Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

I continue my discussion of the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 in the true spirit of the capacity of this place to scrutinise legislation and of assisting the government in its endeavours. Last evening, I alluded to my concern about the absence of a business plan for the NBN Co.—a business that as proposed, if successful, would be of some $43 billion. In the spirit of assisting the government I was endeavouring to prepare for them such a business plan. I had got to the section in the business plan of cost-benefit analysis. Last night I used the words of the Minister for Finance and Deregulation, Mr Tanner—regarded as being one of the more sensible members of the cabinet—who said that a cost-benefit analysis is a complete and utter waste of time. I made the observation last evening that we cannot possibly judge or vote on this legislation until such time as we are in possession of a cost-benefit analysis.

I was somewhat ridiculed for that, but, when I looked into this further, I found that I am joined in that view by various luminaries. Treasury Secretary Ken Henry, on September 2009, said:

Government spending that does not pass an appropriately defined cost-benefit test necessarily detracts from Australia’s wellbeing.

So we have the Treasury Secretary confirming that we should be scrutinising this. I go further. International specialist in regulatory economics Henry Ergas, said at the same time:

Taxpayers deserve better.

       …         …         …

This is hardly public policy as it should be. Nor is it structural reform. Rather, it is legislated blackmail. The legislation’s very vagueness makes this clear; what the government seeks is not a mandate for clearly defined change but an open-ended discretion to inflict massive costs, most immediately on Telstra and its shareholders.

Only last night we had the regrettable performance of Minister Tanner in the media, saying that the coalition is holding up the government’s business. Well, if the government had a business plan as part of its planning, we might not be in this position.

I go on in my business plan to the concept of competition. Anybody proposing a business would have a look at what was currently out there. As we have already heard in this discussion, there are some 175 carriers of communications services, 600 internet service providers, and three suppliers and providers of mobile services. What niche might the new NBN therefore obtain?

I ask: what is the imperative for this, given that it is already a very well supplied market? Those of us who use Skype, for example, know that we can communicate with up to four or five users around the world concurrently free of charge. So where is the imperative to commit the Australian taxpayer to $43 billion of expenditure? And as part of that process of competition I ask, particularly for an instrumentality that is government owned, as this one would be: where is the public benefit test in this whole NBN? We have already had established for rural and regional communities that that benefit is very, very limited. In the context of that public benefit I ask: what are the lost opportunities that would have come had we been able to expend those sums of money on other activities or in fact to reduce debt or to not impose or incur that debt in the first place? I ask the question with regard to the public benefit: what are industry trends? What is industry doing? What is communications doing? We know that it is rushing to wireless communication. We know the uptake of wireless communication and telephony is very, very high. Satellite communication has always been there and is becoming more effective and more efficient. So in the 18-year or so life that it will take to roll out the NBN, should it be successful, where will communications be? I hesitate to say that it will be copper wired. It will be wireless. It will be satellite. So this will be a waste of money.

Again under that public benefit analysis I ask the question: who is affected in relation to this particular exercise? We already know there are 1.4 million people, Australians principally, who are shareholders in Telstra. How will they be affected? I will come to that in a moment. We know that there are 30,000 workers within Telstra. We know there are nine million customers. All of these issues must be addressed, and they must be addressed by the government coming clean and giving us some indication of the information that they have. If they do not have it they should call a halt to this process until they get it, so that we can all enjoy it.

On the question of competition, we know that competition experts have joined us in criticising the government’s plan for Telstra to be disbanded the way it is and to be broken up and for the proposed National Broadband Network. One of the arguments that industry experts put is that it will result in yet another government owned monopoly generating very limited benefits. Who have made these points? None other than former ACCC chairman Allan Fels, who has said:

One must have a … real concern that the outcome of negotiations between Telstra and the government is that there will be a monopoly national broadband network, with Telstra and other major telco players all involved and with very little competition for anyone else.

He went on to say that ‘if the government was fully covered by the Trade Practices Act, its actions in refusing Telstra any new access to advanced broadband spectrum, which was needed for its future growth, would likely be an abuse of market power’. Allan Fels is saying the actions of the government would constitute an abuse of market power. It is a pure case of: do as I say but not as I do. I regard this, then, as an abuse of parliamentary process. Basically, we have a scenario in which people as independent as Allan Fels are expressing concern about the way to go.

What has the Australian Shareholders Association said? They have decried this proposal as lacking a ‘single positive aspect’ from shareholders’ perspective. ASA chief executive Stuart Wilson last year said:

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

This is dangerous legislation if passed.

In the consideration of my hypothetical business plan to assist Minister Conroy I then underwent a SWOT—strengths, weaknesses, opportunities and threats—analysis. Not surprisingly, I could not find many strengths and I certainly could not find many opportunities, other than monopoly control of telecommunications. I asked myself the question: if the government considers Telstra to be a near monopoly and wants to break it up, where is the commercial or, in fact, the constitutional or the legal benefit in replacing it with another monopoly, on this occasion a government owned telecommunications monopoly? There just is simply no sense in the process. I found plenty of weaknesses and I found plenty to threats in the SWOT analysis. I certainly recommend that the government go back and do a very simple one-page SWOT analysis, and I dare say they will find exactly what I have.

In this process of business planning I came to the next critically important area, and that is risk analysis, in which you ask yourself: what is the likelihood of something happening that could be detrimental to, in this case, the Australian community and, secondly, what would be the impact of the decision if it went ahead? As you would expect, most commentators would agree with me that it is high risk: the likelihood is high, the impact is high. I will quote from an internationally regarded telcoms analyst, Mark McDonnell, speaking last year at a conference in Sydney, who said the NBN’s $43 billion price tag:

… does not appear to have been based on any kind of detailed study … specifically, there is no clarity around the underpinning assumptions or about the kind of network and industry arrangements implied.

He went on to query whether the putative $43 billion was ‘simply the construction and deployment costs’ or whether it did in fact also have ‘some allowance for start-up and operating losses’. His prediction was some $113 per month per customer if everybody was to actually sign up—in other words, 100 per cent penetration—but that that $113 would go up to $900 a month for customers if only 12 per cent participated in the process.

Only yesterday, Minister Conroy said to us in this place, ‘Your role is to scrutinise.’ How right he is. Our role is to scrutinise. He will not release an implementation plan only delivered to him last week and he cannot, surely, expect us to pass this legislation on that basis. (Time expired)

Nick Minchin (SA, Liberal Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

I rise to speak on the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 in my capacity as the shadow handling the bill in the chamber and also as the former shadow minister for communications. The opposition will be opposing this bill. We do so for a whole range of reasons but principally it is because it is quite an extraordinary attack on a major publicly listed company by the Australian government. This is no ordinary company, as my colleague, Senator Back, said. This is a substantial Australian company, now publicly listed, with 1.4 million shareholders—I think the widest shareholding of any Australian company—30,000 employees and nine million customers.

This bill also has been quite obviously drafted in order to maximise the discretionary power of the minister. It hands largely unfettered discretionary powers to the ACCC to set upfront access terms and conditions as well as binding rules of conduct with absolutely no regard to procedural fairness or provision for merit review of decisions made.

Despite what the government has been saying, this bill, as it stands, has absolutely everything to do with the $43 billion NBN mark 2 proposal. This is a proposal recklessly committed to on the run without any business plan, as Senator Back has said, and absolutely no cost-benefit analysis whatsoever. The government’s first attempt at the NBN ended in complete humiliation for the government and the minister, and we then had the Auditor-General’s damning assessment of the RFP process. That was a process fatally flawed and doomed from the beginning. It wasted 18 months as well as $30 million of taxpayers’ and bidders’ money. What we have seen here is a slow-motion train wreck from Senator Conroy in his handling of this policy area. For more than two years the telco sector, consumers and taxpayers have had to endure this sorry saga of incompetence from this minister.

We have not had a single new broadband service delivered under the guise of an NBN since this minister came into office, now more than two years ago. We know the minister, apart from the bungling of this and the establishment of this extraordinary proposal for up to $43 billion of taxpayers’ money to be put at risk, is using it in a quite naked way to reward mates. The Mike Kaiser appointment, quite frankly, is a scandal. We have millions and millions of dollars of taxpayers’ money being spent on wages, consultants and the leasing of luxurious office space for a company set up by this government that has not earned any revenue at all and which has not delivered a single service to anyone. We await with great trepidation a future audit on the NBN mark 2 process. Despite Senator Conroy’s claims that the NBN can be built with or without Telstra, we all know that without Telstra, its customers and its network the NBN is dead in the water.

Part 1 of this extraordinary piece of legislation is nothing more than a mechanism to exert maximum pressure on Telstra to prop up the complete absence of any business case for NBN mark 2. It is nothing more than a legislative gun to the head of a major Australian company. Nobody is fooled that this bill is anything but directly and implicitly about the NBN. We have as evidence for that contention comments by David Forman of the Competitive Carriers’ Coalition. He told the Senate inquiry into this bill:

If you suggested to me that the NBN was likely to succeed in the absence of this legislation—

that is, the legislation before us—

then I would suggest that was a pretty big bet.

Stockbrokers Maple-Brown Abbott, described the bill as follows:

... a high risk strategy to deliver the NBN.

That is exactly what it is.

The Minister for Infrastructure, Transport, Regional Development and Local Government, Mr Albanese, in the House gave the game away when he introduced the bill last year and outlined one of the government’s dubious options for Telstra. He said:

Telstra progressively migrating its fixed-line traffic to the NBN over an agreed period and under set regulatory arrangements and for it to sell or cease to use its fixed-line assets

It is utterly naked in its intent.

While the minister is engaged in a charade claiming the bill is all about improving the lot of consumers, in truth, if passed in its current form, consumers could well be worse off. In the supposed interest of consumers, Senator Conroy told us last year that this bill had to be passed through the parliament by the end of 2009 even though these measures for consumers do not come into effect until July of this year. The urgency of the bill was such that the minister chose to go to Egypt for a week during a sitting week last November when we could have dealt with the bill. The government failed to bring this bill on in the final two sitting weeks of last year, having been preoccupied with their CPRS. So we are not going to take any lectures about the urgency of dealing with this bill for the sake of consumers because of the nonsense that has come from this government. Despite this reality, the minister has been going to great pains to claim that the opposition is responsible for this delay, which, of course, is also a nonsense.

The coalition has consistently said that the government should be engaged in proper commercial negotiations with Telstra, free from this sort of legislative gun to the head. But we have not seen the outcome of those negotiations. Telstra thinks that we still have potentially months to go. On 2 March, Telstra advised its shareholders and the ASX:

Telstra’s position on this Bill has not changed.

                        …                   …                   …

We have always said this legislation is likely to destroy shareholder value and makes an agreement with NBN Co and the government harder to achieve.

Why on earth is this government intent on proceeding with the legislation now? We do maintain that major structural change to the telecommunications sector, as contemplated in this bill, should not be considered until the government releases and formally responds to its taxpayer funded $25 million implementation study into the NBN. We are all expecting that this will answer a lot of the questions about the NBN. The minister has consistently referred to the NBN at every opportunity to dodge scrutiny about his proposal. He uses the implementation study to avoid questions on everything to do with the NBN. When I asked him last May a whole series of questions about the NBN, the minister said, ‘The implementation study is examining most of these issues’. We were told that we would get this NBN study in February. It is now the middle of March and we are yet to see it. But we should not be considering this legislation until we get that study and the government’s response.

We are not opposed to sensible reform. We have made that clear and we are happy to consider sensible proposals put before us. The government, if it was sincere, would have put forward the parts of this bill which relate to the existing telecoms’ access regime and consumer measures separately from the evil encased in part 1 of this bill.

The government’s inconsistency here is extraordinary. We have now had the government saying that the NBN Co., which we were told would only ever be a wholesale company, now may well consider offering retail services. That of course has alarmed the rest of the industry, which thought only Telstra would be the victims of this creation. If these provisions were used, as respected business commentator Stephen Bartholomeusz said:

NBN Co’s monopoly, once the network is built, would be even stronger than Telstra’s.

So we think that what is on hand here is the potential for the re-creation of a government monopoly business.

The bill before us inserts a new part 33 in the Telecommunications Act which provides for Telstra to structurally separate. But, if Telstra does not voluntarily submit to the ACCC an enforceable undertaking to structurally separate, the bill then requires the functional separation of the company. In an update to shareholders on 2 March, Telstra maintained:

• functional separation could cost Telstra $1 billion—

that is $1 billion that shareholders would have to pay—

and take five years to implement, damaging customer service and providing no real benefits to consumers.

The bill allows the minister to prevent Telstra from acquiring specific bands of spectrum for advanced wireless broadband service unless it structurally separates and divests itself of its hybrid fibre coaxial cable network and its interests in Foxtel. The bill contains amendments to increase the powers of the ACCC and to make changes to the USO, customer service guarantee and priority assistance arrangements. To sell the government’s case for breaking up Telstra, the government is relying largely on the lobbying efforts of Telstra’s competitors, who of course have a vested interest in breaking up a major competitor. But it is nakedly the government relying on their service in this matter.

But there is a fiction here. The fact is that the telecommunications market, which the coalition opened up to competition, is now much more competitive. The Labor Party are living in the past when they talk about the current state of the market. This is what the ACCC said about the state of competition in this sector, as recently as November 2007, when the Rudd government first came to office:

Since the introduction of the telecommunications-specific provisions in 1997 the industry has developed substantially. Consumers have benefited through improvements in service quality, the introduction of new services, an expansion in service coverage, and the reduction of prices. ACIL Tasman recently estimated that the Australian economy was around $15.2 billion larger than it would have been had the 1997 reforms—

brought in by the Howard government—

and other subsequent developments not occurred. A key reason for this has been the 31 per cent reduction in the price of telecommunications services since 1997-98.

Recent developments demonstrate that competition policy is continuing to produce significant consumer benefits.

That was the ACCC’s description of the telecommunications market in 2007, when we left office. A more recent review of the telecommunications landscape suggests there continues to be strong competition within the sector. The ACMA telecoms report most recently shows we have 175 licensed carriers, 391 fixed voice service providers, 638 ISPs, six mobile networks and four HFC cable networks. There are an extraordinary range of services available to consumers now.

While this debate focuses on the supposed continued market dominance by Telstra, revenue growth trends show Telstra now being outstripped by its major competitors. Last year Telstra lost 30,000 broadband customers in that reporting period, fixed line revenues are down seven per cent and revenue is down 2½ per cent. This extraordinary attack on Telstra by the government is such that the share price has been so depressed that yesterday the Financial Review revealed that Optus is now the biggest telecommunications company in Australia by market capitalisation. And this attack is led by a minister who had the audacity to say in 2006, in reference to our government:

… the childish and unedifying public warfare the government is pursuing against the Telstra board and management will serve only to undermine investor confidence in the company.

Well, here he is doing exactly what he falsely accused us of doing back in 2006.

I want to look at Labor’s apparent position, which is its ‘clear desire for Telstra to structurally separate’. This is a massive policy backflip on the part of the Labor Party. Their telecommunications policy platform of 2007 stated:

Labor supports fair, third-party access arrangements for communications infrastructure. Labor will ensure that Telstra’s wholesale and retail functions are clearly distinct within—

I repeat, ‘within’—

the company.

There is no suggestion at all of separation. As recently as last May, during Senate estimates, I asked Senator Conroy directly about his position on structural separation, and he said in reply:

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

Minister Tanner said in a 2002 paper, when he was the shadow minister, I think:

Any sensible discussion of Testra’s future must consider the possibility of full structural separation, although this idea may not be viable as its time may have passed.

So, even eight years ago, Minister Tanner was honest enough to admit this was something that might no longer be worthy of consideration. In 2005, he said:

Certainly, we are strong believers in a genuine internal separation of Telstra between wholesale and retail, so we can have fair-dinkum, level-playing-field …

This is a policy for which the government has no mandate whatsoever. In fact, it said to Telstra shareholders at the 2007 election that it would not be seeking the formal structural separation of the company.

This really goes to a major issue, the future of privatisations in this country. Who is going to buy shares in a government privatisation—and the government says it is going to privatise NBN Co.—if Mr Rudd and his minister use this sort of legislation to break up Telstra and destroy shareholder value in the way contemplated here? Those who did buy Telstra shares in good faith, in T1, T2 and T3, have every right to feel utterly betrayed by this government, which did not say before the last election that it would seek to break up their company. The message is: buy shares in government privatisations under the Labor Party at your peril. The government’s attack on Telstra also puts at risk years and years of hard work by previous governments to convince the international investment community that Australia is a safe, secure and reliable place to invest. In its submission to the Senate committee inquiry, the Australian Shareholders Association said:

International investors in particular will consider Australia to have a much higher level of sovereign risk if this Bill is passed and the Government allowed to impose its will on a private company.

Australia’s largest listed investment company, AFIC, said:

If the Parliament passes this legislation we think Australia’s investment standing could be significantly diminished. Investors, particularly international investors, will perceive substantially heightened sovereign risk if the Australian Government can act arbitrarily in this way.

Our government sensibly got out of the telecommunications business, allowing competition to drive the sort of investment and innovation that government owned utilities simply do not. Telstra’s scale and capacity as a national, vertically integrated incumbent enables it to make the margins necessary to support the provision of services in the many uneconomic areas of rural and regional Australia which would not receive the services otherwise. It is a reality conveniently ignored by the government, which is making sweeping and unsubstantiated claims that structurally separating Telstra will somehow result in a new wave of investment in rural and regional Australia.

Frankly, you only have to look at the low level of investment by Telstra’s competitors in fixed line services in rural, regional and remote areas to see the nonsense of the government’s claims. As of March last year just 537 of Telstra’s 5,300 telephone exchanges across Australia contained broadband equipment owned by Telstra’s competitors. These 537 exchanges cover some 13.2 million people, or 67 per cent of the population. The rest, while the exchanges are all open to the competitors, do not have any competitors’ equipment in them. The ones that do are located in the major cities and towns because that is where the access seekers can generate a commercial return on the investment. In the other 4,700 exchanges, while Telstra does not deny access to its competitors and there is no technical barrier to the investment, none of its competitors have installed equipment there. So there is no evidence whatsoever that the structural, or indeed the functional, separation of Telstra or any of the other provisions in this bill will result in a sudden surge of new infrastructure investment and affordable service provision—no evidence whatsoever.

In relation to functional separation, the government holds up British Telecom as a successful model. But that process, which commenced nearly five years ago and is yet to be fully finalised, resulted in significant consumer disruption and has produced no significant enhancement in service provision in rural areas. In fact the UK government is said to be considering the introduction of a broadband levy to fund the enhancements in rural and other underserved parts of Britain as a result of what they have done. So structural or even functional separation of Telstra would take years to fully implement and would be very disruptive to the Australian telecommunications market and all the customers that Telstra has.

The government has produced this legislation clearly and obviously as a mechanism for forcing Telstra to the table. The government knows that this extraordinary proposition to spend up to $43 billion of taxpayers’ money to cover the disaster of the failed implementation of its first NBN policy can only succeed if the government effectively gets a hold of Telstra’s customer base, its access network, to make the NBN viable. This is an outrageous attack on a major Australian company. It is not owned by the government anymore, but by 1.4 million Australian shareholders. They are disgusted by the actions of this government, which is behaving almost like some Third World government that comes in and expropriates property of the shareholders of a company with no mandate whatsoever. I accept that it would be different if the government had gone to the last election and said, ‘Our policy will be to force the break-up of Telstra into two separate companies, wholesale and retail.’ At no stage was there any such warning to the Australian people or the shareholders of this great company. The government’s actions are a disgrace. The Senate should reject this bill completely.

Ron Boswell (Queensland, National Party) Share this | Link to this | Hansard source

We are debating the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009, which provides for Telstra to structurally separate. After listening to Senator Minchin, we could be forgiven for thinking that we were in the previous East Germany, where people just went in and took other people’s property.

The amendments we are debating today are all about forcing Telstra to prop up the government’s friendless $43 billion NBN mark II proposal. The government is trying to legislatively bully a publicly listed company, a company with 1.4 million shareholders, around 30,000 employees, and 9 million customers. The bill seeks to prevent Telstra from acquiring of specific 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.

If this publicly listed company refuses to comply with the minister, the bill then provides for a functional separation of the company on terms defined by the minister. This is the same minister who said that NBN services would be rolled out before the end of 2008. This is the same minister who wasted 18 months and $30 million running a tender process that had no prospect of producing an outcome. This is the same minister who committed to a $43 billion NBN project made with no business plan and who refused to do a cost-benefit analysis despite the calls from the Productivity Commission and the Business Council of Australia for a cost-benefit analysis of the government’s massive spending proposal. And it is the same minister who stole $2½ million from rural Australia for their Future Fund, and that will never be forgotten. That $2½ billion was placed in the Future Fund to update telecommunications in rural Australia, and that was just knocked off.

In May last year, during Senate estimates, Senator Conroy was asked about his position on structural separation. He replied:

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

We are debating the minister’s bill here today which goes to structural separation. There is separation happening here all right: separation between the minister and good policy. While the minister heavies Telstra shareholders, to have his way with their fixed line customers, consumers are moving to wireless services in droves, which further undermines the business case for a fixed line NBN to 90 per cent of the population.

Labor made a huge mistake in cancelling the coalition’s rural and regional broadband network project, OPEL, which would have seen new services delivered this year to around 900,000 underserviced premises. The coalition was set to invest $958 million in that project, with the private sector contributing a further $1 billion. That would have included the rollout of 15,000 kilometres of new open access fibre-optic backhaul into rural and regional areas. That plan, the OPEL plan, would have been completed by the end of last year.

Senator Conroy is directly responsible for nothing happening, and he is very good at that. The coalition in government required the accounting and operational separation of Telstra, but the coalition has never supported the calls for a structural separation of the company. The structure of the company is a matter for the company and its shareholders. What would happen if the government decided to structurally separate a major financial institution or a mining company? There would be uproar in the stock exchange.

Who is going to be the next to shake hands with ‘the dead hand of socialism’? I understand that expression was a senior minister’s solution last year to make Telstra behave over the plan for a superfast national broadband network. The senior minister said, according to Lenore Taylor:

The dead hand of socialism is always open to us …

That is the hand we are being dealt in the Senate today. Labor also wants to end the horizontal separation of the company by forcing the company to divest its HFC cable network and its interests in Foxtel—unless, of course, the minister determines otherwise.

I read yesterday that some unions were outsourcing their membership recruitment. Perhaps Senator Conroy should follow their lead and outsource some of his ministerial responsibilities. The outcome could only be better than what we have in front of us today. Not concerned with the splitting of a listed company down the middle and then slicing it sideways, Senator Conroy is also trying to prevent Telstra from acquiring specific bands of spectrum which could be used for advanced wireless broadband services. Denying Telstra future advanced spectrum will mean that there is no upgrade path. Given that Telstra has the largest network in the country, this is likely to have the greatest impact on rural and regional customers. The government is taking this extra punitive action despite the ACCC’s advice that no specific legislation changes are required to address the competition concerns in relation to the allocation of spectrum.

If Telstra is negotiating with the government in good faith, why is the parliament being asked to set a course in legislation that may be rendered redundant once the negotiations have concluded? The bill before us asks the parliament to give wide powers to the minister and the ACCC over the existing operation of the telecommunications network. This may fundamentally change as a result of the decision taken in response to the NBN implementation study. The cart is before the horse, and both the cart and the horse are going nowhere fast.

The lack of consistency in government policy must be making investors tear their hair out at the threat to sovereign risk. If only they could have believed Senator Conroy when he said about Telstra in 2007:

It’s a private company. Structural separation is more a matter for the board of Telstra, the shareholders of Telstra and the management of Telstra.

If only investors could have believed the minister on April Fools’ Day 2008, when he was reported as saying, on structural separation:

I often get asked why we don’t just do it. It’s because Telstra is a private company. It isn’t a government-owned company any more.

In May 2009 he told an estimates committee:

I have certainly never advocated structural separation …

Yet here today in the Senate we are debating legislation for the structural separation of Telstra. How can we believe anything the minister says? Telstra was sold as a fully integrated telecommunications company. While the prospectus identified that there were regulatory risks attached to the purchase of shares, none of these extended as far as warning about potential horizontal separation, the divestiture of Foxtel and the HFC network, nor that Telstra would be excluded from future spectrum allocation. The move to deprive Telstra of access to additional spectrum in the Next Generation mobile broadband service unless it structurally separates and toes the government line has not been subject to appropriate policy considerations, particularly its impact on the mobile sector and customers in regional and rural areas.

A healthy Telstra is important to this country for so many reasons, not least because it invests far more capital than its share of revenue would suggest. That means that the other companies are not investing but are happy to take the revenue. While Telstra generated around 57 per cent of industry revenue, it accounted for 71 per cent of industry capital employed in the financial year 2008-09, including all consolidated business. Over the five years to June 2009, Telstra invested more than $23 billion of capital. That is 70 per cent of the total industry investment—significantly higher than Telstra’s 62 per cent share of the industry revenues over that period.

Because of Telstra’s scale and capacity as a national vertically integrated incumbent, it can support the provision of services in many uneconomic areas of rural and regional Australia where other providers choose not to go or invest. If Telstra is restricted from providing these services, who is going to provide them? The government will have to pay—and do not hold your breath waiting for a Labor government to invest in rural and regional infrastructure in Australia. The Rudd government has already abolished the $2.4 billion Communications Fund established by the coalition for a telecommunications upgrade in rural and regional Australia. That was straight-out theft, and Telstra’s NextG mobile network provided by far the broadest geographical coverage of any network. Starving Telstra of spectrum will mean rural and regional Australia will be deprived of faster and higher capacity services.

Once again, rural and regional Australia are being asked to pay the price of Labor’s incompetence on telecommunications, and its wilful neglect. Even the unions are unhappy. The national president of the Communications Electrical and Plumbing Union said: ‘We’re pretty concerned about what this might do for the jobs and conditions of the tens of thousands of people we represent in Telstra. If Telstra’s revenue streams are impacted, there will be pressure on jobs and conditions.’ He is right about that.

Telstra is also home to the investments of many Australian super funds—and woe betide any government that acts to devalue their future. The editor of the Sydney Morning Herald said on 8 October 2009: ‘In fact, all Australians have a stake in Telstra’s future, thanks to the investments made by their superannuation funds or the government’s substantial holding of shares in the Future Fund.’ The structural separation of Telstra is against the interests of all Australians. I urge the Senate to reject this legislation.

Michael Ronaldson (Victoria, Liberal Party, Shadow Special Minister of State and Scrutiny of Government Waste) Share this | Link to this | Hansard source

The coalition acknowledges the need for regulatory reform and to examine all avenues to ensure that we have a competitive and thriving telecommunications sector. That is on the public record. What we are not prepared to tolerate is the Australian Labor Party and the Rudd Labor government blackmailing a good, honest Australian company that has 1.4 million shareholders. We are not prepared to let the Rudd Labor government blackmail this Australian company with a dramatic outcome for mum and dad investors who bought shares in good faith and have held their shares on the back of undertakings given by the Australian Labor Party in the run up to and after the 2007 election. These people have held their shares on the back of undertakings given and on the back of any policy announcements to the contrary which would have put their shareholding at any risk.

Indeed, if you want to see the impact of this policy and the outcome of the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 on those mum and dad shareholders you need look no further than the Australian stock market over the last two days in relation to Telstra shares. Those shares are up 7 or 8c today on big turnover on the back of the potential for this legislation to be defeated. The market has made it quite clear that it views this legislation as being bad for Telstra shareholders and it has responded to the possibility of this bill being defeated by raising Telstra’s share price. This is further evidence that those small Telstra shareholders who bought in good faith, who maintained their shares in good faith, are being screwed by a bill that they have not had any input into. They are being screwed by a government that did not tell them either before, during or after the 2007 election that it would insist on this regulatory approach. What we have seen in the last two days is a very clear indication that this ill-thought-out policy, for which the government does not have a mandate, is only going to have the outcome of destroying shareholder value.

I invite honourable senators to read the speech of the Leader of the Opposition in the Senate, Senator Minchin, which details substantially the history of this matter and the commentary on it. I urge senators—Labor, coalition, Independent and Green—to read Senator Minchin’s speech and see what the history is, see what has been said in the past and see what people have been told to rely on when making decisions about whether to invest or retain their shareholding in this company. We are not talking in this case about large institutional investors who have the benefit of history and the benefit of volume.

Debate interrupted.