Stirling Griff (SA, Nick Xenophon Team) Share this | Link to this | Hansard source

I rise today to call the Senate's attention to what I consider to be a gross mismanagement of public funds. Every day the government hands over nearly $1 million to line the coffers of Telstra, a company that the government privatised, that is one of the most profitable companies in Australia and that is one of the most profitable telcos in the world. These payments are part of what is essentially a secretive contract called the telecommunications universal service obligation, or USO.

The USO is a relic of the past. It goes back some 30 years, way before mobile phones and the internet took hold of the way we communicate. The USO was created when the telecommunications market was deregulated to ensure that standard services and payphones were reasonably accessible to all people in Australia wherever they lived. This, of course, was when the dominant form of communications for Australians was the fixed-line home phone and where payphones were considered a necessity. Back then, no-one in their wildest dreams could have predicted the role that mobile technology and the internet would play in today's society, nor that the government would spend tens of billions of dollars of taxpayers' money replacing the basic telecommunications network with the NBN. Technology that once seemed more in the realm of science fiction is now an everyday part of our lives. The rapid adoption of mobile technology by Australians has made fixed-line, landline and payphone services largely redundant, with 84 per cent of Australians owning a mobile phone and 29 per cent of Australians using mobile technology exclusively.

In 2012 the USO was locked down in a 20-year contract with Telstra. That is a contract worth over $6 billion to provide services that fewer people use every year. Telstra receives around $300 million to deliver the USO every year; $100 million of this comes directly from taxpayer funds whilst the rest is essentially funded by the consumers through levies placed on telecommunication companies. This equates to $814,000 each and every day for the life of the contract or for 20 years. To put it another way, Telstra earns $565 a minute and has earned almost $2,000 since I started speaking.

In comparison, the government has spent a meagre $160 million over the past three years as part of the Mobile Black Spot Program, with another$ 60 million pledged to fund round 3. Even though taxpayers are paying Telstra to keep services running, available data from government agencies show that up to half of Telstra's regional copper network has, in fact, been shut down. In addition, Telstra has decommissioned approximately half of its payphone network. The remaining payphones are also being used by Telstra for commercial gain, such as Telstra's private wi-fi network, Telstra Air. Just last week Telstra revealed plans to install digital advertising screens on payphones as another revenue earner which effectively is subsidised by taxpayers.

Despite the extreme cuts to its infrastructure, the government inexplicably continues to pay Telstra the full $300 million every year to maintain these services. There are undeniably complex issues to consider as to the long-term arrangements of the USO, given that NBN is rolling out its network. However, fiscal responsibility surely means that the government must immediately stop paying Telstra for infrastructure that no longer exists. This would represent savings of around $150 million a year. These savings could be used to build almost 4,500 new mobile towers in regional areas between 2018 and 2032 when the USO arrangement expires. This will provide 1.2 million square kilometres of increased mobile coverage and, if delivered on an open access basis as recommended by the ACCC, would provide competition in monopolised areas, where consumers are denied real choice and the benefits of a competitive market.

Three independent reviews—that's three independent reviews conducted by the regional telecommunications review committee, the Productivity Commission and the Australian National Audit Office—have all highlighted an alarming lack of transparency with the USO. This should be ringing alarm bells within government. I am very concerned by the lack of transparency and accountability for this contract, and the fact that the terms of the agreement are not, and have never been, in the public domain.

The Australian National Audit Office's report stated:

The Department has not utilised the flexibility mechanisms within the contract which have the potential to reduce the annual payment amounts.

Current contract reporting does not provide enough information to determine whether or not contracted services are achieving policy objectives—in particular, whether the agreement contributes to consumers having reasonable access to fixed services.

Of further concern is the fact that neither the Australian Communications and Media Authority nor the department of communications undertake any form of assurance processes to verify the accuracy of the performance data provided by Telstra. This data is used to calculate compliance with the service benchmarks set under the USO agreement. It is frankly amazing that the accountability of Telstra for its performance under the USO agreement, involving $6 billion of taxpayer and industry funds, is in the hands of the department of communications alone, with no apparent transparency.

With the rollout of the NBN scheduled for completion in 2020, it is imperative that the government take immediate action to begin winding down Telstra's USO responsibilities and payments. The voice services currently provided under the USO could be delivered by the NBN through Voice over Internet Protocol technology. This is a call echoed by the Productivity Commission, which found that voice services delivered via the NBN would be of higher quality than those currently delivered over the copper network.

Calls for USO reform are not new. The government has responded by ordering reports and inquiries and promising to investigate further. The time for reports and inquiries is over. Australian taxpayers and regional Australians deserve action. The USO in its current form represents at least $150 million a year of wasted money that could be used to solve regional mobile coverage issues. Given it does not appear the government can realistically terminate the contract, I implore it to urgently utilise the flexibility mechanisms identified by the Australian National Audit Office within the USO contract to reduce the annual USO payments to Telstra in line with services that they have already shut down. It should then redirect these savings to delivering improved mobile services for regional Australians.

Senate adjourned at 19 : 38