Thursday, 22 October 2009
Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009
I rise to speak on the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009. At the outset I must say that I have some reservations about some of the components of this bill. This bill introduces a new part, part 33, into the Telecommunications Act, which provide provisions for Telstra to structurally separate. I might I add that, should Telstra not voluntarily submit an undertaking to structurally separate to the ACCC, this bill requires functional separation of the company. It also 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 interests in Foxtel. 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. It also contains amendments to increase the powers of the ACCC under the Trade Practices Act and change the USO and the consumer service guarantee.
These amendments, which hold a gun to the head of Telstra and seek to force the company into a structural separation undertaking, are of great concern to me and to millions of Australians who are shareholders, employees and customers of Telstra. It is very clear to me that the changes proposed in this legislation are plainly about one thing only, and that is to assist in making the government’s new National Broadband Network viable. Concerns I have with the Rudd Labor government’s NBN mark 2 proposal are: it involves the renationalisation of our fixed-line telecommunications infrastructure; it exposes taxpayers to all the risks inherent in running a complex and costly telecommunications business; it renders the government hopelessly conflicted as the owner and operator of a commercial business which it is responsible for regulating and for which it has demonstrated it has no capacity to manage up to date; it involves massive borrowings underwritten by the taxpayer; and it is very unlikely that the government will be able to privatise it, as promised, five years after it is built—around 2023—leaving taxpayers stuck with $40-odd billion locked up in a telco company, which, on the government’s current performance, will not be commercially viable.
I recognise the importance of universal access to fast, affordable and reliable broadband, particularly in the predominantly rural electorate of Hume that I represent. I also support the continued improvement of broadband services, including the deployment of next-generation networks and services. Again, this will significantly benefit the rural and regional towns and villages located within the Hume electorate. Unlike Labor, the Liberal Party takes a practical and realistic approach to ensuring that all Australians have access to fast, affordable and reliable broadband services in the most cost-effective way to Australian taxpayers.
At the last election Mr Rudd and the Labor Party promised to commence the rollout of a new National Broadband Network services before the end of 2008. We are nearly at the end of 2009 and it has not even completed a project implementation study. The last two years have been wasted by the Rudd Labor government due to poor planning and incompetence. After running a failed tender for its NBN mark 1 proposal, which wasted 18 months and $20 million of taxpayers’ resources, in April 2009 the government announced that it had abandoned its 2007 election commitment and would commence a new process in a bid to deliver an NBN mark 2. In so doing they have raised the financial stakes and risk to taxpayers considerably.
To cover up the failure of its original NBN plan to spend up to $4.7 billion on a fibre-to-the-node upgrade of Telstra’s copper network at a total cost of $10 to $15 billion, Labor has made an extravagant promise to spend up to $43 billion to construct a fibre-to-the-premises network through the establishment of a government business enterprise—NBN Co.—in which the government owns a minimum 51 per cent stake. The proposal to spend up to $43 billion of taxpayers’ funds has been committed without any detailed cost-benefit analysis or business plan. That is what concerns me. Interestingly, I heard the contributions made by the Independents in this place. While I class the Independents as friends of mine, it would appear that the Independent members for Lyne and New England agree that it is okay to spend $43 billion of taxpayers’ funds without any detailed cost-benefit analysis or business plan. I find that reprehensible. I thought they had more common sense than that.
With a nine-month implementation study planned at a cost of over $50 million and a rollout period of eight years, this is broadband on the ‘never, never’. This proposal has the look of a cobbled together stunt to mask the government’s failure to deliver on its original election promise and to get it through the next election. Nobody denies that fibre-to-the-premise broadband, as proposed by Labor’s latest plan, is a premium service, but it will come at an enormous cost to Australian taxpayers and potentially consumers.
The opposition believes spending of this magnitude by government on broadband is reckless, irresponsible and unnecessary. The government has made this promise despite a failure to conduct any cost-benefit analysis or economic modelling. The government does not even know whether this new broadband company can be commercially viable. Many leading analysts predict that this project will not be commercially viable despite claims to the contrary.
The Rudd Labor government’s proposal also confirms that towns of under 1,000 people will receive not high-speed 100 megabits per second services but services of around one-tenth of the speed delivered by wireless or satellite. 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. Such an outcome will in fact widen the digital divide rather than bridge it. In the electorate of Hume alone this will directly affect over 5,500 residents living in 20 towns and villages. These residents have been dumped into the too-hard basket by this government’s incompetence.
Labor’s broadband plan would see taxpayers carry the bulk of the risk, with the government becoming a 51 per cent majority shareholder in a new government business enterprise. From a position of heavy debt and deficit, created solely by this government, it will need to raise billions of dollars in further debt to fund this project. Labor cannot provide any detail about likely customer take-up rates or the prices consumers will have to pay to use the network. Few analysts predict prices for retail services under the NBN will be less than $100 per month. Therefore, consumers could be forced to pay double what the average broadband user pays today.
In an attempt to make the NBN mark 2 viable, the government announced that it intends to force the break-up of Australia’s largest telecommunications company, Telstra. The decision to break up Telstra is a stark change of policy by Mr Rudd. He said nothing about breaking up Telstra at the 2007 election. This new and radical policy is the ultimate consequence of the debacle that is his approach to broadband. Having botched the implementation of its 2007 election policy to provide $4.7 billion towards the upgrade of Telstra’s network to fibre-to-the-node, the government now has to break up Telstra in order to implement its latest policy of spending $43 billion to create a government owned fibre-to-the-premise network.
The government’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’s customers. The government does not want its NBN to have to compete with Telstra; it wants its NBN to be a majority government owned monopoly. This is the only way the numbers can even remotely stack up for the NBN.
The opposition believes government funding for broadband should be specifically targeted at underserved areas. It also believes in working towards parity between residents living in cities and those living in rural and regional centres. It does not support attempts by government to ‘pick winners’ in the rapidly changing technology sector. Nor does it believe, in this economic environment, that taxpayers should be made to carry most risk in a large-scale speculative broadband venture.
Our approach remains realistic and pragmatic and we are not afraid to acknowledge that, for a continent as vast and sparsely populated as ours, Australians are generally well served when it comes to telecommunications. The opposition is also a strong believer in competition as a key driver of service expansion and innovation and it believes government can use various levers to encourage investment in broadband services and to ensure provision in underserved areas.
It is also important that a safety net be in place for those Australians who do not have affordable access to metro equivalent broadband services. The opposition does not support the unnecessary duplication of telecommunications infrastructure in well served areas, but supports its immediate rollout in areas of under service. We had a fully costed and targeted plan to deliver new, fast and affordable broadband services across the country which was rejected by the Rudd Labor government. Their mismanagement included the cancellation of a rural and regional broadband network project, OPEL, announced in my electorate of Hume, which would have seen new services delivered this year to around 900,000 underserviced premises. The previous government was set to invest $958 million in this project, with the private sector contributing a further $1 billion. This would have included the rollout of 15,000 kilometres of new open access fibre optic back into rural and regional centres. This plan would have been delivering services now and would have been completed by the end of 2009.
I have some other points to make but I will close now by saying that I do not believe there is any harm in waiting until the implementation study is finalised before this bill is considered further by the parliament. If the House does not agree, I will most emphatically be opposing this bill in the House.