional and remote areas.

This bill will reform the competition regime. If we are to promote competition in our telecommunications industry, we need an appropriate regulatory framework. That is why the government is proposing a series of changes to the Trade Practices Act. I understand that many of the submissions received from industry on the discussion paper released by the government in April this year claimed that our regulatory framework is ineffective due to the ability of parties to engage in regulatory game playing and abuse. Litigation is used to obstruct the process in order to delay regulatory outcomes. Telstra has been using lawyers to basically stop the ACCC from doing its job of ensuring that we can get good quality price-effective services delivered in rural and regional Australia.

The bill will streamline the arrangements through which telephone companies access wholesale services. The ACCC will be able to determine upfront terms and conditions for a three- to five-year period, following consultation with industry; determine principles to apply for longer periods; and make binding rules to immediately address problems with the supply of regulated wholesale services. The bill will also seek to reform arrangements in the Trade Practices Act so that the ACCC can address breaches of competition law and conduct damaging to the market. The ACCC will no longer have to consult with a party before issuing a competition notice, a process previously prone to delay and obstruction. These reforms can stop Telstra holding up needed action in the courts.

We need to make sure that people understand the differences between the government and the opposition on this issue. The government is bringing in regulatory reform because we want to ensure that the competition regulator, the ACCC, can do its job in relation to ensuring that people out there who have complaints and concerns can actually get action on them and we can also get a competitive retail market with a decent National Broadband Network underpinning it as the wholesaler of telecommunications services. We heard the opposition spokesman, the member for Dunkley, criticising these arrangements, criticising the ACCC and effectively barracking for the lawyers, who have been part of the prevention of the rollout and the delivery of decent telecommunications services in this country.

The Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 will strengthen consumer safeguards, particularly as we transition to the full rollout of the National Broadband Network. Reforms to key consumer safeguards include the universal service obligation, the customer service guarantee and priority assistance—all of which were flagged in the discussion paper feedback. The bill will strengthen the universal service obligation to ensure all consumers continue to have access to high-quality basic telephone services, including payphones, during the transition to the NBN. As the primary universal service provider, Telstra currently has obligations in terms of installation, removal and relocation of payphones. The government understands that there is considerable community concern about the ongoing removal of public payphones. I know this is something that is important to many of the Indigenous communities throughout Cape York in my electorate that rely heavily upon payphones as a means of communication.

Under the new legislation the minister will specify the standards, terms and conditions of services, connection and repair periods, and reliability requirements. Telstra will be required to meet new minimum performance benchmarks. Failure by Telstra to meet the requirements, including the minimum benchmarks, will expose Telstra to a civil penalty of up to $10 million or an on-the-spot fine issued by the Australian Communications and Media Authority, potentially up to $2 million. The new universal service arrangements will make clear for consumers and Telstra the services Telstra must supply in fulfilment of the universal service obligation rather than those decisions being left to Telstra’s discretion.

Priority assistance is another arrangement that has been discussed as part of this process. The government is acting upon the feedback to ensure such services are not impacted. Priority assistance arrangements require the highest level of telephone service to residential consumers who have a diagnosed life-threatening medical condition. I know of a number of residents in my electorate of Leichhardt who access this service and understand how important a lifeline it is to them. The legislation will require telephone companies to either offer priority assistance services or inform the customer where they can purchase these services.

So we are taking action. We are not going to sit on our hands and do nothing—

Warren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | Link to this | Hansard source

Mr Truss interjecting

Jim Turnour (Leichhardt, Australian Labor Party) Share this | Link to this | Hansard source

when Telstra in the past has basically not met its requirements—and sought to use other methods to prevent the ACCC from doing its job in getting a fair, competitive environment—as a supplier, and as a vertically integrated company, as to other retailers in the market.

I heard the Leader of the Nationals interjecting a minute ago. It is no wonder he is concerned about this legislation. I know that his constituents want us to introduce this legislation, get it through the parliament and roll out our National Broadband Network. I will give you some examples of why that is. These examples are from just a couple of constituents in my electorate and they are the sorts of things that I regularly hear about. This is one of the major complaints I hear in my electorate office. A constituent of mine, who lives in the suburb of Redlynch in Cairns, is an IT consultant who works via the internet for clients all over the world. Six staff rely on him for their employment. Recently he bought a property at Redlynch. He did background research and made sure that broadband was available in the valley. He even talked to a couple of his immediate neighbours before committing to buy. He ordered a business broadband connection and phone line from Telstra but was later advised by Telstra that ‘it is not commercially viable to upgrade the network infrastructure at this time’. Further investigation revealed that the Redlynch exchange is full. The only option is to reapply every two weeks and hope that someone disconnects their broadband.

Telstra then offered Next G wireless broadband. The constituent’s views on Next G wireless broadband are: it is more suitable for residential low internet users, for email and occasional browsing, due to the restrictive bandwidth and download limits—the constituent is a businessman who wants to do business from home, as many people do, and there are people in the southern suburbs of Cairns with similar stories—and it will not support a continuous internet connection for the use of international voice over IP, teleconferencing or the remote management of computers on the other side of the world due to the way it regularly drops and re-establishes the line. The constituent lives in Cairns and wants to participate in the world economy; he wants to drive productivity and create jobs in the economy of Cairns. He said, ‘At its best, this significantly inferior service will cost me seven times what I was paying for my internet connection in Edge Hill’—another suburb of Cairns—‘and, at worst, 30 times more per month.’ That amounts to $1,500 as opposed to $50. It is no wonder the constituent said:

Telstra has no financial incentive whatsoever to improve the wired infrastructure of its exchanges even in urban areas whilst it can happily sell a wireless solution for the sort of additional margins we are talking about.

To know that my neighbour next door and his kids enjoy the sort of broadband I require for less than $100 a month, and yet I am being asked to pay more than ten times that makes me feel completely ripped off and abused. This is an abuse of the monopoly position Telstra have up in Cairns as a provider of both the landline and wireless infrastructures. Basically, with Next G, the government has been blind-sided by Telstra.

This is the OPEL plan that they were talking about rolling out—a similar network. Telstra has a network like this, but it is overcharging and it does not deliver the service that small business wants in places like Redlynch, the southern suburbs and the northern beaches of Cairns.

Residents in the northern beaches have raised similar concerns. The Smithfield exchange is oversubscribed and you have to get ADSL2. ADSL1 tends to run at dial-up speeds. People are upset out there in the community. I am looking forward to talking to them about the opposition’s position on this bill. I am sure that many members here will be going back to their electorates and talking about the opposition opposing our rollout of nation-building infrastructure, the National Broadband Network and the need for us to introduce regulatory reforms that ensure that retailers in the telecommunications area can have access at a fair price to those wholesale services. This is about regulatory reform, but it is also about ensuring that our National Broadband Network is rolled out effectively. It is good for the Australian people, it is good for the Australian economy, it will drive productivity into the 21st century and it is something that I strongly support and look forward to advocating in my local community.

Warren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | Link to this | Hansard source

A few months ago, in April, the Minister for Broadband, Communications and the Digital Economy, Senator Conroy, went on ABC Radio to tell the people of Broken Hill that they could expect to have fast broadband up and running under the government’s much ballyhooed National Broadband Network by the end of 2009. I put that piece of information aside because it seemed to me to be a very optimistic promise—extraordinarily hopeful. The promise was also made to Victor Harbour in South Australia, Emerald and Longreach in Queensland, Geraldton in Western Australia, Darwin and the south-west Gippsland region. These were to be on a priority list for the rollout of the National Broadband Network. That is what the minister said in a number of press releases at the time: those regional cities would receive broadband with speeds up to 100 megabits per second by Christmas.

The reality is that the successful tenders for the construction of these cables have not yet been announced. The minister has 64 days to deliver his promise to the people of Broken Hill, the people of Victor Harbor, the people of Emerald, the people of Longreach, the people of Geraldton, the people of Darwin and the people of Gippsland—64 days.

There are many areas where the government’s election promises have evaporated into fantasy. Telecommunications promises have perhaps been the most monumental failure. Here we are, nearly two years after the last election, when Australia was promised a new world of excitement and supersonic speed when it comes to broadband, and nothing has happened; no-one has been connected.

The member for Leichhardt said he was looking forward to my contribution to this debate, and he has immediately scurried out of the chamber. He must be embarrassed, like all Labor members, that they have delivered not a thing by way of accomplishments in relation to their NBN strategy. Regional Australians are worse off today than they were when Labor were elected and improvements which would have been operating by now have been axed.

Politicians often say that the other side of politics has done nothing or has messed up what it has done. But in this case, better telecommunications, an area which both sides of the chamber acknowledge is important, this government really do have a big duck egg next to their name. There have been reviews, minor tenders, a series of grand public announcements—but that is not progress. Massive spin and the proposed expenditure of a gross amount of public money add up to zero unless they actually do something. Labor have never had a plan to deliver their broadband promise. There has been no infrastructure plan, no business plan, no financing plan, no market plan. Almost two years after the election they have now commissioned a $25 million implementation study to try and find a way to deliver on what they promised.

Worse than doing nothing, this government have actually managed to take regional Australia backwards. By cancelling the coalition’s $900 million OPEL contract to provide the regions with fast broadband, services that would have been in place by now are not. Nearly a million underserved premises would have had fast broadband speeds by the end of this year, but Labor cancelled the contract. Labor criticised the OPEL contract because it was based on wireless, but now all they are offering, in the far-distant future, is wireless for regional areas. They have backed away from their election promises again and again and again, and all they are offering is the same as the coalition would actually have had in place by now—except country people will have to wait up to another 20 years to get it!

Sadly, the NBN has always been Alice in Wonderland material. Before the election we were told that Labor planned 98 per cent fibre-to-the-node coverage, costing $4.7 billion. That was the promise that the member for Leichhardt and the member for Capricornia took to the Australian people. Now the coverage has fallen away to just 90 per cent but the cost has blown out to $43 billion. It is 10 times as expensive but more than two million Australians are going to miss out. What sort of deal is that? What a miscalculation. What a farce. What a dishonest promise to the Australian people. And where will these two million Australians live? Of course, they will be in the regions. It will be people outside the capital cities who will miss out.

The government has also specifically excluded now from its promise all towns with populations of fewer than 1,000 people. There are well over 1,000 towns in Australia with populations of fewer than 1,000 people, and they are now excluded from Labor’s broadband promises. All they can expect is some inferior technology—according to Labor—called wireless, at about one-tenth of the speed. People in regional Australia don’t count. Labor is treating regional Australians with absolute contempt. The broadband that Labor advocates is a two-speed economy. The digital economy promises apply only to the cities. Labor’s NBN will deliver third and fourth fibre networks in cities but nothing in the country and to most regional areas.

The government has said that it will now take eight years to build what it had promised to start delivering by last Christmas. It will be 2020 before country people can expect to get any broadband through the NBN. However, Goldman Sachs JBWere were quoted just recently as saying it will take 18 years for most homes to be connected—2030! Labor promised to start delivering this before last Christmas, but now it is going to be 2030 before people are likely to get this vital piece of infrastructure, as Labor described it. Under OPEL most country people would have had fast broadband speeds by now. Under Labor they have to wait until 2020 to get exactly the same technology.

In addition, Labor stole the $2.4 billion Communications Fund, which had been established by the coalition to fund technology improvements in regional areas in perpetuity, to prop up the funding for their NBN. They stole the $2.4 billion from the country and will spend it in the cities. Labor have shown nothing but bad faith towards the regions, and now they are going to ask us to trust them with radical changes to telecommunications legislation without any commitment that services will be maintained.

One very alarming aspect of the bill before the chamber is that it changes the legislated universal service obligation. Under Labor it will simply be at the whim of the minister as to whether services are provided or not. The coalition legislated the USO so that people in regional areas and other places who need services that may not be economic would have confidence that these services would be maintained. Now they just have to trust that the Labor minister thinks that the service is worth providing. It will not be legislated; it is simply at the whim of the minister and that is not good enough. Asking people put trust in a Labor minister and that their services will be maintained is a very big ask indeed. And the minister we are being asked to trust is Senator Conroy. This is the same minister who is proceeding with plans to close down analog television without having any plans in place to ensure that those who cannot receive digital television will not simply be cut off. This is the only policy that Labor proposes to deliver in the country before it is done in the cities. They are going to cut analog television services off in the country before it is done the cities, even though they have no plan in place to replace the black spot transmitters and no plan in place to help those people who cannot afford to buy a digital television set.

We have digital channels opening up and they are all being supplied in the cities first. Some of the first areas that will have their analog television cut off do not even have all of the new television channels that are being offered in the cities. That is about the only incentive for people to move across to digital television. But it is not happening in many of these key areas. Labor just intends to cut off the television reception and leave people without an option. They would never do that in the cities. This is the contempt that Labor has shown towards people in regional Australia and now they are asking us to trust them with radical new telecommunications reform and take away any obligation on the minister to seek parliamentary approval before slashing the community service obligation. The reality is that we cannot trust Labor. Their performance over their two years in government makes it absolutely clear that to trust them with reforms that are not clearly spelt out—when there is no plan for the NBN—is a monumental leap in faith. They have not earned that faith.

Before we can have any confidence that this bill will not further degrade services in regional areas, the government has an obligation to provide more information on its broadband proposals. The implementation study for the government’s proposed National Broadband Network is not due until February. It is not reasonable to make a decision about the government’s plans without knowing when, how and where the NBN promises will be met.

Telstra is currently negotiating with the government regarding models for separation of Telstra’s retail and cable networks. These negotiations are reported to be progressing constructively and they should be allowed to run their course. The Nationals will assess our attitude for any new model for telecommunications in Australia on the basis of whether it will deliver quality services and technology to regional Australia. We will support measures that increase competition and consumer protection, especially in regional areas. However, it is not clear that this bill will achieve those objectives.

We know that Telstra has lost the trust of people, even in regional areas. The Sol Trujillo era was a disaster. Telstra lost touch with its customers, it abused its market share and it lost the goodwill of the people who had relied upon it for such a long time. They forgot about their responsibilities as a service provider. However, none of the alternative suppliers or their competitors were willing to stray too far away from the profitable areas. There does need to be changes in the way in which telecommunications services are delivered in this country. Telstra has not behaved as well as it should have over recent times. I welcome the more constructive approach that the new management seems to be taking and of course they deserve an opportunity to prove that their words also will be transmitted into actions. But in dealing with this issue we also have to consider the property rights of the existing Telstra shareholders. Those rights must be respected. After all, they bought a vertically integrated telecommunications company, which the government now seeks to break up. These issues must be addressed constructively.

The Nationals recently released their telecommunications policy. It clearly states what the people of regional Australia expect and demand in the area of telecommunications. The Nationals, in coalition, believe that better telephone services, internet access and broadcasting infrastructure will ensure that regional Australians have the ability to take their share of the social and economic benefits associated with new communications technologies. A robust communications network will have a range of applications in regional Australia. It will create better health services, better education, greater employment and business opportunities.

We aim to deliver communications infrastructure to all regional Australians to provide access to high-speed broadband internet, timely and accurate weather forecasts, voice-over-internet telephony, online services such as banking, bill payments, shopping, buying and selling on auction websites and government services. We want the provision of education materials at all levels of schooling, and tertiary study. We also aim to deliver video conferencing; tele-medicine services, whether voice-over-IP telephony or, preferably, video webcam links to doctors; and, streaming media that allows users to listen to online radio stations and watch online TV stations and other audio and video programming. Fast broadband should also provide potential access to the things that have not even been thought of yet. The world is changing and will continue to change and regional Australians should have access to that new technology.

The Nationals are also determined to address the regulatory issues which have discouraged private enterprise from entering the communications industry and providing parity of service to regional Australians. We will work to create a regulatory environment favouring initiative and support for those providing services to the regions. We recognise that no single technology or network will provide efficient and cost-effective communications services, for broadband in particular, to all of non-metropolitan Australia. We are prepared to assist in the development of communications infrastructure which is suitable for a vast range of needs and applications, while also taking account of the geographical diversity in Australian regions.

The Nationals will ensure that regional Australians are integrated into the global community by fast-tracking communications infrastructure in areas with the greatest need. We recognise that, while the market will almost always meet the communications needs of people in the capital cities, government intervention will almost always be needed to ensure that those needs are met in regional and remote parts of the country. The Nationals believe that where the market cannot sustain a variety of networks in regional areas the government has a responsibility to provide an affordable single network. Public-private partnerships can be an appropriate vehicle for delivering telecommunications infrastructure in regional areas.

It is also the case that in regional Australia the greatest productivity gains can be made from high-speed broadband. The Nationals’ policy is to place a priority on rolling out fibre-optic cable to a majority of consumers in regional Australia before cable rollout takes place in areas where competition is already driving the provision of higher broadband speeds. If you have a number of fibre-optic cables in capital cities already, why duplicate them when there are large parts of Australia that do not have a single cable?

The Nationals support the continuing extension of the fibre-optic network to regional and remote communities that are reliant on wireless and microwave technology. Some of those who have the most difficult communications problems are in the most remote areas. The challenge for them is the greatest and it is not going to be provided on a strictly commercial basis. There will need to be support for those kinds of programs and it is especially disappointing that the government has failed to provide any funding in response to the recommendations of the Glasson review into telecommunications services. Reviews were being conducted on a regular basis as a part of the previous government’s commitment to regional Australia. They identified the black spots, they identified the gaps in services, they identified areas where improvements needed to be made and the government then provided funding to address those issues. This government received the Glasson report but has refused to provide any funding at all to fill in any of the remaining black spots in mobile phone telephony. It picked up one or two of the lesser recommendations of the Glasson review, but there is no money available to fill in the black spots in regional areas. This is another example of this government’s bad faith when it comes to addressing regional telecommunications.

The Nationals have been particularly supportive of Telstra Country Wide and there needs to be a commitment that the physical presence of Telstra Country Wide offices in strategic locations will be maintained. The previous government established a $2.4 billion standing telecommunications fund to ensure that new technology and services could be made available to regional Australia as they became available. It was called future proofing and that term is still relevant. As a central plank of our telecommunications platform, the Nationals commit to reintroducing a standing telecommunications fund to give a level of confidence that regional Australia’s telecommunications services will not fall behind. Labor has stolen this fund and, by stealing it, it has taken away the hopes of country people that their telecommunications needs will ever be effectively met. We need to take a broad approach that strikes a good competitive balance between carriers, that establishes a fair and transparent regulatory structure and that accommodates new technologies and solutions. New technology will be a major deliverer for advancement in our economy and unless Labor is determined to entrench a two-speed economy for Australia it must ensure that regional Australians also share in the telecommunications advances that are going to occur in our nation in the years ahead. (Time expired)

Shayne Neumann (Blair, Australian Labor Party) Share this | Link to this | Hansard source

I am happy to speak in support of the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009. I heard the member for Wide Bay in a very animated, if not agitated, state talking about regional and rural Australia. It must have been very interesting to be in those cabinet meetings when he sat at the table in that period of failure and inaction by the coalition. The regulatory framework for telecommunications in this country has not changed much since 1997. The many plans the coalition came out with—18 in 11½years—failed absolutely dismally regional and rural Australia, including provincial towns in Queensland. The member for Wide Bay is so aggressive about our plans, yet what did he say when Telstra was engaging in this sort of behaviour for such a long time? He is highly critical of Telstra and of us but has no word of criticism for his own government, at whose cabinet table he sat. What happened to regional and rural Australia under the coalition? Very little when it came to telecommunications. The OECD shows that Australia has fallen to 16th out of 30 countries in broadband penetration. We are the 20th most expensive country in average monthly broadband subscription prices. Telstra admitted on 16 July 2008 that two-thirds of metropolitan areas and more than 50 per cent of people in regional areas cannot get 12 megabits per second.

The only plan that the coalition came up with was the OPEL plan, and they want to reinstate it—a broadband network that comprehensively failed to demonstrate that it could meet the terms of the funding agreement on service coverage. You can see that in my electorate. The reality is that large parts of my seat were not covered by the previous government’s plans. You have only to look at what Geoscience Australia said in relation to my electorate to see that the coalition were not taking into consideration hills and mountains in their fixed wireless coverage. Large parts were not being covered. The Department of Broadband, Communications and the Digital Economy determined that the OPEL network would cover only 72 per cent of identified underserved premises within its agreed coverage area. By calling for OPEL to be reinstated, the member for Wide Bay and the opposition are being grossly irresponsible. They are not thinking of rural and regional Australia at all. My constituents in the federal electorate of Blair complain constantly about Telstra. The previous government held a number of inquiries into telecommunications—for example, the Regional Telecommunications Independent Review Committee, which reported in September 2008. The package of reforms we have here goes to strengthening the safeguards for consumers. If everything was sweetness and light, as the member for Wide Bay suggests, why establish this review?

The truth is that consumers, businesses, hospitals, schools, individuals, farmers and students were frustrated with the lack of broadband and adequate telecommunications services throughout the country. The previous government knew that. The member for Wide Bay knows it. In his heart of hearts, he knows they failed the very constituents they mean to represent—the Nationals call themselves the people for rural and regional Australia. He knows they failed. Our national broadband rollout will make a huge difference in the lives of people in rural and regional Australia. We do not want to perpetuate the legacy of failure of the previous government. We certainly do not want to perpetrate problems in this sector. What we want to do is overcome the rigidities and the obstructionism of Telstra, overcome the failures of consumer safeguards and overcome the stringent and rigid monopolistic practices that Telstra engaged in. We want to make sure that we broaden the telecommunications network throughout the country and let other players have a fair go. That is what the National Broadband Network is going to be all about.

Why are we dealing with Telstra in this way? Because we believe national investment in broadband infrastructure is critical for the 21st century. We want to increase our productivity. We want to give children who live in rural and regional Australia the same chances and educational opportunities they would have if they lived in Brisbane, Melbourne or Sydney. We will not build the education revolution simply by building libraries and multipurpose halls and by educating teachers better. We have to make sure they get access to 21st century telecommunications so they are not disadvantaged in any way at all compared to children who live in Adelaide, Perth or Hobart. We want to make sure, if you live in Lowood, Toogoolawah, Esk, Gatton, Laidley, Boonah, Kalbar or even Ipswich, you get the same access to the same form of telecommunications. That is why the National Broadband Network is so important. It will rival, as we have said on many occasions before, the Snowy hydro scheme in terms of its scale, significance and importance for the future. I have every confidence that in decades to come Australians will look back and say, ‘What a great initiative this National Broadband Network has turned out to be.’

The investment of $43 billion over eight years to build that network is simply critical to the future of Australia. The legislation that is before the House in effect goes hand in glove with what we are doing. The member for Wide Bay was talking about the implementation study. We are getting the ball rolling by doing the National Broadband Network implementation study. We are initially putting in $4.7 billion and looking for further investment through the Aussie infrastructure bonds. We want to engage constructively in negotiations with Telstra and with state governments. I am pleased that we are negotiating with the Tasmanian state Labor government to build the network in Tasmania first. It is important that, whether you live in Strahan, Hobart or Launceston, you get access to the same form of telecommunications as everyone else.

I heard the member for Wide Bay talk about the fact that Telstra is in many ways quite dysfunctional in its business operations and dealings with consumers. But no real plan was outlined by the member as to what they would do, except to hark back to the good old days—as he thought of them—in terms of bringing back OPEL, and OPEL failed. We need to look to the future and ensure that we increase productivity, promote greater competition and, at the same time, benefit consumers. That is why it is so important to get rid of the red tape, the redundant and inefficient regulation, in this sector. Competition is important, and we need to make sure that everyone across the country gets equitable access to telecommunications.

In this regard, we are looking at changing the way Telstra operates. We are requiring Telstra to functionally separate, unless it voluntarily structurally separates. That is at the heart of this legislation. We are also making sure that Telstra does not acquire extra spectrum for advanced wireless broadband unless it submits to a voluntary enforceable undertaking acceptable to the ACCC to structurally separate and divest its Foxtel interests and ownership of its hybrid fibre-coaxial network. That is what we are doing in this legislation.

Contrary to what the member for Wide Bay said, we are strengthening the consumer safeguards. If you left it up to the member for Wide Bay, the safeguards would all be at the discretion of the Telstra universal service obligation. But we are not doing that. We are going further than the previous government did. We are also increasing incentives for providers to comply with the customer service guarantee and we are putting forward what I think is very important: more stringent rules on the removal of payphones, because that is important, particularly for those in lower socioeconomic areas and those in rural and regional Australia.

We are making sure that ACMA can issue infringement notices for contraventions and we are beefing up the support in that regard. We are also looking to amend the trade practices legislation, because we think it needs to be changed with respect to the specific access regime set out in one of the parts of the Trade Practices Act but also to make changes with respect to the anticompetitive regime set out in another part. We are making big changes in that regard.

What we are doing here is important because we are doing it in response to what consumers of Telstra services and telecommunications services have said. There have been many reports, many reforms and many submissions made with respect to the challenges and the problems in relation to telecommunications in this country, and it is not surprising because the ACCC has noted that Telstra remains one of the most integrated telecommunications companies in the world, both horizontally and vertically. The consequence of that market share is that it is almost monopolistic in terms of its control of the market in so many areas.

As I said, we have had many stakeholders interested in what happens in telecommunications. That is why we have announced this commitment to reforming the telecommunications regulatory system. A discussion paper was issued subsequent to the 7 April announcement in relation to the changes we were going to bring forward, specifically in relation to the National Broadband Network, and a consultation process occurred on similar issues in 2008, previous to our announcement. Over 80 submissions were received and there was a strong response to our recent discussion paper with respect to this matter, with 140 submissions received. We have consulted widely and those submissions have been on government websites. After a period of 15 months and the receipt of over 200 submissions, the message is crystal clear: there needs to be change; there needs to be reform; and the Australian public is heartily sick and tired of putting up with inadequate services including the removal of payphones, coverage for mobile phones and access to broadband and internet services generally.

Because Telstra controls the only fixed-line copper wire that connects most premises in Australia, controls the largest hybrid fibre-coaxial cable and mobile networks and has a 50 per cent stake in Australia’s largest subscription provider, Foxtel, it really has the capacity to tell consumers what they need and what they should pay, and those people do not have access to the alternatives they need. That effectively means that it is put up or shut up—use Telstra services or go elsewhere and pay more. The truth is that we need to make the changes we are proposing in this legislation.

As I said before, when it comes to the universal service arrangements, Telstra really has its own discretion and can do what it wants. We need to make sure, as this legislation does, that those universal service obligation arrangements are fulfilled. The member for Wide Bay was quite critical of us in this regard, but I think that when it comes to reliability and repair the Australian public knows that Telstra has failed on many occasions, particularly in rural and regional areas. A councillor in my area, Councillor David Pahlke, constantly contacts my office in relation to Telstra failings. When I was recently driving around with him in the Somerset region he was pointing out all the failings of Telstra. He represents 60 per cent of the Ipswich area. It is a big rural area including small country towns that are part of the City of Ipswich—places like Walloon and Rosewood. He was expressing to me his absolute frustration with Telstra. Certainly we know from the facts that Telstra has failed to fulfil its universal service obligation. The most recent Australian Communications and Media Authority report, published in the March quarter in 2009, makes that crystal clear and the facts are very obvious in the circumstances.

The amendments in this legislation are about protecting consumers’ access and about reliability for basic telephone services—and we are going to do that and give ACMA, which fulfils the role of the independent regulator in the circumstances, more effective powers to regulate. We are not going to simply rely on Telstra saying, ‘We’ll be good boys and girls and do the job.’ We are going to make sure that they comply with their obligations.

The Regional Telecommunications Independent Review Committee, which I referred to before, released a report which highlighted the declining effectiveness of the customer service guarantee. That should have been very obvious to the coalition in all those years they occupied this side of this House, but for some reason or other nothing was done by those opposite in relation to that. So we are going to give ACMA broad powers to issue infringement notices—on-the-spot fines, effectively—if there are breaches of the civil penalty provisions in the Telecommunications Act and other like pieces of legislation. As a government we recognise, and it is crystal clear to the public also, that if we are fair dinkum about protecting consumers the universal service obligation needs to be not just a matter whereby Telstra determines whether it complies but a matter of enforcement with respect to its obligation.

Finally, we are going to remove a lot of the regulatory red tape. There are some major changes in the legislation with respect to that. I will not outline those in the couple of minutes remaining to me, but I will say this: the member for Wide Bay was highly critical, in a very agitated way, of the government’s commitment to communications and the reform plans that we have. But I say to those opposite that they should back this legislation. They have a failed track record when it comes to telecommunications reform and legislation. They presided over a system that was full of rigidities that allowed one company to dominate the market, not just vertically but horizontally, and it was done to the detriment of consumers and the very small businesses and the very farming communities they purport to represent. I have always maintained that it is Labor and Labor governments that are the true champions of small business and the farming community, because Labor is on the side of those who do not have the power. We believe the legislation before the House goes a considerable way to not just getting rid of rigidity but improving equity and accessibility to telecommunications services for rural and regional Australia. In the circumstances, I am happy to support the bill.

Peter Lindsay (Herbert, Liberal Party, Shadow Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

During discussion on the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 I have been disappointed at the venom that has been expressed against a truly great Australian company, Telstra. Yes, all of us can find this little incident or that little incident of Telstra perhaps not performing as well as it should have. That happens in every business across this country. But we lose sight of the great work that Telstra has done for our nation.

I want to stand up for Telstra here today in the parliament and give them a pat on the back. In the face of lots and lots of adversity, in the face of very heavy criticism, they have continued to roll out extraordinarily good services—highly professional, highly technical services—for our country. Wherever you go in Australia now it is hard not to be in contact through Telstra’s 3G network. I was recently in Boulia—Boulia is a town of probably 25 houses—and there was Telstra’s Next G network. I was able to connect to the world at Next G speeds.

And so it goes on. Across the country, Telstra is there. Is there anybody else there? Of course nobody else is there. They have not had the interest or the commitment to rural and regional Australia that Telstra has had. In the metropolitan areas, the technology that exists at Telstra’s network control centre in Melbourne, for example, is truly extraordinary. In fact, Telstra has two centres. If one fails there is redundancy to move to another centre. It does not matter which subscriber anywhere in Australia they want to check on at that network control centre, they can do it instantaneously and see the standard of the service and whether it is operating properly or if the people are on the phone or their fax line is being used or their internet is going via a point of presence in Karratha. They are able to tell you all of that information and monitor the services to ensure a high standard of reliability of the services.

Many Australians are shareholders of Telstra. This legislation today attacks those shareholders, the mums and dads who put their faith in a great Australian company. This legislation unashamedly attacks these particular shareholders.

I pay tribute to David Llewellyn, who is the Telstra Country Wide general manager in Townsville, and to his team for the way they help the north of Australia and the fantastic service that they give. I also pay tribute to the many men and women in the two Telstra call centres in Townsville who respond professionally to the queries they receive. It is really terrific to see such great work being done in the north.

Do not misunderstand this piece of legislation. It is a drastic piece of legislation. In fact, in my time in this parliament I have not seen the precedent that this legislation will create if it is passed. It is just another attempt by the Labor government to salvage their disastrous National Broadband Network policy. We have very significant concerns about this legislation and that is why we will speak long and loud on this matter. I hope those people listening to NewsRadio in Townsville on 94.3 megahertz and those watching this parliamentary debate being streamed on the internet will listen carefully to the concerns about this legislation that I and the coalition have—will listen fairly, to understand what it is that concerns us and to make a judgement in their own mind, with an open mind, as to how wrong this legislation is.

Among other things, the bill changes the structure of Telstra by inserting a new part 33 into the Telecommunications Act. If Telstra does not give a voluntary undertaking to the ACCC to structurally separate, it will be made to separate by this legislation. Essentially this legislation is intended to force the break-up of Telstra. This radical decision has come as a surprise to the Australian electorate. Labor made absolutely no mention of any plans to change the structure of Telstra before the last election in 2007. It has no mandate to put this legislation before the parliament.

Australians should listen and understand that, when governments are running very high in the polls, when they have very, very strong support, that is when arrogance sets in. That is when governments propose legislation because they know they can and they know they will get it through irrespective of what Australians think about the sensibleness of the legislation. That is what we are seeing here. We are seeing a government who just arrogantly says, ‘Well, we will put the knife to Telstra.’ That is not a good way to run our country. Any fair-minded person listening to or watching this broadcast will, I think, agree with me.

Let us think of what Labor’s promise was at the last election, 2007. It would spend $4.7 billion upgrading the Telstra network to fibre to the node. What has happened since? That has been entirely discarded and now we are going to see a $43 billion government owned and operated fibre-to-the-node network. This move today is all about the Rudd government—the Labor government—trying to ensure that their National Broadband Network has no competition. We have heard Labor speaker after Labor speaker berating Telstra as a single entity with no competition. Well, hello: here is another entity that the government is setting up that will have no competition. If I had to choose between a private sector enterprise who had to turn a profit and a government organisation run as a bureaucracy and as a single entity with no competition, I would choose the private enterprise operation every time.

This monopoly that the government is setting up has launched an unfair attack on Telstra and its 1.4 million shareholders. The bill and the government’s NBN are intrinsically linked. For this reason, the coalition proposes that this drastic legislation be deferred until a study on the implementation of the National Broadband Network is completed. The broadband policy of the Labor government has been hopeless from the outset. They pushed the original proposal back and back and after failing to secure a tenderer for the original proposal—which by the way cost taxpayers $20 million and dragged on for 18 months; hardly a great commitment from the Labor Party to fixing broadband issues—in April of this year Labor announced a new NBN, NBN mark 2. That is the $43 billion unplanned program—one costed on the back of an envelope—that will see the government own at least a 51 per cent share.

Where have they gone from there? Listen to this: they have created a National Broadband Network company and they are paying the CEO and the board an astonishing $43,000 of taxpayers’ money each week. What does the gallery think of that? That is to run a company that has no customers and provides no services. What a good deal that is for the taxpayer! This is the Labor way.

As a member of the Public Works Committee, I recently saw another example of the Labor way and the arrogance of the Labor Party. The Public Works Committee was presented with a letter from the minister for finance declaring the regional backbone black spots program, a $250 million program, as a program that had to be commenced immediately without the scrutiny of the Public Works Committee. That was rammed through the parliament in the last sitting weeks. They said: ‘We’re going to build this, the parliament is going to have no say in it and we’re not going to have the normal PWC process for expenditure of significant amounts of government money. We’re not going to let them run their eyes over it. We’re just going to do it.’

What are they going to do? Run a fibre in parallel to an existing fibre servicing existing points of presence without building any new fibre anywhere else in Australia. It is kind of like the coaxial cable rollout that we saw in metropolitan cities some years ago, whereby two cables were rolled out in a really inefficient way along the power poles of our metropolitan cities. Why did we need two cables when one cable would have done the job? In Australia, we have the fibre in place and the government, without the scrutiny of the parliament, is running out an exactly parallel fibre network and not providing one extra service to people who currently do not have a fibre service. That is the arrogance of the current government.

I also have concerns that there has been no cost-benefit analysis done for this $43 billion proposal. Understand this: the coalition is not saying that the service should not be provided. Blind Freddy knows that we have to be as technologically advanced as a nation as we can be. It is a question of how it is done. There is a dangerous precedent being created by this piece of legislation, with the government using its legislative power to say to a single company, ‘This is what you will do or else.’ It is legislative blackmail. That is what it is committing in the parliament today; that is what the Labor Party is committing: legislative blackmail.

How would you be if you were BHP and the parliament said, ‘In the nation’s interest, we determine that BHP will no longer be in the business of nickel and we’ll legislate for that’? How do you think you would be if you were the board or the shareholders of BHP with the government telling you how you were going to run your business? That is what we are doing today to Telstra. It is fundamentally wrong. This is socialism at its worst. This is Big Brother telling the private sector how they will run their own businesses. The previous speaker was the member for Blair, a lawyer. We could ultimately see the government going into all legal practices in the country and saying, ‘This is how you’ll run your legal businesses.’ That is untenable, as is what is being done to Telstra.

The $43 billion proposal is certainly a very big risk for Australia without any cost-benefit analysis. In spite of concerns by the Treasury secretary, Ken Henry, who said in September, ‘Government spending that does not pass an appropriately defined cost-benefit test necessarily detracts from Australia’s wellbeing,’ the government is proceeding. In contrast, the coalition had a fully costed and responsible plan for broadband in Australia. Under this plan, effective and affordable broadband services would have been available to Australians across the country. The coalition’s plan would have seen a combination of government and private sector investment and it would all have been completed by the end of this year. Imagine that. At a far lesser cost, it would have been completed by the end of this year. But the Labor government’s hopeless handling of telecommunications means that the risky NBN mark 2 is still not out of the starting blocks.

We saw initially Labor saying that they would cover 98 per cent of the country. Now it is back to 90 per cent. People in my area, those on Magnetic Island, will not get access to NBN mark 2. A suburb of Townsville—Australia’s largest tropical city; the capital of Northern Australia—will not get access to the National Broadband Network mark 2. How can that be?

Labor have consistently bungled their broadband network plan. And, in an attempt to get their plans back on track, they are now introducing this legislation to forcibly break up Telstra. After nearly two years of problems and delays with their broadband network, Labor are launching an attack on a great Australian, Telstra. Their new policy is a clear admission about the failings of the Rudd government’s NBN. Labor have realised that for their current NBN to succeed they must essentially take control of the fixed-line telecommunications network. It is extraordinary. I wonder what is going to happen to our airlines. Are the government going to take control of our airlines because where an airline decides to service or not to service does not suit them? That is the implication of the legislation that is before the parliament today.

The coalition has always been a firm believer in competition. We support the introduction of an effective and affordable broadband network but Labor’s handling of the NBN so far has fulfilled neither of these criteria. There are quite a few areas of this bill which need improvement and amendment. In its present condition it is an unfair and extreme attack on an Australian company and its shareholders. We must await the results of the NBN implementation study to best address this. When the amendments are put to this legislation I will certainly be supporting them.

James Bidgood (Dawson, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak to the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009. The bill will make significant amendments to the Telecommunications Act 1997, the Trade Practices Act 1974 and the Telecommunications (Consumer Protection and Service Standards) Act 1999. These amendments will require Telstra to functionally separate unless it structurally separates. The bill will reform the telecommunications competition regime to provide regulatory certainty and timely outcomes and minimise opportunities for regulatory gaming and anticompetitive conduct. It will also strengthen enforcement of existing consumer safeguards in the transition to the National Broadband Network, known as the NBN. These changes will boost competition and greatly benefit consumers in Australia by allowing Telstra to voluntarily separate itself or be ‘functionally separated’ by the government. This will mean that consumers in Australia will be better off and it will allow a more level playing field in terms of telecommunications in this country.

Reform in this sector is a good thing for all Australians. Boosting competition in this sector is very important. The reforms are long overdue. The Australian consumer will be in a better position to gain access to fast, affordable and competitive broadband services offered by either Telstra or any other company.

The enhanced National Broadband Network initiative announced on 7 April 2009 outlined the government’s commitment to the rollout of the NBN as a wholesale-only, open-access network. The lack of competition in the telecommunications sector has resulted in Australia lagging behind other developed economies on a range of telecommunications indicators and that is why this bill is so important for our future competitiveness in this sector.

It is the government’s preference for Telstra to voluntarily structurally separate. Such an outcome would be consistent with the wholesale-only, open-access market structure to be delivered through the National Broadband Network. Provisions in the bill intend to correct this unusual and inherently anticompetitive situation by requiring Telstra to choose its future path. The government is committed to reducing red tape where it no longer exists. For example, under this bill smaller carriers will be exempt from paying an annual carrier licence charge, contributing to the universal service and national relay service levies and reporting to ACMA, as the cost of compliance for these carriers is often considerably higher than monetary contribution. Also, redundant reporting requirements under the customer service guarantee, priority assistance and the network reliability framework will be removed as long as benchmarks are being met.

The bill will also replace the current unenforceable arrangements, which require Telstra to only take reasonable steps to fulfil the universal service obligation, with a legislated requirement for Telstra to supply, on request, specified services at specified standards—including connection and repair periods, reliability requirements, payphone placement criteria and performance benchmarks. The bill will provide for more stringent rules on the removal of payphones and new provisions allowing people to apply to ACMA to direct Telstra not to remove a payphone.

I believe Telstra will work constructively with the government and that it will see that competition is a good thing for the industry. Telstra CEO David Thodey has said:

Telstra supports the Government’s NBN vision. We are willing to discuss options around separation.

In conclusion, I would like to say that as I do my community consultations, from Mackay, across the electorate of Dawson, right up to southern Townsville, one of the most common themes that is brought up by people who come up to me is that we have such a slow, fragmented telecommunications network, particularly in rural areas. Broadband is particularly slow. This is of interest to small businesses, which often need huge documents to be transferred from larger cities to rural areas. Slow broadband slows down business operations, and sometimes it can be quite intermittent. Having this legislation on the books is important as it will address many community needs for a much better, much faster broadband network. A competitive market will be able to produce some good outcomes, I believe, for the people of Dawson and particularly for the rural areas within my seat. With this in mind, I say that this is good news and I commend this bill to the House.

Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Energy and Resources) Share this | Link to this | Hansard source

It is interesting to note that the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 is so important to the member for Dawson that he spoke for barely six minutes on it. It is a bill that will affect virtually every constituent in his electorate who relies at the moment on ensuring that they are dealt with equitably by the telecommunication service providers. The reality is that as he drives across his electorate, as he mentioned, the chances are that he will be using Telstra. The chances are that in the majority of his electorate—not the majority of his population but the majority of his electorate—the only reliable broadband service, mobile phone service and aircard service for his laptop will come from Telstra. Yet we see here a bill which will not only put at risk the level of service in regional and low-populated areas but also damage the hip pockets of every Telstra shareholder in his electorate. There seems to be scant concern for those people.

In rising to speak on the bill, I express the shared concerns of many members on this side of the House who see the deep flaws within this legislation and are mindful of the destructive consequences those flaws will have on Australians and on the Australian telecommunication network. I am no fan of Telstra, but I have to acknowledge that they are the only telecommunications company that has done the job for regional and rural people. They are the only telecommunications company that can provide me with reliable service within my electorate and across the vast inland of Australia, where I travel as the shadow minister for industry and resources.

In recent weeks, much of my time has been dedicated to addressing the most glaring problems of the government’s rushed and reckless CPRS legislation. Unfortunately, the telecommunications legislation we have to deal with now is just another example of rushed and reckless legislation where the Rudd government shows scant regard for the fact that its actions will impact adversely on all Australians. As earlier speakers have indicated, the coalition has strong reservations about several features of this bill—in particular, its provision to hold a gun to the head of Telstra and demand that that company undergo a structural separation. Has the government seriously examined the consequences of that, particularly for regional Australia? Who is making the big investments in regional Australia to ensure the continuation of Next G telecommunications? They provide the voice access on our BlackBerries, the data access on our BlackBerries and of course the data access on our Telstra aircards—were the Department of Parliamentary Services to give us one—which many members have been forced to buy privately to ensure we have access through our laptops while we are travelling in areas outside large capital cities, and sometimes within large capital cities, so much is the difference in the service provided between those data services.

If this bill goes through and Telstra is cut down the middle, I fear that it will do what the other companies have done and simply become a cherry-picking operation where the density of population rewards the level of investment. On that basis, people in regional Australia will miss out. What we have already seen is that there are still difficulties in delivering broadband services to small communities in regional areas which will not be addressed by this legislation. They will not be addressed. I cite one example, and I will be coming back to it later. At the Quinalow State School, which has been in receipt of computers from the government, those computers are still not operating, simply because there is not a broadband link to the main spine that runs down the highway. So schoolchildren at the Quinalow school are missing out. They will miss out again under this legislation because Quinalow is a town of fewer than a thousand people.

That is the practical impact of this, but, as I said, there is also a concern shared by millions of investors—everyday mums and dads, individual Australians, women and men, who have put their hard-earned cash into a company which they expect to be able to operate in a commercial way. They are the shareholders and customers of Telstra. This latest destructive development from a government that has so comprehensively bungled its handling of Australia’s transitional broadband services highlights its lack of understanding of the detail and time it takes to develop these proposals properly. It is in the most reprehensible manner that the government is sacrificing the best interests of Telstra, Telstra shareholders and Telstra customers so that it can frantically try and paper over the cracks in its crumbling national broadband strategy.

The coalition has flagged several concerns with Labor’s NBN mark 2 proposal, the most significant of which is: it renationalises our fixed-line telecommunications infrastructure. Wind the clock back 15 years or, say, 20 years to when the person who sat in the seat on the other side of this table was Bob Hawke and the person who sat behind him was Paul Keating. They understood the risks of government ownership of public infrastructure that could be commercialised. When they started that privatisation, we supported them because the people who do business best are businesses, not governments. Yet here we have a massive renationalisation of what should be a commercial solution.

Here we have a government who, faced with the prospect of what they are proposing—which they basically just plucked out of the air—not being commercial, have said: ‘Oh, we’ll just build it anyway. We’ll just borrow the money and build it anyway. It’ll never be commercial, it’ll never be used properly, it decimates the largest telecommunications company in Australia, but we don’t care about that. We have a policy—our first one didn’t work. With mark 2, we’re going to renationalise fixed-line telecommunications infrastructure.’ And doing so, as I say, exposes taxpayers to all the risks of running a telecommunications business. There is no proposal, no prospectus, no analysis of the numbers. Just take the taxpayers’ money and, when there is not enough of that, borrow some more, put it on the tab, get the taxpayers to underwrite it and off you go. This will involve massive borrowings which, like the Rudd government’s cash splash, must be underwritten by the taxpayer.

Despite the government’s claims that this legislation will privatise the network five years after it has been built, it is likely that that will not happen. The legislation says it will be privatised, but in fact it is likely that the taxpayers will be saddled with financial responsibility for the network well beyond the government’s pledged time frame. Who is going to buy this? And where is the analysis; where is the prospectus? Where are the people queueing up to be part of this?

The coalition has always supported the ongoing development of broadband services and recognises the significance of universal access to fast, reliable and affordable broadband. It is no longer a luxury. Every household should have access to fast broadband. In contrast to Labor’s policy, the coalition takes a practical and realistic approach to ensuring Australians can have access to broadband without taxpayers being saddled with a massive debt.

Over the last two years, Labor has squandered the opportunity to develop a national broadband network, due to its own incompetence. After running a failed tender for its NBN mark 1 proposal, which wasted 18 months and $20 million, in April 2009 Labor announced that it had abandoned its 2007 election commitment and would commence a new process in a bid to deliver NBN mark 2—at a hugely inflated cost to the taxpayer, of course. To mask the collapse of its original NBN plan, Labor has made an extravagant promise to spend up to $43 billion—$43 billion. Even with all the money that is being splashed about at the moment, that is still a huge number. In fact, I dare say there are few people in Australia who could actually comprehend the size of that, even if you tried to stack $100 bills on top of each other. The government is going to spend $43 billion to construct a fibre-to-the-premise network through the establishment of a government business enterprise in which the government owns a minimum 51 per cent.

Labor’s proposal to spend up to $43 billion of taxpayers’ funds has been committed without any detailed cost-benefit analysis or any semblance of a business plan or prospectus. The government has made that promise despite a failure to conduct the work that needs to be done. It has not done the business analysis, it has not done the cost-benefit analysis and it has not done the economic modelling. The government does not even know whether this new broadband company can be commercially viable. I would have thought that would have been the first issue to be covered. This proposal has every appearance of being a stunt cobbled together to mask Labor’s failure to deliver on its original election promise and to get it through to the next election.

Telstra shareholders, employers and customers should not be forced to mop up this government’s mess or compensate the government for its inability to deliver its election commitment of a national broadband network for a cost of around a 10th of this proposal—$4.7 billion. That was the promise they took to the election. We are now looking at $43 billion and rising.

And Labor said nothing at all in the 2007 election campaign about breaking up Telstra, just as it said nothing at all—in fact, the contrary—in regard to private health insurance during the election. Again, this is something that it has pulled out of nowhere that has surprised not only Telstra but also of course the investors, including the mums and dads who have put their money in Telstra shares. This new and radical Labor policy is the ultimate consequence of the debacle that Labor has produced on broadband. Many leading analysts predict that this project will be not only not commercially viable, as Labor claims it will be, but also extraordinarily difficult to put in place.

Labor’s proposal also confirmed that towns of under 1,000 people will not receive the high-speed 100 megabits per second services but services at around a 10th of the speed delivered by wireless or satellite. Herein lies an issue on which the member for Dawson should be standing up for his constituency. He has got small towns in his electorate. I know he has: I have visited them; I have been there. What is he going to say to them? ‘Oh, sorry; if you live in Mackay, that’s fine, but if you don’t you don’t get much’? Is that any way for a government to treat its constituency or for the member for Dawson to treat his constituency? Apparently so.

Apparently there is no need to look after people who live in small towns. I grew up near a small town. I was school captain because I was the only person in grade 7. They did not have a big choice. Small communities are just as important as big communities.

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

Mr Craig Thomson interjecting

Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Energy and Resources) Share this | Link to this | Hansard source

There is always one in the crowd, isn’t there. This oversight, deliberate or otherwise, of small communities is unacceptable in every form. Under Labor’s plan, 10 per cent of the population, or 2.2 million Australians, will get the comparatively slower services despite the enormity of the planned spend. So they are spending 10 times what they said they were going to spend during the election campaign, and they still cannot get to 10 per cent of the population—with $43 billion. Such an outcome will, of course, widen the digital divide within Australia. It will disadvantage those people who, because of their businesses or because of their lifestyle choices, have chosen not to live in major capital cities. Every electorate has them. I have them all across my electorate: Bowenville, Quinalow, Maclagan, Nobby, Felton et cetera. They are small townships, old townships, places where generations and generations have grown up—and they will be excluded from this.

The coalition believes government spending of this magnitude of money on broadband, is reckless, irresponsible and unnecessary. Labor’s attack on Telstra and its 1.4 million shareholders is an admission that its new NBN policy cannot be implemented without effectively renationalising the fixed line telecommunications network supported by the migration of Telstra customers. There has been an overwhelming range of criticism of the Rudd government’s plan to split Telstra. It has not been limited to shareholders but extends to union questions. I thought these people were supposed to look after unions. I thought the unions got every one of them into parliament. I thought every one of them was a member of a union. But the unions have been ignored in this as well. The unions have extended concerns and questions about the human cost of the split, and they fear that the forced action will stifle innovation.

Of course there are myriad concerns about the return of big government and government intervention into the market. We all know the Prime Minister wants government to be at the centre of the economy. He is a good, old-fashioned socialist. He said he was a fiscal conservative, then he said he was a social democrat. He is just a socialist. He wants to be in the middle of the economy. He wants to own companies which he can control to go out there and compete against the companies that people have already invested in and put their hard-earned dollars in.

The coalition believes that government funding of broadband should be specifically targeted at underserved areas. The coalition believes in working towards parity between the residents living in cities and those living in rural and regional communities. We do not support the attempts by government to pick winners in a rapidly changing technology sector. We believe in competition as a key driver of service expansion and innovation. It is interesting that this government is pushing an emissions trading scheme which is all about getting competitive outcomes for least dollar costs. Yet they just junk all that when it comes to telecommunications. They say: ‘All that economic rationality and all the privatisation work that Paul Keating and Bob Hawke did is all rubbish. We’ll just forget about all that for now. We’ll bring in something completely different, which is all about government owning and picking winners.’

The coalition is a strong believer that competition is the answer to making sure you get the best return for your buck. We believe that government can use various levers to encourage investment in broadband services and to ensure that service is provided in regional areas. It is also important that a safety net be put in place for those Australians who do not have affordable access to metro equivalent broadband services. We had a fully costed and targeted plan to deliver fast and affordable broadband services across the country, which was rejected by this government when it won the election. That is fine. They can say, ‘Your plan is wrong; our plan is better.’ But to get their plan to work they had to spend 10 times as much money as was required under both their original plan and under our proposal. Labor’s mismanagement of this issue included the cancellation of OPEL in rural and regional networks, which would have started working by now. The reality is that all we have seen from government so far is heavy-handed socialist policy combined with blunders that have cost the taxpayer huge amounts of money.

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

I rise to support the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009. It is a little bit sad to hear the contributions from the member for Groom and the Liberal Party. After 12 years of office, after this being a major issue for the economy in terms of e-business and so forth, the best they can come up and lament is: ‘We had a plan when we were in government. We didn’t actually do anything, but we had a plan.’ It is terribly sad that their sum contribution to this debate is lamenting the fact that the plan they never put into action, the plan that they could not get up and going when they were in government for 12 years, is not what we have adopted. On this side of the House we are about actually doing something to improve broadband for ordinary Australians.

It also should not come as a surprise to anyone here that we find the Liberal Party again weighing in on the side of the big bosses, big companies. They did it with private health insurance. They did it with the alcopops. Now we have the big gorilla Telstra, and they are in there behind them again. They are putting the interests of big companies in front of the interests of the communities and ordinary citizens. That should not come as a surprise to anyone.

This bill amends the Telecommunications Act 1997 to require Telstra to functionally separate unless Telstra voluntarily structurally separates. It is to prevent Telstra from acquiring spectrum for advanced wireless broadband unless Telstra submits a voluntary enforceable undertaking acceptable to the Australian Competition and Consumer Commission to structurally separate, divest its Foxtel interests and divest its ownership of its hybrid fibre-coaxial network.

It includes a provision which enables the minister to exempt Telstra from the requirement to divest its Foxtel interests and divest its ownership of hybrid fibre-coaxial network, where the minister is satisfied that any concerns arising from Telstra’s market powers are sufficiently addressed by the enforceable undertakings to structurally separate as accepted by the ACCC. It seeks to retain the priority assistance requirement on Telstra in requiring other providers to either offer a priority assistance service or inform customers of providers from whom the customer can purchase a priority assistance service if they require it. It enables the Australian Communications and Media Authority to issue infringement notices for contravention of civil penalty provisions as an alternative to the institution of court proceedings, with the details to be confirmed in consultation with the Attorney-General.

Many of my constituents on the Central Coast of New South Wales will tell you about the shortcomings of their existing broadband services. Some of them do not even know why the service is called ‘broadband’, because it always seems to be so slow. In particular, in the lower half of my electorate, around the Wyoming area, all current solutions simply are inadequate. Wireless just does not work. People are reduced to trying to run their businesses on dial-up. Simply, broadband is not available as a solution for their businesses. In the business park, which is where my electorate office is at Tuggerah, we experience, as does everyone else in the business park, extremely slow broadband services several times during the week. As anyone knows, that is extremely frustrating if you are trying to carry out work. Shortly, our office is moving to the other side of the main trunk route, where broadband speeds are much faster. That this situation was allowed to develop shows the lack of investment by the former government in this technology.

On the Central Coast there are many businesses—including home based enterprises, services and government departments—and thousands of individuals looking forward to the day when they can have a real broadband service. It is virtually impossible in the modern, technologically based commercial environments for businesses to function without a proper broadband service—one that does not let them down with slow, inefficient speeds and bandwidths.

At Ourimbah, which is just 10 minutes away from my electorate office, we have the University of Newcastle campus. Among the many degrees and courses it offers is a bachelor of information technology. The irony is that the broadband, even to the campus on the Central Coast, is below standard and technically not up to scratch for what the students are studying. Nevertheless, these keen students will still manage to do well—going on to graduate and secure careers in managing and processing information, especially in large organisations. From the first year the IT students work on industry-relevant projects and case studies involving such areas as digital media, e-commerce and medical information systems. They learn the principles of good design, using interfaces, databases and systems, and they can choose from three majors—business information and communication technology; digital media and entertainment; and software development and application. Students at the Central Coast campus work on real world projects. Current students have set up an internet radio station and they review audience, content and funding sources to keep the station operational. They do all this despite these broadband limitations. They really should be commended for their ingenuity given the circumstances under which they are operating.

Without proper broadband services, the careers of these future interactive web developers, programmers, business analysts and project managers will be limited, especially if they want to work locally. Graduates of this program who want to go into leadership roles in companies involved in the development, innovation or application of information technologies will probably only be able to do that in the big cities like Sydney because companies that need proper broadband to do business have yet to invest on the Central Coast, where broadband has been inadequate. Indeed, this requirement is not exclusive to IT-specific businesses because a growing range and number of businesses need good broadband to be competitive.

The proposed reform package featured in this bill will have a positive impact on regional Australia in areas such as my electorate of Dobell on the New South Wales Central Coast. Consumers of telecommunications services in regional Australia are more exposed to any shortcomings in the effectiveness of consumer safeguards, such as the universal service obligation and the consumer service guarantee, than urban Australia. The proposed strengthening of the consumer protection framework will reduce the potential for regional and rural customers to experience falling service quality.

Let us take a look at the overall context of how this bill will affect the future telecommunications landscape of Australia. The enhanced National Broadband Network initiative announced on 7 April 2009 outlined the government’s commitment to the rollout of the NBN as a wholesale-only, open access network. The government also announced on 7 April its commitment to reforming the existing telecommunications regulatory regime. A discussion paper canvassing options for regulatory reform was released on the same day. There was a strong response to the discussion paper, with 140 submissions received from a broad range of stakeholders. These included all major telecommunications service providers, broadcasters and media companies, state and territory governments, the Australian Competition and Consumer Commission, disability and consumer groups, business organisations and unions. The overwhelming message from almost every submitter was that the current regime did not work effectively to achieve its goals. They said it was failing business and consumers and that reforms were urgently required.

Taking into account public submissions, the bill proposes a package of reforms to deliver a more efficient telecommunications market with appropriate consumer safeguards as the NBN rolls out. The telecommunications regulatory reform package represents the most significant reform to the telecommunications regime since open competition was introduced in 1997. Amongst the important reforms is Telstra’s vertical and horizontal integration. Telstra remains one of the most integrated telecommunications companies in the world. It owns the only fixed line copper network in Australia, which connects almost every premises in Australia, as well as the largest hybrid fibre-coaxial cable and mobile network and it has a 50 per cent stake in Australia’s largest subscription provider, Foxtel. The government believes that the failure to address the issue of Telstra’s level of integration has meant that current regulation has failed to promote effective competition. The lack of competition in the telecommunications sector has resulted in Australia lagging behind other developed economies on a range of telecommunications indicators.

Telstra, as a vertically integrated company, provides both wholesale and retail services. As a result of Telstra’s vertical integration, Telstra has both the incentive and the ability to favour its own retail businesses over its wholesale customers. The overwhelming message from industry and the regulator, the ACCC, is that the current arrangements to address the issues arising from Telstra’s vertical integration are inadequate.

Most of the industry and the ACCC have called for stronger functional and structural separation measures. It is the government’s clear preference for Telstra to voluntarily structurally separate. Such an outcome would be consistent with the wholesale-only, open access market structure to be delivered through the National Broadband Network. It is important to note that the structural separation can be achieved in different ways. It does not need to involve the creation of a new company by Telstra and the hiving-off of its fixed-line assets through the new company. For example, to achieve the aim of structural separation, Telstra could migrate its traffic to the National Broadband Network and sell or cease to use its fixed-line assets. This would result in full structural separation in time.

The reason the government is not imposing structural separation is that the structure of Telstra is a matter for Telstra shareholders. It has been widely observed that imposing mandatory structural separation on Telstra is likely to raise compensation issues. However, if Telstra does not voluntarily structurally separate, Telstra will be required to separate along functional lines. Even though structural separation is considered to be the better option, functional separation will significantly reduce the incentives for Telstra to discriminate against its wholesale competitors which will result in increased levels of competition. The ACCC supports functional separation as the next best option to structural separation.

Functional separation may take time to implement. However, it is expected that there will be early benefits for competition in the sector. This was the experience in both the United Kingdom and New Zealand which have implemented their functional separation arrangements. The independent regulator and competition authority for the United Kingdom communications industry, Ofcom, has said that the net effect of the BT functional separation undertakings has been positive for both competition and consumers. While structural separation in New Zealand is still in its early days, the results appear to be positive. In addition to its vertical integration, Telstra is also horizontally integrated as it owns and operates multiple different platforms: copper, cable and mobile. Such horizontal integration across platforms is in contrast to most other developed countries where there are restrictions on incumbents from owning both cable and traditional fixed-line telephone networks. Provisions in the bill intend to correct this unusual and inherently anticompetitive situation by requiring Telstra to choose its future path. The proposed amendments would prevent Telstra from acquiring spectrum for advanced wireless broadband services unless it structurally separates, divests its fibre-coaxial cable network and divests its interests in Foxtel. If the minister is satisfied that Telstra’s undertaking to structurally separate is sufficient to address its market power, the provisions allow the minister to exempt Telstra from either or both the requirements to divest its cable and pay-TV interests to acquire spectrum for advanced wireless broadband services. These measures in the bill will promote competition and will deal with the mistakes of the past when opportunities to prevent the problems created by Telstra’s vertical and horizontal integration were missed. Generally the reforms in this bill will address the current regulatory framework and improve competition.

During the transition to the National Broadband Network environment, the existing telecommunications regulatory regime will remain important for delivering services in the interests of Australian consumers and businesses. The vast majority of industry submissions received by the department claimed that the regulatory framework is ineffective due to the ability of parties to engage in regulatory gaming—litigious obstruction aimed at delaying regulatory outcomes. For example, by mid-May 2009, 157 telecommunications access disputes had been notified since the commencement of the regime in 1997. By contrast, only three access disputes had been notified in other regulated sectors, including aviation and energy.

Under the proposed changes, the ACCC will set price and non-price terms for access to declared services in an access determination to apply to all parties. The bill will also remove the right to seek merits reviews of the ACCC’s regulatory decision. This approach is being pursued because Telstra has continually used the regulatory and legal avenues available to frustrate regulatory outcomes and cause uncertainty for its competitors. By providing the ACCC with the power to issue the rules of conduct, the ACCC will be able to immediately address problems relating to the supply of declared services. The overarching objective of the reforms is to streamline regulatory processes and provide the industry with a greater degree of certainty in relation to regulatory outcomes. This certainly will encourage infrastructure investments, including in areas where it is most needed such as in my electorate on the Central Coast.

Other reforms will mean that the ACCC will no longer be required to consult with a party before issuing a competition notice. This is aimed at ensuring the ACCC can act swiftly when it believes anticompetition conduct is occurring in a telecommunications market. The scope of another part of this bill will also be clarified to ensure that anticompetitive provisions apply to content services supplied by carriers on carriage service providers. This will prevent a dominant provider from using its power in one market to damage a competitor in another.

This bill also reflects the government’s commitment to protect consumer access to affordable telecommunications services. The package of reforms strengthens the regulator’s ability to enforce existing consumer safeguards and mitigate the risk of Telstra reducing service quality on its copper network pre National Broadband Network. Specifically, the amendments contained in this bill are focused on retaining and strengthening existing regulation to better protect consumers’ access to, and reliability of, basic telephone services and to address concerns with the removal of payphones and in giving the Australian Communication and Media Authority more effective enforcement powers through the use of infringement notices.

The measures reflect the government’s decision to retain the existing universal service obligation for Telstra for voice telephony and payphones for the time being  and to require improvements to service quality by introducing new minimum performance benchmarks in meeting the customer service guarantee. The new universal service arrangements will make it clear for consumers and Telstra the services, both voice and payphones, that Telstra must supply in fulfilment of the universal service obligation, including reliability and repair requirements, rather than these decisions being left up to Telstra’s discretion. This will address the concerns raised in the Regional Telecommunications Independent Review Committee report that the universal service obligation arrangements are vague and are difficult to enforce. New requirements on Telstra regarding payphone removal address widespread concerns that Telstra has too much discretion in removing payphones.

The Regional Telecommunications Independent Review Committee report highlighted a declining effectiveness of the customer service guarantee. New requirements on service providers will be imposed to ensure statutory performance benchmarks are met. If not met, the service provider will be subject to civil penalties. The bill will give ACMA broad powers to issue infringement notices or on-the-spot fines for breaches of civil penalty provisions in the Telecommunications Act 1997, the Telecommunications (Consumer Protection and Service Standards) Act 1999 and chapter 5 of the Telecommunications (Interception and Access) Act 1979. Looking forward, the government will consider the broader range of issues associated with the delivery of universal access in the NBN environment once the detailed operating arrangements for the NBN have been settled.

Another important aspect of the bill is the removal of red tape. Consistent with larger commitments to address impediments to Australia’s long-term productivity growth, the government is committed to reducing red tape where the need for it no longer exists. Smaller carriers will be exempt from paying an annual carrier licence charge, from contributing to the universal service and national relay service levies and from reporting to ACMA as the costs of compliance for these carriers is often considerably higher than the monetary contribution. Redundant reporting requirements under the customer service guarantee, priority assistance and the network reliability framework will be removed so long as benchmarks are being met. The government will repeal unnecessary accounting and operational separation requirements once a new market structure—functional or voluntarily structural separation—is in place. The government will remove the outdated requirement for Telstra to provide internet services with speeds of 19.2 kilobits per second. The Australian broadband guarantee offers broadband speeds of 512 kilobits or more.

To sum up, Australians can no longer afford to be left behind in world telecommunications. This bill puts in place the changes we must make if we are to keep up with other countries that have already made the necessary technological advances. I commend the bill to the House.

Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to this | Hansard source

The Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 is one of the most disturbing pieces of legislation that have been introduced in this parliament in my 29 years here. I underline ‘disturbing’. It is the first time that I have seen a government deliberately bypass the Constitution by way of a device that denies an established and recognised business access to the means of doing its business. In this case, the government is virtually forcing Telstra to transfer its fixed line traffic to the government’s new business. It is backdoor nationalisation.

The major losers will be the 1.4 million shareholders around Australia who bought shares believing they could trust this parliament. They bought a product from the previous government, and they knew what it was. All of a sudden there is a change of government and the issue of sovereign risk arises again. When commercially can you trust the parliament to protect your interests? Maybe the parliament will protect shareholders’ interests if the minor parties in the Senate reject this nationalisation bill. They are stealing the value of the investment of 1.4 million shareholders.

There will be divisions in this House and a list will be available in Hansard of members of parliament who voted for this device. It will be interesting to know, as we publish it around Australia, how those 1.4 million shareholders will react. Telstra has the most diversified shareholding membership in Australia. They will all be very disappointed with those members of this parliament who do not offer them the adequate protection that they expect for their investment. That is the fundamental of the issue.

Of course, it gets a lot worse than that. I remember in my parliamentary history when Telecom, as we knew it, was a government monopoly. We would all hang around on budget night to find out how much everyone was going to pay for their phone calls. That was a government decision. You did not read ads in the paper saying, ‘Come buy my telecommunications product,’ or see Dodo fly in to tell you what his deal is. You did not get any of that; you waited for the arbitrary increase in the cost of doing business.

If you were a rural resident who wanted a phone on the wall and your farmhouse was up the road from the highway or where the main line went through, in the early 1980s you paid A$6,000 to get the wire put up the laneway. Nobody else was allowed to do it. Who is going to set the charges to run the fibre optics up that same laneway when the copper wire has been disconnected by Telstra under the instructions of this government for fear that it will otherwise lose access to the new dimension of telecommunications spectrum?

I think of the implications of a government wanting to deal with a business that has upset it. If that business is heavily reliant on water, you cut their water off—‘I’ll teach you a lesson. You will do as I tell you.’ Have I purchased your property? Have I exercised section 51(xxxi) of the Constitution, which enables this parliament to acquire property on just terms? No, I just cut your water off. When your business ceases, you either come to heel or hand it over to me or the government company I have established that wants it and does not want to pay for it. Of course, if it is not that, it might be electricity. Do you cut that off? This is a process by which the government renationalises Telstra, which has been sold to the Australian people and has a very significant body of competition.

The message of this legislation is: ‘You, the consumer, will be happy. You’ll get better prices.’ That is pretty interesting because it is not the consumers who feel they are so badly done by; it is the other operators in the market who do not think they are making enough profit competing with Telstra. That is where the whingers come from. Telstra does a few stupid things, like putting a $2 fee on people paying in cash. It enrages people and it was silly and it was stupid. The fact that Optus did it six months before is not a matter of dispute. Optus, for instance, does not do much in my electorate. It was a silly thing to do.

There are occasions when Telstra let the people down in giving them the service they are entitled to. But they are out there wherever anyone wants communications. And it is no longer the telephone on the wall I mentioned. I get complaints from time to time, and I am surprised how often they come by email. My recollection of being in this job was, after the first time I was elected, the town of Denmark in the southern area of my electorate—a little town—had 160 outstanding applications to connect an ordinary phone. That was the level of service that the government provided. And here we are saying, ‘Let’s go back to the future’, on the argument that there will be a competitive advantage to consumers. Not as far as the cost of the network is concerned. The government is going to run that and Treasury will tell you how much to charge for it.

There were some estimates made when this announcement was made about the cost to the consumer, and one of the managers of one of these competing industries—AAPT I think it was—got on the radio and said, ‘We’ve done a back-of-the-envelope calculation, and if every household in Australia takes a connection to this service at the estimated cost’—I repeat: ‘estimated cost’; no-one knows what it is going to cost—‘then in fact we estimate the monthly fee will be $200.’ That is if every household takes a connection. There has been a lot of hoo-ha in Tasmania, and so far about 16 per cent of people have said they might take it on. A big seminar, a big publicity stunt was organised. They had to cancel it; nobody wanted to come. So outside of running some blue wire down a conduit somewhere down in Tasmania, nothing has happened. I might add the town of Burnie got full cable connection from one of the sale packages of Telstra, I think. This was organised with Senator Harradine, who had a pretty simple view about Tasmania: if you did not look after it, he did not vote for you. That was a fact of life. But they got that, and that is working and it would be an interesting test case of just how many people have connected to that system. And that was for free.

It is interesting that when one turns to the explanatory memorandum, the opening paragraph says:

The Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 (the Bill) introduces a package of legislative reforms aimed at enhancing competitive outcomes in the Australian telecommunications industry …

The clerks who wrote the legislation were not game enough to say ‘which will deliver competitiveness’. They gave themselves a bit of wriggle room: ‘aimed at increasing competition’. Of course the second reading speech, which has been repeated by a number of speakers here today and others, makes much of this ‘vertical’ problem. Let me read the second paragraph:

The package has three primary parts: addressing Telstra’s vertical and horizontal integration; streamlining the access and anti-competitive conduct regimes; and strengthening consumer safeguard measures …

It all sounds pretty good and one after the other, including the minister in his second reading speech, made much of the benefits to the consumer. The minister said:

These reforms are not without cost.

I say ‘amen’ to that!

However, international precedents where governments have made reforms to the underlying market structure indicate that the benefits will outweigh the costs.

Well we are entitled to consult history in that regard. History is dominated by reforms of this nature introduced in the United States of America—an extremely big market. The state of California is the fifth biggest economy in the world, and it gives you some relative example of where Australia would stand in that listing. But they had the company—I think it was ATT or ATM. Anyway, it dominated—

Andrew Southcott (Boothby, Liberal Party, Shadow Minister for Employment Participation, Training and Sport) Share this | Link to this | Hansard source

AT&T.

Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to this | Hansard source

AT&T, was it? Anyhow, I know the company and at the time, because of competition issues, which are paramount in the United States, they really pay attention to them, they were instructed to break up that organisation into what became termed baby bells—little operations all working. The major company virtually ended up as the national overseas telecommunications company. And year by year by year, those baby bells got worse and worse and worse. They failed to maintain a reasonable level of pricing for the simple reason they were not big enough. And what has happened in quite recent years? They have all been re-coordinated into a single company. That is what has happened.

It is typical in this place that we always ignore history, we always ignore that this has been tried once before. Everybody who comes into this place with an original idea usually finds someone else tried it years ago. And that great free enterprise economy America, in the interest of free enterprise, believing that it would gain benefit for the consumer by breaking up this big company, has discovered it was a dog: it did not work, it has been re-amalgamated. So here we are, starting on the baby bell road, when it has been proven a failure in the most free enterprise country in the world.

That is pretty interesting, but that is not all of it. Telstra has a copper network. What does the explanatory memorandum tell us about how the government is going to steal this business without paying compensation? It is very clever.

Structural separation may, but does not need to, involve the creation of a new company by Telstra and the transfer of its fixed-line assets to that new company.

You do not have to do that, because if you legislated that you would have to pay the shareholders compensation.

Alternatively it may

Why did the draughtsman put ‘may’ in special letters? Just to make sure that the judge that tries to adjudicate on behalf of the shareholders of Telstra gets the message: ‘We were too mean and tricky to let them get a dollar back for their investment. We want to nationalise it. We want to recreate a union-dominated service and we’re not going to give you any money for it.’ So we get the word ‘may’ highlighted twice in a single paragraph.

Alternatively it may involve Telstra progressively migrating its fixed-line traffic to the NBN—

You know, ‘Mate, you don’t have to come on board. We are just going to send you broke if you don’t. But we’re not going to force you to do it.’ No! And we’re not going to worry about your shareholders—those people who thought they could trust government in Australia. The government is prepared to do the dirty on you, because it has got a secondary agenda.

Alternatively it may involve Telstra progressively migrating its fixed-line traffic to the NBN—

The major part of its business for decades is, admittedly, now being overrun by mobile phones et cetera and the new spectrum. But you are not going to get any more of that, Telstra. That puts an implicit value on your copper line traffic, which you are going to transfer to our new government company. I will wait and see who wants to join as an investor, unless they are guaranteed that they get Telstra’s network for free. Private enterprise has not been rushing to the fold to get into this new company, but you can bet they have all been round the back door and said, ‘Mate, we’re with you when you knock off Telstra.’ I will read that again:

Alternatively it may involve Telstra progressively migrating its fixed-line traffic to the NBN over an agreed period of time and under set regulatory arrangements,—

you know, we will set the rules by which you give it to us—

and sell or cease to use its fixed-line assets on an agreed basis.

I have been in business for a long time. Would I have liked to have been running this deal: I take everything you’ve got and I tell you how I will take it.

This approach will ultimately lead to a national outcome—

in other words, a national-ised outcome—

where there is a wholesale-only network not controlled by any retail company—

Exactly right: the new telecom will be controlled by the government. Who does business as a retailer without the network? And who is going to run the network, even if there is private investment—49 per cent, thank you very much. This is unbelievable stuff. Of course, those who will suffer first will be the shareholders of Telstra, and those who will suffer second will be those who believe that the government of the day will provide them with a better communications network. At some time even their mobile phones slide back into the network. They hit a tower somewhere and the tower is interconnected with the cable network. Telstra has a huge amount of cable, and some of it is involved with its Foxtel business. But this legislation says you have got to get rid of Foxtel, too. That is going to be a great help to the shareholders!

As time is starting to beat me, I want to say a couple of words about the role of the Future Fund and its chairman, Mr Murray, in this fiasco. I have never seen anything so bad. The Future Fund was given a huge block of Telstra shares for the benefit of the public servants, particularly of Canberra, particularly of the defence forces, to ensure their guaranteed superannuation on retirement. The Future Fund was one of the great initiatives of the Howard government, because the money was not there and there was evidence, because of the ageing of the population, that kids would not be able to afford it. Part of that investment was a huge block of shares. How did Murray and his mates use it? They went round and bullied the board; got rid of the directors who were fighting to protect the shareholders; and got rid of the chief executive, who happened to be leaving anyway. They have put a couple of softies in there, who apparently are going to listen more to the government and their shareholders. They ought to be sued for that. You talk about the ACCC. If they sell out their shareholders, they have broken the law.

The minister says, ‘I never talked to Murray once.’ I am not surprised. I think that is probably the truth. But who did? Who sent Murray into their boardroom to bully the directors to sack their chief executive? Who sent Murray in, as the biggest shareholder of Telstra? And what did Murray get for it? What did he get for the superannuants he is supposed to represent? He got a reduced asset. Then he flogged a chunk of it—very surprisingly!—just before all this became public. But he still has a lot of shares. They are going to be worth a lot less money, and that is going to cost the public servants and the Defence Force people a lot of superannuation guarantee in time to come. I raised this matter—if anyone goes back to the Hansarda long time ago. I could see it coming. This is a takeover. It is going to deliver a government managed fundamental network—(Time expired)

Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

I am very pleased to be able to speak in support of the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009. This bill is an amendment to the Telecommunications Act 1997. It has been brought to parliament to require Telstra to functionally separate unless it voluntarily structurally separates, and also to prevent Telstra from acquiring spectrum for advanced wireless broadband unless it submits voluntary enforceable undertakings that must be acceptable to the ACCC to structurally separate, divest its Foxtel interests and divest its ownership of its hybrid fibre-coaxial network.

The bill we are debating today is about strengthening the existing consumer safeguards. When we look at this entire debate, it is all focused on ensuring that we strengthen the safeguards for consumers, strengthen their rights, ensure that they have a very competitive telecommunications network and broadband, and ensure that they are getting value for their dollar. It is about improvements to the universal service obligation. It is also about strengthening the increased incentives for providers to comply with the customer service guarantee, the CSG, and more stringent rules on the removal of pay phones.

These may seem like little things, but out in our electorates and especially in my electorate pay phones are a huge issue. People who perhaps are not lucky enough to have mobile phones like we do, and others who cannot afford to keep a mobile phone or even a landline at their home, are required to make phone calls from pay phones. For those people, it is an absolute essential. The stringent rules on the removal of pay phones will certainly be very important out in the electorates and in the areas where people are suffering. This will be a big help to those people. Many people who do not have mobile phones and cannot afford a landline rely solely on these pay phones. If you are a pensioner, if you are old, or if you are sick and you require emergency services, this is your only contact to the outside world. So I welcome the introduction of more stringent rules on the removal of pay phones.

The other area is the customer service guarantee. We need to ensure that we increase the incentives for providers to comply with the guarantee. We have seen evidence of this in many instances and I have many constituents who contact me on regular basis. For example, one of the recent cases was from Flinders Park in my electorate where a whole street was out. There were no phone connections. When we called Telstra on behalf of the constituents, they threw the blame onto Optus by saying it was due to an Optus provided phone in one particular house. Yet the infrastructure was run by Telstra. When we rang Optus, they told us it was not their problem because the infrastructure was Telstra infrastructure. The poor consumer was left in the middle of all this without a phone for close to 10 days. That is totally unacceptable when we know that they have a customer service guarantee that requires them to fix the problem within the metropolitan area within a certain time. That certain time is well under the week and a half that these people waited for. Again, I welcome the increased incentives for these providers to comply with the customer service guarantee and, as I said, the more stringent rules on the removal of pay phones.

This bill has been brought forth to retain the priority assistance requirement of Telstra and requires other providers to either offer a priority assistance service or inform customers of providers from whom the customer can purchase a priority assistance service if they require it. It also enables ACMA to issue infringement notices for the contravention of civil penalty provisions as an alternative to court proceedings. This bill will also enhance the National Broadband Network initiative that was announced in April earlier this year when the government outlined its commitment to the rollout of the National Broadband Network as a wholesale only, open access network. This will drive more effective competition, and that is what we are after—effective competition which will help drive the costs down and ensure that the services are available. This will provide more effective competition in the telecommunications sector, which will lead to better outcomes for consumers and for businesses.

That said, during the transition to the full rollout of the National Broadband Network, which will occur over eight years, the existing telecommunications regime is going to remain absolutely critical to the delivery of competitively priced services. That is why in April this year the government also announced its commitment to reforming the existing telecommunications regulatory regime. A discussion paper which canvassed options for regulatory reform was released on the same day as the National Broadband Network announcement. This followed a consultation process on similar issues during 2008 which saw over 80 submissions received.

There was also a strong response to the most recent discussion paper, with 140 submissions received from a broad range of stakeholders. This included all the major telecommunications service providers, the broadcasters, media companies, the state and territory governments and even some local governments, the ACCC, disability and consumer groups, business organisations and unions. After consulting for 15 months and receiving well over 200 submissions, the overwhelming message from almost every submitter was that the current regime put in place by the previous Howard government does not work effectively to achieve its goals. That is very critical. The overwhelming majority message from everyone that submitted was telling us that the regime that was put in place by the previous government did not work effectively to achieve its goals. When you get those submissions and you hear the views of everyone that submits, it shows that all of this was failing business and failing the consumers, and that reforms were urgently needed in this area.

The telecommunications regulatory reform package represents the most significant reform to the telecommunications regime since open competition was introduced in 1997. This will lead to better outcomes, more competition, more choice and more innovation for consumers and businesses. These reforms are critical, irrespective of the National Broadband Network rollout and the implementation study. Every day we delay these reforms, every day they are taking longer to implement, is another day of higher prices, less choice and less innovation for consumers and businesses, including those in regional Australia who are affected greatly. When I say this, it comes from my experience of speaking regularly to people in my electorate.

Recently all of us, on both sides of parliament, saw the implementation of a $2 fee to have your bill sent out to you. There is no other business I can think of that actually charges you to send you a bill, but I suppose this shows the way that they view their customers. They basically are a monopoly and can do as they please. I had many calls in my office from many pensioners and people with disabilities as well as everyday people arguing the point as to why they should pay $2 to have a bill sent to them. If it is claimed that it takes more work and costs more to send a bill, you can argue the same thing for putting packaging on a bottle of Coke, for example, and charge a premium for that. It is just incredible that they can get away with it. As I said, every day we delay these reforms is another day of higher prices, less choice and less innovation for consumers and businesses all around Australia. So we must improve competition, and this bill is all about improving competition through reforms to the current regulatory services and their framework.

During the transition to the National Broadband Network environment, the existing telecommunications regulatory regime will remain important for delivering services in the interests of Australian consumers and businesses. The vast majority of industry submissions received by the department claimed that the regulatory framework is ineffective. That is due to the ability of parties to engage in regulatory gaming—the tactics of delay and obstruction which lead to uncertainty for all parties. For example, by May 2009, 157 telecommunications access disputes had been notified since the commencement of the regime in 1997. By contrast, only three access disputes had been notified in other regulated sectors including the aviation and energy sectors. That goes to show that there is an issue and a problem in the area. I am proud to say that this government has bitten the bullet and gone ahead with tackling the big issue, the big picture, and ensuring that the consumer will be the winner out of all of this.

The bill will also remove the right to seek merits review of the ACCC’s regulatory decisions. This will provide greater upfront certainty for access providers and access seekers by removing the months and potentially years of uncertainty while they wait for final prices to be resolved. It will provide the ACCC with the power to issue binding rules of conduct so that the ACCC will be able to immediately address problems relating to the supply of declared services. At this point I must congratulate the minister responsible for telecommunications, the Hon. Stephen Conroy. When some issues arose about some SMS advertising, with people being tricked, I suppose, into subscribing to SMS messages through unscrupulous text messaging and advertising, I went to see the minister about it. After some discussion, we now see that the ACCC has been given some real teeth to tackle these areas. We have seen prosecutions in the last six months of many of these particular service providers of SMS messaging. Now, all other service providers in that area have to comply with the stringent regulation that Senator Conroy has brought in. Giving the ACCC more teeth to be able to go out and prosecute these unscrupulous providers has been a very good thing.

The overarching objective of the reforms is to streamline the regulatory process and provide the industry with a greater degree of certainty about regulatory outcomes. This certainly will encourage more effective competition and efficient investment. Again, competition and efficient investment will encourage better pricing. For whom? For the consumer. The bill will also reflect the government’s ongoing commitment to protect consumers’ access to affordable and high-quality telecommunications services. The government has carefully considered the Regional Telecommunications Independent Review Committee’s report of September 2008, formed by the previous government. This package of reforms strengthens the regulator’s ability to enforce existing consumer safeguards. It includes ensuring that Telstra does not reduce the quality and reliability of services on its copper network during the transition to the National Broadband Network. The bill does not remove any of the existing protections for consumers; in fact, it will ensure that the existing protections are better enforced to provide better quality services and more responsiveness to faults.

Many of the reforms address issues raised by the Regional Telecommunications Independent Review Committee. These reforms will be good for all Australian consumers and for businesses, including those in rural and regional Australia who suffer disproportionately from the inequities of the existing regulatory framework. For example, the most recent ACMA published report, for the March quarter 2009, found that for payphones provided under the universal service obligations only 59 per cent of faulty payphones in remote areas were repaired within the three-day period specified in Telstra’s standard marketing plan, and I have to say that the numbers in the metropolitan area were not much higher. For new fixed telephone connections, 84 per cent were provided by the universal service provider within the customer service guarantee time frame for remote areas, compared to 90 per cent in urban areas.

The amendments contained in this bill are focused on retaining and strengthening existing regulations to better protect consumers access to and the reliability of basic telephone services. As Australians, no matter where we live, whether in remote areas or in the city, we have a right to basic telephone services. We have found over the years this was not happening. As I said, I have whole areas six kilometres out of the CBD of Adelaide that cannot get broadband. In today’s world that is totally unacceptable. Under the previous government we failed in this area, falling way behind other countries. It is about time we got our standards back up there.

The amendments also address concerns about the removal of payphones, as I said, and give the independent regulator, ACMA, more-effective enforcement powers through the use of infringement notices. The measures reflect the government’s decision to retain for the time being Telstra’s existing universal service obligation for voice telephony and payphones and to require improvements in service quality by introducing new minimum performance benchmarks for meeting the customer service guarantee. The new universal service arrangements will make it clear for consumers and for Telstra the services, both voice and payphones, that Telstra must supply in fulfilment of the universal service obligation, rather than these decisions being left up to Telstra’s direction. As we have seen over the last 10-odd years, when it has been left up to Telstra’s direction it remains stagnant. This will address the concerns raised in the Regional Telecommunications Independent Review Committee report that the universal service obligation arrangements are vague and difficult to enforce.

The new requirements on Telstra address the widespread concerns that Telstra has too much discretion on removing payphones. Again, if you cannot afford a mobile phone or a landline connection, the payphone in your neighbourhood is your access to the outside world. If a disabled person or a pensioner requires access to emergency services but has no access to a phone then it is a sorry world that we live in. Telstra probably think they are not making enough money from payphones, but I think it is wrong to look at it from an economic point of view. We should encourage them to have more payphones in every suburb, ensuring that the people I spoke about earlier have access to the outside world.

This is a good bill. It will ensure more competition, it will help drive prices down and it will ensure that our broadband is up to scratch when compared with the rest of the world. Without these services we will not be competitive in business, we will not get our education standards higher and certainly we will alienate rural and remote areas even more than we currently do. That is why I commend this bill to the House. Just about everyone supports it because it is vital for Australia’s future.

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

The Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 is an example of the ongoing conflicts that all public policymakers face when reviewing and considering legislation. With just about every piece of legislation that comes through this chamber, there are competing interests. There are certainly many competing interests in relation to this legislation at various levels—shareholder interests, private interests, public interests and the processes in and around how public policy is presented to this chamber. I am pleased that the member for Hindmarsh mentioned the $2.20 administration fee that Telstra has just introduced in relation to their billing system. That has caused a lot of concern on the Mid North Coast of New South Wales. Only today I received a response from Minister Conroy to a concern raised by a constituent of mine. In that response we can see a point of conflict that relates to the bill we are discussing today. I quote from the letter from Minister Conroy:

Telstra is a private company and the Australian government does not seek to influence decisions about the day-to-day management of its business. Consistent with Corporations Law requirements, these decisions are left to Telstra’s board and management.

By relating that paragraph alone to this bill, I think I could build a pretty strong argument to express my concern about the ‘dead hand of socialism’ infiltrating the affairs of a private company. But the next sentence balances the concerns in this legislation. I again quote from the letter:

The government’s role is to establish the legislative and regulatory framework within which telecommunications service providers operate.

In response to those arguments, we have to consider framework questions for the future of the telecommunications industry and, ultimately, as public policymakers, ask the question that I hope all members in this place ask when they are considering legislation: what is the national interest in this legislation?

Previous speakers spoke about shareholder interests and they circulated lists of those who may support this legislation. They hope that the 1.3 million Telstra shareholders will go to the ballot box and vote against those who support this legislation. I do not buy that argument at all, even though I have concerns about aspects of the way this legislation has been introduced and what the government is doing. I think shareholder interests are for the many good company directors in Australia to look after, as is their fiduciary duty. I do not think public policymakers should be concerned, for good or for bad, with what is in the interest of shareholders in Australia. Rather, as I said, our only concern when passing legislation through this chamber should be whether it is in the national interest.

In that context, I can certainly see why the government is doing what it is doing with this legislation. Even though I do not like what the government is doing with this legislation, I can certainly understand why the government is doing what it is doing. But I do not like how the government is doing what it is doing. I think there are great concerns about the targeting of a private company in Australia today and the issues that are being raised in such an approach. The old Westminster system has tacking laws whereby you cannot attach one piece of legislation to another. In this legislation I think we are seeing a variation on that, with the targeting of one company in a broad sweep of telecommunications framework changes.

I also mention the heavy hand or the dead hand of socialism that we are seeing in pushing towards a private telecommunications approach in Australia into the future and the lurch back to nationalisation and public involvement in telecommunications. That sets some concerns about policy direction and investment in an important industry for the country’s future. I also raise concerns about ministerial authority that is wrapped into this legislation. I have raised this in debate on previous legislation. We are increasingly seeing legislation presented to us in this chamber that leaves ministerial discretion as the answer to issues of concern. I do not think that is good enough. We as legislators should expect more from the executive. We should demand that ministerial discretion, as an approach to future policy, is not enough. I see it in this legislation in various places. When it comes to the crunch of how policy is going to be implemented, the answer provided in the legislation is nothing more than ministerial discretion. That is a concern for the national interest that is considered in this legislation.

From a policy making position, I have concerns—and I have raised these before as well—about the open-ended nature of some of the questions that are presented. They are largely shaped around similar arguments that I just raised about ministerial discretion. I pick out one example in this bill. We are supposed to take on good faith how government will use its powers moving forward. It is a question of voluntary or involuntary structural reform. When you read the detail of the amendment, there really is no difference. Regarding the voluntary option, as presented to Telstra, 577A, subsection (2), says:

In deciding whether to accept an undertaking under subsection (1), the ACCC must have regard to:

(a)

the matters (if any) set out in an instrument in force under subsection (3) …

We then go to subsection (3):

The Minister may, by writing, set out matters for the purposes of paragraph (2)(a).

We are supposed to go back and forth between those two points: whether a minister is going to set an instrument and, if so, what that instrument is going to be.

It is important that, if we are to consider this legislation in good faith as members of the House of Representatives, we know what the minister in the executive is going to set in this instrument, if anything, and what matters he will raise in instruments. For example, will customer service guarantees and universal service obligations be in there? They largely answer the national interest question: is this going to be good for people in communities such as mine who are already struggling to have access to various telecommunications services? But in this legislation it is left as an open question. We are supposed to take on good faith the important question: what is the standard that the minister is going to set, via the ACCC, for a voluntary handover by Telstra? It is an important question that is unanswered in this legislation. I would certainly hope that, in a ministerial response, we get to see which matters, if any, are going to be included in the ministerial instrument that will set the standard for voluntary engagement.

I raise the question of the former ACCC chairman, Allan Fels, about abuse of market power. This is a bullying approach to legislation. It is a fundamental change. Whilst I have previously said I do not think the arguments of 1.3 million shareholders are to be considered in a policy framework discussion, I do think their concerns are certainly worthy of consideration when shaping policy and substantially changing policy, such as we are seeing here. The Fels question that has been raised about abuse of market power is certainly one that I hope government considers on spectrum questions. That is a question for regional and rural areas which is also outstanding. Whilst I concur with the previous speaker that we will hopefully see strengthening of universal service obligations and customer service guarantees through this legislation, I think there are valid arguments and concerns about the upgrade path into the future for regional and rural areas. If Telstra is not the way forward for us in regional areas, are we supposed to put all our eggs in the one basket of NBN Co? Again, we are then left to hope in good faith that the government delivers in the eight-year time frame.

Next year we have the question of retail price control being considered by government. Nothing has been raised in this legislation about that. If there is going to be a shift for regional areas and the future of regional areas, there is the question of how government will handle retail price control in the next decade. In a ministerial reply, we would like to hear what is going to be decided in the six-month window that will set us up for the future.

In conclusion, as I said previously, I do not like the way it is being done or how it is being done, but I do understand why it is being done. With regard to the coalition’s amendment, certainly from my perspective, apart from the seven or eight extremely emotive words in the amendment, I think it has merit, but I do not think the next step of completely blocking this legislation and this important change for the national interest is necessary.

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Order! It being 2.00 pm, the debate is interrupted in accordance with standing order 97. The debate may be resumed at a later hour. I am not sure whether the member wanted leave to continue speaking, but he has it if he wishes.