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

I rise to speak on the Telecommunications Universal Service Management Agency Bill 2011 and related bills. The universal service obligation is a vital aspect of Australian telecommunications. Every Australian needs and deserves access to basic telephone services at a reasonable price. The USO guarantees that these services will always be available. It is important to note at the outset that these bills do not implement or amend the USO. Rather, these bills implement part of the government's backroom deal with Telstra to create the NBN.

The USO primarily benefits residents in regional and remote Australia. For these residents, access to a basic phone service is vital because other communications options are often not available or affordable. In rural and remote areas the provision of basic phone services is often not economically viable, so a subsidy is needed to ensure telephone services are accessible and affordable. The coalition strongly support the USO and we recognise the vital role the USO system plays in keeping regional Australia connected. The USO also provides a subsidy to ensure that payphones continue to be available. Although pay phone use is decreasing, the USO for payphones is vital in regional and remote towns, particularly where mobile coverage is patchy or nonexistent. In metropolitan areas, payphones may seem largely unnecessary, but the experience in country electorates has been that rural communities value the security and certainty offered by the availability of a payphone.

As the government's National Broadband Network is implemented and Telstra moves towards structural separation, there is a need to reform the USO system. Telstra has historically been a vertically integrated operator of Australia's fixed line phone network. As a result, Telstra has been subject to a regulated obligation to ensure that all Australians have access to a standard phone service. As the NBN rolls out and Telstra's copper network is gradually decommissioned in NBN fibre areas, Telstra will transition to effectively become just a retailer competing with other telecommunications retailers. The general thrust of the government's changes to the USO appears to be reasonable, moving from a regulatory system to a contractual system that will eventually be open to competition and should provide benefits to consumers in the long term. However, as with most policies of our current government, the devil is in the detail. While the USO will technically be open to competition, the government has signed long-term contracts with Telstra to deliver the USO as part of its backroom deal to prop up the NBN. These contracts are not publicly available. We simply must take the government's word for it that the contracts offer value for money to both taxpayers and telecommunications users. After watching this Labor government in action over the past four years, I have no confidence that the government has got this right. I will have more to say on that shortly.

Now I will turn my attention to the details of the bills before the House. There are three bills before the House today. The first of these, the Telecommunications Universal Service Management Agency Bill 2011, provides the framework for the new USO system. The bill will create a new statutory authority, the Telecommunications Universal Service Management Agency, to be known as TUSMA. TUSMA will be responsible for entering into contracts on behalf of the Commonwealth for the delivery of public interest telecommunications services. This includes standard telephone services, payphones, the emergency call system and the National Relay Service. TUSMA will also be responsible for ensuring that voice-only customers are migrated onto the NBN fibre before Telstra's copper network is decommissioned. TUSMA will also be required to support research and development aimed at ensuring public interest services, such as traffic lights and public alarm systems, can migrate onto the NBN with minimal disruption.

Part 2 of the bill sets out the scope of grants and contracts to be administered by TUSMA and provides the minister, subject to the scrutiny of parliament, with the ability to set standards and benchmarks that will apply to contracts and grants managed by TUSMA. The agency will monitor the performance and compliance of contractors and grant recipients and maintain a register of all contracts and grants.

Part 3 sets out TUSMA's corporate structure, accountability and reporting requirements. TUSMA will be a statutory agency under the Financial Management and Accountability Act 1997. The minister will appoint a chair and between four and six board members. In appointing TUSMA members, the minister is required to select candidates with a diverse range of skills and expertise. The remuneration for the chair and members will be set by the Remuneration Tribunal. TUSMA will also have a CEO and staff who will be employed under the Public Service Act.

Part 3 also provides for TUSMA to maintain registers of public interest telecommunications grants and contracts. These registers will need to include details for each contractor and grant recipient, contract duration, costs and the services each contractor or recipient is expected to deliver. These registers must be publicly available on the agency's website. TUSMA will also be required to provide a report to the minister every year detailing how contractors and grant recipients have performed. This report will be published in TUSMA's annual report to parliament. The bill also provides for a review of the USO arrangements before 1 January 2018.

Parts 5 and 6 of the bill set out the funding arrangements for TUSMA. Currently the USO for standard phone services and payphones is funded by a revenue based industry levy. The National Relay Service is currently funded by a similar levy. Under the new arrangements, TUSMA will receive government funding with residual funding requirements to be met by a consolidated industry levy.

The government has agreed to pay Telstra $230 million per year to provide standard phone services and $40 million per year for payphones. These amounts will not be adjusted for inflation, but these amounts may be revised up or down as a result of changes to government policy. Telstra will be paid up to $20 million per year for the emergency call service. As part of the government's agreement with Telstra, the emergency call service will be put to tender within five years. If no tenders are received or none of the tenders are acceptable to TUSMA, Telstra will continue to be the emergency call service provider.

The National Relay Service contracts currently cost around $17 million per year. These contracts with WestWood Spice and the Australian Communication Exchange are due to be retendered in 2013. The government estimates that TUSMA will also spend about $15 million per year on migrating voice-only customers onto the NBN and $20 million over two years on developing solutions for the migration of public interest services onto the NBN.

This takes the total expected liability for TUSMA to around $340 million per year, reducing to $330 million after two years, including a component to cover the agency's administrative expenses. This is a significant increase in the cost of delivering the USO. By way of comparison, Telstra received a subsidy of around $145 million to deliver standard phone services and payphones in 2010-11. The cost to provide the USO has long been a contentious issue in the telecommunications industry, with Telstra claiming its cost to provide the USO exceeds the subsidy it receives. But, on the other hand, other carriers claim Telstra is paid too much to deliver USO services.

The government commissioned a report by telecommunications consultant Paul Paterson, who concluded that the net cost to provide the USO for standard telephone services is between $215 million and $262 million per annum, and the net cost to provide the USO for payphones is $35 million to $48 million per annum. The payments to Telstra are in the lower half of these ranges.

This increase in the subsidy provided to Telstra and the government's policy decision to expand the scope of services to be funded by the industry levy mean that telecommunications carriers will be asked to pay a significantly increased levy. In order to give the industry time to adjust to the increased levy, the government has promised to cap the levy on carriers for the first two years so that the overall liability of carriers other than Telstra does not increase. Individual carriers may still pay slightly more or less as their share of industry revenue changes, but the carriers' collective levy will be capped. For this period, the government will provide additional funding to cover the shortfall in the levy collected due to the levy cap. After the initial two-year period, the government has committed to provide $100 million per year towards TUSMA's operations, with residual funding needs to be met entirely from the industry levy.

The second bill before the House is the Telecommunications Legislation Amendment (Universal Service Reform) Bill 2011. The primary purpose of this bill is to make consequential amendments to telecommunications legislation and other legislation related to the introduction of the TUSMA Bill. This bill contains amendments to the consumer protection act which would allow the minister to progressively remove the current USO regulations for standard telephone services and payphones if specified conditions are met and appropriate contractual arrangements are in place. Proposed section 8J sets out the process by which the minister can remove the USO regulations. Before the minister can remove the regulations, a contract to provide the USO must be in place, the minister must be satisfied that Telstra is complying with the contract and the minister must obtain advice from ACMA and TUSMA.

Similar obligations apply to the removal of the payphone regulations, as detailed in proposed section 8K. The minister must wait at least 18 months from the commencement of this section before making a declaration under this section. In effect, there will be two USO systems in place for at least the first 18 months after the NBN is rolled out in a particular area. The final bill before the house is the Telecommunications (Industry Levy) Bill 2011. The bill is the procedural mechanism by which the levy is imposed on telecommunications carriers to support the operation of TUSMA. The new levy on telecommunications carriers will replace the USO and NRS levies. ACMA will be responsible for collecting the levy and assessing the levy amount, as is currently the case.

I want to turn my attention to matters of concern with regard to the TUSMA proposal. The general concept of transitioning the USO away from the traditional regulatory basis is a natural outcome of the government's development of the NBN. However, I find it ironic that the government has only chosen to develop a more competitive USO model because it is building the NBN—the biggest government owned monopoly that Australia has ever seen.

The government loves bureaucracy. If there is a simple way to do something and a complicated and expensive way to do something, this government always picks the complicated and expensive way. At present, ACMA oversees the USO and collects the USO levy. This system has worked reasonably well for a number of years. Instead of utilising the existing capacity within the existing agency, the government has seen fit to create a new bureaucracy with a new platoon of public servants. The new agency will have little incentive to keep expenses down, particularly as the government funding for TUSMA is fixed and any increase in cost will be borne by the telecommunications industry.

To provide incentive for the government to keep TUSMA's administrative costs in check, I have circulated an amendment, which I will move at the consideration in detail stage, which will require ACMA's budget for any given year to be reduced by an amount equivalent to the administrative budget of TUSMA. This amendment is intended to ensure that TUSMA's costs are not duplicated within ACMA. Any increase in TUSMA's costs will flow through to the industry levy and ultimately to the telecommunications consumers. As a result, it is appropriate to ensure that TUSMA is efficient and streamlined.

The coalition is also committed to ensuring that Australians in regional areas will continue to have access to standard telephone services. To that end, I have circulated an amendment to require the minister to obtain a favourable independent review of the quality of standard telephone services before being permitted to roll back the USO regulations. This provision will ensure that an independent expert certifies that the standard telephone services are of sufficient quality to justify rolling back the USO obligation. This amendment will add an additional safety net within the Telecommunications (Consumer Protection and Service Standards) Act 1999 to ensure that the USO regulations are not rolled back too soon.

The coalition also has concerns about the scope of TUSMA's responsibility to expand without reasonable basis. The government has indicated that TUSMA's budget funding will be set at $100 million per year. The residual requirement will be funded by the industry levy. This creates an incentive for the government to shift further responsibilities on to TUSMA under the guise of public interest telecommunications services while shifting the cost away from the government's budget on to industry and ultimately on to consumers. The opposition will carefully scrutinise every move the government makes in this regard. The Senate environment and communications committee has taken submissions on the bills and heard evidence at a public hearing last week. The coalition will wait for the outcome of this Senate inquiry before deciding whether further amendments may be appropriate to ensure that taxpayers and consumers are protected through the transition of USO services to a contractual basis.

It is also important to consider these bills in their context. These bills would not be before the House if the government was not building the most anti-competitive, expensive, ill-conceived white elephant in Australia's history. The TUSMA system was created as part of the government's backroom deal with Telstra to prop up the NBN. As a result, we really do not know what services Telstra will actually be delivering for the $270 million payment. We do not know what conditions have been placed on Telstra in its contracts with the government. We do not know if the contracts represent fair value for money. We do not know whether consumers are getting a raw deal from this agreement.

What we do know is that this government cannot be trusted to prudently manage public funds. We know that the NBN was not the subject of a cost-benefit analysis. We know that the telecommunications industry will be subject to increased levies, which will flow through to consumers. We know that the government is embarrassed to reveal the true cost of the NBN.

Every time the NBN committee asks NBN Co. or the minister for information about the network rollout, the information that is eventually released provides little insight into the status of the project or is presented in a form that does not allow the project to be appropriately scrutinised. From the little information that has found its way into the public domain, we know that the NBN is struggling with low take-up rates. The Australian reported last year that the take-up rates in Armidale in NSW were as low as two per cent at one stage. This is despite a lavish $138,000 launch.

We know that the NBN project is already behind schedule, with key agreements yet to receive approval from the ACCC. We also know that the ACCC still has significant concerns about Telstra's structural separation undertaking, which is a key component of the NBN deal. We also know that NBN Co. abandoned the construction tender process—on April Fools' Day last year—because none of the 14 tenders was acceptable to the government. We just do not know what the replacement contract with Silcar means with regard to taxpayers. I will conclude now and I look forward to speaking further on this bill at the consideration in detail stage.

Geoff Lyons (Bass, Australian Labor Party) Share this | Link to this | Hansard source

Mr Deputy Speaker Leigh, it is a pleasure and an honour to be here before you. I believe it is your first sitting in the chair and I congratulate you on your elevation.

I rise today to speak on the Telecommunications Universal Services Management Agency Bill, or TUSMA; the Telecommunications Legislation Amendment (Universal Service Reform) Bill 2011, the reform bill; and the Telecommunications (Industry Levy) Bill 2011, the levy bill.

Like electricity and gas, broadband has become an essential infrastructure for Australians wanting to participate in an increasingly online world. Like the rest of the world, Australia is experiencing an insatiable demand for speed and data. I am pleased to hear that many of those opposite support a national broadband. The Gillard government understands that if Australia is to remain competitive in our region that, as the world moves to the 21st century digital economy, we need to act now. That is why we are getting on with the delivery of the NBN. The NBN will turbocharge our economy and enable Australia to become a global leader in using the online world—the world of the 21st century. The NBN will provide the infrastructure that will allow retail service providers to deliver advanced digital services to the nation. It will make possible new and improved ways of connecting with one another, from health and education to business and lifestyle.

The TUSMA bill, the Telecommunications Legislation Amendment (Universal Service Reform) Bill 2011 and the industry levy bill form a package of legislation to ensure the continuity of the key telecommunications safeguards in the transition to the National Broadband Network. This package of bills implements the reform of the universal service obligation first announced by the government in June 2010 and establishes the necessary legislative framework to create a new statutory agency, TUSMA, to support the government's service agreement with Telstra announced on 23 June 2011.

I am very pleased to speak on this package of bills today as the NBN is the single largest infrastructure project in my lifetime. To quote Mr Michael Ferguson, who is a Tasmanian Liberal parliamentarian in my electorate of Bass, the previous member for Bass in this federal parliament and the future Liberal candidate for Bass, 'The NBN is a good thing for Tasmania and the possibilities are endless.' I know Michael Ferguson turns up at all the BER openings as well and congratulates everybody on the wonderful achievement. At least he has his head in the right place.

This is an exciting time and we need to move quickly to make sure that we are not left behind. The TUSMA Bill provides a governance, funding, reporting and accountability framework for the new statutory agency to make sure that the universal service outcomes and other key public interest services continue to be delivered effectively in this new competitive environment. TUSMA will have the responsibility to put in place contracts or grants so that Australians continue to have reasonable access to standard telephone service and payphones; calls to the emergency call service continue to be handled and transferred to the relevant emergency service organisation; the National Relay Service continues to provide voice equivalent services for those with hearing or speech impairment; appropriate consumer safeguards are in place to support voice-only customers migrating to the NBN fibre service as the Telstra copper network is decommissioned where those customers remain fixed-line voice-only customers after migration; and technological solutions will be developed as necessary to support the continuity of public interest services, public alarms, traffic lights et cetera.

The key focus of the Gillard Labor government is to minimise disruption for consumers and industry by maintaining basic safeguards as the NBN fibre network is rolled out and replaces the old copper network. Telstra is being required to maintain its copper network to deliver voice services outside the NBN fibre areas and importantly, under the agreement it made with the government that was announced on 23 June 2011, Telstra will also be required to be the retailer of last resort for voice-only services over the NBN fibre network. The TUSMA legislation will ensure that basic telecommunication services remain available to all Australians and that the new agency responsible for delivering these services operates efficiently, transparently and with a high degree of accountability. I also note that the TUSMA Bill creates a rigorous oversight and accountability framework for TUSMA's activities. This includes a requirement that it maintain a publicly available register with key terms and services to be provided under all contracts and grants it makes.

The National Broadband Network is a wholesale communications network being created to deliver high-speed broadband to all Australian premises and the NBN will be the single largest infrastructure investment made by an Australian government, delivering a once-in-a-generation upgrade for our telecommunications infrastructure that will benefit all Australians. This is an exciting time, with so many possibilities available for education, business and health. It also has the potential to create many employment opportunities. We, the Gillard Labor government, understand that investment in the NBN is essential for Australia to be an innovative, knowledge based economy of the future. The NBN opens up many new and innovative ideas for local businesses.

The coalition will take us backwards. They have no broadband plan and they have made no secret of the fact that they will shut down the NBN, disadvantaging local homes, businesses, schools and hospitals across the country. The Leader of the Opposition opposes key investments Australia needs to modernise and move forward, including the NBN. Let me say this to those opposite: to shut it down would be a backwards step for Tasmania. Residents in my electorate of Bass are connected to the NBN and most are pleased with the speed. The only complaint I receive from constituents is that they want access sooner. The opposition leader wants the world to stop still and to go back to the past. Some of us remember the past, like 1983, when the Liberal government had double-digit inflation and double-digit unemployment at the time they were removed by the Australian people. Let us not go back to the past.

My office receives many calls asking when the callers will be able to get the NBN. Innovative local businesses such as Pivot Maritime and Autech, both Australian Exporter of the Year Award recipients, are very excited about the NBN rollout and how it will benefit their businesses. The NBN will also facilitate the restructuring of our telecommunications industry, providing a level playing field on which telecommunications providers will compete and innovate.

The NBN is a nation-building investment that will pay for itself over time. It will boost our economy and deliver benefits in areas like health, education, business and entertainment. The Gillard Labor government's NBN investment is the envy of the world. Vint Cerf, who is the Vice President of Google and recognised as one of the fathers of the internet, was quoted in January 2011 in the Australian as saying:

I continue to feel a great deal of envy because in the US our broadband infrastructure is nothing like what Australia has planned.

He went on to say:

I consider this to be a stunning investment in infrastructure that in my view will have very long-term benefit. Infrastructure is all about enabling things and I see Australia is trying to enable innovation.

Another endorsement comes from Craig Mundie, the Chief Research and Strategy Officer with Microsoft. He was quoted in the Australian Financial Review in April as saying:

In the grand scheme of things going on in the world, it probably ranks up there at the brilliant end of the scale, certainly in terms of what a government can do to prepare its citizens and businesses for an all-digital world of the future. I think the leadership that has been provided here in Australia with this is farsighted and one that I commend. It is a bit like ensuring that the population has water, roads and electricity. To some extent I think that broadband connectivity is going to become recognised as an essential service.

Yet those opposite, Mr Deputy Speaker, have continued to attack our plans and fail to have their own. They seem to be the only ones who do not understand the importance of this investment in our nation's future. I ask those opposite to come clean about their broadband plan. The shadow minister for communications and broadband has been deftly silent on the Liberals' plan for broadband. The coalition needs to come clean on what their actual policy is, what technology they propose to use and what it will cost. Only Labor has a plan for the future direction of Australia.

The world is changing. Australia faces many challenges and big opportunities in the years ahead: an ageing population, increasing global competition, environmental degradation, keeping the economy strong beyond the mining boom, a future for manufacturing and rapidly developing new technologies. If we do not face up to the changing world and if we put our heads in the sand it will not be the well off that get left behind; it will be ordinary Australians who will miss out. This is why Labor is pursuing the policies Australia needs for the future: putting a price on the carbon emissions of big polluters; building the NBN; and a mining tax that will mean all Australians can share in the benefits of the mining boom, increasing retirement savings through superannuation. We are improving living standards for this generation and future generations of Australians. That means making the right decisions now.

We are delivering affordable, high-speed broadband to all Australians and Australian businesses, no matter where they live. It will mean better education, better health care and better access for Australian businesses to the biggest marketplace in human history. The NBN will connect all Australians to high-speed broadband internet services. Ninety-three per cent of homes, schools and businesses will be connected with a fibre footprint and will receive speeds of up to one gigabit per second. Remaining premises will be connected with a combination of next-generation wireless and satellite technologies that will provide peak speeds of at least 12 megabits per second, much faster than most Australians receive today. The NBN will provide local businesses with the opportunity to expand and reach new markets anywhere in the world in an instant, will lower telephone bills for small business and will enhance business services such as teleconferencing, videoconferencing and virtual private networks. Every child will have access to world-class education resources, access to better health care and high-definition, multichannel and interactive TV services. I am pleased to be part of a government that is investing much-needed infrastructure to prepare our nation for the future.

But let me remind the House that the Liberals have had 21 failed broadband plans in 12 years and left Australia with some of the slowest and most expensive broadband in the developed world. On all of the big economic calls like transforming our economic capacity and driving prosperity through the National Broadband Network, the opposition gets it wrong. The Liberals went to the 2010 federal election with a broadband policy that Peter Reith has acknowledged completely ignores Tasmanians. Tasmanian Liberals do not have the gumption to stand up to the member for Warringah's nay-saying and do something constructive for our state and for Australia. Instead, the Tasmanian Liberal team would prefer to play politics at the expense of Tasmania's access to decent broadband services.

It is clear the Liberals are terrified of upsetting the Leader of the Opposition and Senator Eric Abetz. Tasmania has the lead in the country in installing the National Broadband Network, and our schools have been some of the first to take advantage of the benefits it can provide. Launceston, in my electorate, will be connected to the National Broadband Network as part of the third-stage rollout. I look forward to that development and the many opportunities that will be created. These bills have my support, and I urge those opposite to get off the fence and support the NBN package of legislation. (Time expired)

Andrew Leigh (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

I thank the member for his contribution and for his generous remarks on my membership of the Speaker's panel.

Paul Neville (Hinkler, National Party) Share this | Link to this | Hansard source

I too welcome you to the role and hope it will be as satisfying for you as it will be for us backbenchers.

We are talking today about the Telecommunications Universal Service Management Agency Bill 2011, the Telecommunications Legislation Amendment (Universal Service Reform) Bill 2011 and the Telecommunications (Industry Levy) Bill 2011, which will change the telecommunications regulatory environment in preparation for the continued rollout of the NBN. The first of these bills is the Telecommunications Universal Service Management Agency Bill 2011, which provides the government's framework for the new USO system and will change the way the universal service obligations are delivered and funded. The bill establishes a new agency, the Telecommunications Universal Service Management Agency, or TUSMA, which will operate as a statutory body and will be responsible for the implementation and administration of contracts and grants, which will be the primary method of delivering universal telecommunications services in Australia.

Let me say at this point—right at the beginning—that I am ambivalent about this. I say 'ambivalent' because the coalition's dislike of the NBN in its current form is well known. We have to accept that the government has had its basic NBN legislation passed and therefore it has to set out a regime commensurate with the new system. Having said that, the regime has to be something that is within the bounds of fair play and is not going to be inordinately more expensive than what we have at present—or it should not be. You would think that, if the NBN is going to deliver all the marvellous things that the government and its members have said it will, things would be cheaper and more efficient, not more expensive. The member for Bradfield pointed that out very eloquently in his speech today when he pointed out that the non-Telstra telecommunications providers will be paying infinitely more by way of levy under the new system than under the old.

TUSMA will be charged with ensuring that voice-only customers are shifted onto the NBN fibre network before Telstra's copper network is decommissioned. It will also have to support research and development to make sure that public interest services such as traffic lights and public alarm systems can be shifted across to the NBN without disruption. Part 2 of the bill relates to the scope of grants and contracts which TUSMA will administer and provides for the minister, subject to the scrutiny of parliament, to set standards and benchmarks for those grants and contracts. The agency will also maintain a register of all contracts and grants and oversee the performance and compliance of contractors and grant recipients.

Part 3 of the bill sets out TUSMA's corporate structure, accountability and reporting requirements and provides for TUSMA to maintain a register of public interest telecommunications grants and contracts. The organisation will also have to provide a report to the minister every year detailing the performance of contractors and grant recipients during that period. That information must also be published in TUSMA's annual report to parliament. The bill also provides for a review of the USO arrangements before January 2018. That seems a bit far off, but at least it is there.

Parts 5 and 6 of the bill relate to funding arrangements for TUSMA. I ask at this point whether another bureaucracy within the telecommunications bureaucracy is necessary. Time will tell whether it is. The USO funding for standard phone services and pay phones is currently carried out by way of revenue based on a levy; the National Relay Service is funded by a similar levy. However, this will change under these new arrangements, with TUSMA set to receive government funding which will be topped up by an industry levy. All in all, the government is set to give Telstra $230 million a year for the provision of a standard telephone service, with another $40 million for the payphone service. This funding will not be adjusted for inflation, but it may be increased or decreased depending on the policy of the government of the day. Telstra will also receive $20 million each year to operate the emergency call service; however, the provision of the service will be put out to tender within five years. If no suitable tenders are received, Telstra will continue in its role as the provider of the emergency call service. TUSMA will also manage contracts for the operation of the National Relay Service, which currently costs around $17 million a year.

I will touch briefly on the NRS. It is a service that is not as high profile or sexy as some of the others, but it is crucial for many Australians who have a hearing or speech impairment. The NRS is operated on an Australia-wide basis and incorporates teletypewriter, or TTY, technology, which involves individual relay officers translating typed text to speech and speech into typed text, and provides the voice-over system to a wide range of Australians. Industry funds the cost of the NRS contracts through a levy arrangement similar to the USO scheme. This funding arrangement will change as the levy is consolidated with the one relating to the provision of the USO. Let us hope that the service does not drop in quality.

The NRS is a remarkably effective way for hearing and speech impaired people to use modern telephony to stay in touch with friends, family, business contacts and public entities. One of the most important things a government can do is provide an efficient and reliable telecommunications service for people with special needs. We must get the ongoing operation of the NRS right, because our ageing population means that there will be much more demand for its services into the future. In my own electorate, which has the highest over-65 profile in Australia, the need is self-evident. It is crucial that, as we transfer them to other operators, we do not allow these services to be weakened in any way.

Going further on the costs associated with TUSMA, it is estimated that around $15 million will be spent each year in migrating voice-only customers to the NBN, while $20 million will be spent over two years to migrate public interest services to the NBN. Tallying up these figures brings the total expected liability for TUSMA to around $340 million each year—a huge increase on the $145 million provided to Telstra in 2010-11 for the USO. That is the point that the member for Bradfield made very eloquently this morning. Whether it is by direct government subsidy or by going through the non-Telstra providers, ultimately we the taxpayers are going to pay for it: indirectly, in our taxes, or directly, in increased phone charges. That is unavoidable if you are going to more than double the cost of providing the service.

There has long been contention surrounding the costs associated with delivering the USO, and the increased costs associated with this bill give rise give rise to some scepticism. As the chairman of the standing committee on communications in earlier times, I can vouch for that, because one of the great unknowns was the real cost of the USO. The increased subsidy to Telstra and the expansion of services to be funded via the industry levy mean that all carriers will be paying a much higher levy. The government says that to provide some lead time it will cap the levy on carriers for the first two years so that their overall liability does not increase. Again, what happens after that?

In the remaining minutes I have I want to talk about the circumstance in my own electorate. It is not, strictly speaking, a USO matter, but it is germane to the debate we are having today. During the floods 12 months ago, an underriver cable from Bundaberg city to North Bundaberg became dislodged, floated to the surface, was damaged and, progressively during the year that has just gone, became more and more crackly and unusable. Then in December last year there was a great failure throughout the suburb of North Bundaberg. One estimate says that 900 people were affected, but Telstra told one operator that I dealt with that they were dealing with 2,400 households—which I find an extraordinary figure.

What happened, of course, is that they lost phone services or data services, and in some cases both. This went on for six weeks or more. The impacts were quite extraordinary. Imagine a service station without its EFTPOS facilities, or a real estate agent without regular phones—because they live on their phones. Imagine a major developer trying to juggle works and sales programs without a phone, a pony club secretary trying to arrange events involving nominations from out of town, or a supermarket struggling with communications while trying to do orders and the like. This was a very serious thing. Virtually a whole suburb of Bundaberg was without phone services.

But the attitude of Telstra was quite remarkable. At no stage did they send out a letter to the whole of North Bundaberg—which we do as members of parliament when something happens in a particular suburb. No, that did not happen. They did not send out a news release. People found out only when they rang Telstra, and they had to go to one of those 1300 numbers. The call could take anything from 30 to 45 minutes to be answered, and then it was answered from a foreign country. Now I am not in racist mode today; please do not misinterpret my comments. But the people in these overseas countries did not understand the significance of what was going on. When you are trying to explain what is happening in an Australian town in an Australian flood circumstance, you require people with whom you can communicate clearly. This becomes even more important when you want to ring a 000 service and you cannot get through.

Some of the people told me that they felt that Telstra did not use this as an opportunity to find alternative methods of communications for people while they fixed this cable but rather as an opportunity to sell some of their other, more expensive, services. In one case someone was using the Apple iPhone as a modem. This particular person had a limit of one gigabit per month on their phone. Once that one gigabit was exceeded, it was 25c per megabit. As he pointed out, if he went up to two megabits it was going to cost him another $250 a month. Telstra seemed to think that was quite a good idea. I would have thought that the principle put into play there should have been that when a phone went out Telstra would give the person a mobile phone on a temporary basis. But, no, that did not happen in this instance.

It took a long time for anything to happen. Eventually people got a letter from Telstra—on 27 January—backdating to 3 January advice that Telstra felt it was exempt from the telecommunications customer service guarantee standard. The rationale was that because this was some sort of act of God it was not liable and would not have to make the customer service payments. Telstra seemed more interested in going out and covering its own backside rather than in providing its customers with alternative means of communications. If that is the case, how can it be trusted with the USO?

Debate adjourned.